SCOTTSDALE, Ariz.–To compete in a financial services landscape that has evolved faster than most could have ever imagined, the leader of one of Filene’s Centers of Excellence has shared strategies for how to innovate while also noting the importance of answering a question summed up as “WIIFM.”
Dr. Jeffrey Robinson, a professor at Rutgers Business School and who leads Filene’s Center for Innovation and Incubation, told credit unions at the research institute’s big. bright. minds. meeting that there is something they know all too well—they now sit in the middle of a financial services landscape surrounded by old (and very large) and new competitors alike, including many new non-traditional players looking for a piece of members’ wallets.
“Talk to somebody who's under 30 and ask them, ‘Where’s your money?’, and they're going to tell you something that looks like this,” he said, referring to the graphic below.
“The challenge, of course, is that you really don't know what's happening with your money,” Robinson said. “That’s part of my argument when I talk to young people about ways to get involved with credit unions. This just illustrates that there are challenges, but the primary thing that a lot of young people say is the reason that they do all of these things (with the providers shown in graphic) is convenience. It's right there in my digital wallet. I'm using these technologies to use my money the way I want to use it.”
Feeling the Pressure
For credit unions, all of those providers only increase the pressure they feel to grow and serve members, Robinson told the meeting, as shown below.
The question credit unions must answer for members and prospective members to help grab share and lessen that pressure, according to Robinson, is WIIFM: “What’s in it for me?”
“You need innovation to be able to combat these things. You need to think about how you're going to address these kinds of things,” he said.
To offer credit unions some answers, Robinson, along with Staci Duros, research manager at Filene, along with the Center for Innovation, have published a new report titled “Innovation Matters: Creating Competitive Growth in Credit Unions.”
In the report and during his remarks, Robinson covered three ways to address those “pressing challenges, including:
The Building Blocks of Innovation
According to Robinson, the Building Blocks of Credit Union innovation are the “visual representation of the components (blocks) of credit union services, products, value and experiences. Each block represents a different aspect of what credit unions do and how they do it.”
Those building blocks are shown here.
Among those building blocks is the credit union value proposition, which itself is comprised of other blocks that include core products and core services.
“Why this is important is it's just a way of thinking about how you're organized to provide those services and products within your credit union,” Robinson explained. “Some folks like to take an abstract approach to kind of think about what the different parts of your credit are and what you are doing. Then you start mixing and matching, because the mixing and matching actually leads to some other types of innovation.”
The Business Model
When it comes to thinking about the credit union’s business model, Robinson urged CUs to consider these four factors, as shown below.
He said credit unions must also give thought to three other segments: delivery channels member engagement and service experiences.
“Hopefully, all these things are working together. And you’re probably doing some things that fit into multiples of these blocks,” he said. “Think about how you like to do new things in your credit union by rearranging things a little bit. You can get to some new outcomes.
The Power of Social Innovation
Robinson said the power of social innovation is that it is a “superpower that credit unions sometimes forget they have.”
‘This category has a long history inside the credit union space,’ Robinson said. “It goes back to the core premise that we can use innovation to make a difference to solve social problems. The proper power of a credit union is to use that as a differentiator between what we do and what the big banks do.”
Robinson pointed to a consumer survey that found people “intuitively understood that there was something different about credit unions.” For credit unions, he added, that includes having an effect in terms of economic inclusion.
No Hope for Strategy
Credit unions seeking to innovate will have to avoid one strategy, according to Robinson.
“You don’t get to innovation without trying. I can tell you the approach that doesn’t require effort and resources is called hope. You can hope the innovation happens, that through some serendipity, innovation happens. You can hope, but you can’t get to innovation without being intentional.”
Some Recommendations
Instead, to make innovation happen, Robinson recommended credit unions consider:
- Establishing an innovation department/unit
- Creating a task force
- Collaborating with other CUs to seed innovation
- Partnering with a university
- Working with Filene’s i3 program
Your Best Holiday Shopping Offer is Here!
The biggest, best and freshest news reporting in credit unions remains free! Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more. So stop paying those bank-fee-like subscription prices from other so-called “news” publications!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?