BY JEFF KLINE
Still thinking of other credit unions as the competition? In terms of value addition, there may actually be strength in collaborative numbers. Read on to discover why pooling your resources, ideas and expertise with other CUs could strengthen your overall member experience and help you compete with your real competitors.
Those of us who work on behalf of credit unions learned terms like “cooperation,” “one member, one vote” and “mutual self-help” in the early days of our careers. Starting with no capital, people of ordinary means pooled their savings and earned dividends while those who needed to borrow had a ready resource to draw from. Of course, the financial industry has become much more complex than it was a century ago, for both the for-profit sector and the cooperative community. But the premise behind our cooperative model continues to work today.
However, our industry doesn’t always practice collaboration at the professional level, often out of fear of giving away a competitive edge. Yet it’s rare for credit unions to truly compete with each other. There’s plenty of market share to go around; even with record shares of more than $1 trillion, U.S. credit unions have less than one-tenth of the deposits of the nation’s top four banks.
Collaboration brings greater value.
At MEMBERS Development Company, we help credit unions pool their resources, ideas and expertise to offer members not only affordable products and services that enhance their financial well being but also the convenience of today’s technology. For me, working in the credit union community has always been gratifying, but partnering with some of the nation’s largest credit unions to work for the good of their members and prospective members is an exceptional experience.
In the past year, MDC has gained 10 new owners with others in the pipeline –evidence that collaboration is still a very good idea supported by many credit unions.
Members win when credit unions work together, and our three newest members clearly agree. Wayne Grossé, President/CEO of Bethpage Federal Credit Union in Bethpage, N.Y., says his credit union decided to partner with MDC based on its expertise and personal experience with management.
“We look forward to working collaboratively with MDC’s owner credit unions, which have demonstrated a proven track record of innovation,” said Grossé.
James Nastars, President/CEO of Meritrust Credit Union in Wichita, Kan., says the deciding factor was teaming up with MDC and its owner credit unions on a special project.
“Very simply, it’s knowledge,” he said. “We benefit from the combined research and development of nearly 50 progressive credit unions, and in turn, we are able to deploy our resources to help bring meaningful initiatives to reality.”
For Denver, Colo.-based Public Service Credit Union, the key attraction was its ability to add value to the industry, the credit union and, ultimately, its members.
“Partnering with MDC gives us scale, to help us compete not only with the deep pockets of large, traditional, financial services competitors, but also with those who are taking aim from outside the industry,” said Todd Marksberry, President/CEO of Public Service CU.
Member engagement is a top priority.
One of MDC’s most recent initiatives centers on understanding member engagement.Our research shows that engaged members result in a 23 percent increase in profitability and relationship growth. Conversely, disengaged members have a negative effect, costing the credit union as much as 13 percent in income and product usage.
Among the key factors that help engage members are providing a satisfying experience in all the channels they use and offering personalized service that takes into account their wants and needs.
- Member experience – Like all consumers, most members use a variety of access points to do their banking. So whether they visit in person, make a phone call, go to the ATM, use their smartphone or sit at a desktop, it’s vital to ensure they can easily move from one channel to another. At MDC, we’ve found that engagement drops by 30 percent when any channel a member uses isn’t up to par.That means credit unions need to not only pay attention to how a member accesses his/her account but also provide a familiar look and feel across all channels.
- Personalization –MDC’s research shows that members who feel their credit union knows them are much more likely to feel engaged. And if they’re engaged, they are less likely to switch to another institution. They are also more likely to talk up their credit union with their friends and family. Yet a2015 study by IBM and Econsultancy revealed that only 22 percent of consumers say the average retailer understands them as individuals.People also are apt to make purchase decisions in favor of brands that send offers that apply to them, but the study reported some 80 percent of respondents say the marketing messages they receive aren’t relevant to them.
- Personas – One way MDC and its owner credit unions have been working to overcoming this hurdle is by creating personas for different generations of members. Along with our other research, personas help us better appreciate members’ needs and wants. Using Millennials as an example, we know they tend to be the least engaged with their PFIs. Not only are Millennials put off by inferior technology, but they also tend to be annoyed by promotional offers that don’t relate to their interests. And yet Millennials desire personalization more than any other generation!At 83.3 million strong, this age group has supplanted Baby Boomers as the largest generation. Clearly, this is an area where personalization can improve member engagement.
As financial cooperatives, credit unions historically have had a major advantage over banks because their members are also their owners, providing more opportunities to build deep relationships. But as new technologies remove some of the natural “touches” members receive at their credit unions, credit unions will have to work harder to cultivate member connections – especially with younger generations.
But all of this takes time and money. By pooling their resources, credit unions are able to imagine“what’s next” in financial services. MDC’s collaborative approach encourages participants to jointly explore possibilities and then research and develop projects that make sense. That’s a huge benefit. For most credit unions, it would be too costly and time-consuming to do this on their own. But isn’t that what collaboration is all about?
Jeff Kline is Chief Executive Officer of MEMBERS Development Company, an R&D CUSO of 40+ credit unions and partners. Learn more the power of credit union collaboration at membersdevelopment.com.