Solve the need
If automobile ownership declines, credit unions will need to think differently about serving members’ transportation needs, says Downin.
“It requires us to understand how we can continue to be relevant at solving that root challenge,” he says. “That root problem or challenge isn’t trying to finance a car—it’s getting low-priced, easy-to-use, easy to-access transportation in the hands of our members,” Downin adds.
One future strategy Downin likes involves a credit union, or a group of credit unions, buying a fleet of self-driving vehicles for members to use. As a benefit of membership, for a certain fee, members would have access to the pool of self-driving vehicles, he explains.
“We’d be doing the same thing we do today—helping members finance transportation—but in a completely different way that [still] fits well with credit union philosophy,” Downin says.
It’s probably too soon to make this type of investment, he adds. But it’s time to think about how credit union auto loan portfolios will be affected by autonomous vehicles, which could be a major disruptive technology for society.
It’s a topic Downin addresses when he talks with credit union leaders about the future. The pace of the change could sneak up on people, he says.
“The technology is being perfected very quickly,” Downin says. “It’s going to happen sooner than any of us suspect.”
Autonomous vehicles already are being tested on the roads in several states, including California, Texas, Arizona, Washington, Pennsylvania, and Michigan.
The technology is being perfected and companies are making big investments, according to Forbes and other business media outlets. Earlier this year, Ford invested $1 billion in Argo AI, a startup led by former Google and Uber employees, to bolster its self-driving future.
A year earlier, General Motors acquired Cruise Automation for $1 billion with the same goal. Uber spent $680 million on Otto. Meanwhile, others such as Apple, Google, and Tesla are in the race, too. With technology advancing quickly amid high levels of investment, the hype around autonomous vehicles is high.
Conversation among consumers about autonomous vehicles has soared in recent years, according to Crimson Hexagon, a company that monitors social media posts to uncover trends. Crimson Hexagon saw roughly 10,000 posts about the topic in 2010. But in 2016, driverless cars were the subject of more than 600,000 social media posts.
Despite growing interest in autonomous vehicles, some expect bumps in the road.
At the Analytics and Financial Innovation Conference this summer, financial services innovator Neff Hudson, USAA’s vice president of corporate development, suggested that a lengthy adoption period is likely due to inadequate regulations and broader unanswered questions about driverless vehicles, such as insurance and liability.
“The social implications will slow that way down,” Hudson says.
As conversation about driverless cars has grown, consumers’ anger and fear about the topic has also increased, according to Crimson Hexagon. At the beginning of 2017, the company’s research suggests negative conversations about driverless cars are three times more common than positive conversations.
In the near-term, Hudson expects advances in auto features to focus on assisting drivers.
“There are a lot of things we could do to augment drivers versus replace them,” he says.
NEXT: The next 10 years