By John Oliver
Just 25 years ago, traditional financial services providers claimed 50% of the marketplace. Today, there are only half as many of these providers, and the share of the market has fallen to 20%. Traditional financial services providers are in a crisis.
The traditional business model many credit unions still follow was once seen as infallible. As the economy and technology began to evolve ever more rapidly, most of the institutions following this model are struggling to maintain market share. They have found themselves in a “survival of the fittest” situation, without understanding how “fittest” is defined in this new marketplace.
When I ask credit union CEOs what differentiates their credit union from other financial institutions, many will say, “the service we offer.” Credit unions have always prided themselves on their member service, and they should continue to do so. But, if nearly every credit union makes that factor the differentiator for their business, member service can no longer be defined as a differentiator.
Despite these challenges, your credit union can control its own destiny. In order to survive and thrive, your strategic objectives should revolve around the needs of the marketplace—and the first step is to do market research, more market research, and even more market research.
Learn what your current and potential members want and expect from their financial service providers. Then, be creative and innovative in focusing your business model and your products and services on these insights, in a way that can be flexible with changes in the economy and technology.
For example, you may find the pool of potential customers in your market need a provider that excels in offering a niche product or service, such as creative lending options. Or, your target market may expect a unique member experience encompassing high-quality member service, with something special that other financial services providers don’t offer.
The market is already in rapid decline—the time to begin focusing your strategy on the marketplace is now. With the right strategy, supported by research, your credit union can maintain its relevance in the marketplace and become a powerful competitor.
John Oliver is president of Laurel Management Services in Palm Springs, Calif.
Hear more about market-focused strategy at Oliver’s session during CUES Symposium: A CEO/Chairman Exchange, February 3-7, 2013, in Maui, Hawaii.
