In the future, banking will no longer refer to a specific place, but a life process for consumers.
That’s the word from Brett King, founder of Movenbank and author of Banking 2.0 and the forthcoming Banking 3.0. He addressed the World Council of Credit Unions’ (WOCCU) World Credit Union Conference Wednesday in Gdańsk, Poland.
He says credit unions that aren’t prepared for this transformation will not have much of a future.
“This is an incredibly exciting time for credit unions,” King said. “But it’s a terrifying time for credit union executives.”
What’s frightening about this future is the dramatic shift technology has brought not only to how financial services are delivered, but also to the capabilities and preferences of future generations of members—“digital natives”—for whom “new” technology isn’t new.
King says it’s up to credit unions to meet the nature and needs of those consumers—or lose them to competitors.
“The perceptions of what credit unions are in the world will change over the next 10 years,” King said. “How will you build a great journey for your members? That’s the trick.”
Through Internet access and, especially, smartphone technology, conducting financial services has become something members do at a time and place that suits their needs, which rarely requires a visit to a branch, King says.
He says smartphone technology has taken the place of other transaction devices, such as debit cards, due to its capability to complete transactions with the flick of an app and display account balance information in real time.
“The iPhone has become a proxy for the debit card,” King said. “It’s the debit card of the future.”
King cited Kenya’s cellphone-based transaction company, M-PESA (“pesa” is Swahili for “money”) as the world’s fastest growing “bank” based on its widespread use and growing market penetration.
Currently, 20% of Kenya’s 40 million residents have financial institution accounts, while 50% have M-PESA relationships that enable them to transfer cash, pay bills, and perform other basic financial services.
Kenya's figures roughly translate to those of the entire world, King said, in which 60% of the global population are unbanked but 85% have cellphones. King predicted that by 2017, the entire population will have smartphones and most of them will use them for financial services, especially members of Generation Y.
“By 2020, about half of your credit union member population will be Gen Y,” he said. “Mobile will be their preferred way to do business.”
The changing reality will spell the end of many credit union branches, said King. “If you think the branch is the place that the magic happens, where you define your relationship with your members, then you’re in trouble.”
The best option? Redefine your credit union so it’s no longer a destination but a provider of “apps” that enable members to gain crucial information when and where they need it.
Such thinking will close the gap that is developing between credit unions and their members, opening the door for a new generation of digital natives who may even sing your praises through social media.
“It’s all about the context in which you operate,” King said. “Financial services need to be part of the journey, and you need to become embedded in the lives of your members.”
WOCCU’s conference concluded Wednesday with an awards ceremony and a closing reception at the historic Gdańsk shipyard, the birthplace of Poland’s Solidarity movement.