Traditional banking institutions find themselves at a critical juncture in an era where the banking industry is besieged by escalating competition from fintech startups and neo-lenders. The rapid proliferation of these new players, armed with technology-driven solutions, is redefining the landscape, propelling traditional banks and credit unions to innovate or risk obsolescence.
Here, we will explore how consumer expectations have evolved and how one institution, Vibrant Credit Union, has adeptly navigated these shifts, transforming its approach to banking with remarkable success using embedded lending.
In the digital age, consumer expectations have significantly shifted towards a more life-centric approach in banking services, demanding instant access and sidelining conventional reliance on physical bank branches. This change has been catalyzed by a broader societal move towards app-centric lifestyles, emphasizing convenience and efficiency.
As a result, financial institutions, including regional banks and credit unions, are being pressured to reevaluate their service delivery models. They must now compete not only with established banks but also with fintechs, neobanks, and larger institutions.
For example, JPMorgan Chase is looking to compete with the likes of Square and PayPal, partnering with a fintech company to debut online payroll services to entice small business owners. Experian’s checking account offers credit repair incentives to boost customer scores, while other players seek to break barriers and reinvent financial services.
To stay relevant, regional banks and credit unions must evolve by transitioning from relationship-driven approaches to offering digital-first financial products that meet the modern consumer’s needs.
Vibrant Credit Union, founded in 1935, epitomizes a successful pivot from a traditional, brick-and-mortar credit union to a forward-thinking, digital-first institution. Historically, Vibrant was emblematic of the classic credit union ethos—community-oriented, conservative, and steeped in tradition. After seeing growth in the 2010s and a series of mergers, the Vibrant team realized in 2019 that the traditional metrics used to measure their growth were under attack. Starting with their core value propositions, led by CEO and President Matt McCombs, Vibrant sought to carve out their niche in the industry while still serving consumers.
Consumers have the ability to aggregate their business themselves, really, in the palm of their hand… and we see that they’re looking for a very diversified aspect of banking.
— Matt McCombs, CEO and President of Vibrant Credit Union
Member services and a local presence had long been Vibrant’s great strength. However, shifting from a traditional mindset and pivoting to leading new markets required time and energy. Recognizing the strategic imperative to adapt, Vibrant Credit Union undertook a bold transformation, streamlining its physical presence and investing in digital capabilities. This strategic reorientation was not merely about adopting new technologies but signified a deeper commitment to reimagining the credit union’s role in a digital economy. As an established deposit leader, Vibrant’s new focus became diversifying and attracting new lending business to grow revenue. Developing and fostering relationships with large manufacturers became one of the key points of this diversification.
As Vibrant established these partnerships, it soon became clear that flexibility would be crucial for an embedded lending and finance program. When existing systems and technologies within Vibrant fell short of expectations, the Credit Union partnered with FintechOS to build a complete end-to-end user experience for its new lending program.
We had to make sure we could build something in a whitelabel fashion that was really complementary to what the manufacturer needed.
—Matt McCombs, CEO and President of Vibrant Credit Union
Vibrant Credit Union’s transformation included adopting a point-of-sale loan origination system utilizing the FintechOS platform. This innovative approach enabled Vibrant to seamlessly integrate lending services at the point of sale, enhancing customer convenience and streamlining the loan origination process. The new platform allowed Vibrant’s small, agile team to tailor customer journeys and incorporate other technologies into their embedded lending program.
This strategic shift demonstrated Vibrant’s agility and capability to compete with larger financial entities, showcasing that limited resources were not barriers to innovation and competitiveness. With this new embedded lending program, Vibrant Credit Union originated over $40 million in loans within six months of implementation, with projections of reaching $100 million in 2024.
The program’s success illustrates the viability of Vibrant’s strategic pivot towards technology-driven solutions, enhancing operational efficiency and customer satisfaction. This achievement highlights Vibrant’s success story as a compelling narrative of how innovation can lead to competitive differentiation in a crowded market.
Vibrant Credit Union’s forward-looking strategies are characterized by a continuous search for innovative solutions and strategic partnerships that align with its core values and business objectives. The credit union’s cautious yet proactive approach to expansion reflects a keen understanding of balancing growth with regulatory compliance and operational integrity. By focusing on situational value-added services, Vibrant remains attuned to its members’ evolving needs, ensuring that its offerings are innovative, highly relevant, and impactful.
Vibrant Credit Union’s journey from a traditional banking model to a dynamic, digital-centric institution highlights the imperative for all banks and credit unions to adapt to the rapidly changing financial landscape. Like Vibrant, regional banks and credit unions possess unique advantages—trust, community presence, and a deep understanding of local needs—that, combined with strategic innovation, can enable them to compete effectively against traditional and emerging players.
Vibrant Credit Union’s strategic transformation offers valuable insights for other financial institutions grappling with the challenges of digital disruption. The credit union’s journey underscores the importance of embracing change, leveraging technology, and remaining steadfastly focused on meeting consumers’ evolving needs. As the banking industry evolves, institutions that can navigate these shifts with agility, innovation, and a clear vision for the future will survive and thrive, carving out a distinctive niche in an increasingly competitive landscape.
Watch our webinar with Vibrant Credit Union, now available on demand, to learn more about strategic shifts and digital transformation in banking.
