The Decision Maker

How Can Credit Unions be the Disruptor?

Posted by Anne Legg (Thrive) on Apr 12, 2016 11:30:00 AM

How Can Credit Unions be the Disruptor

Asked Jim Nussel, CEO of CUNA to the credit unions in attendance at the Minnesota Credit Union Network’s annual meeting held last week in Minneapolis. 

To move from disruptee to disruptor is no easy feat.  Current disruptors in the credit union space are predominantly quick and nimble Fin Tech start-ups rapidly grabbing market share. The reason they are able to achieve this is simple.  They solve a problem faster and better than current market standards.

For credit unions to create better and faster solutions, they need to evaluate how they perform their business in a different way. 

The target market

First, credit unions need to understand their target market and its problems.Target market identification is a way of tightening the scope of the business that is affordable, efficient and effective.  A target market is a specific market and does not mean that you are excluding members who do not fit your criteria, rather it allows you to focus on a market that is more likely to buy from you than other markets.

Criteria considerations include:

1. Evaluate current member base.

Are these members engaged in the product and services you want? In the channels that you can provide?

2. Evaluate your competition

Who are the Fin Tech start-ups taking? And why? Do you want these members? Can you provide something different for them? Is there an advantage that you offer? Or an advantage you can identify & create.

3. Demographics and Psychographics

Where does your target live and what are their values, interests, lifestyles and attitudes.

There are, of course, many other criteria, but these few will help shift the way the target is identified.

The target market problems and solutions

Next, identify what are the problems of this target and how do the credit union solutions meet these problems.  To identify the target market problems, a wider lens of the landscape needs to be performed. How do these members consumer financial products? Is similar to how they purchase other goods and services or is different.

What are the economic conditions of the target market? Are house prices available for this target? How stable is the local economy?

In terms of understanding how credit union offerings solve the problems of the target market is really the heart of disruption.  Disruption is a lot like innovation as it simply does one of four things:

  1. Discovering a new way of doing something

  2. Taking and existing product/service and giving it new uses

  3. Reframing a problem or an issue

  4. Reorganizing the same information in another way.

Evaluating credit union offerings as to how they could solve the target market problem in any one of the four ways listed above is very difficult. It takes a culture/environment that:

  • is not defined by legacy traditions

  • will not be punished when they fail

  • is encouraged to develop moonshots

Yes, to reiterate, this is no easy feat.  But to quote a  KPMG report.  “Who saw Uber coming on so quickly?”… It is a safe bet that the thousands of cab drivers in big cities didn’t have an inkling of how fast Uber would disrupt their traditional business.”

Credit unions, let’s not be cab drivers, let’s be Uber!

Click to read the Creating Member Experience 2.0 Whitepaper

Topics: Credit Unions, Disruption

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