For financial institutions that can’t develop new products in-house, a startup partnership can help move an innovation agenda forward through new tech-enabled product offerings for customers. However, since small institutions can’t always afford to take the risk of an unsuccessful product rollout, they’ve begun to tap into a program that vets potential partners beforehand.

Run by CMFG Ventures, the venture arm of credit union insurer CUNA Mutual Group, the program lets credit unions work with a small group of pre-selected fintech partners. “We don’t have the budget to have a research department,” said Ben Bauer, vice president of marketing at Marshfield, Wi.-based Simplicity Credit Union. “To be able to test things instead of just developing a product, rolling it out to our membership and seeing how it goes, it helps to take care of some of that risk ahead of time.”

Simplicity Credit Union, an institution that has 24,000 members and $264 million in assets, has been testing a new type of personal loan product from startup Align. The product uses non-traditional underwriting methods to reach a larger swath of potential borrowers who can repay the loan through income-share agreements instead of interest-based repayment models. It’s a means to reach a broader customer base and stay on top of customer expectations.

“Depending on your credit union’s risk strategy, you may or may not be able to approve loans for people with unsteady income,” said Bauer. “Or you’ll be in a situation where you’re putting credit union members’ money at risk, so this is a way to get around that.”

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Given that bank-fintech collaborations don’t always work — a recent INV Fintech study of institutions found that just 43% of such collaborations were successful — the opportunity to work with a group of pre-selected partners through a large industry organization like CMFG Ventures helps these institutions carry out product tests without longer-term commitments.

“The program enables testing and learning without any long-term commitments to the fintech companies,” said Brian Kaas, managing director of CMFG Ventures. “They’ll be able to test and see whether the products or solutions resonate with credit union members and, through those lessons, credit unions can determine whether to engage in longer-term commitments with those companies.”

CMFG will work with four to five fintech companies per year that are selected for the program, including Align and investment platform Finhabits. Credit union think tank Filene Research Institute is partnering with the venture arm on the research that results from the product tests.

From a startup perspective, the program helps a company grow its customer base through enterprise partnerships, and it offers a window into understanding the needs of credit union member customers.

“We never targeted credit unions specifically, but we think there’s a nice alignment between our product and [credit union members],” said Adam Ginsburgh, co-founder of Align. “What we are excited about is being able to test and research that hypothesis — what are the attitudes of credit union members and credit union leaders around income-share agreements — through a rigorous research approach.”