Investing in fintech. Investing in fintech. (Source: Shutterstock)

The $8.7 billion VyStar Credit Union in Jacksonville, Fla. said Tuesday it created a $10 million fund to invest exclusively in fintech companies.

“Investing in innovative companies allows VyStar to learn from and replicate pieces of their innovation methods,” Joe Colca, senior vice president of digital experience, said. ”These partnerships also allow VyStar to truly have a seat at the table to help ensure the products and services provide the maximum benefit to credit union members.”

This announcement follows the recent release of a survey of credit union executives and a white paper by West Monroe Partners. The Chicago-based technology and management firm found that to improve their technology and growth potential, more credit unions are seeking partnerships with banks and fintech organizations instead of merging with other credit unions. The firm surveyed 100 credit union M&A decision-makers.

Fewer than half (46%) of respondents are looking to merge with another credit union. Instead, they want to merge with banks (32%) and fintech organizations (22%).

VyStar, Florida’s second largest credit union by assets and members, signed an agreement in January to buy the $279 million Citizens State Bank in Perry.

According to West Monroe, the primary reasons for wanting bank/fintech mergers are twofold. The first is technology-based: credit union leaders feel that a bank or fintech partnership will facilitate access to technology that would not be available otherwise. The second reason is growth: Leaders feel these mergers will make their business more viable over the long run.

“Partnering with fintech companies is an important strategy for VyStar to ensure we are delivering industry-leading solutions,” Chad Meadows, VyStar’s executive vice president/chief operations officer, said. “As a result, VyStar’s goal through these partnerships is to find the like-minded fintech companies that are laser-focused on delivering value and ultimately the best experience for our membership.”

The credit union also recently invested $1.25 million in CUSO PayverisCU, which focuses on financial wellness and digital payment solutions for credit union members.