A few years ago, the Harvard Business Review published an article about the states of disruption across all industries. Retail banking fell into the category of “high” levels of current disruption and “high” susceptibility to future disruption. The authors referred to this as a state of volatility. Where most might consider banking durable, it’s quite the opposite.
Remember the days when credit unions focused on consumer loans, banks on business loans, and savings and loans on mortgages? Gone. Countless credit unions now offer every product once considered the exclusive domain of a specific kind of institution. That’s great for member acquisition. But when a financial institution acquires a member, that means that member left, or decided against, another financial institution. Volatility is a two-way street. But it still might be a great thing for credit unions.
The Impact of Volatility on Credit Unions
Recently a board member asked what state of disruption was right for credit unions. After thoughtful discussion, all present agreed that “volatility” was the best state for our cooperative institutions. Uncomfortable as it might be, volatility compels credit unions to constantly recognize, seek and create change for members.
Another director commented that credit unions were disruptors. When credit unions were first forming in the United States, they were new entrants offering products and services to overlooked, ignored and avoided segments in an established banking market. Today, the fact that there are more than 130 million credit union members in the U.S. proves that disruption works.
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