Avoiding a Kodak Moment

The term “Kodak Moment” means a situation or event that would be perfect for memorializing with a photograph. This was common vernacular for over 50 years and was eventually trademarked by the Kodak company.

Today, the phrase can represent the downfall of Kodak due to complacency and myopia. Specifically, it speaks to how a behemoth of a company worth over $31 billion and holding over two-thirds of the global market share was brought down by marketplace disruption and filed for bankruptcy protection in 2012.

Kodak was the leading provider of photographic film, supplies and cameras since George Eastman founded the company in 1888, over 130 years ago. It seems rather obvious in hindsight that the use of cameras and photos would change – specifically, as digital images began to be produced, eliminating the need for film. More importantly, the photography world changed when digital cameras were merged into mobile phones, and the manner of distribution shifted from sharing physical photos to posting them on social media.

Kodak, in its defense, was aware of these marketplace changes but could not embrace new opportunities or pivot to new business models. Notably, the first digital camera was created by a Kodak engineer in 1975, and Kodak did acquire a photo-sharing site called Ofoto in 2001.

Unfortunately, Kodak shelved the digital camera due to its price point and the complexity of the technology, and its positioned Ofoto as a channel for printing more photos rather than sharing digital ones.

How does this relate to credit unions?

Credit unions are a bit like Kodak. Here are the similarities:

• Both have been around for a long time. Some credit unions date back to nearly 100 years.
• Both have been offering the same or similar products since their inception. Deposit and loan products have been around for a very long time.
• Both have experienced disruption in the marketplace. Members are changing. Their digital capabilities are growing exponentially due to these new skills, resulting in new expectations in their financial relationships. Members want to know how to manage debt, receive advice on achieving desired lifestyles, and develop a healthy relationship between money and happiness.

The broader concern here is that credit unions’ offerings may no longer fit or fulfill their market’s needs or intentions.

In a 2016 Harvard Business Review article about Kodak’s downfall, Innosight Senior Partner Scott Anthony offered the following three questions that an organization should ask as it considers its current state and how it can avoid myopia.

What business are we in today?

The answer is not banking, but perhaps financial lifestyle coaching. Credit unions serve as the conduit for members to live their best life as it related to their income and debt. They’re responsible for delivering and maintaining a healthy relationship between money and happiness for members.

What new opportunities does disruption open up?

If embedded finance tools such as digital payments, buy-now-pay-later solutions and others are taking market share, what does that tell us about the member?

It might be saying that members are taking actions to achieve desired lifestyles where digital transactions are ubiquitous, and uniqueness and competitive advantage is in the coaching.

What capabilities do we need to realize these opportunities?

Some new capabilities to consider may include:

• Offering coaching that occurs digitally and via a 24/7/365 experience.
• Understanding the financial dreams, aspirations and feasible member goals through an analysis of member spend and transaction data.
• Developing new measurements of success that focus on the benefits of maintaining a healthy relationship with money.

As credit unions head into planning season, now is the perfect time to ask these questions, take a moment to pause and determine whether they are wearing Kodak blinders, and start making the adjustments needed to embrace new opportunities.

Anne Legg is the Founder of THRIVE, a data education and strategy consultancy located in San Diego, Calif., that has worked with over 600 credit union leaders. She is also the author of “Big Data/Big Climb,” a credit union playbook for leveraging data and talent to achieve revolutionary member relationships.