GRAND RAPIDS, Mich.—Credit unions that perceive the Internet simply as a delivery channel or a self-service employee cost reduction tool will have trouble competing in the not-too-distant future, warns one analyst.
Randy Karnes, CEO of the CUSO CU*Answers, emphasized credit unions can no longer just use the Internet, but instead must also become sophisticated and accomplished Internet retailers.
“Many CUs do not think in global terms about retailing as the overall umbrella for their response to members,” said Karnes, whose company is embarking on a research project to look at how CUs can become savvy Internet retailers. “But as CUs continue to see their opportunities more liberally—due to community charters, expanding or extending SEG footprints…they are wondering what general retailing practices should now be considered in their best practices.”
Living the Tactics…
Karnes said most CUs have been living the tactics—making changes in response to what their members have wanted or they thought their members have wanted.
“They have responded or reacted to external pressures with a tactic over and over again,” he said. “Being and believing that you are a competent Internet retailer is different. It means you have to set goals to recalibrate your approach to retailing in this financial services marketplace. It means you have to include the Internet in your culture and muscle memory responses. It means you have to think like an Internet consumer and respond to what they are looking for. It means looking for income from the Internet. And, playing more offense than defense.”
Karnes emphasized that becoming a strong Internet retailer is a “mindset thing.”
“It is a project for a new narrative and vocabulary,” he said. “It is not simply about automation—it is about getting the job done for the member who lives in this channel, has expectations of this channel, and is competent in the channel.”
Two Things Needed
Karnes said for many credit unions to get better at being Internet retailers, they need to trust the Internet and, above all, do something else.
“They need to experiment over and over and over,” said Karnes. “But know it is about process, not just automation and presentation. Choose the areas, or even design areas that allow you to prove you are engaged. If you want to lend on the net, then set up the situations where you can and do it without hesitation. Start with savings secured loans—not much underwriting there—or signature loans, not much collateral verification there. Build on success, and improve speed and commitment.”
Randy Karnes
On more difficult initiatives, Karnes emphasized credit unions should not wait until every Internet retailing effort is fully automated.
“Do not wait to do the impossible. Get started. The goal is to say yes to the member and proceed to the next phase quickly—but that next phase may take some behind-the-scenes work,” Karnes said.
Where CUs Have Advantage
Karnes insists credit unions have an advantage over many Internet retailers because they have a close relationship with their members.
“Too many CUs are trying to be Internet retailers across the board. They should focus their Internet retailing at this point on opportunities where the member is engaged fully and authenticated so the credit union can trust the transaction and move forward on data they can verify,” he said, adding that is a much better strategy than “stumbling” with consumers they don’t know. “I am just saying that for now, focus on what you can do to garner the respect of your best relationships and the core members that drive CU success.”
Karnes said the approach gets credit unions away from a big problem—trying to be everything to everyone via the Internet.
“I would rather be a competent Internet retailer with my committed, known audience than be constantly tracking unknown audiences that may never respond,” he said.
A Critical Point
Karnes said Internet retailing is at a critical point, and CUs need to recognize this.
“We have passed the tipping point between non-Internet aware consumers and very Internet savvy consumers,” he said. “The Internet is so invasive in our lives today that most of our activities have some expectation of how the data, knowledge, or trends available via the Internet could enhance every activity we take on.”
As more consumers interact with their financial institution via mobile devices and PCs, many analysts have shared concerns that credit unions’ big competitive advantage over banks—personal, face-to-face service—will slip away. But Karnes said that won’t happen.
“Personal is not face to face—it is respecting people and acting like it face to face or not,” he said. “It’s about can I get what I want and need? Do they act like they know me? And in a pinch, do they make me feel like I am important? Caring is the competitive advantage, and CUs will be just fine.”
A 2019 Initiative
As CUToday.info reported, as part of its 2019 Business Plan initiatives CU*Answers recently kicked off a year-long research project to work with credit union leaders, business developers, and tactical units to solve challenges around how credit unions act as Internet retailers to sell products and services to their members.
“We saw the need to take the vision and the importance of the Internet to credit unions up a notch,” said Karnes. “We believe there is a growing need for CUs to see that the comprehensive term of ‘retailer’ has been changed, as well as the mindset of consumers. If you want to deliver value to members and consumers today and in the future, you better be good at Internet retailing.”