I was working with a smaller credit union — $60 million in assets and 6,000 members — that had carved out a nice niche serving an assisted care facility in its community. The facility had 20 employees, and this credit union’s managers were wondering if other facilities in the community would have the same need this SEG did.
I assured them that M&T Bank, with its 30% market share in the community, would not be going after 20-person opportunities. Yet, if this credit could attract four or five of these assisted care facilities, it could increase membership significantly. This would be a real win for the credit union and the new members, and aging population care is certainly an area of significant growth.
Stockholders’ lust for immediate returns forces banks to look for big, high margin lines of business. That’s why 20-person opportunities just don’t make sense for them. The credit union opportunity is to use banks' investment time horizon and profit formula — grow gross margin and ROE — against them.
That’s why it’s critical for credit unions to identify where they can find, and grow, these niches. If they do that well, over time, the niche can turn into a big opportunity. When credit unions get so entrenched with these niches, it will be difficult for a new competitor to come take it away.
An “Ah-ha” Moment
I heard a radio ad for Navy Federal Credit Union this morning. Navy’s TV spots on Monday Night Football are funny and well done. This radio one, though, had two guys talking about what it meant to serve and how Navy was distinctly positioned to help their specific needs. There was no rate or product mentioned. It was all about community.
Many might think Navy is so big that it can do whatever it wants. Navy is the largest credit union, but it would rank around the 38th biggest bank, about the size of an average regional bank.
Navy, too, started small like every other credit union. Over the years, it worked its niche and discovered what matters to members. That’s why it gets hired more often than it gets fired.
What does it mean as an institution to get hired or fired? Learn more about that in the "jobs to be done" concept.
This is a reminder to all to get out there, talk to members, and get your arms around what it would take for more people to hire your credit union.
Understand how close you are to getting fired. And then do something about it.
Click here to read more about the "jobs to be done" concept.