STOCKHOLM, Sweden–As credit unions pursue not just sustainability but excellence, there are several issues they must confront as they lay out their strategies moving forward, according to one person.
Mark Meyer, CEO of the Filene Research Institute, shared with the World Credit Union Conference in Sweden a number of issues that concern him, as well as some thoughts around what credit unions can do.
The first issue Meyer described as “salty membership growth,” the kinds of numbers at many CUs he said make him nervous.
As the CU Daily has reported, what growth in membership at credit union that has taken place has been at the largest CUs, with the smaller asset categories either stagnant or seeing declines.
“I do think we have opportunity to grow more effectively and more robustly,” said Meyer.
Better Use of Data
According to Meyer, it’s great that credit unions often rely on word-of-mouth and advertising to do the talking for them, but it’s not enough.
“What I don’t hear us talking about is how we learn about the needs, wants and behaviors of our members through utilizing member data to understand what’s next,” said Meyer. “We can ask them everything (in surveys), but to understand what they’re doing, where they’re spending, how they’re spending, using data to make decisions and drive our focus is ever so critical.”
Disintermediation
After reminding how the basic business model of credit unions worked, Meyer said he believes credit unions really need to be “looking at what’s happening to our deposit model,” and that includes what’s happening with payments.
“Increasingly, small bits and pieces of what traditionally was held by our credit unions is finding its way onto third party balance sheets,” he said, citing Starbucks, which is holding more than $1.8 billion of customers’ money on its balance sheet via its app.
In that case and others, Meyer said, it’s serving the shareholders of Starbucks and not the members of the respective credit union members.
What Does It All Mean?
“So, what does this mean? This means as we look around the corner to what’s next we have to think and approach strategy,” Meyer stated.
He cited work down by Harvard Business Professor Michael Porter who many years ago developed a well-known strategy triangle around cost leadership, differentiation and focus.
Many credit unions have opted for the low-cost model. In the broader marketplace, Apple is a good example of differentiation, he said.
‘Where Do You Choose to Play?’
“Focus means looking at a very specific segment for very specific needs,” Meyer explained, citing Lululemon as an example.
“I think as we look forward, for this need for excellence and how we navigate that strategy triangle, look at where do you choose to play as a as a credit union,” Meyer said. “We can learn things from other industries.”
