RANCHO CUCAMONGA, Calif.–In a marketplace that has changed in so many ways, especially since the onset of the pandemic, credit unions have had plenty to think about. Now they’re being given the opportunity to “Rethink Everything.”
That’s the theme of Co-op Solutions’ upcoming THINK Conference, which is set for Chicago May 2-6.
Although the meeting is returning to an in-person format this year, the annually popular THINK-themed events did not take a sabbatical during the past two years as a result of the pandemic. In fact, the company had more than 5,000 people engaged with it through a dozen or so THINK virtual events in 2021, in addition to approximately 2,500 who attended its first virtual THINK event in 2020, according to Samantha Paxson, chief experience officer with Co-op.
The same pandemic that appears to be winding down, paradoxically, has only wound up the competitive threats to credit unions as a result of the mass migration to digital offerings, most especially from fintechs. The result is credit union leaders seeking effective paths forward.
“Credit unions are wanting insights and information and strategies to move forward, they want to know how to best make change during this time,” Paxson said. “So, we feel a responsibility and a passion to be there and to share all the data that we have to help credit unions do their best. That's what we did in the (virtual events) and now we're coming back together to see everybody in person.”
At the center of “Rethink Everything” will be a focus on “member centricity” as the key to growth, a theme Co-op and its research has increasingly emphasized.
“That's where we think credit unions need to be focused in order to grow. That is where fintechs are focused,” Paxson stated.
Hearts in the Right Place, But…
Why do credit unions continue to come up short when it comes being member-centric?
“They are there in their hearts, just not where members are today. They are not at the level that members expect or in the manner in which members expect to be served,” Paxson said. “Their model is still focused on product-centric delivery. They are primarily focused on being the best deal in town with the best rates and the best value for members’ money. The challenge is that member behavior has moved and shifted. There's a change in in expectation. There's a change in interaction. And now credit union members are extraordinarily empowered to go find what they need through their phones and through fintechs.”
Paxson noted Co-op has done consumer and member research with EY and Filene over the past year.
“We did two sets of research, with one focusing on member expectations and member behavior with EY,” Paxson explained. “The other study with Filene focused on credit union expectations for growth and credit union behavior. There was an opportunity gap between those two audiences. Credit unions are focused on and concerned with earnings, experience and expenses. And they are leaning on the traditional model that has helped to sustain them to grow, which is interest income. However, margins are really being squeezed. The refi market has really gone away There is greater focus on HELOCs. And they’re not quite seeing the interrelationship between the interest side of their income statement and the non-interest side of their income statement.”
The Short- and Long-Term
But the only income statement members are looking at is their own, observed Paxson, and that includes the challenges in their daily financial lives they are looking to resolve. For credit unions, the real opportunities are in short-term daily financial management and long-term financial health and wellness, said Paxson, adding those short-term concerns can be issues such as daily liquidity, managing all their digital subscriptions, with how to best move money between accounts.
It is the “blend” of short- and long-term challenges that members confront every day and on which they are looking for a guiding hand, Paxson explained, noting members “do not get a loan every day” but frequently interact using payments, often multiple times per day.
“Credit unions should be the center of that, putting the member at the center and designing their income streams around that member,” Paxson recommended.
What Needs to be Rethought
And that brings Co-op to the “Rethink Everything” Theme of its 2022 meeting.
“What we're focusing on is how you design your credit union around your member, not only to help you live in your mission, to live your service model, but to help you help members in their financial lives and deliver financial wellness and financial well-being,” Paxson said. “It’s also to grow your credit union, to increase member economic participation in your credit union. You do that by helping to provide the use cases that they use in their daily lives and that includes digital first. It includes payments, it includes P2P, it includes buy now, pay later. It includes the transparency for members to best understand their financial lives and then to be able to take action to improve it. If credit unions haven’t aggregated it and aren’t that primary financial relationship for their members, then they cannot help their members.”
And if credit unions don’t move to help members at every moment of their financial lives?
“They’re slowly going to lose market share and not be able to grow both the interest income side of the house and the non-interest income side of the house,” Paxson said.
Where to Start?
But for many credit union leaders, even if they have bought into the research and the need to build around member-centricity, there is often another issue: where to start?
“That’s why we’re holding this conference. We have actually organized this conference based on that,” said Paxson. “We have brought in outside speakers that help exemplify the key learnings and the strategies credit union should use as case studies.”
Three-Part Meeting
According to Paxson, the meeting has been broken into three parts:
- “The first is knowing your members like never before, so you need a really strong data strategy in order to really understand how to design your credit union around your member and understand the micro-segments of your current member base and where your prospects are. It's about what you do in order to serve those members and gain ongoing interaction and engagement.”
- “Second is about being their choice for every moment. So, what solutions do you offer today that are are going to engage that member in the way that they expect to be engaged with and to interact with you. Again, it’s going back to digital-first. It’s about leading with payments as a driver for loans. My understanding is that of all of the loyalty components, it’s the fraud components that can be growth strategies for you. Those are not risk-mitigating strategies, but growth strategies.”
- “Third, it’s about how do you invest in your credit union’s tech stock. It’s embracing the power of connection to really be a platform organization, to be an ecosystem of financial services and technologies for your members.”
The Presenters
All three pieces of the conference will be based on key learnings as backed by the research by EY and Filene, Filene said, with speakers and “incredible brands” that really exemplify the key takeaways, according to Paxson.
Among those speakers will be:
- Swan Sit, a global digital marketing consultant who has been dubbed the “Queen of Clubhouse” by Forbes
- Sallie Krawcheck, CEO and founder of Ellevest
- Ken Kocienda, product architect of Humans, and former designer and engineer for Apple
- Dave Logan, a New York Times best-selling author and co-founder of Care4th
- Eswar Prasad, a professor at Cornell and author of “The Future of Money”
The Deep Dives
For those who have attended the THINK events in the past, Paxson said this year’s event will feature more deep dives in the research than prior meetings, offering specific strategies and master classes on data activation and the latest trends, including conversations around crypto, machine learning and AI.
Paxson acknowledged all that conversation around technology can be overwhelming, which is why the THINK meeting will also include a number of fun events, including a Cubs/White Sox baseball game at Wrigley Field and an event at Chicago’s navy Pier. There will also be a separate CEO event she said will offer plenty of networking opportunities as well as unpacking what it means to be a leader in a post-pandemic event.
The ‘Real Purpose’
“The real purpose of this is credit unions need to take a hard look at their business now and see how to pivot to really stoke growth so that the American Consumer Satisfaction Index doesn’t go down for a fourth year in a row,” said Paxson, “so that we don’t see fintech growing at 505% and credit unions losing share by 3% a year. This is the opportunity for credit unions.
“I hope people will walk away with a fire in their belly to go make change in their credit union,” she continued. “Business as usual is not going to work. Business as usual and the way we have operated our credit unions has been fine and we’ve had steady growth, but we are facing stiff competition from big tech and fintech and we have a giant opportunity to serve members the way they expect to be served,” Paxson continued. “People need credit unions, and credit unions need to design around people.”
Big Ideas are for Small CUs, Too
To some leaders at smaller credit unions, all of that may sound like an investment beyond their budgets. But Paxon disagrees.
“That why Co-op exists,” Paxson said of the company, which is a CUSO. “Co-op exists to serve credit unions, to aggregate those costs and to build the tech stock so they don’t have to. We exist to bring technology together, to bring the data capability together, to do the security so that credit unions don’t have to do it independently, and to do the new innovation and to plug it into their ecosystem. This is why Co-op was started.
For more information on the meeting, go here.