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Just because a product sounds cool, doesn’t mean you need it. You know your latest credit card that gives 3% cash back for grill purchases? It’s probably great for a certain segment, but unless you’re CEO of Grillmasters FCU, it is unlikely to appeal to few people in your field of membership. and the specialty product might be bad for your bottom line.

According to a study by William Jackson, a Filene Research fellow, diversification beyond sources of noninterest revenue can worsen your credit union’s performance. High diversification in product lines can have negative impact on credit union performance. The old saying “You can’t be everything to everyone” comes to mind as costs associated with hyper-specialization for niche audiences eat into product margins.

Additionally, consumer behavior research indicates one big reason for this lower performance is choice overload. Research by Eldar Shafir of Princeton and Sendhil Mullainathan of Harvard argues that people do not always make choices that benefit them the most due to “cognitive scarcity.” In other words, stress impairs people’s ability to think, ­effectively shrinking their world to only the stress at hand.

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