Volatility: A Perfect State for Credit Unions
August 8, 2023
A few years ago, the Harvard Business Review published an article about the states of disruption across all industries.
Retail banking fell into the category of “high” levels of current disruption and “high” susceptibilities to future disruption. The authors referred to this as a state of volatility.
Where most might consider banking durable, it’s quite the opposite, according to Jeff Rendel, certified speaking professional and president of Rising Above Enterprises.
Remember the days when credit unions focused on consumer loans, banks on business loans, and savings and loans on mortgages? Gone. Countless credit unions offer every product once considered the exclusive domain of a specific kind of institution. That’s great for member acquisition. But remember: when one member is acquired, that member left or decided against another financial institution. Volatility is a two-way street.
Recently, a board member asked what state of disruption was right for credit unions. After thoughtful discussion, all present agreed that “volatility” was the best state. Uncomfortable as it might be, it compels credit unions to constantly recognize, seek, and create change for members. Another director commented that the history of credit unions was founded on disruption: new entrants into an established market offering products and services to overlooked, ignored, and avoided segments. Today, more than 130 million credit union members in the U.S. prove that disruption works.
Disruption has always been with us – online banking, mobile wallets, blockchain, fintech, and the list will go on. It’s here to stay. Perhaps it’s time for credit unions to actively recognize the opportunity that accompanies volatility and disruption, building this mindset shift into culture and strategy. Many credit unions actively observe other retail services for insights into changing consumer expectations and service standards, making adjustments expected from members. Other credit unions research new and established fintech companies that produce business intelligence into experiences and delivery methods that appeal to consumers, as well as opportunities to introduce artificial intelligence and automation to operations.
Further, exploring fintech partnerships and investments (within and outside the credit union industry) can provide new sources of value for members, revenue for your credit union, and access to the technology that sets the tone for the future of financial services. And to add more volatility to the mix: charter expansions, mergers, and bank acquisitions highlight that the credit union industry is prepared to continue as a unique, but always upgrading, entrant into an established market.
Many credit unions realize that, as the industry swiftly advances, systematic monitoring and enrichment of strategy is exceptionally important. One credit union CEO recently shared that she considers disruption, in partnership with volatility, as an active tactic rather than an outside threat. Making the opportunity that comes with volatility a part of her credit union’s culture, she assembles the executive teams each month for half-day strategy sessions focused on 1) volatility authenticated by trends 2) opportunities to “intentionally adjust for excellence” (her term for planned disruption) and 3) making real-time refinements to operations. This has allowed her credit union to be nimble and always on guard for new ways to be an improved partner in members’ financial lives. The results? Double-digit growth, ROA, ROE, and a net worth ratio nearly twice the industry average.
If volatility and disruption have always been with us, perhaps the committed pursuit of the duo is spot-on. It can deliver the next point of distinction that your members are counting on for you to present. Some have discovered that the ever-changing nature of our business, and members’ expectations are best met by consistently exploring new ways to add value for members. Volatility is the perfect state for credit unions.