While competition for consumers’ wallets is more intense than ever, credit unions can leverage their knowledge of members to outflank their bigger rivals, a CUNA Mutual Group executive told attendees during a CUNA's America’s Credit Union Conference session Tuesday.
“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, CUNA Mutual Group senior vice president of strategy and business development.
“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 said.
Financial institutions and retailers have members’ savings, lending, investments and insurance business in their crosshairs because 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 "big data" is key to that effort, according to Lass. Financial institutions and retailers, including credit unions, all have knowledge about their consumers, be it attitudes and behaviors, to determine where they shop, call or search.
“Data have 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.”
Data come 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 actions credit unions can take to win the battle for their members’ wallets:
►Implement a data strategy. Credit unions might 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 the credit union’s value proposition, and segment members based on needs, attitudes and behaviors.
►Predict member needs. Once a credit union obtains data, it must use the information intelligently. For instance, a new homeowner needs a lawnmower; a new parent needs life insurance.
►Adhere to a sustainable financial model. Understand the lifetime value of members. They are not only profitable, they will deliver value.
►Deliver service excellence. Credit unions’ differentiator is great service. Stay the course on that, but be ready to adapt to changing needs.
►Enliven member democratic control. Shine a brighter light on their cooperative structural difference. Remind members they are the owners and their credit union doesn’t have shareholder issues like most competitors.
►Don’t forget about product and price. Credit unions should 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.
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 says.