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In today’s hyper-connected, highly digitized world, credit unions face greater challenges to their survival than ever before. Members increasingly expect highly-personalized, high-tech services coupled with the convenience of anytime, anywhere banking through any channel. At the same time, credit unions are facing greater competition than ever before from not only banks, but also fintech startups and non-traditional players. These non-traditional competitors are extremely savvy at leveraging digital technologies including mobile, analytics and the Internet of Things to deliver greater convenience and much sought-after services to members, often at a much lower cost than traditional financial institutions can offer. Credit unions must continue to find ways to differentiate themselves in a crowded market, provide the services that today’s digital members want and increase their bottom lines.
Exacerbating the challenges credit unions face today is the threat of digital disruption – the use of digital technologies and business models to improve business performance. Digital disruption is sweeping across industries and has the potential to overturn and reshape markets faster than perhaps any force in history. Cisco and IMD, one of the top-ranked business schools in the world, recently surveyed more than 165 financial services executives to better understand the impact digital disruption will have on the industry and found that roughly four of today’s top 10 financial services incumbents (in terms of market share) will be displaced by digital disruption in the next five years! In fact, 45% of financial services executives surveyed believe that digital disruption “somewhat” or “significantly” increases their risk of going out of business altogether.
Despite the dire ramifications, the vast majority of credit unions may not be prepared to deal with digital disruption and do not have a plan in place for how they can better leverage digital technologies to differentiate themselves from competitors and deliver an improved member experience. Forty-one percent of financial services executives responding to our survey stated they are taking a “wait and see” approach, in hopes of emulating successful competitors. Only 27% have a plan and are willing to disrupt themselves in order to compete.
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