What Does It Mean to Be a ‘Primary Financial Institution?’

Today, the goal for most credit unions is to be their members’ primary financial institution. But in an era of ever-increasing regulation, technology and expectations, what exactly does that mean?

Credit unions have come a long way in a relatively short period of time, explains Jeff Russell, president and CEO of TMG Financial Services and a keynote speaker at the Northwest Credit Union Association (NWCUA) 2012 Convention and Annual Business Meeting, and while such a degree of change can be dizzying at times, credit unions have more opportunity for growth now than ever.

In the days before expanded field of membership, “[credit union] marketing was largely about putting up fliers in the break room and having HR people walk new employees down to sign up for the credit union. And those days are long gone.”

“Credit unions compete in a really competitive marketplace and with some of the most sophisticated financial services companies on the planet. And now, increasingly, even non-financial services companies are getting into things like the payments business and such. So, the question really is, what does it take to be relevant to the next generation of consumers, the next generation of members?

According to Russell, much of the current credit union marketplace was shaped by the move to expand field of membership, moving from single-sponsor credit unions with inherent limitations and a narrow focus to larger community-based credit unions. And this is also essentially the root of the significant opportunity for growth that credit unions are now experiencing.

“What happened is we moved from an environment where it was a pretty closed-loop world to one where now it’s more of a mass market,” Russell said.

As a result, credit unions have found themselves better positioned to compete with national banks, having become, in many instances, financial institutions with the potential for huge reach. But determining how best to grow, how best to become large-scale competitors, remains a challenge for the credit union movement as a whole.

“Now we’ve got to start to think about what really is our market share?” Russell said. “Are we tapping into younger consumers? The Hispanic marketplace? Small businesses? Whatever those markets are—and those are kind of the three big markets I see for credit unions—how do you tap into those?”

Russell explained that the second consequence of being in a position to compete with big banks is the need to always remain on the cutting edge of consumer needs. Not only is it the best way to remain competitive, but it also represents a commitment to providing the best possible member service, and it is made even more challenging by the fact that today’s financial institutions are in a period of transition between traditional in-branch and strictly tech-based banking.

“Increasingly, the amount of table-stakes that an institution needs to have to be able to compete to be someone’s primary financial institution has increased,” Russell said. “We’re still in this world where it’s both bricks and clicks, to use the old analogy.”

“You have to have a robust online channel,” Russell said, beginning to name just a few items on the long list of things credit unions need to compete. “You’ve got to have home banking, you’ve got to have bill pay. Increasingly, you’ve got to have mobile, a P2P solution, more and more technology-based things. I want to be able to do my loans online. I want to be able to open accounts online. All those things. And we still have folks that believe there’s a branching strategy necessary.”

“Can you be everything to everybody? Are you going to emulate your competitors or are you going to differentiate?”

Interested in Learning More?

Russell’s discussion at Convention, scheduled for Oct. 2-4 in Vancouver, Wash., will dig deeper into the issue of relevancy and the overall state of the current credit union market landscape, answering some of the pressing questions facing credit unions and working to help the movement’s leaders develop concrete strategies through these insights.

Convention registration will be available soon, and the Northwest Credit Union Foundation (NWCUF) is also now offering scholarships for Cycle 2 of its professional development scholarship program, which includes events taking place between Aug. 1 and Dec. 31 of this year, giving credit union professionals in the region access to a discounted Convention experience.

Questions? Contact Training Programs Coordinator Yuri Jung: 206.340.4817, yjung@nwcua.org.

Posted in Events, MAXX Annual Convention.