FinTechs and Credit Unions Increasingly Play Nice With Each Other | PYMNTS.com (2025)

If you can’t beat ‘em, join ‘em.

Many financial technology firms have historically sought to compete with credit unions by offering their own financial services and credit products to lure credit union members into their fold. That’s no longer a hard and fast approach.

The technology firms increasingly regard the smaller financial institutions not as competitors, but as clients. FinTechs have long partnered with the pint-sized banks as the latter seek access to the advanced technologies powering mobile banking and digital payments that digital-first consumers expect. But fewer Fintechs are now aiming to displace credit unions with their own financial services or products; instead, their focus has shifted to selling their solutions directly to them. Think of it as Silicon Valley meets small-town America, and everybody gets along.

Grasping the changing dynamics of this relationship is critical for leaders at both credit unions and FinTechs. Recent data from a forthcoming PYMNTS Intelligence study in collaboration with Velera reveals significant shifts in engagement, competitive perceptions and the perceived ease of working together. That’s even as the share of FinTechs selling to credit unions has remained relatively stable over the past four years. Call it a FinTech adjustment of attitude and strategy.

Roughly 4 in 10 FinTechs partner with credit unions to actively sell products or services to sector. In the process, they now see the business relationship as mutually advantageous, not as brass-knuckled competition. Only a year and a half ago, roughly 1 in 6 FinTechs saw credit unions as rivals. Today, just 1.9% do. What was once viewed as a battle for consumer wallets has quickly given way to a vendor-client model.

Read more: Update: Credit Unions Challenge the Challenger Banks for Gen Z Wallet Share

The Other Side of the Story

That’s half the story. The other half is that more than 50% of FinTechs do not currently sell their products or services to credit unions. Several key reasons contribute to this. For non-sellers, competing for credit union members as customers of their own financial products and services remains a goal. Thorny compliance and regulatory issues present a major obstacle, cited by more than 4 in 10 non-selling FinTechs as a reason for not engaging with credit unions. Roughly as many FinTechs say they don’t offer the products and services that credit unions want. There’s also a lingering perception that credit unions aren’t innovative enough to want their solutions.

But the potential for increased engagement is there, as 1 in 5 FinTechs that do not sell to credit unions would reconsider their stance if they could onboard multiple credit unions simultaneously, evidence of their desire for greater efficiency and scalability.

See also: Credit Unions Capitalize on Consumer Trust to Boost Growth

Key Takeaways

• The perception of credit unions by FinTechs has shifted dramatically from competitors to customers, with over half of FinTechs now selling to credit unions and only 1.9% viewing them as rivals.
• Obstacles for FinTechs selling to credit unions have significantly decreased, but challenges including small budgets, slow implementation, regulatory issues and product misalignment persist.
• FinTechs currently prioritize partnerships with software platforms, merchants and digital banks more highly, focusing on consumer-facing payment solutions such as mobile wallets and contactless payment. Still, as 40% of FinTechs partner with credit unions, the shift to a vendor-client relationship means more growth opportunities for both.

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