A holistic approach to personal finance
Another significant component of the shared value business model is the holistic relationship the credit union has with the consumer. This component reflects the former credit union model with one big difference: It creates a closer relationship between the consumer and his/her finances through emerging technology.
The shared value business model also provides a social media component within online banking. Currently when a member uses an online banking platform, regardless of device, the use is limited to transactions.
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This model will allow for a social media aspect be apart of the online banking so members can create saving and lending communities, like there currently exists on Facebook.
This allows consumers to engage with others on how to solve financial problems, or to simply meet others who share a similar financial situation.
Other member-centric and member-value products and services could include:
- Loans that have a savings give back to reward good repayment history [pdf];
- Credit cards that donate a portion of the interchange income into a credit union scholarship fund;
- Fee alerts to warn members they’ll be charged a fee if they continue with a certain transaction; and
- Financial management tools to help reduce the number of members who use courtesy pay products excessively.
The shared-value future
The shared-value business model creates a sustainable way the credit union industry can compete in the future without looking like banks. It provides economic value to the credit union industry through the additional income generated from peer-secured loans.
This model also allows credit unions to capitalize on their status of being locally owned and operated, their responsible investing policies, their reasonable executive compensation policies, and their people-helping-people philosophy.
In addition, consumers are looking for authentic financial institutions after the Great Recession. The shared value model fulfills that need. It gives credit unions the ability to gage their success in the community with the number of new successful businesses they help generate.
The shared-value business model also benefits society through the creation of local businesses and jobs. This is a new and uncontested space that could be greatly served by the credit union industry, and a space that returns the credit union industry to its roots.
ANNE LEGG is vice president of marketing at Cabrillo Credit Union in San Diego and former chair of the CUNA Marketing & Business Development Council. The recent MBA graduate explores credit union sustainability in her MBA-thesis/white paper, “Creating a New Credit Union Sustainability Business Model.”