GRAND RAPIDS, Mich.—Credit unions this year need to “cross the tipping point” towards online retailing.
That is the stance of Randy Karnes, CEO of the CUSO CU*Answers, who points out that making this shift requires changing the culture within the credit union.
“I hear a lot of credit union CEOs talk about how they need to add new online services for their members in 2016—RDC for some, automated membership opening for others—but what I’m not hearing from these CEOs is a dedication to changing their culture to be effective as online retailers,” observed Karnes. “Instead of a piecemeal approach to online and mobile strategies, credit unions need to awaken to the fact that the old methods of doing business won’t cut it anymore.”
Karnes said the days of the “if I build it, they will come” mentality, where credit unions could simply throw up a new branch and watch the people walk in, are dwindling. And taking that approach for online strategies is sure to result in failure—the virtual world is too crowded, he said.
Virtual Branch
“If you’re not a retailer and you don’t know how to get members to visit your virtual branch, you’re in trouble,” insisted Karnes.
Credit unions should not be expected to flip a switch and become full-fledged online retailers by 2017, explained Karnes.
“Most still need to figure out what being an online retailer means to their credit union. But by continuing down the path most are taking, they’re missing out on the opportunity to begin that culture shift now,” he said. “It will take years of work—budgeting, planning, setting deadlines, and being accountable to it.”
Karnes said that he believes that many credit unions are approaching this selling change in the way most people approach their New Year’s resolutions.
“They wake up thinking ‘I will be me and make this change in what I do.’ But in doing so they’ve already defeated themselves—they haven’t reconciled themselves with changing their identity,” said Karnes. “They should be waking up thinking ‘I will be someone else for the rest of my life.’”
Randy Karnes
Replace Old Identity
Karnes said credit unions need to wake up to the idea that they will be a retailer of financial services, instead of a credit union that simply offers a service here or there as they come along.
“They have to be willing to abandon, retire, and replace old investments, their old identity, and shift to new ones,” he said. “To cross that tipping point from 80% old methods and 20% new methods to 20% old and 80% new, that requires hard decisions—likely unpopular ones—that many credit unions are just not willing to make.”
Making that transition and those decisions is easier said than done, acknowledged Karnes. He said that CU*Answers understands the challenge, which is why it has begun developing the Internet Retailer Support Center, a new support desk for credit union virtual channel project managers.
“It’s a one-stop shop for credit unions to explore all the digital strategy products we offer and pick the ones they want—like an online retailer,” Karnes said. “We’re creating this as much to improve our own operational efficiencies as to show credit unions that this type of approach can work for them.”
Online Strategy
For the last few years CU*Answers has been trying to “alert” credit unions to how important this change would be.
“In 2012, I asked credit unions at our CEO Strategies event, ‘Do you have an online strategy? Or are you simply buying toys to amuse yourself?’ I asked if they have a centralized online strategy? A comprehensive approach? Someone in charge? I warned them that it could mean a bumpy ride over the next few years if they didn’t have answers to those questions,” said Karnes. “Years later and they may be staring the storm in the eye. I hope they’re prepared.”