Banking On Digital Growth Part 2: Reasons For Change

One of the current ‘must read’ books on our shelves here at Metric is Banking on Digital Growth by James Robert Lay. It’s full of insights and ideas on the future of the financial industry and has proven valuable to many of our credit union clients.

Our CEO, John McDonald, has pulled out a few of his favourite insights and we’ll be summarizing them here on our blog - but we hope you’ll read the entire book!

In Part 1 of this series, we explored the ways in which recent trends—including a global pandemic—have disrupted the financial sector and transformed operations for FIs and credit unions across the board. 

In this article, we drill down further to examine why credit unions must evolve their approach to stay relevant in today’s swiftly shifting market.

DEMATERIALIZATION

Dematerialization is the process of moving from physical certificates to digital ones. For example, the traditional bank cheque is quickly losing relevance as the uptake of electronic payment apps grows. Given the vast amounts of sensitive data FIs must handle, as well as the increasing expectations of speed, convenience and streamlined data integration on the part of users, credit unions would do well to start planning their own digital evolution. After all, it’s only a matter of time before traditional methods are phased out entirely. 

DEMOCRATIZATION

With the rise of fintechs and alternative forms of banking, demand is growing for traditional financial institutions to become more accessible to everyone, regardless of geography, income, age, goals or financial literacy. Restrictions and revolutions sparked by the recent pandemic have only helped accelerate this demand. As barriers for entry are continuously lowered and newcomer FIs create fierce competition, credit unions must integrate plans for accessibility, understanding and ease of use into their short- and long-term strategies.

DEMONETIZATION

The dematerialization and democratization of personal and business finance means that traditional FIs are losing the power they once had to control market pricing. For a real-world example of the implications, we must look no further than the music industry. When dematerialized, democratized disruptors such as Apple Music and Spotify started making big gains in market share, traditional labels failed to evolve. As a result, they effectively relinquished what power they had to control pricing in the market. Credit unions that come to terms and evolve with our new digital landscape will emerge stronger for it. 

THE FOURTH INDUSTRIAL REVOLUTION

First came steam, then electricity, then computers. Now, FIs must embrace the Fourth Industrial Revolution: cyber-physical. This revolution encapsulates the new ways in which digital technologies interact with our physical environments. Examples include automation, machine learning, machine-to-machine communication and the Internet of Things, to name just a few. Credit unions that make a conscious effort to evolve with this revolution in mind will have the best chance of staying relevant and in-demand.

ADVANCED CONSUMER PATHWAYS

All of these technological advancements have given rise to an increasingly educated and empowered consumer. This consumer is not bound to traditional decision making pathways, and creates their own buying journey. The adage “if we build it, they will come” is no longer relevant in a market saturated with choice. To continue their growth, credit unions must evolve their marketing and communications approach—as well as their tools and services—to meet members and prospects where they are, with the right message and competitive options.

Are you ready to evolve your approach to credit union marketing? We’d love to chat about the trends you’re seeing—and how Metric can help you break ground in new territory. Talk to us today to get started.