By Frank J. Diekmann
Do you get the not-so-subtle feeling someone is trying to tell credit unions something? Like consultants. And experts. And the marketplace. And the universe!
This is a different type of new year we’re in, not because it brings with it a new century or other calendar landmark as other years have, but because everyone is so just so eager to be finished with the last one. Just Google “2020” and “dumpster fire” and say goodbye to your afternoon.
But what’s most interesting about 2021 is that it isn’t 2021 at all—it’s 2031. All you have to do is just listen to what every researcher and expert and market observer has been trying to alert CU leaders to—it seems we have skipped ahead a decade—at least in terms of how consumers expect to be served moving forward.
You may know the future is digital, but that’s where you’re wrong—it’s the present. And some competitors have very much figured that out and are forcing CUs to respond to them.
Paging Mr. Van Winkle
In his own recent post, Cornerstone Advisors’ Ron Shevlin said a new study includes a “wake-up call” for FI leaders. In this case, the kind of wake-up call Rip Van Winkle received.
While CU leaders were rightfully absorbed with learning all the intricacies of social distancing and work-from-home over the past year, other organizations were also busy, including the so-called “challenger banks,” also known as fintechs.
In the case of market leader Chime, a new study from Cornerstone Advisors and StrategyCorps estimates a healthy 12 million U.S. consumers have become customers of the online bank. If that 12-million number is true, it represents a whopping 50% growth in just one year at Chime among the very target market credit unions need—young consumers.
Shevlin further pointed to research in January 2020 that showed just 4% of Gen Zers and Millennials considered a checking account from a challenger bank their primary account. By December 2020, that percentage had grown to 15%, he said.
Shevlin attributed much of Chime’s appeal is its “featurization strategy,” which includes among those features giving users early access to money, letting customers make debit card purchases that overdraw their accounts with no overdraft fees, and a credit-builder credit card.
Screeching Alarm
But here’s the part of that wake-up call that should set the alarm setting to one of those really annoying screeches you can’t sleep through: Shevlin said the Cornerstone studied asked consumers the extent to which their primary bank helps improve the performance and health of their financial life, and Chime was rated especially highly among customers for acting to do just that.
For CUs, that’s a big ouch. In years past I often interviewed experts who warned other providers were learning from credit unions’ other common bond—trust from their members—and that they would eventually duplicate it. That all seemed so 2031, so far away. Until a decade was fast-forwarded.
“This should be a wake-up call not just for challenger banks but for a lot of banks and credit unions,” cautioned Shevlin.
For his full analysis, go here.
Clean & Simple
And if you haven’t taken the time to look at Chime’s user interface, you should do so. It’s clean and overly simple and will remind you of some of your own favorite apps. What about your CU’s mobile interface? In the early days of going online, credit unions basically took their lobby brochures and crammed them junk drawer-style into their crude sites. Many CUs have since taken their (improved websites) and jammed those into the smaller mobile screen. What about yours? Does it look like it was built bycompliance instead of for an end-user looking for efficiency?
It isn’t just the upstarts who are starting early. The nation’s biggest bank, JPMorgan Chase, plans to roll out a digital retail bank and has already hired 400 people to make it work. The bank says the goal is to be “simple and exceptional,” an objective that often becomes mutually exclusive inside many organizations, including CUs.
It will be worth watching.
Here’s one more way 2031 may have arrived early and should have credit unions acting—now!
Where Are The New Members Going?
As CUToday.info reported here, membership growth at credit unions as 2020 closed was at its slowest pace since 2014.
For too many inside CUs I get the sense many believe (wish, hope, pray) the new year will turn back into an old year, say 2018 or 19, in one respect, and that is membership growth will once again be robust. But will it? After all, all those Chime customers have come from somewhere.
So, welcome to the new decade in ways you may not have thought. And don’t hit the snooze button.
Frank J. Diekmann is Cooperator in Chief of CUToday.info and can be reached at Frank@CUToday.info. Mr. Diekmann is also author of the new book, ‘501 Name Tags: Everything You Need to Know About Business Can be Learned at a Conference & Forgotten in the Trade Show.” For info: www.501nametags.com.