Leveraging the Digital Divergence of Community

Is your CU expanding your connection to digital community, or are you relegating yourself to legacy strategies and priorities?

Have you listened to your data lately? What stories are being told? Perhaps you’ve noticed a change in the way money is moving through people’s lives? Maybe even the way it moves through your credit union? Have you taken the time to truly contemplate the future of your community’s commerce, and what that means for your branch strategies?

From the origins of the very first credit union, belonging, membership and stewardship have been industry principles. Co-workers became more than colleagues, bonded beyond the workday to pool their resources, make loans and produce organic growth, creating and exchanging value. People helped people financially flourish. Capitalism turned into collaborative community. From the very beginning, building and nurturing community defined the credit union movement.

Fast-forward to the present day and credit union missions remain the same. They still remember the noble ideals of democratic access to financial products and services, financial literacy and local equity. Yet, an all-new playing field has arrived. Community now coexists within the digital dimension, alongside our familiar physical one. Just think about the metaverse, virtual reality, artificial intelligence, augmented reality and digital money outside banks. These phenomena raise challenging questions: How can traditional branches remain relevant? Are they needed? Are they wanted? As currency becomes digital too, will you be ready for that transformation? How are your branch and operational strategies informed by these tectonic shifts in the marketplace?

The reality is (however uncomfortable we may be with it!) brick-and-mortar branches are no longer the primary way consumers derive value from their financial institutions. In fact, the way money moves through people’s lives is now a matter of digital engagement that drives value creation and exchange. This shift to a primarily digital community creates a wealth of opportunity for community financial institutions to define, steward and strengthen their own communities through a “local” metaverse, organizing individual members and businesses into a conscious, mutually supportive ecosphere. These “digital fields of membership” are markets untethered to your physical communities; they are unencumbered by the limitations of traditional, physical fields of membership.

But, this shift isn’t unexpected, and while the paradigm continues to increase in potency, it’s not a new revelation. Consumers have been digitizing themselves for years. Think about how your engagement in community has shifted. Up until the early 2000s, family movie night involved a trip to your closest Blockbuster to rent movies, but today, you can just rent movies from any digital device. So, how do credit unions move past legacy strategies and operations and avoid our industry’s version of the “Blockbuster video” moment? Or, maybe you feel like the Netflix/Blockbuster analog is overplayed. If so, consider this: Travel (airplanes, hotels, rental cars, etc.) didn’t go anywhere, only travel agents did! As a result of democratic, direct access for consumers to travel providers, global travel experienced a renaissance – a golden era. How will your community financial institution engage in the impending renaissance of decentralized, local, digital, democratic money and local commerce?

Define Parallel Paths Forward

Credit unions are accustomed to locating branches proximate to target audiences. The industry does an increasingly effective job of ensuring that as members and prospects move through the physical world, they are exposed to credit union brands, but what happens when members move through their digital communities? Do members experience the credit union difference when they shop online? Do your branch strategies reach inside digital communities, providing safe, secure, local, digital stewardship? Can they crowdsource local insight and expertise for their financial decisions or must they relinquish their digital behavior to national and international data pirates? Are you able to create and exchange value in the digital age as your founders did in the earliest days of your credit union? Are you prepared to make digital stewardship an essential aspect of your mission?

Building your own local metaverse isn’t a distraction. It’s an opportunity to accelerate the velocity of money locally, drive economic health, thwart data pirates and boost connection to an expanded member base.

Simplify the Complex

Money is morphing and consumers are moving funds to new landscapes. This revolution presents a substantial opportunity for local institutions to reorient their strategy and operations to retain and capture this data, anchoring your position in the money business (not simply the dollar business).

Think about the increasingly potent and rapid shift to decentralized finance, cryptocurrency and digital assets. How are you supporting these consumer demands? How much of your deposits are being taken from your institution and moved to standalone applications that support the processing and exchange of digital assets? What if your institution was able to vault and process cryptocurrency and digital assets and use these “non-traditional” deposits to leverage more traditional products such as loans and payment services? What better connection and valuable service could you provide as a nexus of your community than safeguarding and stewarding the data of your member’s digital wealth?

Understandably, this digital transformation of money, commerce and community may be scary and confusing, and maybe you’re even a little resistant to the renaissance. Rest assured, you’re not alone.

The purpose of a credit union branch has shifted. Is your credit union expanding your connection to digital community, or are you relegating yourself to legacy strategies and priorities?

Jessica Fongemie

Jessica Fongemie is Director of Communications for DaLand CUSO in Rocky Hill, Conn.