With emerging competitors such as State Farm Bank and the increasing commoditization of financial services, credit unions will have to get outside of their comfort zones in order to compete, according to one consultant.
"State Farm has opened its own bank, and essentially they've got 22,000 loan officers in the form of independent insurance agents all across the country," said NewGround's Kevin Blair during his remarks before The Credit Union Journal's SEG & Business Development Conference. "When something becomes a commodity, you are forced to compete on price. Non-traditional income has exceeded interest income and traditional income is eroding, so credit unions must be retailers as the economy shifts from a services economy to an experience economy. Consumers want a dynamic experience, not a forced, fake one."
As NewGround is primarily known for its design/build expertise, Blair discussed how credit unions can create experience impact by rethinking how they branch.
The key, he said, lies in getting beyond the traditional, expected "bank" experience. To illustrate how an organization can do this, Blair pointed to most recent winner of the "Experience Retail Business Award:" the Cerritos Library in Cerritos, Calif.
Most people have the same mental picture when they think of libraries: stuffy, quiet halls lined with books and patrolled by even stuffier librarians who are permanently shushing people. Not exactly the most inviting of places.
But Cerritos Library is different-think of it as the EPCOT Center of libraries. From the moment a person parks and begins walking toward the library, the experience begins: motion sensors trigger the fountains as if to welcome each individual personally.
Inside, the library is bright, airy and colorful, almost a cross between a particularly well-appointed shopping mall, an interactive children's museum and an amusement park, just without the roller coasters.
"Cerritos asked, 'Why would anyone go to the library?' Credit unions need to ask themselves, 'Why would anyone go to the credit union?' " Blair suggested. "What do Cerritos and eTrade have in common? They are both deploying experience retail. The Cerritos Library touches all of the senses."
Echoing and building on the sentiments of other speakers, Blair discussed the importance of brand. "Your brand is not just your name and logo. It's an emotional reason to buy," he explained. "You may need a car, but you want that car. Your branch is the physical manifestation of your brand. Sure, you have to hire an architect to design your branch, but you should hire a brand creator first."
While many credit unions may be looking at revamping existing branches by redesigning the inside of those branches, don't make the mistake of underestimating the importance of curb appeal, he observed.
"It's just like when you're buying a house. It could be beautiful inside, but you'll drive on by because the curb appeal isn't there," Blair commented. "The outside of your branch is the largest billboard you have."
And while it's important to have a consistent look and feel from one branch to another and one touchpoint to another, Blair advised that "one branch doesn't fit all." "Look at the demographics in the area in which you want to put your branch, look at what your competitors have put in place in that area," he advised. "What works in one area may not work in another one."
