Lending

King: Bye, Bye Branches

Failing to adapt to changing consumer behavior and technology could lead to CUs’ demise.

November 07, 2012
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Brett King speaking at the CUNA Lending Council Coference.

Are credit unions doomed to follow the footsteps of record shops and bookstores, which have largely disappeared from the retail landscape?

It’s entirely possible, says author Brett King, if they—like the aforementioned stores—fail to adapt to changing consumer behavior and disruptive technology. He addressed the CUNA Lending Council Conference in Miami Monday morning.

King, founder/chairman of Movenbank and author of "Bank 2.0" and the new "Bank 3.0," advises credit unions to examine the patterns that led to the demise of businesses in several industries.

The record industry, for example, started out selling a physical product (vinyl records) in physical stores, and then sold physical products in digital stores due to the Internet. It now sells music digitally in digital stores.

“The iPad changed the industry in terms of distribution,” King says, “and eliminated the need for physical stores.”

King sees the same thing happening among financial institutions, which for years have relied on branches to sell physical products (checks, credit cards, debit cards), and are now doing so digitally via online and mobile banking.

Since 1995, there has been an 85% reduction in the number of consumer visits to financial institution branches, King says. “That’s a huge shift. So why do we think branches are where the magic happens?”

Financial institutions have only seen the start of this shift, he adds. Consider that:

“By 2016, there will be 300 digital interactions for every one branch transactions,” King says. “The phone becomes the bank account. There’s no way you can compete or maintain relationships if you rely on the branch.”

Credit unions must determine how they’ll attract and interact with members who have grown up with this technology, King says.

Instead of traditional marketing, today’s most successful brands rely on customer advocacy. He says 80% of Generation Y have bought a certain brand and 70% have visited a store or restaurant based on friends’ recommendations.

This is a point in credit unions’ favor, King says. “Advocacy is the great benefit credit unions have. Why aren’t we using that to attract the next generation of customers?”

King cites several ways credit unions can foster advocacy among members:

“We have to change our behavior,” King says. “If not, we’ll be out of business. We’ve seen it in every industry.”

Great for selling books

Randy Schultz
November 07, 2012 9:14 am
The continued surge in technology should be no surprise to any of us by now...and if you're not looking at integrating and elevating its importance into your credit union strategy, you'll certainly be challenged for new growth in the coming years. But to think that branches and technology won't coexist is an interesting approach. As we continue to design branch experiences that integrate technology there is an opportunity to maximize both and build relationships based on that integration. It's certainly one of those "glass half full" questions that the answer will be left up to those credit unions who are progressive enough to embrace it and stay on the leading edge rather than take the "let's wait and see what happens" attitude that has plagued so many in the past. Great wake-up call article Brett!


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