SAN ANTONIO–Get ready: the landscape will only be getting more and more crowded in 2018, but it won’t be with physical outlets plain to see on the corner, according to one person.
“If I was a credit union, I would be concerned about the all the different fintechs that have flooded the market,” said Mark Hein, CEO of SWBC’s Financial Institutions Group. “There are many companies trying to find ways to use account aggregation to their advantage by collecting more information on people to better market to them,” he said. “We’ve seen larger banks make investments into fintechs that allow them to get smarter about who they’re doing business with and have more visibility about the people who they’re not doing business with. That’s a threat to credit unions that historically they’ve had a challenge combating—for the simple fact that they’re not as large as some these big banks making sizable investments.”
Many companies that have not traditionally been in the banking business are starting to test the waters, Hein noted.
“Companies like Square, Walmart, potentially Amazon in the next few years, are seeking ways to turn their current customers into banking customers. For credit unions, that means finding ways to stay relevant, as competition continually increases from non-traditional threats like retail companies encroaching on the banking market,” Hein said.
Perhaps what may be most important for credit unions to understand is that the consumer they have today is going to be different than the consumer they have five years from now.
Mark Hein
“With the help of technology, the average smartphone-carrying individual wants to do business with someone that makes it easy to do business with. Folks of the Millennial generation and younger would rather communicate and transact with a business on their smartphone than talk with a live person,” said Hein. “This continues to be a change from how credit unions have historically built their business by placing brick-and-mortar locations throughout the community and sprinkling in a little online banking to satisfy changing member needs.”
Invest In Tech
Hein believes credit unions must concentrate on investing in technology that focuses on a world five years away in which consumers and members will have little interest in speaking with their CU.
“It’s sad to say, but that’s the technology-first world we live in,” he explained. “Current and future members want to engage with their credit union on their own time, which could be outside of traditional business hours. Technology allows members to do so, and the demand for this behavior will only increase.”
Hein added that he expects to see the pace of credit union bank buys increasing over the next five years, as well as more credit unions with national footprints emerging.
“As we at SWBC look toward the future, we continue to find ourselves uniquely positioned to help credit unions find a less-expensive, more efficient way of doing something rather than the way they used to be,” said Hein. “Again, looking back to the slowly shrinking credit union industry, we respond to the market by getting creative. At the core, many of our competitors are selling essentially the same product. So, we get creative by building concrete nuances that add value when we deliver a product. We put a lot of effort into finding ways to change the dynamics of how credit unions look at these products historically. The same mentality could be used by credit unions when positioning their products to the 21st Century consumer.”