CU Industry at the Tipping Point

Competitive challenges and evolving technologies provide opportunities for CUs.

November 9, 2012

The credit union industry may be at a tipping point, says John Lass, senior vice president of strategy and business development for CUNA Mutual Group.

Stemming from rapid changes in the competitive landscape, digital technology, and customer channel preferences, Lass explains the tipping point—or strategic inflection point—may cause credit unions to re-examine current business methods.

“The challenge for our industry is to adapt to the new competitive dynamic without sacrificing our powerful core values and attributes,” Lass says.

In order to keep up, credit unions need a growing number of channels to connect with members: branches, call center, online banking, and mobile platforms.

There will be consequences for credit unions that don’t adapt, Lass explains, citing examples from other industries. After Apple launched iTunes in 2003, he says, the music industry rapidly evolved into the digital age and, since then, more than 2,700 record stores have closed.

“The music industry was caught off guard by the digital movement and, as a result, the CD and record industry has been hit with devastating losses,” Lass says.

Netflix vs. Blockbuster, Kindle vs. brick-and-mortar bookstores, and the rapid decline of Kodak due to the explosion of digital camera sales are other examples, Lass says.

“The key point here is that digital, mobile technologies, and channel shifts all played roles in these industry tipping points,” Lass says. “The credit union system now faces the challenges, but also the opportunities of incorporating digital convenience into the cooperative model.”

Lass is optimistic for the credit union system because it has one unique quality that sets it apart from other financial institutions: cooperative principles.

“Unlike the music industry, the cooperative model provides credit unions with powerful competitive advantages,” Lass says.  “There are some tremendously successful examples of credit unions embracing ‘do-it-yourself’ banking, and it’s paying off for their institutions and their members.

“One member, one vote,” he continues. “Credit unions are the only financial institutions offering that kind of individual power and input.”

Lass addressed CUNA Mutual Group’s third-annual Online Discovery Conference.