3 minutes
Make sure you’re seizing opportunities. You can do so by thinking positively.
Practically every strategy textbook tells us to build a SWOT analysis. Yes, there is value in evaluating strengths and weaknesses and being aware of threats on the horizon. But one SWOT category matters most in meeting consumer needs and keeping credit unions viable: opportunities.
Disruptive companies are adept at assessing market needs and filling gaps, thriving at our expense. Today’s credit unions need to do a better job of shedding outmoded practices and ways of thinking to recognize and seize opportunities.
For most of our history, the regulatory climate formed an unassailable barrier to competitors trying to enter our space. Since deregulation these competitors can now cherry-pick the best lines of business. Their efforts are paying off.
In 1970, traditional financial services providers extended about 60 percent of all credit to consumers (now <20 percent) and held 50 percent of consumer’s financial assets (now also <20 percent), according to figures from the Office of the Comptroller of the Currency. Bit by bit, we’ve seen erosion of our core business. While deregulation has opened up unlimited possibilities, we are holding ourselves back from capitalizing on them.
A significant driver of opportunity is technology, which has generated lucrative opportunities others identified while we maintained the status quo. Companies like Uber and Airbnb built new models to take business away from traditional providers. Lending Club and Prosper are the country’s biggest peer-to-peer lenders. Pre-loaded payment cards siphoned dollars out of deposit accounts. As I’ve often noted, however, if the marketplace is changing, we’re effectively going in reverse.
Status quo is a myth. Inaction may be the biggest risk of all. The 1988 Piper Alpha oil rig disaster serves as a cautionary tale. Of the 228 people on board when explosions ripped through the platform, only 167 came out alive. Most did so by leaping into the North Sea. The moral of the story is that you can ignore signs of doom all around and face certain death, or you can seize whatever chance you have at survival.
One success story is a rural credit union located in a depressed area of the country. It found opportunity in helping a segment of the market perceived as high risk: consumers in financial difficulty. With a strategy of helping when others won’t, the credit union discovered there was good business in managing risk, pricing accordingly and providing additional resources to built financial stability in these households.
I’m a great believer in an appreciative inquiry approach to strategy that focuses on positives. If you endlessly address negatives, you’ll only come up with tactical responses (reactions) instead of developing forward-looking strategy (proactivity). Clearly, the rural credit union benefited by viewing the marketplace with an eye toward what’s possible, rather than only seeing weaknesses and threats.
Opportunities abound in consumer financial services. We owe it to our members to serve them better.
John Oliver is president of Laurel Management Systems Inc.
