The NAFCU Journal May-June 2020 - 36

MANAGEMENT INSIGHT

Can Credit Unions Compete
With Bank Behemoths
and Fintech Unicorns?
By Jason Osterhage

I

t's impossible to miss the headlines, and
you can see it in the apps on your own
phone: Digital disruption is coming
from everywhere in consumer banking.

Upstart fintechs rapidly become "unicorns" valued above $1 billion by investors. In the fourth quarter of 2019 alone,
eight new fintech unicorns were born.
According to CB Insights data, U.S.based fintechs drew almost $5 billion in
venture funding last year.
The biggest banks aren't standing
around with their hands in their pockets.
JPMorgan Chase & Co. spends more
than 10 percent of its annual revenue
on technology, according to Bloomberg
Media. Fox Business reported that Bank
of America has spent more than $35
billion on high technology in the last
10 years, including $1 billion just on its
mobile banking application.

The convenience and capability of digital banking channels - integrated with
traditional branch and phone channels
- has leaped forward in recent years. The
standard gets higher with every app update.
And our competitors are harvesting, analyzing and modeling new data in new ways
to improve service, manage risk, automate
processes and personalize products. Banking in the 21st century is a data business.
If your credit union hasn't yet felt the competitive pressure of these trends, it soon
will. It's fair to wonder whether we can
36

compete - and win - in this new, expensive digital world. Is there hope for us? My
answer is yes! The game is more challenging than ever to play, but it's a great time
to be a member-focused, customer-owned
cooperative financial institution. Credit
unions have some real advantages.
We have clarity and integrity of
purpose. As customer-owned organizations, credit unions serve one key
stakeholder above all: our members.
■	 We can take the long view. We don't
have to worry about impatient venture
capitalists looking for an exit. We don't
need to report quarterly earnings to
Wall Street. Our structure allows us to
make long-term strategic investments
in member service and technology.
■	 We have collaborative superpowers.
Our historically connected industry
gives credit unions a unique way to
punch above their weight class. We
can integrate, partner and cooperate in
ways others rarely do.
■	

We can hold our own against big banks
and fintechs if we have the courage to
exploit our advantages and make bold
tradeoffs that focus limited resources
where we have a "right" to win. I would
put three big key plays in a winning
credit union's strategic playbook.
Target narrow, catch wide. Pick a
member segment with a clear needs
profile, and commit to intensely focusing
on serving that member segment well.

Many banking organizations attempt to
offer a full range of banking products
to everyone in their trade area across
all stages of life. You can't get away with
attempting this anymore.
Member needs must drive digital and
data transformation. With a laser focus
on a specific member segment, you can
configure your technology and data to
serve those members. Begin each year
with three to five big member-value headlines in mind. Write the press releases in
advance. Tell the story of the big member
benefits you'll deliver in the year ahead.
These can be service improvements, new
products, or better fees and rates.
Draft winning talent. We can't do new
and different things with exactly the same
people working in the same jobs exactly
the same way. Bring in talented and
ambitious people with fresh ideas. And
adopt new ways of working - collaboration tools and agile teaming. The capacity
of any organization is determined by the
capability of the people within it.
The job of a growth-seeking credit union
executive isn't likely to become easier in the
near future. But I have high hopes for credit
union leaders willing to call up the courage
to engage their unique strengths and run
these three big, bold competitive plays.
Jason M. Osterhage is the chief lending and
member experience officer at Alliant Credit
Union in Chicago.
THE NAFCU JOURNAL  MAY-JUNE 2020



The NAFCU Journal May-June 2020

Table of Contents for the Digital Edition of The NAFCU Journal May-June 2020

The NAFCU Journal May-June 2020 - Cover1
The NAFCU Journal May-June 2020 - Cover2
The NAFCU Journal May-June 2020 - 1
The NAFCU Journal May-June 2020 - 2
The NAFCU Journal May-June 2020 - 3
The NAFCU Journal May-June 2020 - 4
The NAFCU Journal May-June 2020 - 5
The NAFCU Journal May-June 2020 - 6
The NAFCU Journal May-June 2020 - 7
The NAFCU Journal May-June 2020 - 8
The NAFCU Journal May-June 2020 - 9
The NAFCU Journal May-June 2020 - 10
The NAFCU Journal May-June 2020 - 11
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The NAFCU Journal May-June 2020 - 13
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The NAFCU Journal May-June 2020 - 16
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The NAFCU Journal May-June 2020 - Cover3
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