There’s an easy way for credit unions to find out how to compete with fintechs and attract millennials – download those companies’ apps and sign up for their services.
That’s the advice from Sean King, a fintech consultant at Los Angeles-based UXOps and a former senior designer at Green Dot. King's remarks came during a breakout session at the Michigan Credit Union League’s Annual Conference and Exhibition in Detroit last week.
Fintechs and challenger banks focus on the technology and streamlined user experience that millennial consumers want, said King, but some also share similar philosophical underpinnings to credit unions. He offered the example of Aspiration, which he said not only donates a portion of fee income to a charity of the user’s choice, but also works with a membership structure similar to credit unions.
Aspiration and other players also position themselves as not-for-profit entities like credit unions, he added, even though they are for-profit companies.
“I really do think credit unions have some unique positioning advantages already” as far as competing with these entities, he said. “It’s just a matter of how do we communicate this? That’s why it’s important to look at some of the marketing, go to the websites, download the apps and even look at some of the direct mail these fintechs are putting out. You can get some great ideas to how you can tweak your existing brand.”
Speaking earlier in the day, however, King pointed out that targeting millennials may require a shift for some institutions. Neo-banks and fintechs generally aren’t offering services credit unions can’t already provide their members, he noted in remarks during the conference’s general session.
But King said in his own research he found that credit unions are losing members in their 20s and 30s, often to new competitors. These members, he said, are leaving because – accurately or not – they don’t see their credit union as being sophisticated enough to provide the solutions they need in their lives, including services such as helping pay off student loans, buying a home or a great rewards-based credit card offering.
While the digital-only landscape is growing, he added, those entities build share of wallet in the same way as traditional financial institutions.
One key for credit unions, then, may be to highlight one old-fashioned aspect: safety and soundness. That’s because many in the fintech, challenger bank and neo-bank space aren’t federally insured.
“Looking at what happened in 2008, credit unions were actually much stronger than traditional banks, so play that up and make that another meaty point to bring up when you’re positioning your brands,” he said.
