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We knew it was going to happen. Those big greedy banks were going to come up with new fees to replace the interchange income lost thanks to Dodd-Frank-Durbin-Obama. I hiked the hill last year (my first time) to try and get the Durbin amendment stalled – because it was flawed. But no – this is a bill that helps consumers. Balls.
When the average American consumer can ill afford it, banks are once again hurting the little guy.
History is repeating itself. Credit Unions to the rescue.
Raise your hand if your credit union’s loan-to-share ratio is at an historic low point and your CFO is looking for non-interest income? I know there are probably lots of CFOs saying “Let’s charge LESS for checking and we can still be the hero.” To them I say a firm, “No!” (use a rolled up newspaper if you need to and just hit against your leg for effect)
This is such an opportunity that cannot be taken lightly. A true differentiator could emerge. Think about it – when people ask us:
“What’s the difference between a bank and a credit union?”
Our answer can simply be, we don’t charge you for checking.
When someone asks:
“Why should I join a credit union?”
We can simply say, we don’t charge for checking.
But Denise – we need to make money!!
Okay. How about this. Lend.
That’s right. Make your money the old-fashioned way. Lending it.
Banks are also being accused of not lending to people in need even after those greedy bastards got bailed out by the taxpayers. For shame.
Make a loan to someone with no credit score! Crazy! Before we had FICO scores EVERYONE we made a loan to had no credit score.
Imagine being the hero that makes a Gen Y their FIRST car loan and helps them establish credit AND doesn’t charge them or checking! We could lower that average age of a CU member (now hovering around 49) considerably.
In the immortal words of Seal “We are never gonna survive……..unless we get a little crazy.”
We missed the first three days of our vacation because of a cancelled flight. Finally arrived at our Villa in Tuscany late Tuesday afternoon. Yesterday we spent the entire day with Monika Iris – our guide to the Chianti region. Every single place she took us had one thing in common – they stay deliberately small so they can concentrate on the quality of their product.
A great example is the DOCG rating for Chianti wines. There are rules – much like the NCUA’s CAMEL rating only these make sense.
Rule #1 – Your grapes must be grown by you. You must have complete control of the product. No participation grapes.
Rule#2 – You must limit the quantity including the number of grapes per vine that are allowed to grow to maturity. You cut down several bunches before they are allowed to mature and they become fertilizer. Not every grape can join the bottle. There is no “lives, works, worships” grape rule.
Rule#3- You must pass a rigorous blind taste test – a valid survey of your product – the experience.
Everything I experienced yesterday validated the thought that quality versus quantity still matters. In one day I feel as if the cost of the trip was justified.
Today – Castellina for gellato…….
The not new New Beetle was unveiled in New York City last week. Yes, you read that correctly. A new VW Beetle was revealed with the sole purpose of proving that it was NOTHING like a VW Beetle. Klaus Bischoff, VW Design Chief, was tired of the Beetle’s flower power image and the fact that 61 percent of New Beetle purchasers in 2010 were women. Blech!
Take that bud vase off that dash. No flowers for you.
You can only order the not new New Beetle in Black (and eventually red and white) No more fun colors for you!
Gone are the circular headlights that looked so much like eyes with droopy lids women would dare to put eyelashes on them. No more fun for you!
I owned a 1973 Super Beetle named Howard, a 1979 VW Beetle Convertible named Marge and a 1999 VW New Beetle named Toonces. I am…..was the Beetle’s target audience. Apparently no more.
This is perhaps the weirdest business strategy I’ve ever heard of. Clearly a loyal audience was established, so let’s destroy it.
The not new New Beetle isn’t a horrible looking car, but all the charm and quirkiness we loved has been engineered out of it.
The only feasible reason for this strategy in my opinion? To make the VW Classic Beetle and the New Beetle (the old one) more valuable.
It’s finally happening. Banks are giving up on Free Checking. After taxpayer bailouts and posting record profits, it’s not enough. Let’s see how much money we can get from consumers in the worst economy since the Depression.
Now is the time for credit unions to do nothing. Absolutely nothing – and you will be the hero. You will have your differentiator back.
Consider the airline industry. No one charged for bags. Then American airlines had to charge (so they say) and then one-by-one everyone followed. Everyone except Southwest Airlines. And the best part? Marketing decided to flaunt their decision to do nothing in a series of very successful ads.
So please, do nothing.
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.
It was 1945. The world record for the mile stood at 4:01.3, held by one of the great Swedish runners of that generation Gunder Hagg. That was the fastest recorded mile in human history. Naturally there was pressure to break the four minute barrier.
It took 9 years for the record to be broken. John Landy came close in 1952 with 4:02.1 but declared:
So close – yet so far.
May 6th, 1954 Roger Bannister ran the mile in 3:59.4.
He broke the four minute brick wall barrier. He did what many did not think was humanly possible. And 46 days later John Landy, who had said, “I don’t think I can,” ran the mile in 3:57.0
Today Apple announced that they have created an iPhone that is essentially a wallet. It’s a closed payment system that uses something called near-field communications or NFC technology.
According to an article in CU Times this morning:
iTunes users still could use credit cards and banking accounts to fill up their iTunes accounts, but that would be the extent of financial institutions’ involvement in an Apple mobile payment system.
Creating a new payment system would cut out middle men like VISA and MasterCard.
Just last year I heard a now retired CUNA CEO say “We’ve been talking about smart phone technology for years – I still think it’s way off.”
The four minute mile has been broken in the financial industry.
And Steve Jobs just lapped us.
Last week The Gap revealed their new logo.
More than 1,000 “friends” left disparaging remarks on their Facebook page.
Today Gap announced, the old logo would return. They took a page from the new Coke old Coke playbook. Oops. They didn’t know you loved their old brand so much.
Lessons we can learn from Gap:
1. If you change your name/logo and there’s no outcry from your members, you’re in trouble.
2. The logo is not your brand – but it is the symbol of recognition of your reputation. Gap had 20 years of solid reputation and a very basic logo. Why mess with that?
3. Be careful what you wish for – when you beg for friends on Facebook, you better listen to them.
Two words: Instant. Gratification.
Last week-end I was catching up with all the Hollywood gossip in People magazine and read a review of Jonathan Franzen’s latest book. I love him. Pulled out my Kindle and bam. Owned it.
Earlier this week I posted on the CUCallCenter blog the ROI on a social media journey. We posted this video, and sat back and watched the hits like it was, well television. Instant feedback.
Just now my niece texted me (during breakfast) that Netflix dances on Blockbuster’s grave with instant viewing of Battlestar Gallactica! Frakking awesome news.
Netflix gets it. When Blockbuster was still making people queue up on a Friday night to get the latest release and penalizing you if you did not drive BACK to the store within 24 hours to return it, the folks at Netflix were beginning to digitize all titles.
As my friend Brent Dixon said at the Credit Union Association of New Mexico’s Annual Meeting this year. Now means now. Not in five minutes or five days. Instant gratification. That’s what Gen Y expects. Is it reasonable? Sure. Better yet, is it possible? Of course.
Consider the primary financial indicator (or so most people think) the checking account. A royal-pain-in-the-you-know-what-to-move. And how have we addressed the issue? A switch kit that looks like a To Do list highlighting what a a royal-pain-in-the-you-know-what-to-move it is. Another glaringly obvious idiocy? Being told I’ll have to wait 7 to 10 days to receive my Debit card. BUT, I can still get a pad of temporary checks instantly. Gen Y wants it now. Ten days is an eternity. They don’t even know HOW to write a check.
I’m going to go watch the BSG now. Frakking awesome.
So say we all.
This morning Nathan Capron, Marketing Specialist for UniWyo FCU posted the link to the Beloit College Mindset for the Class of 2014 on the CUNA Marketing Council ListServ. Nathan had a great intro to the piece:
“I think I read somewhere that attracting Gen Y was a hot topic for credit unions; has anyone else read that? (he adds that was intended to be sarcastic).
The intended audience are professors at Beloit. It’s to help them create relevant connections in the classroom. Nathan wisely sees the application in our marketing.
If we’re to lower the average age of a member from 48 to 47 (a lofty goal) we need to start thinking like a Beloit College professor. I give you a glimpse of the cultural touchstones that shape the lives of students entering college this fall.
1. Since digital has always been in the cultural DNA, they’ve never written in cursive.
2. With cell phones to tell the time, there is no need for a wrist watch.
3. They will be armed with iPhones and Blackberries, on which making a phone call will be only one of the many many functions they will perform.
4. Email is just too slow and they seldom, if ever use snail mail.
5. Czechoslovakia has never existed.
6. Nirvana is on the classic oldies station.
7. They first met Michelangelo when he was just a computer virus.
Takeaway: If you’re still trying to lure new members with a free box of checks, and no mobile banking application, you’ll likely die of old age.
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The 2020 Vision of Marketing 
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