As I sat through my first credit union planning session, the defining qualities of this industry became apparent to me. As a recent business school graduate, my academic background is grounded in the strength of an organization’s bottom line. However, while listening to the board and executive team of this $45 million credit union, I realized how different this industry is, and that it can still be successful without a narrow focus on profits.
Looking around the room, it was easy to see a large generational gap, especially between the board members and myself. They spoke of their grandchildren’s spending and saving habits; I related them to my own experiences. They reminisced of the days when they started the credit union; I wondered, in a world of online high yield accounts and hundreds of convenient ATMs, would I ever really need to join a credit union let alone start one.
The Key Question: How to Grow?
The group focused on new growth opportunities, bringing out ideas for new product sets and facilities that could deliver greater convenience.
I listened to the way they talked about their business as ideas were discussed. It was all about the member, their experience, their trust in the institution. They spoke of the passion they felt in serving their members, as if it was a “Thank You,” rather than “You’re Welcome.” It was overwhelmingly agreed upon that the strength of the credit union is service. In my head I was thinking, “How could this open up new growth segments? Specifically, how can you appeal to me and the younger market?”
Finding New Opportunities
The youth market represents a huge potential for credit unions, but it also poses a large challenge for credit union leadership. The “old way” of opening up to employer groups and using a person’s job as the driving force of membership is fading fast. The slide below shows just that. Younger demographics, those 18-34, are learning about credit unions from family members rather than the workplace. Credit union strategic planning needs to take this into consideration.
One way to realize the opportunities from younger members comes through a traditional credit union strength – partnerships. Great partnerships have proven to be extremely successful for both businesses. Apple and NBC joined forces to promote the viewing of NBC TV shows as video on ipods, CitiBank and American Airlines were among the first to offer an airline rewards program to credit card holders, and on a more local scale, here in Washington D.C., a local bank, Chevy Chase, has partnered with the DC subway system to put their ATMs in various stations.
However, some older credit union decision makers find it difficult to identify partnerships relevant to today’s youth. We asked the group if there are any organizations related to this credit union’s field of membership that they could partner with to drive growth. There were over 20 people in the room, and this silenced them.
Credit unions need to think of new ways to move forward and partnerships are a great way to gain visibility. If orchestrated with the right companies, credit unions can get deeper awareness and member penetration. Asking the right questions is important. Can we work with other credit unions via CUSOs or shared distribution networks? Are there community or government organizations that blend well with our current member base and play to our strengths?
Using Credit Union Strengths
The opportunities for credit unions are very promising and the youth market can lead the growth charge. Listening to the discussion about the value of service and being sure that the member gets what the member needs; grabbed my attention and is something that I believe other my age can relate to.
The values that credit unions pride themselves on are the same that Gen Y appreciates. I read recently in the American Banker that honesty is highly valued among today’s youth. In the article, a credit union CEO said “It’s a generation with a high BS meter. When you say ‘no fees,’ you had better mean no fees.” At first I laughed at this because it is so true. Then I got to thinking, if a credit union is all about a member and begins to tailor that dedication to the younger audience, it is using a key strength to grow its membership.
In a world filled with high yield online savings accounts and 24-hour banking, the financial institution with the greatest ability to find a need and service it will succeed with the next generation. Working at Callahan & Associates, the passion for credit unions is always top of mind, but I never understood how that could be a viable business model until I saw the way that a “real” credit union could use this ideology as a strength to open up new opportunities. Credit unions just may need to tailor their delivery to this new audience.
To learn more about approaches to strategic planning and mechanisms that organizations have used to convert plans into action, listen to our recorded webinar, “ A Roadmap to Success: Effective Strategic Planning Processes,” brought to you by Callahan & Associates.