Credit union Internet strategy: Pass on the portals!!!

The portal theory argues that if credit union members are using the Web for shopping, information and entertainment, imagine the institutional benefits if those members started from a credit union-controlled portal. It sounds good in theory-but only in theory. Before joining Open Solutions Inc., I spent three years developing what has become one of the fastest growing Internet business-to-business companies in the world, RoweCom, Inc. So it was with great interest and intensity that I began asking banking and credit union executives about their Web-based strategies for the dramatically changing financial services landscape. After poring over analyst reports and visiting bank and credit union presidents across the country, I wasn't surprised by the varying views and philosophies being espoused. E-commerce has experienced rapid growth. RoweCom alone grew to revenues of over $300 million in less than 30 months, but the Internet and related applications are in their infancy in terms of total impact on our society and economy. In talking to financial institutions, one recurring theme intrigued me: the idea that the best Internet strategy is for credit unions to become portals for their members. One financial institution executive immediately referenced the financial statements of Yahoo! and with great excitement, highlighted the amount of advertising dollars collected by Yahoo! from its portal Web site. Bad in practice. But, a portal, by definition, is a gateway to other places - an access point for an individual to advance to another site on the Web. Certainly, I understand the argument that if members are going to visit other sites, wouldn't it be better if they started from a credit union-controlled portal - allowing for advertising and potential commerce-driven revenue. Maybe, but a portal will also allow members to see the great advertisements of competitors, maybe even sign-up for a new account at a brokerage that has banking as well. Perhaps members will be able to easily see how much lower your CD rates are. Not exactly credit union nirvana. Leverage your greatest assets.. The Internet will allow enterprises, credit unions included, to leverage long-standing consumer relationships. Members trust the names they know, and used strategically, the Web can serve to extend an institution's reach and operating efficiency. One way to accomplish this is to use Internet-based software and services to create commerce and community around the financial transaction. By leveraging the trust they have garnered in the marketplace, credit unions can own e-commerce activities for certain consumer demographics. For instance, a large portion of the untapped Internet market has been reluctant to use the Web for fear of fraud. When the fraud-phobic demographic makes their first online purchases, they will be more inclined to look to a name or institution that has a history of protecting their interests (more specifically-their money). Consumer trust is a credit union, community bank or thrift's greatest asset. Credit unions, and community financial institutions in general, have cultivated trusted brand identity over the years, by offering great personalized service, support for the community and secure investment options. As more and more consumers adopt the Internet to conduct banking and e-commerce, credit unions should adopt complying technology as quickly as possible. Yet, it is very important that credit unions do it in a way that leverages existing relationships and reinforces member trust. Rather than a portal, credit unions should strive to become networks of community and commerce. Credit union sites shouldn't be a gateway to other places on the Web, but a destination where their members stay to conduct banking transactions, view community announcements and purchase items that are important to them and their families. While there, members can review local and national news, hear about specials from the corner bookstore as well as the latest promotion from sharperimage.com (The Sharper Image). The network approach is a highly integrated experience. This may differ for commercial accounts or retail accounts, but each credit union's nNetwork should be unique and customized for the particular needs of its community - whether geographically, by demographics or by a certain segment. Building a commerce network allows institutions to create a customized community and commerce site where members have their needs met in one place. Any advertisements will be those that support the network, participating vendors and perhaps even say something nice about the credit union itself. Any purchases through the credit union's commerce network should generate valuable advertising and revenue streams for the institution. And why not? Credit unions have worked hard to build member trust and long-standing relationships. Both of which can be greatly reinforced by establishing a convenient and trusted Network, customized specifically for a credit union member's online experience. There is a huge misconception out there that the Internet and its applications are putting more and more space between people, but the Internet should not move people, including credit unions and their members, further apart. Just the opposite. It should bring them closer together. In the case of credit unions, an Internet strategy should embrace and leverage the things that made them close to members in the first place; member-centric, service oriented relationships. The portal strategy is not the answer to your credit union's Web initiatives. Leave the portal strategies to disinterested third parties like Yahoo!. Credit unions come to the Internet party with very valuable assets: member trust and an established history of member centered relationships. Reinforce these relationships and credit unions do more than survive; they thrive.