By Joe Brancucci
Sometimes we get so engrossed in the day-to-day elements of our business that we lose sight of the bigger picture. There’s a lot going on in our industry and this is probably as good a time as any to take a few steps back to put it all into perspective.
Reflecting on this, I think that 2011’s Bank Transfer Day was a great shot in the arm for all of us who participated actively, creating a group of passionate supporters and demonstrating how we care for our current and future members. But there was a lot more to it than that. Credit unions demonstrated their real value, which goes much deeper than products like financing and checking/savings accounts.
At the heart of it, providing favorable rates for home loans and car loans really helps keep families together and allows them to hold on to their jobs. And, by showing the intrinsic value of credit unions, which is to help keep members “whole,” we were able to reinforce our messages to current members and reach an entirely new set of prospective members in a different way.
But this is no time to rest on our laurels. Competition from banks is not the only problem we’re facing. One of these is the recent risk-based capital proposal. Although it could be positive in terms of our ability to innovate, it was not as well thought out as it should have been. In my opinion, it was a solution for a problem that had not been adequately defined.
An even more pressing challenge, however, is the desire in some parts of our industry to hark back to the “good old days” rather than allow the industry to grow and develop to meet and, better yet, anticipate member needs.
What this requires is a new attitude and a lot more futuristic thinking. Let’s ask ourselves what we can do better than anyone else. Take, for example, what has typically been our basic business model of bricks and mortar operations. Now let’s overlay the current reality that nearly 905 of our transactions are done remotely, leaving only 10% being done in our locations. Yet most expenses continue to be location-related. The questions facing us are how we should evolve and how we can reduce security risks related to online use, but still create and nurture relationships.
Reinvention Already Happening
This means reinventing ourselves. We’re already seeing it happen. The best credit unions reflect their communities through nontraditional business models that are focused on their communities and their needs. If we want to be counted among the best, we must be courageous and willing to make some hard decisions. Yes, we may lose some of our more traditional members who don’t feel comfortable with new directions – but they are our past and not our future. And, to make it clear, they are not our champions and the ROI on their services is and will continue to be low.
Holding on to our past, as comfortable as it may be, is not the way to succeed in the future. Our charter is worth saving, but we need to use it as a point of reference for future gap analyses. We need to become more nimble, following the example set by such organizations as Amazon and Netflix, which continue to refine and reinvent their models, rather than becoming the Blockbuster Video of the financial services world.
Here’s where we have an advantage over banks: although they have more resources, they lack our customer focus. They begin with technology and expect their customers to adapt. We must handle change more creatively than they do, building on our core strength of relationships, looking at change first of all from a consumer perspective.
However, we need to understand that intimacy with our next generation of members will be defined differently. In the past it was people helping people. Now it’s up to us to help members virtually while maintaining intimacy. Part of this future growth will be authentic communication with our members. We need to be open, frank and honest with them about what we’re doing and why, demonstrating to them how this ultimately serves their needs. We’ll also need to make their transactions more personal, using technology to recognize them and show we’re listening.
A Final Thought
One final thought on promoting intimacy relates to our responsibility to create a much higher level of financial literacy. Financially illiterate people – regardless of their ages – make poor financial decisions. Financially illiterate parents beget financially illiterate children. Financially illiterate adults are often less productive employees and are almost certainly unprepared for retirement. This is a huge issue that is catching up with us quickly.
So, going forward, our challenges are threefold: supporting communities and innovation in our programming, developing a new, more meaningful level of intimacy with our member-owners, and creating a higher level of financial literacy for all ages. I believe we’re up to these challenges.
Joe Brancucci is CEO & President of Tampa, Fla.-based GTE Financial. You can reach him at joe.brancucci@gtefinancial.org.