SAN FRANCISCO (2/25/13)--Credit unions must take an innovator's approach to increase their marketshare and disrupt the commercial financial industry with low-cost, high quality alternatives to existing products and services, says a financial technology columnist.
"Credit unions have to popularize great products that banks would never dare to launch for fear of cannibalizing existing revenue streams," wrote Ivan Schneider, a columnist specializing in financial technology for Enterprise Efficiency.
Credit unions rely too much on the concept that they are superior to banks because of their community focus, ethical lending policies and member-owned structure, Schneider said in the column, "Advice to Credit Unions: Innovate or Die." By sending that virtue-based message, credit unions create the expectation that they must only maintain service levels on par with commercial banks, he said.
"And by that thinking, credit unions will stagnate at 6% market share forever," Schneider wrote.
But while credit unions for the most part lack the resources to develop new technology themselves, they are great proving grounds for new technology, Schneider wrote. Financial technology is full of startups and established providers with new approaches to core banking, multichannel management, mobile access, branch reconfiguration, "and other powerful and potentially disruptive technologies," he added.
"If credit unions intend to shift financial power away from big banks, there's no quicker route than for credit unions to discover a better technological formula for serving customers," he wrote.
The main challenge is that credit union leaders remain open to new ideas and pitches from industry vendors, Schneider concluded.
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