By Rhiannon Stone
Credit unions have long been a financial institution of choice because of the lower rates, superior member service and community focus they provide. More and more, however, the marketplace is changing.
The demands of members are shifting, and will only continue to do so as the population ages and new generations open their first accounts. To make things more complicated, the competitive landscape in which we operate is also evolving – financial institutions are expanding, and new technologies are being developed every day.
Differentiation will be critical as the marketplace continues to shift. Here’s why we must continue to focus on setting our credit unions apart if we want to remain competitive:
1. The abundance of financial institutions continues to grow. There is an increasing number of financial institutions to serve members’ needs. The mortgage market is being taken over by loan-only institutions such as Quicken Loans. These companies will continue to capture market share once enjoyed by credit unions. The good news is that loan growth was strong last year at 11%– we will need to continue to offer superior loan services to meet our members’ needs to sustain this trend in the years to come.
2. New technologies are being introduced constantly. The use of Bitcoin, a digital currency, and payment apps, are also increasing competition. We still don’t know where Bitcoin will go, but it’s plain to see transactions as we know them are changing. Credit unions slow to adopt new technology will also find their members leaving for other institutions that prioritize the latest developments. Technology is being used to generate insights about members and their behavior – a powerful tool credit unions must leverage to provide personalized offerings and keep their members.
3. Consolidation is occurring at a rapid rate. More and more credit unions (and banks) are closing locations and consolidating their branches. Credit union membership is still on the rise – thankfully – but our market presence is shrinking. Fewer branches mean fewer touchpoints for our members. We will need to consider new ways to communicate our value and reach our communities, such as advertising via targeted via social media campaigns.
4. Convenience is king. The number one concern for consumers is convenience. Above the branch experience or the relationship they have with their financial institution, consumers are looking to make money management as easy as possible. The customer service credit unions provide was (and still is) a key differentiator, but it must be balanced with convenience. Setting ourselves up for success will depend on how well we address this factor. We must continue to look for ways to make doing business with us as easy as possible.
It’s time for credit unions to think about the marketplace and consider differentiation beyond customer service. Serving our members will always be at the core of what we do, but finding innovative ways to reach them and understand their behavior will be key. Making a concerted effort to ensure the credit union experience is seamless will also be critical as we look to retain our membership into the future.
Rhiannon Stone is COO at EPL, Inc. For info: www.eplinc.com.