Why we are all going to die of old age

Sounds like a good way to go, right? Ripe old age, preferably in your sleep. But I’m not talking about you, or me, I’m talking about the credit union industry. We are mathematically on track to die of old age. I mean we’re already over 100, so the chances are pretty good that we can’t sustain life for much longer.

But here are some concerning vital signs, if you will.

1. The average age of a credit union member remains at an unbelievably old 47
2. Research shows the average age of a credit union borrower is 2 -5 years OLDER than that
3. The National Youth Involvement Board was founded in 1967 with the mission to reduce the average age of credit union members by recruiting more members under age 18 (see #1)
4. If your average loan yield is somewhere in the 4.5% range you are favoring A and A+ paper (aka older members)
5. If your “pays on time ratio” is close to 100% you’re not taking enough risk. We are in the risk business.
6. Most credit union loan policies will not loan to a person with a zero credit score (aka all young American humans – today everyone is born with a score of zero)
7. The vast majority of credit union websites still use shiny happy stock art people (no brand differentiation) are clunky electronic brochures with too much dull copy and are not optimized for mobile. Example: Can I join using my smart phone? Can I get (not just apply for) a loan using my smartphone?
8. Still spending money on radio ads, newspaper, direct mail, and commercials? I bet your Board of Directors love it!
9. Speaking of your Board – what’s the average age of that group?

You have to be committed to appealing to this younger generation or the math is there folks. Eventually those cash rich, credit worthy, steadily employed, big bunch of Baby Boomers that have sustained the bottom line for decades are going to die.  And we will die with them.

We need to “young it up.” Commit to the Millennials as your primary target audience. If you were to start a new credit union today from scratch and decided that your target audience was 20-32 year olds (first time borrowers) what would your loan policies look like? You’d HAVE to go back to loaning to the person. The three C’s (character, capacity and collateral). You need to have everything accessible on their smartphone (which is where they live). It’s not just enough to have your website optimized for mobile, you have to be able to actually conduct business – I don’t want to read your “brochures” on my phone. Give me a button where I can quickly apply for a loan.

It’s daunting where we need to be and it seems that things are moving at the speed of light in the Fintech world. I can ask Alexa for the balance in my account, pay for my Starbucks with my Fitbit and Mastercard has partnered with Samsung so I can order and pay for my groceries from my refrigerator.

Next week is the NACUSO Network Conference where we will once again highlight the most innovative ideas in credit union land with the Next Big Idea Competition. Last year’s winner was Constellation. In just one year they have raised over $26 million in credit union investments.

Their website opens with “The next big idea has arrived. For years, nothing changed. While the rest of the financial world has made use of rapidly expanding fintech solutions, credit unions have been shackled by legacy barriers that deprive them of access to the latest digital technologies. These barriers have left credit unions unable to provide the services their members needed.

But now, Constellation is here. And the revolution has begun.

We have raised the most capital in the shortest amount of time in credit union history. This is a testament to the power of our groundbreaking idea. Our patented, secure marketplace benefits fintech developers, credit unions, and most importantly, credit union members.”

This is how we compete – by not seeing each other as competitors but collaborators and innovators. Join the revolution!  There is still time to register for NACUSO’s 2018 Network Conference next week (April 16-19, 2018) and see the Next Big Ideas presented on stage, and talk with these innovative entrepreneurs in the reception immediately following the competition.

For information regarding the NACUSO Network Conference go to www.nacusonetwork.com

Read more about Constellation at https://www.constellation.coop/