Gradually, then suddenly. By JP Nicols 
“How did you go bankrupt? Two ways. Gradually, then suddenly,” wrote Ernest Hemingway in The Sun Also Rises. This idea of things falling apart gradually, then suddenly, may also apply to the world of credit unions. For now the rumors of CUs’ deaths seem to have been greatly exaggerated. Despite all the recent talk about “digital disruption,” credit unions have survived the assault of their would-be disruptors to date. This makes one ask, has all of this talk about fintech been overhyped? Can we finally forget about chasing the latest technology and just get back to providing great service to our members? Well, yes and no. We are just in the early stages of digital disruption and things are happening fairly gradually in the near term. As Bill Gates said, “We tend to overestimate the change that will occur in the next two years, and underestimate the change that will occur in the next 10. Don’t let yourself be lulled into inaction.” The term “disruption” does not necessarily mean that the entire industry and all of its current participants will suddenly cease to exist. Disruptive innovation changes the game by creating new products, new markets and new relationships between organizations and individuals—and that is already happening. Since 2008 we have been mostly focused inwardly on industry mechanics and regulations, much of which is geared toward strengthening financial institutions and preventing another global financial crisis and recession. During that same time, the rise of broadband, smartphones, apps, social networks, and other technologies have profoundly changed the lives of our members. The industry will survive, in some form or another—but the real question is, will you survive? Of course providing great service to our members is absolutely a top priority, but we have to rethink how we do that in light of how our world is changing. The financial institutions that are doing that well are not just surviving but thriving in this era of digital disruption. We have to think beyond simply differentiating ourselves from banks, or even from one another, to standing out from a whole new slate of potential substitutes to traditional financial institutions. Today, your members can replace every single service you provide with an app on their smartphone. This is a pretty new challenge to a very old industry. Henry Ford allegedly said that if he had asked their customers what they wanted, they would have said “a faster horse.” It seems that many credit unions are quite convinced that putting a digital wrapper on their old analog business models is good enough. It is for some members. For now, at least. But as the pace of change accelerates, it will become even more important to define words like “value” and “service” on our members’ terms, not our own; and we have to pay more attention to what they do than what they say. The gradual changes we are feeling today will become sudden before we know it. JP Nicols is managing director of the FinTech Forge and founder of the Bank Innovators Council. He has been recognized internationally as a leading voice on innovation, strategy and leadership, and his work has been featured in top publications and conferences worldwide. He will be presenting on “Thriving in an Era of Digital Disruption” at Execu/Net™ August 28-31 in Fish Camp, Calif., near Yosemite. Read “Relatedness: The Key to Employee Engagement” by Sandra McDowell, and “Measuring Your Mission” by Charles Dahan, both of whom will also speak at Execu/Net. Access a collection of articles by speakers at Execu/Net, including one that describes why getting outside facilitates productivity.
