Competition for consumers’ wallets is more intense than ever and is coming from many directions. But credit unions are in a good position to compete with and outflank their bigger rivals in this battle for members’ wallets, if they become more consumer-centric by using member knowledge readily available to them.
“The battle for the American consumer is crowded with competitors – card companies, telecoms, retailers, financial institutions and platform players, to name a few,” said John Lass, senior vice president of strategy and business development with the CUNA Mutual Group. “Technology and the ease with which new players enter the game of winning consumers’ business will require credit unions to respond, or be left in the wake,” Lass told attendees of CUNA’s America’s Credit Union Conference on Tuesday.
Financial institutions and retailers have their cross-hairs on members’ savings, lending, investments and insurance business as new technology has changed the delivery of financial services to consumers.
Lass said the common battle cry in the quest for those businesses -- and payment systems -- is customer centricity, and key to that is what’s referred to as “big data.” Financial institutions and retailers, including credit unions, all have knowledge about their consumers, be it attitudes and behaviors, to determine where you are shopping, calling or searching.
“Data has become a real asset,” Lass said. “Leveraging data is the key to knowing your members’ needs and having the ability to deliver the right products and services to the right person at the right time.” Lass said data comes in many varieties: account balances, browsing data, social media, email and transactions, to name a few. “Harnessing that data is a key to customer centricity,” Lass added.
Lass cited seven things credit unions can do to win the battle for their members’ wallets:
Implement a data strategy – Credit unions may not realize it but they have a lot of information on their members, and now is the time to use it in a member-friendly way that keeps their best interests in mind.
Segment the member population – Determine which segments resonate with your value proposition and segment your members on needs, attitudes and behaviors.
Predict member needs – Once you have the data, use it intelligently. For instance, a new homeowner needs a lawn mower; a new parent needs life insurance.
Adhere to a sustainable financial model – Understand the lifetime value of a member. They are not only profitable; they will deliver value to you.
Deliver service excellence – Credit unions’ staple differentiator is great service. Stay the course on that, but be ready to adapt to changing needs.
Enliven member democratic control – Credit unions need to shine a brighter light on their cooperative structural difference. Members should be reminded they are the owners and as such their credit union doesn’t have shareholder issues like most competitors.
Don’t forget about product and price – Make sure you offer relevant products that are comparatively affordable. Most credit unions don’t have scale to be a product leader but through their cooperative structure, they should work together to be competitive on products and pricing.
Each year, new competitors enter the battle to provide financial services to the American consumer. Banks and credit unions now compete head-on with retailers, mobile network operators, card issuers and Web-based platforms such as Google and Amazon.
Convergence around savings, lending, investments and insurance has intensified as new technology has changed the delivery of financial services to the consumer. The battle is most intense in the area of payment systems. Lass identified key competitors and their new marketing strategies. The cooperative member centricity value proposition will be vital to survive and thrive in the midst of this dynamic competition, Lass added.