NEW YORK — Although competition for consumers’ wallets is more intense than ever, credit unions are in a good position to compete if they use data they already own to become more member centric, said John Lass, senior vice president of Strategy and Business Development for CUNA Mutual Group during a Tuesday afternoon breakout session at CUNA’s America’s Credit Union Conference.
However, Lass said banks, insurance providers and payments players are increasingly turning to customer-centric strategies to compete in the financial services marketplace.
“Every major consulting company is telling banks to be more customer centric,” he said. “It’s no longer a differentiator but a baseline requirement.”
The good news, he said, is that credit unions have a natural advantage, because cooperatives are built around a member-centric focus, existing solely to serve their members’ needs.
Lass shared seven strategies credit unions can use to win the customer centric battle. The first item on the list is to develop a data strategy.
“Data has become a real asset,” Lass said. “Leveraging data is the key to knowing your members’ needs and having the ability to deliver the right products and services to the right person at the right time.”
Credit unions often make the mistake of thinking members want more choices, he said, when what they really want is the product or service that meets their need.
Volume, variety and velocity are three factors affecting data, he said. When it comes to volume, the financial services industry generates the second largest amount of volume, trailing only media and communications. That means financial services trumps health care, insurance companies and even retailers when it comes to data they already own that can be used to anticipate and meet member needs.
For example, he said, credit unions should track ACH outflows to determine if they are losing market share to payment providers like PayPal. Data also can be turned into a helpful financial service like the cash flow monitor offered to Wells Fargo customers, he said. The online banking service utilizes spending history patterns to predict a customer’s cash flow position 30 days in the future. And, Wells Fargo deployed touch screen ATMs this year that are customized for each user, offering only the buttons and options customers want and need.
Another strategy is to enliven member democratic control, which Lass said is the one thing banks can’t touch.
“The last time you had an annual meeting, how many members came?” he asked the audience. Rather than elect directors from only the few members who attend the meeting, he suggested, credit union could allow members to vote online, as outdoor cooperative REI does.
An audience member asked Lass if consumers even care about the structural difference between credit unions and banks.
“If the answer is nobody cares, then that’s a problem, because that means at the end of the day, the only thing that separates us from banks is a tax exemption,” he said. “But I believe most members don’t know about it because we haven’t educated them about it.”
Additionally, he said, that structural difference could be an anecdote to the backlash against big banks that are too big to fail.