What’s the Greatest Threat to Your Credit Union?

by Henry Meier

To me, the two greatest threats to the credit union business model are the virtual bank and the inevitable competition we will face as big-box retailers offer more and more banking services.  However, judging by the number of credit unions that continue to build branches, my view is clearly in the minority.  So how do we identify and react to those threats that represent a disruption to our business model and, once we do, how do we react?  That’s the subject of an outstanding piece (subscription required) in the latest edition of the Harvard Business Review.  I would suggest not only reading the article but using the framework outlined by the authors as a starting point for a meeting of your top staff and maybe even the board.

The first step outlined by the authors is to distinguish between traditional competition and a truly game changing approach to the industry’s business.  For example, a new bank down the street might force you to make some changes but not the type that would make you rethink your business model.  In contrast, if people like Brett King are right, if you’re not responding to the increasing use of virtual banking services by your competition, then you are standing by while your traditional approach to financial services becomes obsolete.  Once you determine that a competitor’s business model truly is disruptive, then what steps should you take?

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