Diekmann: How Backward Has Become The New Forward
Is "backward" the new "forward?" In at least one critical regard for credit unions, the answer is yes.
Consider the word "movement," which in recent years has coincidentally had exactly that effect upon CU people in that it "moves" them one of two ways: toward an embrace of the word as foundational differentiation for credit unions, or toward aggressive rejection as some dusty, Turner Classic Movies-like antiquity dangerously out of place in an online world.
But is it time for movement toward a third option? At least one person sees a bridge between the Depression-era class struggle-like roots of the credit union "movement" and the crowdsourced "movements" of today's connected consumers, most especially those much-desired Millennials. If indeed what is old is new again, credit unions are chic (even if they're unaware of it).
The Other Movements
"We have been looking at three things," explained Mike Kelly, CEO of PSCU, referring to a trio of trendy yet fundamental "movements" in not just the U.S. but around the world. "The first is 'Localvore,' which is the farm-to-fork movement. The second is the 'Makervore' movement, which is local manufacturing. And the third is the 'Shop Small' movement, which American Express has done a great job with. They are all talking about the same thing as credit unions."
Kelly's observation is the latest neon sign to have been lit in recent years that the very attribute some "progressive" credit union "leaders" prefer be relegated to the same box as old mag tapes is the very same attribute others can't get enough of.
What is missed by so many but which is right there under their nose — literally in the form of tablets and mobile phones — is the inverse effect of technology, which has allowed people to interact globally even as they seek to live and work and connect much more locally.
Kelly shared his thoughts as he approaches his third anniversary leading the CUSO, which will host its annual Member Forum this week. The company has branded itself around a single word, "Forward," meant to represent what it says as its focus on "agility, energy, and engagement" that "moves credit unions ahead of the innovation curve."
But part of that look forward is the keen recognition that the old movement model has new resonance. "We are trying now to convert [consumers] by riding the tailwinds, rather than just trying to convert over a customer of B of A," explained Kelly. "Millennials love the ethical business model. You can win as credit unions by focusing on your strengths, which are service and community focus. You will lose the branch and technology battle, but nobody does this better than credit unions."
Kelly said PSCU's strategic imperative is the "idea of relevance, and for credit unions being relevant with their members, so the member says 'I should look at my credit union first.' "
"The consumer is greedy but in a positive way," continued Kelly. "The consumer wants to apply for services on demand. They are fueling this digital engagement. And technology is becoming unbelievably dynamic. It's more readily available than ever, it's more sophisticated than ever and it less expensive than ever. Our suspicion is this shift to digital is putting a spotlight on the generational shifts in credit unions."
In this case, said Kelly, the generational shift is the move from Baby Boomers, whom he credits with doing a "fantastic job of building credit unions that were location- or niche-based," to millennials who "want to do business with companies that have a social conscience."
"The opportunity is in aligning the strategies in this time of incredible shift. For us the good news is that money is a social issue rooted in change and that is never going to change. Consumers are always going to want a trusted agent to hold their money, and credit unions have much more social currency than anyone else."
Where Kelly doesn't find currency is with consultants or columnists with pessimistic messages about the future of CUs. "We think the millennials love the model of credit unions MORE than baby boomers," he declared.
Meanwhile, when it comes to the organization he leads, Kelly said PSCU continues to strive to be a "company of ideas" that seeks to do three things: ideate, implement the best ideas, and iterate. Two and a half years ago it launched an internal idea platform called Spark that has collected more than 900 ideas from staff; it's now open to PSCU-owner CUs, too.
Strategy Is Paying Off
The strategy appears to be paying off. Account growth is up 15% to 16.5 million accounts in its portfolio; its patronage dividend is up 130%; the company has made a five-fold capital investment in the business, and its ROE is 25% to member-owners.
PSCU's biggest investments now are in mobile (although it has pivoted away from the "Mobile Container" concept it had announced earlier), and in numerous apps that will launch this month.
"You absolutely need the product lines to be great, but when you are asking a credit union to sign a five- or seven- or 10-year contract you have buy in to how we create value," said Kelly. "The products have to be there, but it's about more than that, it's about going up another level. You have to exploit current advantages and explore future advantages. If you just focus on product you are going to be Blackberry."
Frank J. Diekmann can be reached at firstname.lastname@example.org.