MILWAUKEE—Competition in the financial services industry is only going to get tougher by 2020, especially as more non-traditional sources continue to offer expanded online alternatives, according to the La Macchia Group.
Ben La Macchia, VP of planning and real estate, said that Millennials will dominate the financial services industry at that time, and that they are open-minded to non-traditional sources of borrowing and depositing money.
“Credit unions can beat any of this competition with service; however, if the service isn’t backed by a current, retail-focused effort, then the message will be missed by that segment of the market,” said La Macchia. “Trends indicate that Millennials want technological convenience and excellent service from their financial institution. Credit unions do extremely well with service and are beginning to offer more technological convenience.”
It is important that CUs differentiate themselves in their markets and focus on the things they do well, said La Macchia. “Rather than be all things to all people, they need to understand why their members select them as their PFI, and build and develop the relationships they have now.”
Viable To Millennials
CUs also need to be cognizant of the wants, needs and expectations of Millennials and Gen Y, to ensure they are a viable option for younger generations, he said.
“Getting the right technology and branch positioning—market and geography—to capitalize on the continued development of Millennials is pivotal to ensuring a credit union is positioned to grow,” said La Macchia. “Without growth, a credit union cannot remain viable for the long term. This total commitment to a consistent, relevant image directly relates to a credit union’s market positioning, facility placement and branded identity being reflected in all of its facilities.”
La Macchia said there are a number of questions for every CU leader.
“They should be asking themselves not only ‘Do we have the right image, products and services to interact with younger members?’ but also, ‘Are we positioned in the right place to be seen and do we have the image to attract these young members?’ If the answer to the either of those is no, then the credit union needs to take a hard look at their strategic position. They need to understand their own strengths and weaknesses, capitalizing on strengths with consistent messaging at all member interaction points.”
Branches Not Dying
La Macchia predicted that those who are predicting today that the branch is dying will be proven wrong in 2020.
“The media portrays the reduction in number of branches as being a direct correlation to the industry’s overall health,” he said. “While it’s true that the overall number of branches in the financial services industry has declined in the last five years, much of that has been due to mergers and acquisitions on the bank side where overlapping service areas have been removed. It’s a fact that branch visits are continually declining, they will continue to decline as we convert to a paperless economy.”
However, the amount of business being transacted in branch is actually increasing—it’s just being done differently, said La Macchia.
“Instead, it appears that the nature of branches are changing, becoming more and more informational and member interaction centers versus transaction centers,” he said. “Nonetheless, the physical location remains the number one source for organic new member growth for nearly all credit unions.”
La Macchia said his company’s proven process for working with CUs on branch performance, construction, the credit union's brand, and identifying opportunities will carry CUs into 2020 and take them forward.
“All of this is done with an emphasis on how our recommendations will impact each credit union we work with,” said La Macchia. “This is specifically true with our firm’s accountable and proven track record in branch/technology integration. Our recommendations have to make financial sense and our track record shows credit unions that they can trust La Macchia Group to help them build their business.”