By: PSCU

The members of the PSCU Innovation team were asked for their predictions of what will be the biggest innovations that will take place in the credit union space in 2024, as well as what they see in the two or three years beyond that. After you read these, we would love to hear your thoughts. Email us at productinnovation@pscu.com to share what you agree with, what you disagree with and if you have any predictions that didn’t make our list.

Angelina Renaldo, Innovation Strategist

Open banking is on the top of everyone’s minds. It’s being hotly debated as a result of the Consumer Financial Protection Bureau (CFPB)’s proposed rulemaking, which would require all U.S. financial institutions to adopt and offer access to members’ banking data, with their members’ permission. Even if the bill doesn’t pass, open banking is already having an impact on the financial institutions which have adopted it. These financial institutions are finding that certain actions like data sharing and money movement are much more safe and secure, such as applying for a loan and giving permission to access balance and salary verification at other financial institutions. The largest financial institutions have already put open banking standards and protocols in place. My prediction for 2024 is that we will see the inflection point of the adoption of open banking access among credit unions and community banks.

Following that, we are at the start of the extinction of passwords. Layered authentication and passwords have been a sore spot for online banking, for mobile app users and for contact centers managing a financial institution’s lockouts and password resets for far too long. Additionally, second-factor authentication, such as one-time-passwords, can be and are phished at scale today. I see newer authentication methods that are on the market, such as FIDO passkeys, being implemented for consumer-facing products and services. Many major platform players, including Google, Apple, DocuSign, PayPal, Intuit and Amazon, have adopted passkeys for a simpler, stronger password-less sign-in — and they set the stage for consumer expectations.

Further out, embedded finance, leading to the “everything app,” will gain acceptance in the U.S. There are several successful examples overseas. WeChat is relied upon by over a billion users in China to hail a car service, pay bills and send money peer-to-peer (P2P). Paytm in India allows users to book travel, pay utility bills, purchase tickets to concerts and send money to friends. In the U.S., we have extensive banking services and dozens of apps on our phones, but not one “super app” — at least not yet. Venmo has credit and debit, crypto, P2P, youth banking and other services, but has far to go to integrate additional services. Elon Musk has stated his vision to make X an everything app, including dating services, banking (X already has applied for money transmitter licenses in nearly every state) and in-store and online merchant payments, all combined with the existing social networking.

Stacy Hockaday, Strategic Product Manager

I see 2024 as the year of instant payments. The FedNow^SM Service launched in July of 2023, and we are already seeing the hockey stick of adoption. One hundred financial institutions are now processing instant payments on FedNow in the few months since it’s been operational. It is conceivable that by early 2024, there will be 300, quickly catching up to the over 350 that are on The Clearing House’s RTP service. Payroll, account-to-account (A2A) transfers, business-to-business (B2B) payments (especially replacing checks), insurance and government disbursement will be just a few of the use cases that will drive adoption.

Further in the future, I see a convergence of payments taking place, enabled by payments hubs. The number of payment rails keeps growing – for example, Angelina’s prediction of money movement through open banking adds yet another option to the already long list which includes instant and real-time payments, faster payments over debit rails, wires, ACH and non-bank account-to-account options such as Venmo, PayPal and Cash App. Merchants and payment senders of any type will want a simplified means of selecting the optimum way to get money to the intended recipient.

Lou Grilli, Sr. Innovation Strategist

I believe that the biggest innovation that will win gains in the credit union space in 2024 is artificial intelligence (AI) being deployed as assistants for many tasks, in addition to the existing implementation of chatbots and speech recognition in contact centers. I think that we’ll see AI helping out in multiple departments with tasks like writing job descriptions and code, as well as optimizing and then personalizing web and mobile interfaces for each member. Member-facing staff can utilize AI to look up company policy, as well as leverage business intelligence to suggest insights to share with each member, reducing costs and improving efficiencies.

While I don’t think that adoption of AI in 2024 will be anywhere near complete by the end of the year, I want to add another innovation — blockchain technology — as my prediction for beyond 2024. We are already seeing pilots being executed to represent auto titles as tokens on a blockchain, and there are other countries that have moved forward with migrating real-estate property titles to blockchain. Filene Research Institute is driving a pilot for bringing NFTs to credit unions. One more use case that fits in with Stacy’s prediction of the convergence of payment rails is money movement —specifically tokenized deposits being used today by big banks for their multi-national clients as yet another payment rail.

Vlad Jovanovic, VP, Innovation

We are seeing the consumer fully embrace digital channels and look for more personalization in the digital space. I believe that most of the innovations that will have a meaningful impact over the next five years will come from consumers’ expectations for personalization and immediacy.

As open banking gains traction in our market, this will open the door to innovation and create business models that we probably haven’t seen yet, but, as Angelina and Stacy mention, it may also significantly accelerate adoption of A2A payments and money movement. As the speed of money movement accelerates, this will drive more attention to fraud management and prevention, and that’s where we’ll see wide deployments of AI technology to help combat fraud more effectively in the new environment.

I agree with Lou, that AI, and especially generative AI (GenAI), will have a huge impact in the workplace. As AI technologies permeate more of our ecosystem, we’re going to find use cases that we haven’t even thought of today, all of which will drive toward more personalization, efficiency and improvements. I do see a future where we all have a personal “AI assistant” that helps us with our decision-making and to be more effective and impactful in tasks.

Another important innovation to watch for is quantum computing. I expect that before the end of this decade, we will have a chance to operate in an environment that is tremendously improved in terms of capabilities, possibilities and speed. This will bring a new dimension to innovation, where we’ll be able to take existing tech like GenAI, overlayed with computing capabilities that far exceed those of today and open new opportunities that are not even feasible in the current computing environment. As any new tech, it will take a while for this to be generally available within our industry, but like with the boom of GenAI today, it will be the companies that are investing into research and development early on that stand to see tremendous return on investment over time.

These are the top innovation trends of 2024 and beyond. What do you think of our innovation experts’ predictions? Email us at productinnovation@pscu.com to share your thoughts and if you have any predictions that didn’t make our list.