Beware of ‘Death by 6,000 Cuts’

Nontraditional competitors are chipping away at traditional financial institutions’ business

Competition for credit union members is heating up—and it is no longer just coming from other financial institutions.

In recent years, new and innovative players have entered the financial services realm, and they’re looking to grab pieces of your business, John Best, president of Best Innovation Group, told CUNA Tech/OpSS Council Conference attendees Monday.

Best defined this trend as “death by 6,000 cuts.” This refers to the six thousand financial technology startup companies that are each targeting one small piece of traditional financial institutions’ business model.

These companies include such diverse offerings as CoinStar (coin exchange), Acorn (which rounds up customer’s purchases and puts the excess into investment accounts), and Kabbage (an online lender to small businesses).

What traditional lenders will be left with, Best says, is members’ transactional business while new, innovative players siphon off the more profitable pieces of the traditional banking business.

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