ATLANTIC CITY, N.J. – CUNA Mutual Group Senior VP of Strategy and Business Development John Lass gave attendees a true "Reality Check" during his presentation on Wednesday morning on the current strategic crossroads that the credit union industry faces.
John Lass gives credit unions his prediction for the future of the credit union movement over the next four years.
Credit unions are at a pivotal tipping point, says Lass. Four years ago, credit union faced a very different type of competitor in the industry than they do now. PayPal, Target, and WalMart are getting into the financial services industry; a true game changer for credit unions. Credit unions need to watch out for develpoments in mobile payments, says Lass. The key organization credit unions should be keeping their eye on is Isis, Lass points out. Isis offers a “mobile wallet” that organizes payment cards, offers, and loyalty cards in one app on a smartphone. With JP Morgan Chase and Capital One already signed onto the Isis network, “credit union need to get a seat at that table,” says Lass.
He also gave the example of Japan’s largest mobile phone provider gaining a bank charter allowing Japanese consumers to do most of their banking over their phones. This company gained unprecedented marketshare. Lass also pointed out the completely digitized USAA, which has consistently been ranked at the top when it comes to customer satisfaction, even though it’s completely self-service based.
Results of Lass's audience poll questions regarding traditional spread income.
Falling behind as the financial services industry becomes digitized isn’t the only challenge credit unions face, says Lass. He’s seeing a trend of traditional spread income becoming “compressed”. "Income comes from fees or spreads, that is pretty much it,” says Lass. When asked what they think the future of the traditional spread income will be in the next five years, 34% of attendees said they see it widening while 65% think it will continue to compress.
After giving credit union this reality check, Lass gave them some peace of mind. “Branches are here to stay,” he said. “But credit unions need to find a way to sell away from the branch.”