Credit unions are turning to software startup Bankjoy to ramp up their digital banking operations, opting for the relative newcomer over more established core banking providers.

“We looked through many Fiserv-type organizations but didn’t pick them because we didn’t want to be any other client,” said Steven Page, vice president of IT at SafeAmerica Credit Union. “We wanted someone that we could grow with.” Fiserv is the biggest credit union core system provider with 32% market share, according to fresh data from FI Navigator and Williams Mills Agency, a financial services PR firm.

Pleasanton, Calif.-based SafeAmerica Credit Union partnered with Bankjoy in 2015, the year the company was founded, to modernize its core and revamp its digital footprint. The $470 million credit union serves 40,000 members across Northern California and with Bankjoy co-developed its online website, mobile banking app and in-app features, like loan applications and remote deposits. SafeAmerica is eyeing Bankjoy’s new AI chat capabilities, slated to launch next month.

Since the start of the pandemic, the Royal Oak, Mich.-based Bankjoy, has grown its customer base by more than 50% to a total of 34 credit unions and community banks. The company provides mobile banking apps, online banking interface, online loan originations and other essential digital banking services through its open API platform. Bankjoy has raised $1.8 million over four rounds, according to Crunchbase.

“The traction started in Q1 and got accelerated during the pandemic,” said Mike Duncan, founder and CEO of Bankjoy. “We have gained more customers in the past six months than in the past year and a half or so.”

The end-to-end banking service provider helps credit unions improve their overall digital banking presence and upgrade specific digital channels. It recently onboarded SIU Credit Union in Carbondale, Ill., among others.

SIU Credit Union, which serves 23 counties of Illinois and originated almost $150 million in mortgages, personal and auto loans in 2019, plans to go live with Bankjoy by the end of this month. According to Brian Maurizio, vice president of IT at the credit union, it will use Bankjoy’s online authentication tool to upgrade its cybersecurity and its AI chatbot for online customer interactions.

The AI can respond to account-specific inquiries via voice and written messages, set up account alerts, and it will be available through Alexa on Bankjoy’s platform next month, Duncan said. “We created the AI in house to see how people really interacted,” he added. “Our AI can understand and react to voice interactions, and also respond to messages.”

Bankjoy plans to teach the AI to give customers insights and help with loan originations, features the startup aims to launch next year. The company is calling the advancement “Bankjoy 2.0,” and considers AI the future of banking, according to Duncan.

The core provider market for credit unions is already a crowded space, with a total of 10 core providers working with more than 85% of the market. In addition to Fiserv, there is Symitar, by Jack Henry, which works with 15.2% of U.S. credit unions, and FedComp, which works with 10.5%, according to FI Navigator.

Bankjoy’s recent influx of banking customers signals a trend: Smaller financial institutions are looking to small core providers for flexible technologies, simpler contracts and cost reductions compared to legacy core providers.

“The big core processing companies are inflexible; they are hard to deal with when trying to integrate other products and they tend to be very proprietary and keep you from using others,” CEO Brice Luetkemeyer, CEO of Bank of St. Elizabeth, previously told Bank Innovation. The Missouri-based community bank recently invested in Neocova, another core banking startup based in St. Louis, along with Coastal Community Bank, First Financial Bank, Kearny Bank, Provident Bancorp and Sunwest Bank.