LAS VEGAS (11/5/14)--A person only has to scan headlines to be able to identify once-stable companies that fell into oblivion by disruptions in their marketplaces brought on by new technologies and business models--and those innovative and quick enough to take advantage of what those things offer.
At the Credit Union National Association's Community Credit Union and Growth Conference here, Steve Heusuk posed the question Tuesday: Will retail financial services see its own crisis of disruption--as have automobiles, film photography, music delivery, GPS systems and many more. Heusuk is the senior manager of strategy and business development for CUNA Mutual Group.
Using Harvard Business School's Clayton Christensen's definition, Heusuk described a market disruption as an innovation that allows consumers access to a product or service that once was only accessible by the elite. It is what Henry Ford did in the 1920s when he established mass production of automobiles, bringing the car down to its essence--a mode of transportation. But then it is what was done to Ford Motor Co. in the 1970s by such cost-efficient product innovations as the Honda Civic.
Retail financial services may be nearing its own time of disruption with investment in financial innovation and technology tripling between 2008 and 2013 to nearly $3 billion, Heusuk said. He described the characteristics of a successful disruptor as:
Heusuk acknowledged there are risks to embracing innovations--market disruptors--early on because not all disruptors are ultimately successful. But he added that one wants to avoid following the model of Kodak, an industry giant that ended in oblivion. Kodak, he said, could have been a disruptor with digital technology but was so locked into its film-based business model that it met its demise by not taking the leap.
"If you are afraid to take a leap as innovators yourself, this could happen to you," he warned, adding that there are currently many disruptor in retail financial services. Heusuk said it is a battleground pitting financial institutions against nonbank competitors for savings,loans, investments and more.
He said disruptors in financial services seek to:
Heusuk offered defensive strategies to his credit union audience, saying they should:
CUNA Community Credit Union and Growth Conference, which runs through Thursday, is offering a full slate of keynote speakers, breakout sessions, workshops and solution sessions. This annual conference aims to bolster connections within the credit union movement and help guide credit unions to maximize their growth potential The 2015 conference will be held Sept. 22-25 in Phoenix, in conjunction with the National Federation of Community Credit Unions' annual conference.