Create a sustainable market advantage for your credit union

by Tim Harrington, Credit Union Front Line, CUNA Councils

Can you strictly define your credit union’s business model and your competitive advantage?

If you say, “We’re a full-service credit union and our competitive advantage is member service,” then you’re missing the boat.

Let’s delineate five business models and competitive advantages:

1. Convenience model (McDonald’s). Convenience is the trump card in banking services. Bank of America and Wells Fargo have inconsistent service and only moderate pricing, but have gigantic market share. Why? They sell physical convenience. Their branches and ATMs are everywhere. Many consumers will accept higher prices and lower-quality service for the sake of convenience.

2. Best price model (Costco). Many consumers bypass convenient options to get to Costco, a warehouse store that allows them to save money on bulk purchases. Your credit union’s pricing would have to be sufficiently different to stand out, and you can’t sustain the best price model unless your internal costs are lower than your competitors’.

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