Putting Your Credit Union Leadership in the Hot Seat: Tough Question No. 1

Where is your credit union’s growth going to come from?

By Shazia Manus, Chief Strategy and Business Development Officer, AdvantEdge Analytics

McKinsey & Company recently proposed a framework for helping C-level executives make critical decisions around transformation and growth. Over the next several weeks, we’ll explore the framework’s three critical questions through the lens of data maturity and the credit union industry:

  • Where is your growth going to come from?
  • How can you grow now and tomorrow?
  • How will you set up a strong growth engine?

Question No. 1: Where is Your Credit Union’s Growth Going to Come From?

When confronting the first of the three questions, a credit union team must commit to thinking expansively. This may require leaders to leave the castle and take a walk around the kingdom. Spending time with frontline staff who solve everyday problems for members can help you think about growth in entirely new ways. While you may not have the ability to go full “Undercover Boss,” simply walking around and talking with tellers, loan officers and others will reveal all kinds of opportunities.

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And, in today’s landscape, those opportunities are infinite. As a digital world has begun to layer over the physical one, a parallel universe of unfathomable potential is coming into view. It’s not only our opportunity, but our responsibility, to get in there and explore the ways our cooperative organizations can play in this new reality.

It’s really about reimaging our place in the world. And, to do so, we must develop a keen awareness of the value we deliver today. Only then can we begin dreaming big about the value we can deliver tomorrow.

Substantial growth will come from the new fruits of our old roots.

Over my career in financial services, I’ve found it to be incredibly helpful to look outside our vertical for “new fruits” inspiration. After all, credit unions are far from the only legacy organizations trying to find their place in the digital world. What I’ve discovered is that the incumbents having the greatest success with transformation have adopted or are on their way to adopting a platform mindset.

Imagining Growth from a Platform Mindset

Platform business models take us out of a narrow way of thinking. Rather than brainstorming growth from a product-first mindset (e.g., building a better mousetrap), platform thinkers take a more expansive approach. Their approach is designed around the end-user, and seeks to enhance their experiences or solve their problems faster, more thoroughly or in a way that’s actually enjoyable.

Thanks to digital technologies that allow people and organizations to seamlessly connect and communicate in real-time, we are now capable of co-creating value for end-users in a way never before possible.

Co-creation is a huge piece of the platform pie. We see examples of providers coming together from all different walks of life to build customer-centric models that wouldn’t be possible without collaboration (and competency around technology integration, of course).

Tesla Reimagines Risk Profiling

Take Tesla, for example. Yes, it is a new company, but its approach to growth is a great example of platform thinking. Consider the way Tesla bundles lifetime auto insurance with the cost of its cars. Shopping for auto insurance can be a hassle, so why not eliminate that pain point for Tesla customers?

What’s more, the collaboration between Tesla and its partner insurance provider(s) may actually reduce the costs of insurance – for both providers and drivers. Because each of Tesla’s connected cars is generating massive amounts of data, assessing a driver’s risk profile will become exponentially more accurate and, therefore, less expensive. Tight collaboration and mutual benefit will allow Tesla to ensure the insurance partner passes that savings onto its customers.

The ultimate vision of Tesla and other platform business models is to transform the user experience – in this case, car buying – to be seamless and pain-free. Although Tesla is pursuing development of its own insurance company, they are partnering with existing insurers in the meantime. In other words, they are co-creating the ultimate car-buying platform.

Nike Gives Potential Competitors a Boost

Another example is Nike. The company has built its own developer network to help startups. Every summer, Nike hosts entrepreneurs in its Portland headquarters for three months. All that time, the startups are getting help from Nike engineers to build something new using Nike’s user data and proprietary technologies.

These newcomers could be considered a competitive threat to Nike. But, when other shoe innovators build on top of its Nike+ platform, the incumbent gets to experience the best of both worlds. The “old dog” gets to learn a few new tricks while retaining its comfy position on the front porch of the athletic footwear industry.

Credit Unions as Platform Businesses

As they consider where their individual cooperative’s growth is going to come from, credit union leaders would be wise to adopt a similar frame of reference. How can financial cooperatives – entities already wired for collaboration – work with potential disruptors to reimagine value for members? Can they build a financial services ecosystem that pulls multiple touchpoints into one? These are the tough questions credit union leaders and their teams may want to incorporate into strategic planning discussions around sources of growth.