Boutelle said in his address last week that five of the top 20 corporate spenders on research and development across all industries are automakers. The race toward fully autonomous cars is well underway, and one automaker, Volvo, already has announced it will offer only electric or gas/electric hybrid cars as early as next year.
Even with all that spend, roads and regulations also will need to evolve, and quickly, if those ACES are to reach their potential. How vehicles are financed also will need to respond to the changing models of ownership.
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The average U.S. household currently spends 56% of its income on vehicle costs, and many are looking for alternatives to traditional ownership, according to a breakout session led by John Thomas and Mason Trullinger, CEO and vice president of residual risk management, respectively, at Credit Union Leasing of America.
Many consumers turn to leasing, because of the lower monthly payments and ability to swap out for a new car every two or three years, the CULA executives said, and it’s an attractive avenue for credit unions because of the higher yields and lower competition among lenders.
Credit union lenders understand ownership and leasing, but they need to get ready for subscriptions in which terms vary widely. Some services offer three-year commitments but provide a new luxury car every year, whereas others have terms of one, three, six, or nine months. Examples include Care by Volvo, Ford’s Canvas, Book by Cadillac, and Fair. Rollouts already are underway in many major markets.
In another session, Lee Wetherington, director of strategic insights for Jack Henry’s ProfitStars division, disccussed emerging technologies and trends — including machine learning, artificial intelligence, digital personas, and the Internet of Things — whose impact on credit unions is just beginning. According to Wetherington, the general progression in offering great service has transitioned from user interface (UI) to user experience (UX), to engagement, and ultimately trust. In other words, the emotional connection between a member and an institution is paramount and artificial intelligence will play a big role in the relationship.
And then there are platforms. Wetherington shared these points:
The World Economic Forum predicts platforms will become the dominant model of financial services.
Amazon is already in the financial services market with Amazon Payments and Amazon Cash.
Amazon has also partnered with Bank of America for its small-business loan program and is reportedly working with JP Morgan to offer checking accounts to customers on its platform.
P2P payment platforms are storing customer funds on their platforms and also are looking at offering checking account services to use those funds.
What does the future hold for credit unions? How can the movement position itself to create and contribute to society?
Those are two strategic questions credit unions should keep in mind as they navigate through what’s to come, according to strategic futurist Nancy Giordano of Play Big Inc.
Technology is changing, information is expanding, and culture is shifting exponentially. Credit unions need to be agile and prepared throughout this transformation. Continually answering those two questions will guide the movement through these disruptive times.
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