Enemy, thy name is Starbucks.
That’s because the coffee giant handles billions of dollars of card transactions each year and is entering the financial services periphery with some savings and transfer services, James R. Lay told attendees Wednesday.
Not only that, “consumers see their baristas more than they see your tellers,” said Lay, CEO of CU Grow.
It’s possible, but not likely, that Starbucks will start a bank, he said—but other nontraditional providers have, notably Movenbank and Simple.
It’s all part of a “seismic shift” nontraditional providers are causing the financial services industry, Lay said.
“It’s time to admit the traditional banking model is broken and flawed,” he said. “The banking industry is at high risk of disruption.”
Add to that the fact that young adults aren’t showing traditional financial institutions much love. Lay cited a recent survey that revealed 71% of Generation Y respondents would rather go to the dentist than to a bank—and that 33% believe they don’t need a bank at all.
The remedy: Digital “storyselling,” he said, where credit unions use member stories to position and sell their products. “People trust people—and they buy stories, not features. The key to success is humanized content and distribution channels.”
He advised taking a seven-step interconnected digital strategy that asks:
“The time to act is now,” Lay said. “We’ve seen the casualties: Borders, Blockbuster, Tower Records. They built business models based on the branch model.
“We have to change how we operate and generate leads,” he continued. “That’s through story telling. It’s the real moment that sells online. Those stories start with people—and that’s the credit union model.”