With non-traditional entrants such as Wal-Mart and Apple, expanding their market share in the financial services space, CU Times asked several leaders the following question:

“Besides banks, who or what would you say are the biggest competitive threats to credit unions and why?”

credit union competition gigi hyland “The Great Recession has brought about a sea change in how individuals achieve and maintain financial security. As a result, one key threat is not seeing financial services through a consumer's eyes.

The American Dream of a traditional career, buying a car and home, sending and paying for your kids to go to college and having a nice retirement nest egg has been irrevocably altered, especially for the generations born after 1980 (Gen Y/Millennials and Gen Z).

This cultural shift, coupled with alarming statistics on the percentage of medical debt Americans owe, the amount of student debt kids have coming out of college, and the increasing difficulty middle-class and low-income families have making ends meet all create an amazing opportunity for credit unions.

Consumers want control of their money. They want the freedom of choice and capability to decide their current and future financial life. Credit unions need to constantly examine whether they are meeting people where they are in life and providing the information, resources, products and services consumers need to financially thrive.”

Gigi Hyland

Executive Director

National CU Foundation

Washington

Bob Dorsa on competition “I sincerely do not believe the threat to credit union mortgage lending comes primarily from a lending institution but rather from the lack of knowledge and understanding about credit unions and how the cooperative model is different.

I have maintained for many years, credit unions must become known not just for cheap car loans and free checking accounts but much beyond that. The fact that credit unions, in the majority of cases, operate and lend in local communities should be a huge advantage. I question whether most credit unions fully grasp the strategy to use their local business presence.

Relationships with local contractors and other businesses benefits everyone in the community when consumers select local lenders who are familiar with local issues and trends. Naturally, other lenders represent a real competitive force, however, the perceived threat as I see it is not taking the bull by the horns and seriously address these issues throughout the organization.

If the staff and volunteers are not convinced the credit union is the best solution for most consumers, then I suggest start over and review all of the facts and opportunities again.

Stated another way, the threat for many credit unions is not taking of the full advantage of all of their opportunities to add to growth while helping people in their communities realize the American Dream of homeownership.”

Bob Dorsa

President

American CU Mortgage Assoc.

Las Vegas

Read More: Credit Union Execs Weigh in

soyna mcdonald on compeition “The biggest challenge facing credit unions isn't coming from big banks or even from our fellow credit unions. Instead, we face two different types of issues: regulation and non-traditional payments.

With everyone from Wal-Mart to Google trying to get a piece of the payments pie, credit unions must be flexible and innovative to make sure that our products keep up with the market and provide the services our members desire.

Credit unions have to be ready to provide products and services that can compete with anyone else in the market, whether they're a bank, a fellow credit union, a retailer, a card company, an online merchant or anyone else who decides they want to throw their hat into the financial services ring.

In addition, credit unions continue to put an increasing amount of time and funds toward ensuring we meet and manage the onslaught of regulations being issued by multiple governmental entities.

For a large credit union like RBFCU, the regulations are grueling to analyze and implement. For many smaller credit unions, the onerous rules overwhelm the resources they have available.”

Sonya McDonald

EVP/Chief of Staff

Randolph Brooks FCU

$5.662 billion in assets

Live Oak, Texas

credit union competition julie moran “Technology, while somewhat of a threat, can also be looked at as an opportunity for credit unions. As more and more non-traditional entities like Apple enter the marketplace with mobile payment options, credit unions need to be able to adapt rather quickly either by partnering with these organizations to complement their efforts or by creating their own product that can serve as a standalone solution.

[Digital Credit Union] was one of the first credit unions to partner with CU Wallet, the CUSO which is owned by credit unions. CU Wallet is working to provide a comprehensive, industry-wide, cutting-edge mobile payment solution to DCU and our nearly 80 credit union partners.

Product innovation continues to be a focus of DCU whether it be through investing in technology or investing in team member resources to uncover the next big thing that will revolutionize banking. DCU has always been at the forefront of implementing technological enhancements whether it's with our website, online banking platform, mobile apps, call center, or branch network.”

Julie Moran

Vice President, Support Services

Digital CU

$5.993 billion in assets

Marlborough, Mass.

Read more: Marketing's Take on Competition?

credit union competition james robert lay “In a digital economy, credit unions face a triple threat, starting with changing consumer behavior. It is no secret that branch traffic continues to decline. And as more credit unions introduce digital services like remote deposit capture, key transactional branch traffic will drop further, resulting in fewer sales opportunities.

Another threat credit unions face is from the neobanks as they operate by a different set of rules. While credit union business models have been built around physical branches and broadcast marketing channels, which are not as effective in a digital economy, neobanks operate with business models built by a digital, or mobile-first, vision.

Even with these challenges and threats, there are many opportunities for credit unions by utilizing a three-step approach.

First, credit unions will train executives and staff to help them understand and envision the tremendous growth opportunities digital business models can provide. Next, with a vision in place, a credit union will assess their current resources and prepare a digital business model blueprint and plan of action. Finally, the credit union will use this blueprint as a guide to build a website that sells, which becomes the center of their digital business model.”

James Robert Lay

CEO

CU Grow

Pasadena, Texas

credit union competition Sean McDonald “The biggest competition for credit unions is a credit union that competes against itself. There are still many credit unions that are clinging to outdated, irrelevant, and inappropriate methodology. As a result, they're not growing. They're not attracting the kind of member that they need to survive long term.

For instance, the decision-making process at many credit unions is akin to watching paint dry. For whatever reason, it still takes a long time to make critical decisions. Great organizations and leaders make decisions quickly and confidently. Stop making excuses or employing delay tactics and just make a decision.

Second, old growth tactics. The marketplace has changed. Sorry, but business isn't going to come to you; you have to go out and get it. That means hiring employees with the skill sets that are needed for today's ultra-competitive marketplace.

You must shift from taking orders from members to building the relationships out through cross-selling [and] having meaningful conversations. You have to invest in training in order to develop your employees and give raises and bonuses only to those who deserve it. For those that don't, they'll have to just work harder.

In short, credit unions need to simplify, get more efficient, and start thinking and acting more strategically.”

Sean McDonald

President

Your Full Potential LLC

New York

Instant Insights /

Biggest Competitive Threats or Biggest Opportunities?

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