Credit unions are off to a strong start in 2017. Loan originations in the first three months of the year topped last year’s record first quarter by 13%. Credit unions’ share of the auto finance market nationally hit 18.8%, and first mortgage market share hit a new high of 8.6%. Nearly 1.4 million net new members joined a credit union, the most ever during the first quarter. Balances in every category of share products grew faster over the past 12 months than one year ago. A double-digit increase in share draft balances led the pack.
In a post-recession environment marked by historically low interest rates and an increase in regulations across nearly every business line, credit unions continue to find ways to deliver value to their members.
Member usage of products such as auto loans, credit cards, and checking accounts continues to rise along with average loan and savings balances. Data from the Federal Reserve that shows credit unions are capturing a larger share of consumer loans reinforces these trends.
Why are credit unions succeeding at a time when competitors are stumbling? The core reason is the cooperative model — a model based on mutual success.
The credit union succeeds if it understands and meets members’ needs. Members succeed by tapping into products and services that provide them with a better financial deal, more convenience, or greater expertise.
The success of both the credit union and the member should increase as their relationship deepens over time. As a result, credit unions take the long view of relationships and avoid decisions that lead to short-term gains but potentially damage their greatest asset ? their relationship with members.
But to serve members, credit unions must first identify what members need.
The credit union succeeds if it understands and meets members’ needs.
Understanding “Jobs To Be Done”
Over the past two years, Callahan & Associates has been working with management teams at credit unions across the country on Professor Clayton Christensen’s Disruptive Strategy course. This course helps organizations avoid being displaced by disruptive competitors. A key component of the course is Christensen’s lesson about “jobs to be done.”
Understanding a consumer’s job helps companies avoid getting too focused on existing product and service offerings at the expense of recognizing and responding to the changing needs and goals of customers. By focusing on what consumers are trying to accomplish, organizations can stay ahead of forces that could capture their existing customer base.
An example of a job to be done is expedient travel from New York to Los Angeles. A company that provided transportation via train in the early 20th century might try to move customers by building a faster train or limiting the number of stops. However, a company that was truly focused on meeting the job to be done might invest in developing airplanes to better meet the need. Such an approach helps to sustain the company and avoid being displaced by new technologies.
The jobs to be done approach has resonated strongly with the credit unions Callahan has worked with, in part due to how well it aligns with the philosophy and model of member-owned financial cooperatives. Credit unions are in the business of serving member needs, and any steps to further that goal are worthwhile.
There are numerous jobs members do that credit unions can help facilitate. The key is to understand it’s not about the product; it’s about the job. It’s not about the mortgage loan; it’s about helping a member to buy a house. With this framework, credit unions can design processes and products that best meet the needs of members who are looking to complete that job.
What Jobs Are Your Members Trying To Do?
Callahan’s Leadership Team Development uses the jobs to be done framework to help your executive team tackle challenges and manage opportunities.