I dont’ think I’ve ever gone three weeks without a blog post. After Steve Jobs broke the four minute mile and lapped us, my mind went into simmer mode. I had some great comments from some very smart people on that last post. It gave me pause.
Tim McAlpine made this comment:
Who knew the sleeper of an iPod / iTunes combo created a decade ago would lead to iWorld – a magical place where you need not go outside (or carry cash or plastic).
People inside the financial world will dismiss this invention just like the extinct record stores and newspapers and the bookstores and the video stories and the…
And then Borders filed for bankruptcy (as expected). Another warning shot across the credit union bow – a shining example of disruptive technology destroying an entire industry.
Why did Borders Books, Music and Movies ignore the trifecta of disruptive technology that was the Kindle, iPod, and Netflix?
Because their target audience (current customers) were not early adopters of technology and would likely never shift over. There are plenty of people that still love to hold a book in their hand and buy CDs in their plastic case and put them on a shelf in their home. Barnes & Noble was allowed to survive and will hang on a bit longer because they also mimicked Amazon.com early in the game by opening an online store.
One could argue that most existing credit union members (age 48 on average) are not likely to use PayPal or move to an electronic wallet. Too late in the game to change. So we’re safe, right? For now.
But it begs the question: “What about future customers?” New customers are born every day. And this Generation named Y is the second largest in US history. When they reach the age of disposable income and independent transportation (16) are they gonna drive to Borders to buy the latest Lady Gaga CD? Hell no. They are going to download it to their iPhone. That’s what killed Borders.
Apple’s electronic wallet is not going to destroy the banking model over night – but the model will replace the traditional process of moving money for Generation Y and Z. They won’t have to switch – they will merely be provided with two options. Drive down to your parents credit union (at $4.00 a gallon in gas) and stand in line to deposit a check or sit in line at the drive-up ATM (wasting precious fossil fuel) OR upload money to their phone.
Our world has changed. The iPhone is really a disruptive innovation. Jobs improved our product and service in ways that the market does not expect, and is designed for a different set of customers. The next generation of customers.
The numbers are there to support our eventual Border-like-demise. The average age of a credit union member continues to inch up and for most risk-averse-regulator-devout-near-retirement leaders, the loan-to-share ratio continues to decline. Some of these venerable commanders have even declared that “It’s not going to be my problem, because I won’t be around in five years.”
There is no better form of validation of Jobs innovation than that statement, in my opinion.
The 2020 Vision of Marketing 
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February 21, 2011 at 11:23 am
Ken Gardner
So what are we waiting for? Oh right, we’re still arguing over interchange and CFPA and a host of other things. When are we ever going to realize that to create we have to work towards positive innovation not maintenance of the status quo?
February 21, 2011 at 2:58 pm
Denise Wymore
Ken,
Spot on. I think we allow these distractions to become the excuse why we cannot and will not innovate.
February 21, 2011 at 12:27 pm
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February 21, 2011 at 5:25 pm
Gene Blishen
Ken has hit the nail on the head here. There are all of these lower priority arguments that really are heard as ‘you have to do it this way, my way’. We ask leaders in our Central organizations to lead but they get bogged down in being all things to all credit unions all the time. We don’t publish standards or common sound business practices for particular subsets of credit unions 1 or 2 branch CUs versus 50+ CU organizations. And in the meantime our environment of change speeds along, outpacing what was last year or last week. Maybe we need to re-think how we co-operatively arrive at making decisions.
February 22, 2011 at 6:46 am
Janine McBee
The credit union industry size is both blessing and curse. When compared to the banking industry, credit unions are small in size. Our relative smallness should be a blessing, leaving doors open to us to innovate our way into the future faster. Yet, for many credit unions, size is a curse. Too many credit unions are having to spend way to much time keeping up with regulations and compliance issues, working to survive. Innovation is seen as an impossible luxury.
The average age of credit union members can also lead to the idea that innovation is not necessary, “our members would not use technology”. Are you so sure about that? Maybe you haven’t provided “the app for that” to meet your members’ and potential member needs.
Might the age of members provide an opportunity to connect generations, establishing a two way mentoring/learning environment? In turn, bringing younger members into the world of credit unions.
Are you seeking input from all demographics you have the ability to serve, looking for ways to help them with their finances as they journey through life?
Let’s don’t stick our heads in the sand as technology evolves and needs/wants change. Our industry was built on “people helping people”. Let’s put our collective talents and energy together and innovate forward.
February 22, 2011 at 8:12 am
Denise Wymore
Janine,
Thank you so much for this comment. I loved what you said “Innovation has become an almost impossible luxury for so many credit unions struggling today.” That’s why the Filene Research Institute is repositioning themselves from the Think Tank to the DO Tank.
We are partnering with Matt Davis of Filene to help us research and implement an innovative product we hope to launch this year.
Some predict that this could be “The Year of the CUSO” as credit unions pool their resources to innovate.
Cooperation among cooperatives is essential for our survival – now more than ever.
February 22, 2011 at 7:18 am
Amy McGraw
One thing I have taught my kids is to never expect things to stay the same, and then when things change you’re ready. Not only do we have to be ready to move, but we should be on the move, anticipating change, heck MAKING change happen. Look outside the box people, the days of scotch tape marketing are over. We need to move with the times to keep up with this elusive Gen Y, we need to speak their language and offer products on the platforms THEY use. This is an example of what Apple does best – using technology to create convenience. Carpe Diem people – there will be no tomorrow if we wait.
February 22, 2011 at 8:14 am
Denise Wymore
Amy – you’re a smart mom.
Carpe Diem indeed!
February 22, 2011 at 12:45 pm
MB
My parents are 84. They have a cell phone, a Mac laptop, e-mail, a Facebook page and online banking. Why would any businiess assume just because someone isn’t young that they don’t use the available technology?
February 22, 2011 at 3:38 pm
Larry H.
I’m really anxious to see what you and the guys at Filene come up with. I can’t think of anything that credit unions have truly innovated since payroll deduction. Unless you count branches in high schools, which I don’t. The guy who said “the more things change, the more they remain the same” must have been thinking about credit unions because they remain the same despite all the changes taking place. We need to shake them out of their sleepiness and into the year 2011. Keep going guys because I know that the blogs posts are making a big differene. As cooperatives, we have to cooperate with other cooperatives for the greater good and to be able to say that we are cooperating.
February 26, 2011 at 10:53 am
Tim
Can’t wait to see you at GAC11