To succeed in the retail financial services landscape of the future, we need to understand some key principles (Rules) along with technologies and techniques (Tools) to implement them.
Rules
The principles to guide strategy and tactics. Just because we’re in the Digital Age, it doesn’t mean that the Laws of Nature, Human Nature and Economics have been repealed. Even so, there are some changes you’ll need to make because of the new retail financial services landscape.
The Fundamental Things Apply
The Laws of Nature, Human Nature and Economics are still in force. People still have the same basic motivations for managing their finances. They still have the same basic thought processes for selecting trusted advisors. Basically, they still want the same things they’ve always wanted. Here are some fundamental things to pay attention to.
The marketing process still works the same as always. Folks who haven’t heard of you yet need to hear about you enough to have that little bell go off in their head when they hear your name. Folks buy for their reasons, not your reasons, so tell them the benefits. People stay with financial institutions that meet their needs and treat them right.
Convenience matters. Make it easy for folks to become members and deal with you and they are far more likely to do so. Do everything you can to offer places, products and pathways that people can use without thinking about them, so they can concentrate on achieving their goals.
Differentiation drives competitive advantage. Back in 2001, when the folks at Gallup talked to banking customers in the United States, less than 10% reported that one bank stood out as "the best." 58 percent of current banking customers said that "all brands are the same." That's good news and bad news.
The bad news is that it's likely that you’re one of the “just like all the others.” The good news is that setting yourself apart should be easy. Credit unions should be different from banks.
Differentiation drives market share and customer loyalty. And the two most important drivers of differentiation are culture and people because just about everything else can be copied.
Your culture should aim for the following things that add value and comfort to the relationship.
- Have people take responsibility for solving the problem. Don’t pass it around.
- Admit mistakes.
- Remember who people are.
Perceived value in the target market drives profitability. That's the key finding of the largest study ever of profitability drivers, the Profit Impacts of Marketing Strategies study. Most businesses have to define the target market and determine what constitutes value there. For credit unions, the field of membership defines the overall market.
Remember that what constitutes value will vary with different sub-groups. It will be different for different generations. It will be different for individual members at different stages of life.
Technology is a tool, not a reason. Pay attention to differentiation and value for your members. Then use technology as one of the ways to deliver increased value.
The Times They Are A-Changin’
The Digital Age, the Deregulated Age, and the 21st Century are different from earlier times in some key ways. Here are some things that are different and that you should pay attention to.
Banking is increasingly everywhere. You need to be everywhere, too. Don’t wait until everyone's ready for it to introduce technologies that let folks do their banking from wireless phones and other channels.
Banking is increasingly everytime. Make sure you can deliver both anonymity and relationship all day and all night every day.
You have more competitors than ever. Don’t be surprised. Expect it. So make an effort to be clear about who you are and how you deliver value and be unremittingly diligent about telling folks about it.
You have to run faster than ever. Make sure you use technology to help you answer inquiries instantly when that's possible. But don’t put so much emphasis on speed that you fail to deliver quality.
Tools
Tools include both technologies and techniques. Here are some tools and how you might use them to compete to win.
There are two key tools for retail financial services success in the next decade. One is the Net. The other is a branch network. They work best when you use them together.
Online banking will become more and more important as the way that people do the anonymous part of their banking. They will check balances and transfer funds using their PCs and wireless phones. They will make payments online and purchase things there using credit and debit cards.
Your Web site will be important as a repository of information that people can check out whenever they choose. Every financial product and service you offer should be described on your site. Your site should also explain what a credit union is and allow folks to become members.
Email is a power tool for communication. Use it to stay in touch, to notify and to respond to requests for information. Much of your email can be automated or handled using “pre-fab” replies.
Email is especially important because so many folks will be using financial management software like Quicken and will not be visiting your site regularly. A simple email newsletter can tells folks about key products and new offerings. Keep the letter short. Use links to your Web site as the way folks can find more information.
Your branch network is where your members will come in contact with real people. They will go there or call there when they need things explained, when they’re not sure about something and just as a basic part of how they live their lives.
Shared branching is a perfect part of an effective strategy for a credit union. It fits in with the historical branding of the movement, rather than the individual credit union. It helps leverage limited assets.
To make all of this work you need strong information technology infrastructure and good customer relationship management software. Use those to support an effective credit union strategy and a strong credit union culture that delivers value and you have all the tools you need to succeed in the retail financial landscape of the future.
