For years, CO-OP Financial Services, Rancho Cucamonga, Calif., was known as a credit and debit services company that managed a shared ATM network. Today, said Todd Clark, its president and CEO, CO-OP is changing its mindset and integrating technology.
“We are building and implementing a new model today. We are a software and technology company,” Clark said, while revealing he has lived the life of writing code into the wee hours for a startup. “Making change at this company is different from running a startup because you can’t do change by yourself. Digital is raising consumer expectations. One study found by 2020, customer experience will overtake price and product as a key brand differentiator.”
The banks are “doubling down” on digital, and so has CO-OP, Clark said, declaring, “I’m not talking about omnichannel. Omnichannel – meaning making all your channels look the same – is so 10 years ago.”
Today, CO-OP is building an ecosystem, which Clark defined as an interconnected set of services, through which users can fulfill a variety of needs in one integrated experience.
“We expect fintechs will partner with legacy financial services organizations to strengthen ecosystems,” he predicted. “New ecosystems are likely to emerge in place of many traditional industries as early as 2025. Payments will be involved in all of those, and we want to make sure credit union cards will be out front.”
By 2030, CUs will have to be advice providers, access facilitators and value aggregators, Clark continued. In this brave new financial services world, credit unions will connect their members to healthcare providers, travel and leisure experiences, communications devices, and transportation resources.
“Everything we are doing at CO-OP, we are trying to humanize the experience,” he said. “We want to be data-informed, not data-driven. We don’t want the data to make the decisions.”
The path to digitization is “integrate to innovate,” Clark said, adding CO-OP is looking to create a single, integrated experience so it can put its client credit unions everywhere their members want to be.
Enterprise availability will be made through an initiative known as MyCO-OP. Clark noted some credit unions already have access to MyCO-OP, which the company is rolling out in stages.
Security is a huge concern, so CO-OP is “constantly” working on fraud monitoring and prevention, said Clark, with artificial intelligence and machine learning playing a “big part” of that effort. He noted analysts project financial services will see the greatest increase in profit margin of any industry thanks to AI – 15 percent.
Many consumers still believe their digital payments are not secure – which Clark said is a “problem” for CO-OP and its CUs. He said financial institutions have to be the trusted partner because they are 100 percent responsible for cybersecurity.
“Security is a business line,” he said.
Through machine learning, CO-OP can gather enough information to make fraud detection faster and smarter, Clark shared. He gave the example of a member who buys airline tickets to Paris, and proceeds to take an Uber to the airport, and then uses a credit card to check in to a hotel in Paris and buy a meal in Paris – and at the same time the card is used in Los Angeles. AI will know the latter transaction is fraud.
“Machine learning detects unusual usage patterns, and it learns continuously,” he said, while introducing attendees to COOPER – the name for CO-OP’s latest technology initiative
. When COOPER Fraud Analyzer rolls out in June, it will be in the form of an account-based risk management solution for CO-OP Shared Branch clients. Later this year will come COOPER Fraud Score, which uses machine learning to create a risk-scoring model that determines the level of suspicion for a transaction. The company said this capability will be available on account-based products first, moving to add card-based products in 2019.
“We are excited to roll this out,” Clark said Wednesday. “COOPER will help us shore up our ability to do fraud detection on shared branching. COOPER is the beginning of the AI era at CO-OP. Machine learning and automation will take over a lot of what we are doing today. We cannot manually track millions of transactions. It is my view that many credit unions are way too conservative, so we want to give them the tools to open up.”