As Kent mentioned last week in his post-Financial-Brand-Forum recap, there seems to be a certain amount of indecision about whether it’s time to panic, and exactly what we should panic about. Should credit unions panic about Walmart sticking their very large toes into our personal financial services turf? Or Amazon, Apple, or Costco? All the above?
And what level of panic would be proper?
To look at just one example, I’ve gotten a few emails touting Costco Mortgages lately. Intrigued (hey, they do have great deals on bacon and blue jeans), I dug in.
I was a little disappointed to find that basically, it’s just a referral arrangement. They collect some info and then hand you off to an established mortgage lender for the same old routine. Same for several other Costco services – car buying hands you off to a local dealer, the HVAC service sends you to a local installer, etc.
And, uncharacteristic for Costco, reviews are mixed – sometimes the providers start shenanigans, and the helpful folks at the Costco front desk can’t do much about it directly.
So are non-traditional players really going to eat your lunch with a rat’s nest of referral arrangements and white labels?
There will certainly be some lunch-nibbling, yes, but credit unions still have a lot of advantages to call on.
For example, authentic, personal trust is one of the most important values, especially for millennials and Gen Z (or whatever we’re calling the next generation). Flimsy referral arrangements break the links of accountability that create trust. Plus it’s obvious when there’s another middleman who must get paid somewhere.
Social responsibility is also incredibly important to the next economic generation, yet very few credit unions have done much to lead the way and tell their stories. Members need something they can believe in. There’s a lot of unexplored territory here.
Of course, you’ll first need to make sure you have the processes, policies, infrastructure, and tech to compete. For example, retained local mortgage servicing is a HUGE potential advantage that very few CUs are marketing or even mentioning. But it obviously requires an enormous commitment, and enough mortgage volume to support it.
The same goes for credit cards and other types of lending – if your application and approval process for an existing member takes more than about five minutes, you’re losing loans and cards in droves. And the rate of loss will accelerate rapidly. What are you doing about outmoded processes right now?
Is it time to panic?
It depends – can you keep up on the tech and processes side? Can you offer members something more than great rates? Can you approve a 22 year old member who just started her first job after college for her first new car loan? Can you do it in 30 seconds? Through an app she filled out on her mobile phone in less than two minutes? On Sunday? While she’s standing in front of the car she wants to buy?