What keeps me up at night is the proliferation of bank and non-bank competitors for the core business of credit unions, especially for payments and loans and the use of big data to source new business. You know the story. Apple, Google, Paypal, Prosper, Lending Tree, Walmart, Amazon, etc. all want a part of the financial services market and they have the financial tools and market intelligence to beat credit unions at their own game. If we do not quickly and aggressively respond to this growing threat, credit unions will become marginalized.
There are CUSOs out there that are responding. OnApproach, Denali Analytics, Isthmian, CU Wallet, Q-Cash and others are working to find solutions to the challenges of competing with the deep pocketed fin tech folks. Our pace of adoption must increase if credit unions are to continue to keep and grow their membership. I think that forward thinking credit unions understand the threat and want to respond. My hope is that the urgency level will increase in 2016.
The new year is upon us now and what will be the drivers of the credit union world in 2016? I am afraid it continues to be a call to respond to our rapidly changing world. This CU Times article by Kirk Kordeleski sums up the challenges credit union face to the rising number of competitors for the core business of credit unions: payments, loans and deposits. It sort of makes you long for the good old days when there were only banks to worry about. It is as if we are in a race for our members’ business and as we run the race around the track to capture that business there are people jumping out of the stands everywhere to run against us only they have skateboards, roller skates and hover boards. Members expect to do business in several types of delivery channels, including self-directed automated Internet channels and unless credit unions respond, credit unions will be left in the dust.
The good news is that we have solid member relationships and time to act, but act we must. There is also good news in that there are opportunities. In the Wall Street Journal there was an article published on November 27, 2015 which cites evidence that the big banks are pulling back on small business loans. The ten largest banks lent $44.7 billion to small businesses in 2014 down 38% from a peak of $72.5 billion in 2006. In the same period nonbanks have increased their market share to 26% from 10%. There is also a Filene White Paper by John A. Largay, Professor at the McDonough School of Business, Georgetown University which confirms that there are significant opportunities for credit unions to serve small businesses. The cost of making and servicing loans to small businesses kept the bank competition down but that issue is not a barrier to the fin tech lenders. In fact this issue is a competitive advantage for them unless credit unions act to create viable technology solutions that are equally competitive.
So let’s get serious this year about making the changes we know we have to make to stay competitive. Let’s explore the opportunities the CUSO model gives us.
The challenge for credit union leaders who want to explore collaborative partnerships and CUSOs seems to be twofold: how to find and connect with partners who have similar challenges, needs and goals; and, how to evaluate their potential collaborations and develop the data and business plans and get them in front of the decision makers in a timely way, so they know what the advantages are, the timeline and what they will need to invest.
NACUSO is known for the Next Big Idea Competition, so why not build on that creative energy and spirit by bringing people together for a facilitated session to generate some real opportunities to collaborate with other CUSOs and credit unions? So this year, we present our new Partner Connection Sessions! NACUSO will hold two Partner Connection Sessions during the 2016 NACUSO Network Conference to give attendees an opportunity to connect with like-minded credit unions and CUSOs to develop collaboration opportunities that generate net income, achieve scale, share or mitigate risk and/or take advantage of new opportunities.
Goals of the Partner Connection Sessions:
- Invigorate the process around collaboration by building up a real buzz about ideas and performance and how utilizing CUSOs to implement collaborations is a unique competitive advantage that credit unions enjoy.
- Get the right people at the sessions who want to investigate the collaborative alternatives and start the conversations
- Start the partnering process. Through a facilitated discussion, move the potential partners to identify their collaborative goals and agree to further discussions or an assessment process.
Joining me in the facilitation of these sessions are the best of the best in the world of collaboration and CUSOs – experts who have already done it, including:
Kirk Kordeleski
CEO and Founder of Kordeleski Consulting, Kirk is widely considered a breakthrough financial performer with an unmatched track record of growing credit unions and providing leadership and direction in the non-profit community. Mr. Kordeleski is a relentless bottom-line driven respected industry-wide for leading Bethpage Federal Credit Union to become the largest credit union in the Northeastern United States. Kordeleski has a history of working with credit unions to overcome their reluctance to “lose control” and see the value of collaboration. His collaborations saved millions of dollars annually for the owners of OTS and S3 CUSOs.
Vic Pantea
Vic is President and CEO of Pantea Consulting, Manager of Marketplace Alliances at CU*Answers and former CEO of Member Gateways, the highly successful CUSO that formed several other very successful CUSOs for their 24 credit union owners.
Vim Anand
Vim is a Partner at Kordeleski Consulting and a Senior Executive with 30 years of global business experience, having worked in Europe, Asia and the USA. A former senior partner of EY, Vim has a successful track record in improving business performance through re-engineering, technology and leadership change management.
Mike Atkins
Mike is CEO of Open Technology Solutions, a multi-credit union CUSO owned by Bellco CU, Bethpage FCU, and SECU of Maryland. Prior to OTS, Mike served as Chief Information Officer for Bellco CU and as Interim President and COO for a financial services solution provider offering home banking and electronic bill payment products. Mike also served as a senior practitioner with Deloitte Consulting for ten years, managing business and technology projects for financial services companies.
We will arm participants with the tools to prototype and test their business in the credit union marketplace. Don’t miss these exciting new sessions which will be held on April 5th & 6th at the 2016 NACUSO Network Conference at the Encore in Las Vegas.
ABOUT THE AUTHOR: Guy Messick has provided strategic planning and legal consultation services to hundreds of credit unions and credit union service organizations nationwide. Since 1987, he has served as General Counsel to NACUSO where he also serves as liaison with the National Credit Union Administration.
