Over the past ten years, Ongoing Operations has worked with approximately 25% of the top 100 credit unions. Recently, we have become much more focused on the credit unions trying to get to the $1B club. In working with both groups, we have found some pretty interesting consistencies among the ones who have “made it”. Generally, there are three segments that make it to the holy land of scale…
- Great Markets
- Innovative Business Model
- Grit and Focus
At the top of this group is the great market segment. These are credit unions that have killer SEG groups that grow and grow and tend to have simple, bread and butter requirements of their credit union. These credit unions are able to achieve scale and dominate their target market, enjoying the benefits that come along with their larger size. Cloud probably isn’t a big game changer for this group. They have the scale, the market, the balance sheet, and natural focus.
Then there are the Innovative Business Model credit unions. These credit unions generally experienced a major SEG meltdown or limited growth geographically or some other constraint. Along the way, they began to innovate by changing their branch delivery structure, or creating CUSOs for non-interest income etc. This group is a great match for cloud. They know what is unique about themselves and their market and they know how to keep tailoring their services to their niche. Cloud is a great option because most likely data center, IT security, good telecom, and business continuity aren’t the differentiators their members are looking for…Instead, they may want to ditch the IT plumbing work and have their Technology teams engaged in their niche business. By focusing technical staff on creating unique branch experiences, alternative lending products, or a wholly-owned CUSO that helps their niche, these organizations can get to healthy growth rates and solid balance sheets through less conventional means.
Finally, there are the Grit and Focus credit unions. These guys got dealt the worst hand. They have challenging markets that don’t lend themselves to an innovative approach. This group has the biggest opportunity to leverage cloud in my opinion. Why? Well, this group has a forced focus – they have survived against all odds and stayed the course. They made the hard decision when they had to and closed a branch or killed off a service. So, they have realized a key component of the billion dollar group. Focus. The big boys know what they can be best at and what they can’t. Consequently, they surgically outsource things that don’t help them tackle their market better than a competitor or don’t help them differentiate within their niche. Focus is often much easier to define by what you won’t do then by what you will.
So, if you want to reach $1B – cloud may be a great way to free up your limited resources to focus on Member Facing technology, data analytics, or innovating to create fierce loyalty with existing members while attracting new, targeted market segments.
Do you have a strategy to get to the cloud? Do you know what you should move first? Do you have concerns about security in the cloud? If you have these or other questions contact us at email@example.com or visit www.ongoingoperations.com.