Credit unions are facing competition at a level they have never seen before. Online, high yielding savings accounts are attracting deposit dollars. Banks remain aggressive with credit card offers, even in the current economic climate. Despite positive numbers in the 2nd quarter, credit unions continue to experience slow growth, especially when it comes to attracting new members, as industry membership only increased 1.25% in the past 12 months.
On the identification front, consumers are increasingly unable to differentiate a bank from a credit union, particularly since many banks are using credit-union-like messaging in their marketings. At the same time, members are demanding more from their financial institutions, such as easier access through online and mobile channels, as well as other convenient technologies.
What Does It Take to Stay Relevant?
Every single day, companies reinvent themselves to succeed in their specific marketplace. But what does this take? Here is one example:
Nintendo, the patriarch of the rapidly expanding personal video game market, has accomplished something amazing over the past two years. They cast off their outdated image and moved from third place amongst their competitors to the top spot in the gaming world. This success occurred because of a single innovative differentiator…
Nintendo started out at the top of the heap in 1985 as the first personal video gaming system that enjoyed widespread popularity. For nearly two decades, they successfully held their own against competing gaming systems from the Sega Genesis to the Sony Playstation. But the tide turned against Nintendo as we moved into the new millennium and they launched the Gamecube.
The competition, most notably Sony's Playstation 2 & Microsoft's Xbox console, decided to embrace new trends that were emerging in the gaming industry. While Nintendo's flagship games continued to focus on wholesome standards, such as the Mario or Zelda franchises, while edgier games with a more mature focus were developed for the other consoles.
The gaming industry was changing, as many of the children who grew up playing Nintendo became more interested in titles aimed at adults, such as Grand Theft Auto and Halo. Nintendo’s Gamecube was completely dominated by its competitors and it did not look like Nintendo's traditional approach could effectively compete in the rapidly changing environment.
How did Nintendo Get Back on Top?
They came up with something that the market had never seen before, something that was truly innovative and clearly differentiated them from their competitors.
They introduced a completely motion-sensitive controller and gaming system- the Wii, which launched in 2006. It is the first video game system that allows people to manipulate their actions in the video game using body movement, instead of solely relying on button and joystick combinations. This new capability allows the system to develop different types of games that have never been seen before, including functional fitness applications. The Wii not only resonates strongly with youth, but is the first system to be universally desired by every age range, from elementary school children through seniors at retirement centers. The system is so popular, that the Wii continues to fly off the shelves wherever it appears, even two years after its initial release.
How Can Credit Unions Learn From This?
Credit unions struggle to break out of the pack with their traditional message of “member value” simply because the entire financial services industry has co-opted the "we have your best interest at heart" message and constantly bombard the public with it. The industry needs to find new, fresh ways to get their message across and visibly demonstrate their difference to potential members! This is no easy task, but I think that industry professionals need to take the time to try and come up with some answers…
One Example of Industry Innovation:
Musicstream LIVE is an emerging initiative in the credit union industry that has recently caught my attention. This program will combine live music concerts from up-and-coming artists at high schools across the country with online streaming music, free downloads, and social networking. Credit unions will be able to stage these concerts at their local schools and have an opportunity to bring their message to young people in an exciting environment. One of the biggest strengths of this venture is the wide variety of high-profile partners that have already been secured. These partners include music industry heavyweight BMI (Broadcast Music Incorporated) and the Future Business Leaders of America, which have a chapter in nearly every high school across the nation and will use their student members to promote the concerts.
I have been unable to find any type of similar program offered by other financial institutions. Keep in mind that musicstream LIVE is still in the planning phase, and will come to market in early 2009. This initiative has the potential to allow credit unions to differentiate themselves from competition in the youth market and I will certainly be keeping my eye on it.
What Ideas Do You Have?
I would like to ask anyone reading this article to leave a comment. Share with all of us, what do you think could be an example of a differentiator for your credit union? Don’t worry about what is currently feasible. If anything is possible, and price and implementation no object, what would you desire from your financial institution?
I will be participating in a Gen Y panel discussion that will examine how CUs can apply 15 successful strategies that the retail industry has used to appeal to Gen Y. At the end of September, Callahan will also host a webinar focused on helping CUs attract the 18 & under crowd.