GECU of El Paso, Texas ($1.2B) recently embarked on a “blue ocean” expedition. Based on the book, Blue Ocean Strategy by K. W. Chan Kim and Renée Mauborgne, the credit union explored its role in the financial services industry.
It is no secret that credit unions compete in a “red ocean” crowded with competitors vying to steal customers from their rivals. GECU followed a few steps to search for its “blue ocean”, or untapped market space that creates and captures new demand.
GECU examined its situation and identified some “wins”. Member satisfaction stood at an all-time high and the credit union's sales and service culture had taken hold. However, at the same time, it operated in a “me-too” mode of introducing bank-like products and loyalty was difficult to maintain with its sophisticated competition.
“When you look at the marketplace, there are products and rates that sometimes we just cannot match," says Musette Bracher, VP of marketing at GECU. “At some point you have to ask yourself, is the “service” proposition status quo going to be enough or are we just treading water?” GECU continued its expedition for its blue ocean with primary research.
The credit union partnered with Filene Research Institute/Design Concepts and seven other credit unions. Through in-person two hour interviews with only six selected members, GECU sought information to aid in creating a more meaningful value proposition. Musette joined the two researchers from Design Concepts for the in-home visits and learned that credit union members:
Sometimes avoid reality and create complicated systems for handling their money
Do not understand a credit union versus a bank
Do not equate value with loyalty
Have unrealistic worries about credit scores
Regard credit unions as unsophisticated yet value membership
GECU videotaped the interactions and studied them later with the credit union team. These findings helped GECU explore emerging opportunities.
The Blue Ocean Opportunities
The credit union identified a few key areas for differentiation:
Create tangible benefits for membership. GECU will look for ways to create tangible value for credit union membership. Ideas include merchant discounts and other benefits such as offering members "member-only" access to political candidates via debates and fundraisers.
Offer more financial education. Research demonstrated the exorbitant need to educate members. GECU is just “scratching the surface” right now but plans on offering various life stage seminars. Topics will encompass handling money for newlyweds to information for members dealing with life crises such as death or divorce.
Assist the “bucketeers.” Members handle their money in complicated ways. One, for example, felt better about having 10 credit cards with a $100 balance than one card with a $1,000 balance. GECU accepts that although it may not be able to change member behavior, it will offer systems to help prevent members from over-spending.
Keep doin’ what we’re doin’. GECU will keep serving the underserved and reaching out to segments of the population that need their help.
Credit unions are at an inflection point. On both an institutional and industry level, we are deciding our future. This transition is evident in credit unions making fundamental changes to its business such as field of membership expansion, name changes and conversions. GECU’s strategy is to identify and pursue new growth opportunities. What is your credit union’s strategy? Are you pursuing a red ocean or a blue ocean? Please share your comments below.