For years, banking executives were warned about the threat fintech startups posed to traditional banks.
And it’s true, fintechs continue to flourish. Last year, they
But it turns out another sector entirely — big tech — was redefining the banking industry.
According to a
But when it comes to big banks, they barely register. Millennials have a firmly entrenched attitude where one big bank is pretty much the same as the next but they prefer the ease of banking with credit unions.
Millennials (and Gen Z’ers for that matter) have been spoon fed “fast, easy and convenient” since they were toddlers. And big banks aren’t particularly good at “fast and easy.”
Banks need more agility. Millennials don’t respond well to bureaucratic, slow technology or high fees. They continue to rely on legacy technologies - something
Meaning millennials are open to banking alternatives (even if it means foregoing FDIC insurance and other protections), because nearly everything big banks once specialized in — moving and lending money, managing savings, issuing credit — can be accessed through tech giants.
Industry consultant
“When we used to ask consumers ... who they trusted with their money, whether it was comparing a bank to a fintech firm or a large tech firm, there was the wide gap ...” she said. “We've now seen that gap really narrow.”
As a result, Google, Amazon and Apple have made big banks far less relevant.
Its users already have the necessary device in hand — and they are already loyal to the brand. And because Apple is obsessed with user experience, brand advocacy is a given.
Make no mistake: some big institutions try.
But smaller institutions long ago beat them to the punch. Ally Bank, San Diego-based Silvergate Bank and Quontic in New York are just a few of the midsize institutions that have been offering
And this is where smaller credit unions should take note: faced with competition from both the banking sector and Silicon Valley, agile credit unions are ideally positioned to carve out a competitive edge by deploying the sort of cutting edge technology millennials expect.
Take the outmoded bank-loan application process as a for-instance. Bank loans cost too much and demand borrowers jump through needless hoops where each loan — auto, mortgage, business loans, lines of credit, credit cards — requires a new application. Banks offer no value in this clunky process except to serve as costly middlemen.
Credit Unions can capitalize on this inefficiency by introducing blockchain-based, self-executing smart contracts to replace the outmoded paperwork requirements banks demand to make lending more efficient, transparent and affordable.
Big banks aren’t going anywhere, but as they have steadily lost market share,