Why 'Business As Usual' Is Not An Option
There is no question this past year has been one of extraordinary challenges to all those in the financial services industry. Challenges have included costly regulatory and legislative proposals, onerous assessments for corporate stabilization and the share insurance fund, a number of assisted mergers and shrinking capital ratios.
Yet, we are still standing. So the question is, "Now what?" Survival, and survival alone, is not an option. We must adroitly adapt to the events around us and move forward with a renewed sense of vision for our industry.
Looking ahead, it is relatively clear that neither our industry nor the world around us will return to "business as usual." We have experienced a major paradigm shift, and the financial services market will never be the same. Along with volatility, unpredictability is sure to be the order of the day.
Just a few years ago, author Nassim Nicholas Taleb introduced the concept of the "black swan" — a rare external event that is both unpredictable and of very high impact. Before 2007, no one had ever heard of black swans. Some are not questioning whether black swans are the "new normal." If so, are they more dangerous than the "old normal," and will the "new normal" lead to greater volatility and risk? The short answer to both is: probably yes.
But that is not necessarily bad.
Opportunity For Reinvention
We have the unique opportunity to reinvent ourselves and our industry for the future. Fortunately, we have a great foundation upon which to do so. For the sixth consecutive year, credit unions have outperformed banks in customer satisfaction, according to the latest Foresee Results/Forbes.com online financial services study. In fact, based on the survey, credit unions provide the most satisfying online experience. The study also found that with higher levels of satisfaction, credit unions were well-positioned to increase market share, since higher customer satisfaction correlates to a higher likelihood to purchase more services.
On a related note, IBM recently conducted its fourth biennial survey of global CEOs and asked senior executives to rate the most important leadership characteristics in the new economic environment. Creativity and integrity topped the list.
It comes as no surprise that creativity will prove to be essential, especially given the many unknowns we face such as the creation of a new Consumer Financial Protection Bureau and possible limits on debit interchange fees. Creativity was identified as the key to mastering the growing complexity of the business landscape because it is only by seeing things through a new perspective that we can adapt to evolving circumstances and make smart, timely business decisions in our new rapid-fire world. As an example, technology affords us many creative ways to reach out to existing and prospective members. Using social media and providing new services like mobile banking are just two ways credit unions are harnessing technology to better serve and respond to their members' needs.
Furthermore, we must not be afraid to challenge the status quo and empower our employees to do the same. That includes reviewing the natural person business model and how we connect with our members. The plethora of regulatory and legislative changes our industry faces requires us to examine all aspects of our business to ensure effective management and future prosperity.
The Value of Integrity
Finally, it is clear that consumer confidence has suffered an overwhelming blow in the last few years. It is especially reassuring that global CEOs recognize the extraordinary value of integrity, the hallmark of our industry and a priceless attribute in financial services. Forbes Chief Brand Officer Bruce Rogers, in commenting on the Foresee Results/Forbes.com study, underscored this belief: "More than ever, reputation management is a critical element of financial services marketing."
Case in point: The launch and success of the "Move Your Money" campaign. Arianna Huffington and her friends and colleagues astutely identified the growing dissatisfaction and frustration among consumers with big banks and their questionable practices. Together, they created The Huffington Post's "Move Your Money" campaign, which provided a vehicle for consumers to express their ire at the banks while giving them the impetus to make a change. This grassroots movement quickly captured national media attention and provided NAFCU with a unique opportunity to promote credit unions as a worthwhile option for consumers. Today, "Move Your Money" continues to thrive and inspire folks to action. NAFCU also continues to capitalize on the movement to champion the value of credit unions.
So if the current turmoil has taught us anything, it is that our core values and commitment to our members cannot be compromised. We have weathered this current financial situation better than most because of our outstanding record of ethical behavior and prudent business practices. These fundamentals will continue to serve us well even in uncertain times.
Ultimately, we can either see change as a stepping stone or a stumbling block. The difference depends on our attitude and determination. I believe we possess the ability to successfully navigate our way through this new reality. After all, we have certainly proven our mettle in challenging times before.
Going forward, we have to embrace change as a constant and leverage creativity to help manage the growing complexity of our industry. Simultaneously, we must ensure integrity does not suffer in the process. Integrity is one of the quintessential defining qualities of our industry and has long led to us being held in the highest regard among our members, legislators, regulators and the public at large.
Fred Becker is president and CEO of NAFCU.