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Predicting What Your Members Want in the Future

BY JEFF KLINE

When I asked credit union managers 20 years ago what posed the biggest threat to their organisation’s future, they cited the difficulties in competing with banks and S&Ls, and the converging competition from related brokerage and insurance companies, mostly because of their size and deep pockets, which allowed them to invest more on systems and technology, as well as having much larger marketing budgets.And of course someone would occasionally throw in Microsoft.

Who knew our competitors in 2018 would turn from community banks to companies like Google, Amazon and Apple? Probably not many, because they were a search engine, an online retailer and a computer manufacturer. Why would anyone expect them to compete in the financial services market?

That got me wondering what credit unions might expect in years to come. But instead of thinking about 12 or 24 months from now, we need to look further down the road – 5, 10, and 15 years from now. What will be the key issues facing our industry?

Identifying future challenges

Some things never change, like dealing with regulations, fighting off industry competitors and needing new and better cyber security.But what else can we expect?

  • Focus on controlling expenses. With narrower profit margins arising from increased competition, careful cost management will continue to be vital.

  • Payments are going digital with more demands for simple – but secure – ways to send payments to anyone anywhere.
  • Artificial intelligence.No one likes calling customer support only to wade through a series of menus just to get a simple question answered.Now, savvy companies are beginning to use artificial intelligence to better understand customers’ preferences and needs. Machine learning will enhance the customer experience as chatbots simplify interactions.
  • Data analytics.Yes, data is everywhere today, and credit unions can capture every byte. But data is worthless unless it’s organized and analyzed. We already use it for fraud detection, personalized marketing and risk management. Soon, promotions will be micro-targeted, so consumers never see irrelevant offers.

Embracing future challenges

These trends certainly aren’t a surprise to our industry; in fact, they’re already hot topics now. But what will be the “new big thing” in five or 10 years? MDC’s Owner Meeting last August focused on learning from forward-thinking leaders – experts in envisioning what’s next, who both put us on guard and tickled our imaginations. For instance, entrepreneur and author Josh Linkner of the Institute for Applied Creativity discussed five obsessions essential for competing in a fast-moving world. Here are his suggestions for today and in the future:

  1. Get Curious. Ask questions? Why? Why not? What if? Look at the situation from a different angle and think about it as if limits didn’t exist. What would be the perfect solution then?
  1. Crave What’s Next.Many executives worry about the future, but innovative leaders hunger for life-enhancing changes. In his book,The Road to Reinvention, Linkner says,” Change is inevitable. You need to decide: Will you drive that change, or be driven away by it? Will you disrupt or be disrupted? By choosing to deliberately reimagine your own status quo, you can secure a strong future for both your company and your career.”
  1. Defy Tradition. Ask questions that spark new ideas. Look at a process and ask, “What if I didn’t have to …?” Remote deposit capture and e-signatures are good examples. These innovative processes make it easier to put money into an account or apply for a loan, yet they started with someone asking questions like, “What if a customer didn’t have to physically present a check? What if s/he could sign papers online?”
  1. Get Scrappy. Don’t be afraid to raise your company profile. We’re in the banking industry, traditionally not known for quick and clever, edgy behavior. But today’s FinTech competition thriveson novel approaches. To engage millennials – and their parents – we must keep up.
  1. Adapt Fast. Stay on top of what’s ahead and think how you might meet the challenge. How might credit unions be the disruptor ? We’ve done it before with ACH, not to mention cooperative banking!

Learning from the past

The Federal Reserve Bank of Minneapolis published an article in 1992 that recently caught my eye. The theme dealt with how earlier predictions that technology would revolutionize the banking industry hadn’t come true. At the time, consumers could use their phones to check balances or move funds between accounts, but adoption rates were low, and some experts predicted technology wouldn’t bring many changes to the banking industry. According to the Fed article, consumers didn’t like using “new” technology because it was cumbersome to use and limited in its scope. Hmmm … I wonder if the author has bought groceries or applied for a credit card by phone yet? Is consumers’ increased use of technology because it is no longer cumbersome to use and limited in its scope? In other words, yes, consumers will resist change unless there is something in it for them—faster, easier, cheaper. So, maybe the author wasn’t wrong … the technology just had to evolve more.

It seems amusing now, when the financial services industry is seeing digital disruption up close and personal – with technology changing consumers’ expectations.

Ray Kurzweil, author of The Singularity is Near, says the use of digital devices and other convenience services proves the “law of accelerating returns.” Like genetic evolution, each generation of technology uses the tools of the previous one to create more powerful technological innovations, which then become commonplace.

What will financial services be like in 20 or 30 years? True to their roots, I’m confident the credit unions that thrive will still care about their members, knowing who they are and providing awesome service. And the tools we’ll use are already in the mind of a creative thinker today.

jeff-klineJeff Kline is Chief Executive Officer for MEMBERS Development Company, a CUSO owned by more than 50 top-tier credit unions and credit union partners. MDC serves as large credit unions’ growth engine, facilitating a collaborative approach to research, development, and product innovation to serve the changing needs of today’s members.

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