Credit Unions (CUs) and non-bank financial institutions (NBFIs) face unprecedented competition as regulatory changes test their mettle in a transforming digital landscape.
Having spent years working with these organisations, I’ve seen firsthand how embracing digital transformation, especially in payments and cash management, can unlock new efficiencies, reduce risk, and deliver a superior customer experience. In these two similar finance verticals, there’s a new appetite for modernisation.
For decades, credit unions have relied on systems that, while reliable, are increasingly outpaced by the demands of digital payments. The competitive pressure from banks and various NBFIs is quite real. In this scenario, transformation is not a luxury but a necessity.
Organisations are seeking not just to keep up, but to get ahead, by gaining real-time visibility over cash flows and ensuring transactions are safe, secure, and efficient. That means the days of paper-based processes and even spreadsheets are numbered.
Treasury teams now need answers at their fingertips, not after hours of manual reconciliation. By leveraging advanced cash management hubs and solutions like Bottomline’s PTX, these teams can instantly know when payments are made, manage liquidity with confidence, and respond to market changes in real time.
This isn’t just about speed; it’s about empowering decision-makers with the data they need to act decisively. Let’s explore this further.
NBFIs Need Customisable Solutions
NBFIs are feeling the heat. Whether it’s insurers, payment service providers, or funds industry players, the challenges posed by legacy systems are universal. The solution?
Automation and real-time cash visibility. These modern capabilities allow organisations to understand their cash position across multiple currencies and geographies, enabling smarter pricing, better investment decisions, and tighter control over interest expenses.
And since no two NBFIs are the same, the approach must be tailored, with an understanding of each client’s unique needs, and designing solutions fit for purpose.
Here, as everywhere, security remains paramount. In a world where bad actors are tirelessly seeking vulnerabilities, ensuring that payment systems are robust and trustworthy is non-negotiable. I’ve seen cases where fraudsters intercept payment files, redirecting funds with a few keystrokes. Once the money’s gone, it’s often unrecoverable.
That’s why it’s critical to have systems in place that not only detect anomalies but also instil confidence in every transaction, for both payers and payees.
The Overlooked Pressure Point: AR Challenges
But modernisation doesn’t stop at payments and treasury. Accounts receivable (AR) is where many credit unions and NBFIs feel the most operational strain.
For credit unions, outdated billing systems and manual reconciliation processes can lead to delayed collections, increased Days Sales Outstanding (DSO), and member dissatisfaction. With limited staff and resources, many CUs struggle to follow up on overdue accounts or offer the digital-first experiences members now expect.
NBFIs face a different kind of complexity. Whether managing premium collections in insurance, recurring invoices in leasing, or high-volume transactions in fintech, AR processes are often fragmented across systems and geographies. This makes it difficult to gain real-time visibility into receivables, assess credit risk, or ensure compliance with evolving regulations. In both sectors, the lack of automation and data-driven insights can hinder cash flow, increase fraud risk, and limit strategic agility.
Modern AR solutions, integrated with cash management platforms, can help close this gap. By automating invoicing, tracking payments in real time, and surfacing actionable KPIs, organisations can reduce DSO, improve forecasting, and strengthen customer relationships. In short, AR deserves a seat at the digital transformation table too.
Regulation as Change Agent
Regulation, often seen as a burden, can actually be a catalyst for positive change.
The introduction of standards like ISO 20022 and Confirmation of Payee (CoP) requirements has forced organisations to rethink their processes. But compliance isn’t just about ticking boxes. It’s an opportunity to improve customer experience and operational efficiency.
When fraud losses go down, organisations can offer better rates and lower premiums, reinvesting those savings into further innovation.
The transformation journey doesn’t have to be daunting. The most effective solutions start with a conversation. It’s sitting down with decision-makers to understand their drivers, whether it’s compliance, customer experience, or broader strategic goals.
From there, it’s about designing a solution that addresses pain points, whether that means automating direct debits, enhancing cash visibility, or integrating screening solutions to prevent payments to sanctioned entities.
Putting Digital Transformation to Work
Implementation is a partnership. It’s not about dropping in a one-size-fits-all product and walking away. It’s about working together with clients, mapping out project plans, and supporting them through every phase of the transition. Sometimes it’s a single-phase rollout; other times, it’s a multi-stage journey.
The key is transparency, communication, and a relentless focus on delivering value at every milestone. For CUs and NBFIs looking to accelerate their modernisation, my advice is simple: Don’t try to build everything in-house.
The old ‘build or buy’ conundrum isn’t all that perplexing. Building is hard. Buying is smart.
Also, payments are changing so fast that specialised expertise is required. Connecting with experienced payment service providers (PSPs), for example, can get you to market faster, with fewer bumps along the way. Case studies and peer references are invaluable at this stage. Learn from those who’ve already navigated the route, and don’t be afraid to ask tough questions.
Payments is an exciting sector right now, especially in B2B. The regulatory environment is driving innovation, and the modernisation of payment rails is opening up new possibilities. By embracing change, leveraging the right technologies, and focusing on the needs of your members and clients, you can turn compliance into a competitive advantage and set your organisation up for long-term success.
Digital transformation isn’t just about technology – it’s about mindset. It’s about seeing regulation as an opportunity, not just a hurdle, and getting the right solutions to CUs and NBFIs.