Analyst Cites Threat From Asset-Management Plans
The days when a credit union executive could look out the front door and see most of the competition are
Insurance companies, mortgage brokers and others are using technology to establish themselves as often-invisible competitors-
Koto is director of retail delivery for Jack Henry & Associates, a supplier of financial technology to the financial services industry
"Ten years ago, the manager of a credit union could stand on the front doorstep and see 80% of the competition," Koto said in an
There has been incredible change in technology in recent years, and Koto said it has accomplished many good things. But he
Koto said most CU mangers have heard the oft-repeated statistic that 20% of members produce 120% of profits, while the other
"The key question is: what are credit unions doing to keep these high net worth members that are critical to their survival? In the
Brokerage firms are "eroding" the member base of CUs, Koto asserted. He said they have a lower regulatory burden than credit
"Long term, credit unions must stay committed to their niche-which is serving members," he continued. "They need to reduce
Sizing Up the Competition
Koto asked attendees to name their main competitors. Several mentioned Washington Mutual, and others said car manufacturers'
"Competitors are no longer geographically constrained," he assessed.
To be competitive in this crowded marketplace, Koto said CUs must know their competitors, know their members, choose the
"Actually," he said, "many credit unions have little or no sales culture. They say, 'We're at your service,' but expect members to
Another problem, according to Koto, is brokerage accounts at CUs have been unsuccessful because senior managers have been
Beware of Total Merrill
Merrill Lynch recently launched a wide-ranging product it calls "Total Merrill." Koto described it as an "all-in-one asset
"I've had credit union managers tell me Total Merrill scares the hell out of them," warned Koto.
Charles Schwab offers a similar package, known as the "Schwab One Account," he added.
"Having all statements in one envelope is a big selling point," he said. "The current statements at credit unions are not attractive,
A disparate statement, Koto asserted, says to the member that a CU cannot handle his or her needs. On the other hand, he said, a
Check Out the Other Guys
Koto challenged attendees to put themselves in their members' shoes by opening a Schwab One Account or a Total Merrill
"Many investors are dissatisfied with their current advisors," he said. "It is not the advisors' fault, but the market's. However, it
"If you establish multiple relationships, it adds profitability," he reminded the audience.