SPOKANE, Wash.–Imagine it is the year 2020 and on your watch, your credit union has gone belly up.
As a credit union leader, what were the trends you missed? What were the signals you ignored? And what were the investment decisions you delayed that led to this demise?
Now come back to late 2017: What changes will you make today to prevent this from happening?
That scenario was painted by Anders Sorman-Nillson, a futurist and author who spoke to the challenges ahead for credit unions–and all retail providers–that may not play out in the ways CU leaders think or as the result of assumptions being made.
Speaking to the Northwest Credit Union Association’s MAXX annual conference here, Sorman-Nillson, who has worked with a number of well-known brands, including credit unions in Australia, summed up the challenge as being one of integrating “word of mouth” with “word of mouse.” In other words, blending the analog and the digital in a way that smooths the consumer journey in ways the consumer wants.
Sorman-Nillson, who was described as an expert at helping to bring provocative future strategies out of a disruptive age–which he addresses in his book “Seamless”–told credit unions that “as a futurist, I am also a little bit of a traditionalist, and the ethos of credit unions is close to my traditionalist heart.”
But the tradition of credit unions alone simply won’t cut it by itself moving forward, he said. Instead, that tradition must transition to the digital world.
“This future is digitally dehumanized,” observed Sorman-Nillson. What that means for credit unions, he explained, is the need to find a way to weave tradition and the future together to win the hearts and minds of members is becoming increasingly important.
A Mother of an Example
Throughout his remarks Sorman-Nillson used his mother and a clothing store she owns in Sweden as a proxy for older generations and traditional businesses as he illustrated his various points. For instance, he noted customers annually came into her store to be measured and then ordered new clothes. Now, they still come in for the measurements, and then they exit, go outside and around the corner, and order the clothing on Amazon.com.
“My mum doesn’t like change and I think that’s kind of universal,” he said. “Change can be extremely difficult. The problem with change is change doesn’t care if you or I like it; it’s always going to happen without our permission. When the rate of external change trumps the internal ability to deal with the change, we are potentially in a lot of trouble. We all have someone like my mum in our business. And sometimes we have to make sure we don’t throw away the digital baby with the analog bathwater.”
In work Sorman-Nillson did with Australia’s second-largest credit union, he said it has built a brand of being an unsung superhero in helping members to achieve their goals, including in a digital marketplace. The Australian CU has branded itself very well to reinforce what a credit union is, he added.
“I get personally upset when I see fintechs stealing from your brands today,” he told the meeting. “I love that in the Pacific Norwest you have a large marketshare. Nonetheless, we have to think of new ways of partnering with new technologies to ensure our voices are heard into the future.”
Sorman-Nillson emphasized at several points that there is a huge need for people to better manage money, citing research showing 47% of Americans can’t cover a $400 emergency bill, and that the personal savings rate peaked in 1971.
“Money is the number-one stressor in the United States,” said Sorman-Nillson. “Is this something you can help with?”
Five Questions to Consider
Sorman-Nillson urged all credit unions to ask themselves these five questions:
1. Is your credit union changing at least as rapidly as your most demanding client or member?
2. What percentage of your work involves frequent high-volume tasks?
3. What percentage of your work involves complex problem solving or novel situations?
4. Are you training the leaders of tomorrow for jobs that won’t exit?
5. What banking tasks ought not to be handled by machines?
“What worries me is not necessarily the machines are learning and becoming smarter, but that we as humans are struggling with change,” said Sorman-Nillson. “Learning is something we used to enjoy. I think we can code for a better humanity. That great American thought leader, George Costanza, said that everything important in life needs to have a physical package. Is this true today? Everything that can be digitized eventually shall be connected. Today, the majority of money in our system will eventually be digital? The problem is this creates potential areas of friction with members.”
What to be Asking
Sorman-Nillson said leaders in every credit union need to be asking how old processes or technologies are creating fiction whereby the positive intent to do business with the CU might not be digitally enabled.
“Are their member journeys that cannot be fulfilled because you have not invested in the right technologies?” he asked.
But in asking that question credit unions can make a mistake if the assumption is that technology can’t provide a more human experience. If a bot improves the member interaction with the credit union, for instance, is that not more “humane,” Sorman-Nillson asked the MAXX meeting.
Sorman-Nillson said the research shows that the more digitally engaged affluent consumers are with a company, the higher their Net Promoter Score.
“Increasingly, our members are taking matters into their own hands and they want to partner with companies that help them to do that,” he said. “We are increasingly entering what’s known as the transformation economy. Members want to partner with brands that help them self-actualize. They want more financial independence and less stress.”
Noting that the app Acorns–which allows users to round-up purchases to the next dollar and to place that amount into a savings account–signed up 650,000 customers in just its first year, Sorman-Nillson asked credit unions if they have considered partnering with fintechs such as Lenddo, aire, Credit Kudos, and wonga, rather than Equifax, Transunion and Experian.
Seamless Transformation
“My final point is that increasingly customers and members are craving seamless transformation,” Sorman-Nillson said. “The digital world is ephemeral. It’s easily forgotten. But being nostalgic is not strategic. Vinyl (records) sales may be up, but it’s a blip in the overall trendline. The future is increasingly about being able to seamlessly interweave the best of the analog world with the digital world.”
Sorman-Nillson noted that the member journey is no longer a purely linear progression from awareness to engagement to evolution to decision to usage. “We now do so increasingly in a journey that skips between the digital and analog touchpoints,” he said.
As an example, he pointed to credit union branches, noting, “Branches are no longer just distribution centers of stuff and products. Increasingly, they need to tell a story about your brand and your ethos.”
Readers interested in more information can find it at http://asn.thinque.com.au.