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CUs at pivotal tipping point Reality Check attendees told
ATLANTIC CITY, N.J. (3/2/12)--Credit unions are at a pivotal tipping point in terms of competition, attendees at the New Jersey Credit Union League's Reality Check conference in Atlantic City were told Wednesday.

John Lass, CUNA Mutual Group senior vice president of strategy and business development, made predictions for credit unions for the next four years during the New Jersey Credit Union League's Reality Check conference in Atlantic City. (Photo provided by the New Jersey Credit Union League)
John Lass, senior vice president of strategy and business development at CUNA Mutual Group , noted that four years ago, credit unions faced a very different type of competitor in the industry than they do now.  PayPal, Target and WalMart are getting into the financial services industry. He dubbed them true game changers. (The Daily Exchange March 1).

He cautioned credit unions to watch out for developments in mobile payments and told them that the key organization to watch is Isis, which offers a "mobile wallet" that organizes payment cards, offers, and loyalty cards in one app on a smartphone. With JP Morgan Chase and Capital One already signed onto the Isis network, "credit unions need to get a seat at that table," Lass said.

Among the examples he cited: Japan's largest mobile phone provider, which gained a bank charter to allow its customers to bank over their phones and gained unprecedented market share, and  digitized USAA, which consistently is ranked at the top in customer satisfaction, even though it is complete self-service based.

Falling behind as the financial services industry becomes digitized isn't the only challenge credit unions face, Lass said. He pointed out a trend of traditional spread income becoming "compressed."  "Income comes from fees or spreads--that is pretty much it," he told attendees.

When asked what they think of the future of the traditional spread income will be in the next five years, 34% of attendees said it will widen, while 65% said it will continue to compress. After providing this "reality check," Lass presented some peace of mind. "Branches are here to stay," he said. "But credit unions need to find a way to sell away from the branch."

At other Reality Check sessions, credit unions heard this advice:

  • Technology and social and economic mobility is a top priority for the Millennial Generation--the 50 million Americans born between 1981 and 2000--and those should be the top priorities for credit unions that want to attract this generation, said Kenneth O'Connor, director  of student advocacy for Fynanz, a private student loan company and CUNA Strategic Services provider.
  • Credit unions need to access the "credit union landscape"--strengths, weaknesses, threats and opportunities--to make their business model sustainable, said Anne Legg, vice president of marketing at Cabrillo CU, San Diego. Legg introduced the Shared Value Business Model, which provides economic value to the industry through additional income generated from peer secured loans needed to manage expenses.
  • New trends are reshaping the world of financial services, said Mark Sievewright, president of Fiserv's Credit Union Solutions. He presented technology trends credit unions must embrace to stay current and viable, noting that  credit unions must keep up with the digital movement and open themselves up to the world of "mobile." Debit cards and online bill pay are must-haves to attract and retain younger members.  "Mobile" is a revenue opportunity for financial institutions, he said.
  • To prevent identity theft, consumers must "think like a spy," said identity theft victim John Sileo. "We're leaving digital DNA all over the place," he said, emphasizing the need to take responsibility for managing, controlling and protecting data.


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