Jake Dunagan makes a living predicting the future.
He presented two futuristic scenarios for credit unions during the 2019 CUNA Lending Council Conference Monday in New Orleans.
Dunagan, director of the Governance Futures Lab at the Institute for the Future, examines “urgent” future issues using a continuous “foresight/insight/action” process.
He says this process is an excellent strategic planning tool. “This is a skill set you need to cultivate,” he says. “This process never stops. We want to institutionalize foresight. Long-term thinking pays off with real results.”
Dunagan doesn’t aim to pick a single future. Rather he develops four to five scenarios by examining “potentially impactful small trends” such as a product or service experiences, business initiatives, personal observations, research projects, data points, and news stories.
He’ll then ask strategic questions about these scenarios, such as:
In which scenario is your credit union positioned for success?
In which scenario is your credit union at a disadvantage?
What actions are needed to move toward your preferred future to avoid a negative future?
Are you prepared if the future goes in a different direction than the one most assumed?
Dunagan presented two scenarios as to what credit unions will look like in 2030:
Potent potables. In this scenario, peer-to-peer lending programs open a flood of new value for previously underserved consumers. These include creative loan programs, pay-as-you-go insurance, and reduced personal risk and stress. The new loan options are life-changing for people who previously couldn’t afford to buy homes.
Unions of credit. While the economy is strong, growth has not been shared equally and the “super rich” control the vast majority of wealth, he notes. Most consumers are relegated to being renters, scavengers, and hustlers. Ownership lies in the hands of the few who allocate access to assets through modular rental models, subscription services, and “freemium” platforms.
Credit unions lead the way in providing creative and nimble services and offerings for the gig-based, precarious worker of 2030. The trust factor has been important in the information-openness that many members have with their credit union.
“The point is, here are certain trajectories of change,” he says. “How do you deal with them? How will you serve people in a way that matches your mission? These are seeds of ideas to think through.”
Underlying these scenarios are several real trends:
Evolving ownership. Stagnant wages and the rising cost of real estate and other big purchases are fueling the trend from ownership to on-demand access. Ownership will be elusive for many, especially in high-cost areas. “How can your credit union succeed if fewer people own things?” Dunagan asks.
The gig economy. Half of the workforce will be freelance or gig workers by 2025, he says. “Most workers will be in the 1099 model instead of W2. Financial institutions base their lending criteria on consistent W2 income. How will you adjust?”
Trust is the new currency. Trust in all U.S. institutions is at an all-time low due to data breaches and the selling of consumers’ data. Organizations that gain consumers’ trust will have a big competitive advantage.
Big data risk models and lending alternatives. Organizations are beginning to use nontraditional data to in underwriting decisions and credit scoring, including social media posts and cell phone use.
VUCA, or volatility, uncertainty, complexity, and ambiguity. This addresses environmental challenges, migration, social unrest, and “regulatory schizophrenia,” Dunagan says. “How will you respond at every level, from institutional to individual?”
Fintechs and techfins (technology companies that offer financial services). How will these companies affect your business? Should you collaborate or distinguish your services?
“Embrace the unexpected and be open to seemingly outlandish futures and radical changes, and prepare yourself,” Dunagan advises. “The downsides of being blindsided are severe.”
Credit Union Rock Stars are outstanding credit union professionals and directors from a wide range of disciplines who inspire and innovate to advance the missions of their credit unions. The 25 members of the 11th class of Rock Stars were selected for their exceptional creativity, innovation, and passion.
