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Credit unions be alert to disruptions in financial services sector
ACUC/WCUC attendees told how to defend market position against disruptions
DENVER, CO (July 13, 2015) – As investment in financial innovation and technology heightens, credit unions need to be aware of disruptive competitors seeking to pilfer business using alternative business models, attendees were told at an America’s Credit Union Conference (ACUC) and World Credit Union Conference (WCUC) breakout session Monday. Both upstarts and established players pose threats as they attempt to market financial products and services to consumers.
“Credit unions should pay attention to the clock because change happens – and it happens fast,” said Patrick McElhenie, director of product management for CUNA Mutual Group. “In financial services, many players on the periphery are trying to compete in the core product areas of savings, lending, investments, insurance, and payments. Credit unions must distinguish between what’s a sustaining technology versus those that are truly disruptive.”
McElhenie co-presented with Karim Habib, director of lending for CUNA Mutual Group. The pair shared many examples of innovations that have shaken other industries, such as GPS devices being replaced by smartphones, and digital technology replacing traditional camera film in just a few years.
McElhenie and Habib encouraged participants to be alert to changes happening within the credit union industry. For example, new lending business entrants Lending Club and Kabbage are taking innovative approaches to peer-to-peer and small business lending.
“Online access has revved up the speed with which companies can connect with customer and service niche markets,” said Habib. “The online direct lending and peer-to-peer finance communities have turned lending from a manual process into an automated and efficient exchange.”
To help prepare credit unions to win the battle for members’ loans, McElhenie and Habib identified defensive and offensive strategies for credit unions to employ.
“Use defensive strategies to buy time,” said Habib. “Or, you can build an offensive strategy and become a disruptor yourself. There are many proactive moves you can make to get into the game yourself. For example, a Texas bank saw ‘Simple,’ an online checking account alternative, as a threat and bought them.
Further, credit unions must understand where disruptors are gaining traction and making inroads with millennials. “Companies who don’t speak mobile are missing the boat, because young consumers are expecting it, even demanding it,” said Habib.
“Create loyalty with members by removing as much friction as possible from your lending processes, and make the loan process easy,” added McElhenie. “Find ways to say yes to members; don’t give them a reason to do business with a disruptor.”
McElhenie and Habib concluded the presentation by urging credit union boards and management to come together and ask the hard questions:
- Are you prepared to defend your market position against a truly disruptive bank?
- Will your current value proposition still resonate with members 10 years from now?
- Do you have clear vision of what retail financial services will look like in 10 years?
- What can you do to remain relevant to millennials?
By taking an eyes-wide-open approach and confronting the brutal facts, credit unions can create a truly disruptive credit union model that competes against disruptors.
About CUNA Mutual Group
CUNA Mutual Group was founded in 1935 by credit union pioneers, and our commitment to their vision continues today. The company offers insurance and protection for credit unions, employees and members; lending solutions and marketing programs; TruStageTM-branded consumer insurance products; and investment and retirement services to help credit unions and members achieve financial security and success. More information is available on the company’s website at www.cunamutual.com
CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Life, accident, health and annuity insurance products are issued by CMFG Life Insurance Company. Property and casualty insurance products are issued by CUMIS Insurance Society, Inc. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Corporate headquarters are located in Madison, Wis.
Photo caption: CUNA Mutual Group’s Patrick McElhenie explains to an ACUC/WCUC audience the importance of being alert to disruptions in the financial services sector to help defend market position and win the battle for members’ loans.
