(This was also posted on the CU Times blog on February 4, 2011)
The announcement that the iPhone will be released on the Verizon network in the next couple of months got the tech pundits buzzing, but only slightly. That fact that Android powered phones have made major inroads into the smart phone market is the major reason for the collective yawn from the technorati, but credit unions should be taking the proliferation smart phones as the signal of a major threat and a major opportunity for our future.
The New Consumer
You’ve seen them, but maybe haven’t realized what they signal. At a shoe store two women take a picture of the bar code on a pair of shoes…not to find out more about the product, but to see if they can get a better price elsewhere. The mobile Internet is a powerful tool for the new consumer. With their always connected, location-aware device they are on the lookout for deals and positive buzz. The new consumer can not only quickly identify deals, but loopholes that allow them to manufacture their own unique deals. You’ve heard about Groupon and Foursquare (and maybe even tried them), but these are just the first pioneering efforts to link retailers and the rapidly expanding number of consumers using the mobile Internet.
It almost goes without saying that this new consumer is a threat to credit unions…at least those without a strategy to connect with them. The current credit union service model best suits the shrinking number of consumers who plan ahead for the financing of a major purchase. Very few credit unions are equipped to serve the consumer who makes their financing decision at the time of purchase. Look at the sad state of direct auto lending as an example. As consumers have come to expect and rely on financing options at the dealer, fewer and fewer purchase auto loans are made in the branch. Indirect lending was providing a healthy solution to the problem until recently, but now the captive lenders and big banks are competing fiercely for what little volume there is in that space. The top twenty lenders own over 80% of the new auto market – leaving credit unions and other small lenders to fight over the remainder.
All is not lost. In America the adoption of mobile technology has been slower than in Asia and Europe. We can learn from the successful mobile strategies in other parts of the world to develop methods to compete in the newly developed mobile landscape. Imagine, for example, that your members have opted into a “deal finder” app that you provide. Say one of those members has visited their second auto dealer of the day, and your location-aware app has a behavior-driven rule to send that member a special financing offer good for 48 hours – only they must specify the dealer send the loan to you to get the deal. That’s just one way you can use the mobile Internet to connect with your member when they are shopping. Never before have we had the opportunity to be so connected to the purchase process, or know so much about our member’s shopping behaviors.
Stop Following and Start Leading
Credit unions are in a unique position to leverage the trust they have built up with their members and the capabilities the emerging mobile technologies will provide. The time to build a mobile strategy is now. Don’t wait for the perfect turn-key solution, either. You would spend a couple million on a new branch…put that much into a “mobile development fund” and start building. Map your overall strategy and start experimenting. Make “fail fast” your motto. Design, build, measure and repeat.