MIAMI BEACH, Fla.–In all the discussion and analysis around the shift to a digital marketplace, it isn’t all about technology, according to one person.
Brad Leimer, the cofounder of the consultancy Unconventional Ventures and a former credit union executive, offered some positive words about the role credit unions have played in the lives of everyday people from the moment of their founding, as well as advice on how to continue to do so in the future.
Speaking to CO-OP’s THINK Conference here, he said of credit unions, “We’re all in this together to make banking better. How is your institution doing it? We know financial services are changing, and the players are changing, as well. So what is going to happen to our credit unions and their members?”
There Will Be Blood
The THINK conference is dominated by discussion of the shift to digital platforms and delivery, but Leimer added, “Technology is only a portion of this shift. The type of empathy we show to our members every single day is as important as anything else. I firmly believe there is a social contract between credit unions and their members.”
It won’t be easy to get to that future, with Reimer saying, “There will be blood.” That blood is the result of an increasingly consolidated market in which the biggest players are only getting better. Reimer forecast that the banking industry will be dominated by 15 or fewer institutions, which currently control $13.2 trillion. Bank profits, he noted, soared in 2018 to $236 billion.
“Too big to fail may feel too hard to compete with,” he observed, adding credit unions reported $13.5-billion in net income during 2108, but still hold just 8% of the assets banks represent. “Size does matter, but it should matter in the way we look at the future. The community banking model, whether you’re a community credit union or community bank, is being challenged. Credit unions and community banks are in a surprisingly similar position as fintech startups. We need to hustle. We have to work together. Today, there are 12,000 startups focused on fintech.”
Other Points Raised
Other points made by Leimer:
- Credit unions should focus on the income side of the member balance sheet. A minimum wage worker cannot afford a two-bedroom apartment anywhere in the United States, he said.
- There was $14 trillion in outstanding consumer debt at year-end. “So it is imperative we offer tools to help people manage debt.”
- Also at year end, there were 44.7 million student loan borrowers who owed $1.56 trillion.
- 48% of near-retirees have nothing saved in their retirement savings.
Why Demographics Matter
There are also demographic changes underway that Leimer said should affect every CU’s strategic planning.
- Leimer said a child of 10 today has a 50% chance of living to being 104. “When are they going to retire? Eighty? How are they going to afford 104 years of life?”
- In the next two days, 20,000 people in the U.S. will turn 65. “So why do we talk about Millennials, when the 65+ population is going to double by 2020—that’s next year. Instead of building our technology for Millennials, we need to build technology for all. The opportunity to address this market alone is $7.6 trillion, which is significant.”
What Can Be Done to Make Things Better?
Leimer said first and foremost, to make things “better” credit unions need to improve their digital onboarding. How quickly can you onboard a member? Do you require a signature card? Don’t do that.”
Other Observations Shared:
- “We have a social contract with the communities we serve. I believe we have a sacred obligation in all the solutions we come up with to go back to listening, to having empathy. We talk about financial education, but we can do better.”
- “I think unbundling is a huge opportunity. When you are really, really good at something people will draw themselves to you. Be the credit union that helps people save money, but also be the credit union that helps people build money, too.”
- “Let’s create a connected business model for all credit unions. Why can’t we take 116 million members and turn that into 300 million. Your community is everywhere. What you do matters to everyone. Credit unions make communities stronger. Through listening and fulfilling people’s needs, we make lives better.”