Move beyond disruption to become a disruptor
Discovery Conference Attendees Learn How to Increase Member Value, Decrease Perceived Member Sacrifice to Move Beyond Disruption
MADISON, WI (October 21, 2015) — Credit unions are facing their greatest competitive threat ever by disruptive competitors with new products and services that are eroding credit unions’ market share and value proposition, attendees of CUNA Mutual Group’s sixth annual Discovery Conference were told today.
“Although, total credit union membership is increasing, nearly half of all credit unions are actually losing members, which means they’re not growing. If they’re not growing, then they’re dying and being disrupted,” said Steven Rick, chief economist for CUNA Mutual Group, in a keynote address. “Credit unions must learn to adopt strategies and capabilities of innovative, disruptive financial institutions and become disruptive credit unions themselves.”
According to NCUA data, 46 percent of credit unions reported membership declines between 2010 and 2014, with this percentage jumping to nearly 70 percent for the smallest of credit unions with assets less than $20 million.1 Rick attributed these declines to competition moving forward faster than the pace of change at traditional credit unions. New, innovative products and services are luring members away from traditional credit unions without much resistance.
“Disruption doesn’t happen overnight. It’s a slow process; it takes time, but venture capitalists are pouring money into financial technology startups with the intent to unbundle traditional products and services offered at traditional financial institutions,” said Rick. “Eventually these investments will be felt, but today credit unions should be more concerned with losing members to the innovative, disruptive financial institutions next door, not the financial technology startups on the rise in Silicon Valley.”
Disruptive financial institutions recognize the dangers posed by financial technology startups that offer alternatives to traditional banking accounts, lending, insurance and investment products. They are not being passive like traditional credit unions. Instead, disruptive financial institutions are “fighting fire with fire” through new, innovative products and services, said Rick. These actions may be hard to see, but the effect is being felt.
Rick examined three types of disruptive financial institutions: disruption enablers, challengers and progressive incumbents. He assessed their strategies, capabilities and business models to help credit unions protect themselves against this new competition.
“Imitation is the greatest form of flattery. Do what they do. Stay ahead of the digital wave. Find ways to increase member value by increasing perceived member benefits while simultaneously decreasing perceived sacrifices,” said Rick.
To create more member value, credit unions need to:
- Embrace Member Centricity
Offer the best overall solution for members, not the best product. Focus on identifying and filling new needs for members, and manage their experiences.
- Provide Robust, Consistent Multi-Channel Experiences
Deliver enhanced functionality, frictionless movement and a consistent member experience from one channel to the next.
Use interactive teller machines, deploy temporary branches, move to small format branches and sell under-performing branches.
Gain member insight to enhance member acquisition, retention and cross-selling to align with member needs and life situations.
- Actively Engage and Support Experimentation
Develop a willingness to fail in small and low-risk ways to develop cutting-edge, state-of-the-art products and services.
- Make Strategic Build, Buy, Partner and Collaboration Decisions
Invest, acquire or engage in strategic partnerships with firms that help deliver greater value to members.
Credit unions can learn more about moving beyond disruption by viewing Rick’s Discovery Conference keynote address on-demand at cunamutual.com/registerondemand.
The Discovery Conference is an annual event sponsored by CUNA Mutual Group that attracts a national and international credit union audience of more than 1,300. The virtual, no-cost event is designed to give credit union leaders valuable industry insight and trends in the insurance and credit union industries. After the event, select content is available on-demand for attendees to leverage and share best practices through the end of the year.
Photo Caption: CUNA Mutual Group’s Chief Economist Steven Rick told Discovery Conference attendees in a keynote address that credit unions must learn to adopt strategies and capabilities of innovative, disruptive financial institutions in order to become disruptive credit unions themselves.
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