COLORADO SPRINGS, Colo.–Everybody wants simplicity, but it's hard to deliver in the credit union business, said a panel of executives from inside and outside the industry at the CO-OP's THiNK 15 conference this week.
The conversation was on the topic of betterment – one of the four megatrends CO-OP said credit unions face today. It focuses on the rapid growth of businesses geared toward helping people achieve their goals.
Branches present a prime opportunity to capitalize on this megatrend because they are increasingly becoming centers for member support rather than transactions, the panel said.
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"We're trying to look at different ways to attract people to our locations," said Louise Johnson, VP of branch and business services at the Herndon, Va.,-based Northwest Federal Credit Union, which has $2.8 billion in assets and about 183,000 members. Transactions are going down, she said, but she noted that people want to have "those really big conversations" face-to-face and credit unions must be able to provide platforms.
The shift isn't simple, however. "This is probably the biggest challenge that an incumbent industry will face; it's very hard to get inside the mind of a person who's not you," she said.
Betterment also means credit unions must simplify in order to create and reinforce member habits, said blogger and author Nir Eyal. Eyal is the author of Hooked: How to Build Habit-Forming Products; he spoke at length to the 600-plus credit union executives who gathered in Colorado Springs, Colo., for the conference earlier this week.
"I would look for ease over motivation," he advised. Credit unions can differentiate themselves if they can promote products or services they've developed that carry tremendous simplicity.
"Those kinds of products are the ones that users really love," he said. "Not only do they love them, they love to tell other people about them."
One challenge is that financial security involves a lot of "doing" habits and "not doing" habits, Eyal said. "These technologies are really great for helping people do things that are simple to do. They are not very effective for getting people to stop doing things," he said. Physical fitness and budgeting apps, he said, are bad at jumping in and interrupting people when they're making bad choices, he said.
Simplicity also means streamlining things – especially in digital banking.
"When it comes to your webpage, what's the key behavior we want someone to do every time they come to the webpage? It needs to be just one thing we want them to do. Everything else falls out of that," he said.
This isn't so easy, said Chris Bokovitz, who is vice president of sales and service at Coors Credit Union in Golden, Colo., which has $200 million in assets and about 18,500 members.
"I think the key would be understanding why are they coming to that site in the first place," he said. "In our industry, we put all our products and services out there. We're very busy on our websites. It's understanding that consumer behavior is that challenge and that hurdle that a lot of the smaller institutions have."
Regulatory pressures also put credit unions at a disadvantage compared to less regulated competitors such as PayPal when it comes to experimenting and innovating. That's a real threat, panel members said, because there are lots of opportunities for companies to compete with some aspects of credit unions.
"Where industries get surprised is where disruption occurs," Eyal said. "A crappy competitor comes out of nowhere and everybody dismisses it as inferior, and then after a while they kind of displace the incumbents because the quality catches up. That always occurs because the incumbent can't compete."
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