Financial institutions haveoperated for decades under the assumption that they offer whatconsumers need and that consumers will come to them.

Consumers need them.

With the burgeoning popularity of the smartphone, financialinstitutions have been rocked to their core and they're stillscrambling to figure out what their role will be. Consumers aretruly now the center of the universe.

Mike Kelly, CEO of PSCU, pointed this out in an interview. Now,in this digital shift, the business has become more about theability and speed of moving money around. Financial institutionsmust be able to perform this function without alienating theirbase.

You don't want to be the next JCPenney, Kelly quipped.

At the same time, you need to remain in business under thestress of regulatory burden, the weight of the existing retaildelivery structure, and serving consumers who have never knowncomputers and others who have only lived in a world connected by amobile Internet. The demand for technological advances can onlyaccelerate.

If you need any evidence of that, look at CUNA Mutual'sexperience for instance: Mobile loan applications through its appincreased from 4% in 2011 to 20% of applications by 2013.

Gens Y and X are clamoring for mobile technologies andnontraditional banking, such as P2P and crowdfunding, and they wantto fulfill a mission of social good. Credit unions are the originalcrowdfunding; we just need to, as an industry, bring it into the21st Century and beyond, but again, not at the cost of offendingthe base.

This is the same base that can vividly recount their experiencewhen gas stations switched from full to self-service. The boomersstill complain about that but they adapted. And, many boomers aremore technologically literate than previous generations have beenas they age.

Credit unions can transition to smaller branches with moretechnological components, such as personal tellermachines. CoastalFederal Credit Union has transformed its branches with thehelp of PTMs and reduced the number of tellers by 40%, whileincreased teller hour services to members by 86%.

Kelly noted that credit unions talk about trying to match theonline experience with the in-branch experience, but instead hesuggested matching the in-branch experience to the 24/7 online ormobile experiences: Efficient and always open. Use the technologyto make the experience better, not worse.

As CUNA Mutual's newly installed CEO, Bob Trunzo, told me,“Those that will be successful in the future are the ones that canprovide not only a multichannel environment, but a qualitymultichannel environment.”

Credit unions' mobile delivery must be top notch. Anything lessis unacceptable. Otherwise the Simples and the Squares and theStarbucks apps will take that consumer connection away from you,and financial institutions become merely a middleman — a wholesaleprovider. And credit unions have neither the scale nor thestatutory ability to succeed in that role.

Aite's Ron Shevlin recently wrote a great blog poston whyfinancial institutions can't be Amazon, essentially theinterweb's middleman. Amazon doesn't care whose product you buy aslong as you buy it through Amazon. Kindle is Amazon's tablet, oneof the few products it creates, yet Amazon still lists iPads at asweet deal.

Would your credit union do that?

It could. Some credit unions already participate in sharedbranching, and share HR or compliance executives. Credit unions arethe perfect financial institutions to band together andcooperatively offer products.

Ten $100 million credit unions could have the scale of abillion-dollar financial institution. Wait a minute, that's calleda CUSO!

Credit unions are the original social business, so get back toyour roots while reaching for your future.The reality is that if credit unions don't come together in a bigway, more failures and closures will follow. So far thisyear, sixcredit unions have failed or closed according to SNL.That's on pace with last year, except there are fewer credit unionsdue to mergers and failures to start with, so really it's anincrease.

The jump in asset size of these credit unions is alarming, too.Year-to-date 2013 failures tallied less than $5 million, but in2014 came to a whopping $63 million.

Many credit unions are stuck in the rut of trying to follow theroad map that got them there. It's no way to attack the future.

Respect the past, but, as Kelly told me, “A compass beats a mapin today's world.”