Platform Modernization Through Fintech/Core Provider Integrations
- A new study tracks how fintechs are reshaping partnership strategies with credit unions
- The data indicate rising fintech‑credit union alignment
- Credit unions are pursuing third‑party innovation rather than building everything internally
Fintechs are increasingly turning toward community banks and credit unions, and the fastest way to bring those innovations to market is through the core and item‑processing providers that institutions already use.
A recent PYMNTS Intelligence report entitled “Credit Union Innovation Readiness: How FinTechs Are Shifting Their Partnership Strategies,” a collaboration with Velera, found fintechs are now 19% more likely to partner with credit unions than a year ago, with nearly half of end‑user fintechs reporting at least one credit union partnership. Because large national banks tend to build technology in‑house, fintechs are focusing on middle‑market institutions and credit unions that actively seek third‑party innovation but often lack the internal resources to build modern digital platforms on their own.
Integration Over Replacement
While fintechs are looking to partner with financial institutions and credit unions directly, there are other paths of adoption that offer better integration. The article notes that small financial institutions and credit unions "often lack the internal resources to build new digital infrastructure, but they want to keep pace with consumer expectations." Additionally, many of these institutions still run on legacy cores and slower decision cycles.
To address these challenges, fintechs increasingly package their capabilities to plug into existing core and item‑processing rails rather than requiring disruptive rip‑and‑replace projects. Core providers and item processors effectively become distribution hubs, allowing their client institutions to turn on new capabilities—such as advanced fraud controls, AI‑driven support, or modern card‑management tools—through configuration rather than custom builds.
This model also helps address top partnership hurdles like long approval timelines and complex regulations, because integration, compliance, and ongoing support are handled once at the platform level, then scaled efficiently across many institutions.
Optimization of Technology Stacks
The key for smaller financial institutions and credit unions is platform modernization. Relying on outdated and legacy systems only leads to falling further behind the competition. As noted in the article, these financial institutions do not need to take on large IT projects to leverage the latest innovations.
Service bureaus and core providers have been collaborating with fintechs for decades. Most recently, we have seen them embrace and collaborate with fintechs to integrate new technologies like AI and machine learning into their platforms. This includes check processing automation and fraud detection.
This has streamlined the integration process, enabling smaller financial institutions and credit unions to leverage these technologies without the heavy burden on their IT departments.
