2 minutes
How credit unions should respond to innovation, disruption and M&A activity in the fintech space
Drew Pascarella is a senior lecturer of finance at Cornell University, Ithaca, New York, and a lead faculty member for CEO Institute: FinTech in New York. He answered questions about what credit union CEOs and executives need to know about fintech in a recent video.
What do CUs need to know about fintech?
There’s lots of recent news in the press about how valuations have come down, how funding is slowed, how merger and acquisition activity has slowed, but really that’s missing the larger point. Fintech as an industry is extremely well-funded. In fact, 2022 is the second-largest funding effort on record by venture capitalists. And over the last five years, about $350 billion has been deployed in fintech. That’s money that is now currently being spent to build, to grow and to take share.
How are mergers affecting the industry?
M&A involving fintechs are rapidly changing the financial services landscape. Contrary to prevailing market themes, 2022 [was] shaping up to be the second busiest M&A year on record for fintech with well over 1,000 transactions executed. Each of those transactions has the potential to rapidly change an already complex and perhaps confusing landscape by creating vertical integrations, pairing capabilities, building market presence or creating cost synergies. At CUES CEO Institute: Fintech, we’ll do a thorough review of the landscape and what’s changed to make sure that you remain current on the industry.
Are fintechs friend or foe?
Fintechs are not your enemies. In fact, many want to be your friends. There’s an entire ecosystem set up to help credit unions digitize and grow while letting you focus on what you do best. We’ll review that ecosystem. We’ll study successful collaborations, and we’ll strategize about how and why you might partner with fintechs and at what cost.
Can CUs manage without tech expertise?
Building and deploying fintech and digital capabilities has more to do with employee culture than access to technical skills. The key is gearing your organization up for that change, change that you will lead. Successful digital transformation is rooted in employee culture, and that culture starts at the top with you.
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