By Ray Birch
PLANO, Texas—Credit unions can learn a lot from Domino’s Pizza, according to one person, who emphasizes CUs cannot overlook this lesson.
The dominant pizza chain has become number-one in pie sales in the U.S. by realizing something critical to its success: it’s not in the pizza business. Instead, it’s a technology company, according to Eric Dotson. Dotson told Catalyst Corporate’s Economic & Payments Forum credit unions must come to a similar understanding.
But before he got to his point about how credit unions must make the switch to digital if they wish to survive, Dotson, EVP with Aptys Solutions, shared with his audience the story of Domino’s success, including video from former Domino’s CEO J. Patrick Doyle.
In the video Doyle described how the company leveraged digital ordering—with more than 60% of its sales now via electronic means—and is moving to driverless car delivery with vehicles that have touchpads on the side of the car for completion of the sale.
Dotson said Domino’s evolution has been all about customer convenience and providing products and service via delivery channels people now expect.
“Dominos changed to a technology company with a focus on customer convenience. They even offer a one-touch ordering process. It is about looking at technology and digital transformation then and figuring out how that will improve the business,” stated Dotson. “Financial institutions must realize they are first and foremost a technology company offering banking and retail services.
Looked Down Upon
“When you look at Domino's before their business transformation, most financial institutions find themselves in a similar situation—such as having a reputation as being on the trailing edge of technology,” Dotson continued. “Unfortunately, financial institutions have always been looked down on as a slow adopter of technology. But financial services is facing rapid digital transformation and a business model change in response to unprecedented levels of digital adoption.”
Dotson compared how consumers have flocked to digital engagement channels \ during the pandemic as a “tsunami” of change.
“The digital shift we are seeing now was happening before the pandemic, but at a slower pace,” noted Dotson. “Overnight it seemed like consumer expectations changed and old habits disappeared. Very quickly many consumers realized they need to be able to interact with their financial institutions in a way they haven't done before.”
An 18-Week Half-Decade
Dotson pointed to data from McKinsey that shows consumers vaulted five years forward with digital adoption in just 18 weeks during the health crisis.
Dotson emphasized that credit unions need to become part of the faster payments chain, and that means being connected with real-time payments.
“Twenty-four percent of consumers say that they would consider switching to a different financial institution for faster payments,” he said, pointing out faster payments are expected to go from three-billion transactions in 2021 to eight-billion in 2025.
New data also show mobile transactions have caught up to the volumes previously seen in branches, Dotson added.
That includes an increase in P2P transactions, with 79% of consumers saying they use the service. Yet despite the popularity, Dotson noted there’s a bit of a paradox at work, as one survey found 47% of consumers were unaware of whether their financial institution offers the payments option.
Lessons from Other Countries
P2P payments and cryptocurrency will both play roles in the rise of faster payments, according to Dotson.
“The U.S. market is trailing a lot of other countries that have already implemented real-time payments,” Dotson said. “And I'm not talking two, three or four countries, but 20 or 30. Many countries are offering the service in addition to touchless payments, such as QR codes. This is not really about improving sales, it is more about improving the customer experience.”
The Right Targets
What does all that mean? Dotson emphasized credit unions must evaluate their strategic priorities.
“If you're a credit union and you want to succeed in this digital-first environment, you must quickly reset your digital agendas to meet new member needs for engagement,” he said. “It is time to point your digital firepower at the right targets.”