Is Your Credit Union Evolving as Rapidly as Your Members?

Similar to how technology has evolved since the 1990s, consumers' relationship with money has transformed and CUs must adapt.

What is a credit union’s unique meaning beyond the transactions of banking? What values has your institution instilled in the community? How will you maintain those values and deepen trust in the era of decentralized finance?

For just a moment, let’s travel back in time to arguably the best decade of movies, TV and music.

This past March, I was lucky enough to attend an event called 90sCon and it was certainly a blast to spend a nostalgic day, meeting the actors and musicians from my childhood and getting behind-the-scenes scoops on the TV shows, movies or music videos I played on repeat. The 90s were not only a decade that introduced exciting entertainment and truly unique fashion trends, but they were also pioneering times of exciting new technologies, like the internet and email. This got me thinking about the nature of engagement and how our attention and expectations have evolved over the years.

In the 90s, we either planned to watch our favorite shows when they were broadcast or we had to “tape” them to watch later. Family movie night practically required a trip to the closest Blockbuster Video to rent a VHS. When not content to wait for the radio station to play our favorite hits, CDs reigned supreme for playing music. Today, all of these forms of entertainment – and nearly unlimited options to learn, engage and connect – are available at the click of a button. There’s no need to step inside a video or record store when you have an app on your phone that brings those commodities to you, wherever you are. Using the framework created by inventions such as the telegraph, telephone, radio and personal computers, the internet integrated capabilities into what is now possibly the most important technological advancement from the 20th century. The novelty of the world wide web allowed all of these industries to live on the internet and extend their products and services to exponentially larger audiences. The way we communicate with one another (locally and across the globe), the way we watch movies and television, listen to music and travel is all streamed and supported by the capabilities of the internet. So, why would we think the business of money will be any different?

Traditionally, we think of money as the cash or plastic cards inside our physical wallets, the dollars traded from armored trucks to banking vaults, and ultimately, the cold, hard cash that lands in your hands when making payments or purchasing goods. However, in today’s world, like television, movies, music, mail and travel, money is shedding its old physical form for the ease, efficiency and security of a dynamic, digital life. We now live in a reality where money moves through our lives digitally – and like movies, music and the mail, the benefits of decentralization are irresistible. So many aspects of our daily lives are now augmented by the digital world that we may take them for granted, or assume that the digitization of our lives is complete, but money continues to evolve. This evolution now demands a response from the money industry, just like it did from the entertainment industry. Will you be disrupted and displaced by the digital revolution of money, or have you defined a strategy to marshal the streaming of money and payments within your community?

Let’s start by unpacking a common industry topic – branch strategies. Historically, banking was a straightforward branch-based operation. The industry did an effective job ensuring that as members and prospects move through their days, they’re exposed to credit union brands. But in today’s digital age, the meaning of a “branch” and the way we “move” through the environment, exposing ourselves to brands, products and services, has been forever changed. Unsurprisingly, a truly digital financial system has emerged, operating in parallel to our legacy system. It is flourishing and branch strategies need to prioritize that data-driven reality. Banking is now less a branch-based operation and much more a decentralized, digital experience. Energized by digital wallets, relationship-based rewards and digital currency, consumers are finding more efficient and convenient tools to safeguard their earnings. Ancient technologies, like NACHA/SWIFT and EFT, are hopelessly struggling to keep pace as the speed, safety and security of the blockchain inundates the market, rendering these legacy systems utterly obsolete. (Just as Netflix and Hulu replaced Blockbuster, email replaced snail mail, and a handful of apps replaced travel agents and increased efficiency around transportation.)

The business of “banking,” the expectations and demands of the modern consumer for access and engagement, and the sustained relevance of your credit union, now requires a strategy that meets your members where they are. If modern day consumers are accustomed to the instant gratification of streaming entertainment, why would we expect a different experience when it comes to safeguarding and accessing their wealth? In order to merge the credit union mission with the digital reality of emerging financial solutions (protecting/improving members’ financial well-being during an economic downturn, keeping money local through local merchant partnerships, safeguarding digital assets, etc.) local financial institutions will need to build operations that extend the credit union experience through the decentralized financial world.

The branch of today can be inside your community’s favorite local coffee shop, small business or wherever your members are if your credit union prioritizes data at the core of your strategy and controls the digital channels that connect your credit union to your community.

Now, let’s go back to those significant questions: What is a credit union’s unique meaning beyond the transactions of banking? What values has your institution instilled in the community? How will you maintain those values and deepen trust in the era of decentralized finance? (Thus, what is the credit union movement worth? Why does a credit union have value? What are you doing to maintain that position of trust and value in your community?) If you can answer these, you’re on the path to understanding the technological and social significance of money merging with the internet.

Jessica Fongemie

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