SAN ANTONIO -
"So many of us in the credit union movement have been on the right track, but the marketplace is changing dramatically. If we keep doing what we are doing, it will no longer be relevant," said Harrington of the Tucscon-Ariz.-based consultancy T.E.A.M. Resources. Harrington told attendees of the Texas CU League's recent Leadership Conference here credit unions should re-invent themselves by 50% every three to five years.
"We must be open and willing to change dramatically," he said. "But change is not easy-it is uncomfortable."
The CU movement is losing approximately 300 credit unions per year, Harrington continued. In 1989 the total was 15,000. In 2000, there were 10,700. Last year, the figure had dipped to 8,462. At the same time, the average asset size has grown from $40.9 million in 2000 to $84.9 million in 2006.
The key in this new environment, he said, is creating a new value proposition.
"We have to give our members a reason, a very, very clear reason to come to us."
Harrington cited research by Deloitte Consulting that found the No. 1 trait consumers look for in a financial institution is location/access-far ahead of No. 2 product offerings. He asked the audience members if any of their CUs are convenient to every person in their field of membership. When no hands were raised, he said, "Other than single-sponsor credit unions with their headquarters at the workplace, credit unions are not convenient. Branches bring in new accounts if they have a good location-within 1.5 miles of someone's home or work. Having lots of branches is good, if they are sales-centric; driving new accounts and business."
In addition to adding branches to increase convenience, Harrington said CUs can create a "market advantage" by finding the two or three things at which they can become experts. If credit unions are exceptional at these two or three things, members not only will seek out the CU for those factors, they will forgive it for the things at which it is not as proficient.
"Be super, not merely better than average," he advised.
Thinking strategically means not only examining the local marketplace, but taking examples from effective companies outside banking, such as Wal-Mart, Starbucks and Subway. Harrington said CUs must understand their members' needs, identify what successes it already has that can be amplified, and then identify what it must do to move forward.
"Look at Nordstrom. Customers do not get bad experiences when shopping at Nordstrom because the employees take initiative to make the customers happy," he said. "Another example is Disney. There is fanatical attention to consistency and detail. If you go to a Disney park, the bathroom will be clean, because one cast member is assigned to just one or two bathrooms. Disney does not want guests to see water on the sinks or not be able to get a paper towel."
Applying these concepts to CUs, Harrington said they must do a better job of cross-selling their members. "If we don't ask our members to do their business with us, someone else will. Banks outsell credit unions. And remember serving members includes meeting their needs."
