Strategy in a whole new world

Focus on your member relationships, take advantage of competitors’ weaknesses, and embrace technology investments. Mark Sievewright, senior vice president, Fiserv Inc., Brookfield, Wis., delivered those words of wisdom at CUNA's America's Credit Union Conference & Expo in Boston.

Mark Sievewright: Consumers don't trust banks. That's a huge opportunity for CUs to win market share.

Sievewright shared six strategic themes changing the movement today:

1. Decreasing financial performance is prompting efforts to spur growth and restore confidence in future returns. “Net interest margins have been declining since 2004,” he said, “and the credit union movement won’t see a 1% return on assets anytime soon.”

Most credit unions, he maintains, are moving to a 12- to 18-month planning schedule versus a five-year schedule.

2. Market consolidation, product commoditization, and more demanding consumers are changing the rules of how credit unions do business. Banks and credit unions are competing for the same business, and in consumers’ minds, financial institutions are one of the least differentiated brands, according to a recent Fifth Third Bank study.

Consumers don't trust banks today, Sievewright claims. "This is a huge opportunity for credit unions to win market share. You may not get another opportunity like this."

3. Redefining existing business models is essential to the movement’s long-term sustainability. “We're at a tipping point in the movement,” he declared. Credit unions’ net interest margins remain lower than operating expense ratios, and noninterest income has become more important.

Consumers are shifting their behavior to saving, and financial firms are trying to capitalize on that mentality. He advised credit unions to brainstorm with staff for a suite of revenue ideas, citing examples such as gift cards, identity theft protection, and account packages.

4. Delivery channel changes will be profound. Branches won't go away, he said, but there will be slower growth in new branches. His projected annual growth per delivery channel over the next three years: online, 27.2%; telephone, 7.1%; branch, 1.4%; and ATM, 0.5%. "In what channel would you put your money?"

5. Demographic shifts will redefine service and channel delivery. Recent Labor Department statistics show today's consumers will have held six jobs by age 30—and many will hold three jobs at once. These shifts will affect how you do business in terms of both products and their delivery.

6. Regulatory changes will redefine our business and its revenue and profits. Credit unions can expect more regulatory burden, he predicted. While safety and soundness are essential, credit unions need to get involved in advocacy.

A simple roadmap to real relationships with members, he added: trust plus experience plus knowledge plus advocacy.