MARLBOROUGH, Mass.–Credit unions need to be focused on four trends, according to one person.
Those four trends, according to Mark Sievewright, president of Sievewright Associates, are:
- The business model of how financial services gets done is changing, and technology is an absolutely vital part of that.
- Technology itself. “This is the slowest it’s going to be. So when we look at over the next five to 10 years we know technology is going to continue to evolve very rapidly.”
- New competitors, especially fintechs, are forcing credit unions to be better at what they do. “And we need to get better at finding collaboration points between established industry players and the emerging fintechs with better mousetraps.”
- Behavioral changes at the consumer level.
In remarks prior to an update on progress being made by the CU Ledger initiative, Sievewright said, “Technology is crushing some of the ways we have been doing business. We all know what’s going on in retail with the massive shift. Walmart is attempting to become Amazon before Amazon becomes Walmart.”
How to Respond?
How should credit unions respond? By blending their physical and digital models as part of their overall financial services strategy, according to Sievewright. He noted, for example, despite the significant investments made by Bank of America in its digital platform, it is still planning to deploy 400 new physical branches over the next few years.
Sievewright said the effect of mobile on financial services has been transformative, “but that was just the end of the beginning.”
Sievewright said the “next big things” in credit unions, which weren’t being talked about 10 years ago, are artificial intelligence, the Internet of Things, and analytics. “Analytics will absolutely redefine how marketing is done. I have a saying, ‘Why guess when you can know?’”
A Commonality
What all of the new players in the fintech space have in common, according to Sievewright, is they have found ways to make the consumer experience smoother. A big piece of that is identity management, which is big part of what the CULedger effort is all about (see related story here).
For example, Sievewright pointed to SOFI’s announcement it is becoming part of SpringLabs, which is a consortium built around identity management.
“These companies are creating verbs around moving money. Venmo has become a verb,” he said. “Why is Venmo so successful? Not only does it make moving money easy, it adds a social element. It’s going to be interesting to see what PayPal does with Venmo and whether it pushes it to the point of sale.”
Smoothing the Friction
Sievewright noted the greatest friction for consumers has been in the finance and insurance spaces, which is why so many new entrants have entered the market.
“Rightly so, we get caught up on the aging of America, including this incredible wave of Millennials and Generation Xers,” said Sievewright. “By 2025, 75% of workforce will be a Millennial and the organizations trying to serve these groups are having to run multiple business models, because the ways in which you serve a Baby Boomers or a Gen Xer are vastly different. What’s interesting to me is we’re seeing fundamental behavior changes across the age groups.”