WASHINGTON–On an eight-hour trip from California to Washington, D.C., Samantha Paxson noted she engaged in approximately eight different digital transactions, from paying someone via Venmo to preordering at Starbucks to buying online access during her flight.
Meanwhile, during the last eight years, Paxson said she has applied for three loans—and yet when credit unions are asked where they are focused, it’s always on lending.
“It’s time for us to be bold,” said Paxson in opening remarks to the Underground Collision here hosted by Mitchell Stankovic. “What I hear in credit unions and what I have consistently found to be true, is credit unions saying, ‘We’re fast followers. We’re going to wait and see how this plays out.’ I want to encourage us to be aggressively optimistic and go after the market.”
Paxson, the chief experience officer with CO-OP Financial Services who also serves on a credit union board, noted every credit union’s P&L focus is on the lending side of the business. When she asked how many in her audience have looked “aggressively” at making payments the primary driver of their bottom lines, no hands were raised.
They Don’t Need You
“Did Apple come to the financial services space with loans? Or with payments? Why. Billions of clicks,” said Paxson, before detailing all the clicks she had engaged in on just the one trip to Washington alone.
“We are in a new battleground being taken over by big tech and fintech, which is not a bad thing; we can take them on,” said Paxson. “However, your member does not necessarily need that relationship with you. I am encouraging us to behave like a big tech company, a fintech company. Actually, to behave like the big banks.”
While that may sound controversial, Paxson pointed to how big banks differ from credit unions. Of the $1.4-trillion loan portfolio among the biggest banks, 21% is represented credit card loans. Among credit unions, which have a loan portfolio of just under $1 trillion, the credit card portion is just 6.5%.
“If we were at the same level, we’d have $30 billion more,” said. Paxson.
“We need to be baked into the day-to-day lifestyles of our consumers,” said Paxson. “Just 20% of our members call you their PFI, and that is going away. People don’t necessarily need a traditional financial institution. We have a huge opportunity to engage our members.”
What Can A CU Do?
So what can credit unions do?
“I would argue today we need to really study our economic indices,” continued Paxson. “We need to understand the lead measures and the loud measures. I am a board member and we look at how lending is performing; that’s really important. But as we also know, payments drive loans. We need people to think of their credit unions for those big life decisions. We need to be essential to lifestyle, not just life stage. Our members trust us. We have huge character love. But do they trust us from a capability standpoint. We have to demonstrate we can be there when our members need us, and we do that by being digitally available.”