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Speaker CUs no longer a place but an app
GDAŃSK, Poland--The future of banking may not be a physical presence, but an "app" that makes life's processes easier, author Brett King told a World Credit Union Conference audience Wednesday.

Click to view larger imageThis is an exciting time for credit unions--but a terrifying time for credit union executives, Brett King told a World Credit Union Conference audience in Gdańsk, Poland.
For many that future is now, and credit unions not prepared for the transformation already engulfing the financial services industry will not have much of a future themselves, King said. "This is an incredibly exciting time for credit unions," said King, author of the forthcoming book Bank 3.0 and the closing speaker for the conference, presented by World Council of Credit Unions in Gdańsk, Poland. "But it is a terrifying time for credit union executives."

Technology has brought a dramatic shift to not only to how financial services are delivered, but also to the capabilities and preferences of future generations of members. For these "digital natives," technology is not new--it is all they have known. It is up to credit unions to meet the nature and needs of those consumers or lose them to the competition, King said.

"The perceptions of what credit unions are in the world will change over the next 10 years," King said. "How will you build a great journey for your members? That's the trick."

Through Internet access and especially smartphone technology, credit union business has become something members do at a time and place that suits their needs, and those needs rarely include a visit to a branch. In fact, smartphone technology has taken the place of other transaction devices, such as debit cards, due to its capability to complete transactions with the flick of an "app" and display account balance information in real time.

Audience members learned that credit unions must redefine themselves as "app" providers.
"The iPhone has become a proxy for the debit card," King said. "It's the debit card of the future." He cited the Kenyan cellphone-based transaction company M-PESA ("pesa" is Swahili for "money") as the world's fastest growing "bank," based on its widespread use and growing market penetration. Currently, 20% of Kenya's population of 40 million have financial institution accounts, while 50% have M-PESA relationships that enable them to transfer cash, pay bills and perform other basic financial services.

Kenya's figures roughly translate to those of the entire world, King said. Sixty percent of the global population are unbanked, but 85% have cellphones. He predicted that by 2017, the entire population will have smartphones and most will use them for financial transaction services, especially Generation Y members.

"By 2020, about half of your credit union member population will be Gen Y," he explained. "They will be mobile-first, and that will be their preferred way to do business."

The changing reality will spell the end to many credit union branches, said King. "If you think the branch is the place that the magic happens, where you define your relationship with your members, then you are in trouble," he added.

Generation Y members are mobile-first, which will change the way credit unions do business, King said. (Photos provided by World Council of Credit Unions.)
The best option for credit unions is to redefine themselves as providers of "apps" that enable members to gain crucial information when and where they need it. Such thinking will close the gap that is developing between credit unions and their members, and open the door for a new generation of digital natives who may even sing credit unions' praises through social media.

"It is all about the context in which you operate," said King. "Financial services need to be part of the journey, and you need to become embedded in the lives of your members."

King went into even greater depth during Wednesday's "Bacon, Eggs & Business Experts," one of the conference's two separate-fee breakfast sessions that started the day. In between, breakout session audiences looked at increasing regulatory reporting requirements, studied lessons in credit union lobbying and learned to cultivate social responsibility as part of sustainability.

The conference ended Wednesday.
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