ANAHEIM, California — Both banks and credit unions risk becoming irrelevant as more consumers begin to turn to other approaches to payments and lending, according to banking consultant Brett King.
King, author of BANK 2.0, spoke Wednesday to attendees at CO-OP Financial Services THINK 2011 conference and credited the rise of the Internet for the explosion in different forms of mobile payments, peer-to-peer lending via social networking.
King noted that the largest payments organization in Kenya with far more customers than the four major banks is actually not a bank at all. It's a telecommunications company that facilitates the transfer of money over mobile phone networks with text messaging.
Similar things are taking place in Hong Kong and London, King said, and there has been a corresponding boom in P2P lending, which, coincidentally, has loan loss rates that are a fraction of that of mainline financial institutions like banks and CUs, King said.
This has powerful implications for both banks and credit unions, King said, because it means consumers feel entirely empowered to take financial services on their own terms and then tell their friends and family about how they have found your service.
“It will not matter how much money you spend on advertising,” King told the attendees, “if my friends tell me your credit union sucks I am not going to use your products or services, because I trust my friends.”
The conference continued through Wednesday in the Grand Californian Hotel at Disneyland.