How Smaller Institutions Get National-Issuer Card Features — Without Building Them

Community banks and credit unions’ card programs have often been capped by their own technology budgets. Developing new card capabilities in-house costs millions in time and resources that were hard to justify. So, innovation consistently reached them years after national issuers, if at all.

Partnership models are changing the economics of card programs for smaller institutions. Since a partner can build a capability once and spread the cost across institutions and cardholders, a smaller bank gets access to the same functions as a national bank at a fraction of the cost, all delivered in months instead of years.

Need to Know:

• A card partner builds once and spreads the cost. Development gets shared across every institution and cardholder in the partner’s portfolio.
• Smaller institutions get enterprise-grade capabilities. Installment lending, tokenization, digital card controls, and fraud analytics come through the partnership.
• The partner’s roadmap matters more than the institution’s size. A $250 million credit union can get a new capability close to when a top-tier issuer does.
• New features arrive in months instead of years. Modern APIs and cloud platforms replaced the custom development that legacy systems required.
• Strategy stays with the institution. Partners deliver the technology, but target customers, product economics, and growth goals are still internal decisions.

Now, what a smaller institution can offer doesn’t depend as much on its technology budget, and instead can focus on other priorities, like member acquisition and product strategy.

How Shared Costs Change the Innovation Math

For smaller institutions, the partnership decision often plays out around scale. A card partner builds the capability for a new feature once and can then share it across every institution it serves. No single credit union could justify that investment on its own.

The result is that a credit union can offer the same card functions as a national bank without the millions a big bank has in its R&D budget. “In short, the financial institution gains enterprise-grade capabilities without needing an enterprise-sized technology budget,” Matt Carpenter, SVP and market director of Elan Credit Card, an agent credit card issuer, told The Financial Brand.

For example, Carpenter points to installment lending, digital card controls, tokenization, real-time rewards, fraud analytics, and emerging authentication technologies. Each of these on its own is expensive, but together they cover most of what today’s cardholder would expect from their bank’s program. However, he says, with a partner, the savings from developing these programs can be applied locally to the programs that matter most to the institution.

Without partnerships taking on that work, banks would have to spread their technology budget across running the existing card platform and building anything new. Maintenance often wins these battles because the card can’t go down, so innovation got whatever, if anything, was left over.

Key insight: “Ten years ago, a credit union’s ability to innovate was largely constrained by the size of its technology budget, since much had to be built internally,” Nola Ogunyemi, SVP of consumer lending at BECU, told The Financial Brand. “Today, partnerships with networks, processors, and fintechs allow us to deliver capabilities such as real-time decisioning and personalized experiences that once required significant in-house technology investments and hundreds of engineers.”

What Institutions Get from the Partnership

For credit unions, the partnership begins at the point where members interact with it. At BECU, the capability members first notice is its digital account opening.

“One example is digital-first credit card originations,” says Ogunyemi. “This new technology simplifies account opening and allows the applicant to see what they qualify for with no impact on their credit. This new flow allows members to add their new cards to their digital wallet and enhances self-service card management that consumers expect from larger card issuers.”

BECU didn’t build this feature. Ogunyemi says the credit union’s partner handles the work that runs underneath many of the features their cardholders see, from transaction processing and statementing to portions of fraud management.

“Instead of building everything ourselves, we were able to lean on our strategic partners to do the heavy lifting of platform modernization – allowing us to focus our investments on product strategy, member needs, and an innovative experience,” says Ogunyemi.

While the ability to offer these new features is critical, so is the timeline. These capabilities also arrive faster than they used to.

“Today, when an institution is aligned with a strong credit card partner, the timeline is often measured in months rather than years,” says Carpenter. “The key variable is less about the financial institution’s size and more about the card partner’s roadmap.”

Key insight: Carpenter says that if a partner has already built and tested a capability, a $250 million credit union can gain access on a timeline close to a top-tier issuer.

Ogunyemi also sees that speed inside BECU: “Introducing a new capability often required extensive custom development and integration work across multiple legacy systems. Modern APIs, cloud-based platforms, and stronger partnerships allow us to move from concept to implementation much more efficiently.”

Now credit unions can match the digital experiences members expect while keeping the advantages they have that national issuers can’t replicate. But it’s incumbent on smaller institutions to have a strategy in place to continue to drive members toward their products.

Amanda Swanson, senior director at Cornerstone Advisors, a consulting and research firm serving banks and credit unions, told The Financial Brand that “Outsourcing the technology doesn’t mean outsourcing the strategy. Financial institutions should define their target customers, desired behaviors, product economics, and growth objectives. Their partners should help deliver against those priorities.”

What to Ask for Next

“Most financial institutions ask, ‘What products do you have?’” says Carpenter. “A more forward-looking question is, ‘What capabilities are coming in the next 12 to 24 months that will help us compete for our members’ primary financial relationship?’”

Carpenter suggests asking how the partner is preparing for AI-driven experiences, how digital wallets and tokenization are evolving, what fraud prevention investments avoid creating member friction, and what the partner is building that an institution couldn’t realistically create itself. These are the capabilities that may decide whose card members reach for next.

For Ogunyemi, one answer already stands out. “The next frontier is personalization. Members increasingly expect financial products to anticipate their needs and provide relevant offers and recommendations in real time.”

Key insight: Personalization runs on data, and that’s where Swanson recommends demanding better intelligence. “Financial institutions have tremendous amounts of transaction data, yet too often receive reports explaining what happened rather than insights telling them what to do next. The next competitive advantage is turning transaction and relationship data into timely, relevant action.”

Bottom line: The budget no longer sets the ceiling. The features that a community bank or credit union can put in cardholders’ hands don’t have to depend on what it can afford to build. A credit union with a few thousand accounts can offer the same digital card experience as a national issuer on close to the same timeline. The difference now is what institutions do with that access. The ones getting the most from the model are spending the savings on their members, not their infrastructure.