What You Should Fear

These caught my eye this morning before I downed my second cup of coffee:

"Economist Identifies Offbeat Industries for Loan Growth" - American Banker

"Banks Use Science to Crack the Genetic Code of Spending Habits" - Bank Technology News

Change is inevitable, even in retail banking.

Bryan Clagett and I (James Robert Lay) are very excited to have the opportunity to speak next week at the Open Thinking Summit (October 5-6) in Westminster, Colorado. 

We have also been given the opportunity to provide two people the opportunity to attend for free and would love to see you there. 

Simply complete the short form below and tell us what innovation means to you and your credit union and why you want to attend the Open Thinking Summit.

You can also help by spreading the word and sharing this opportunity with your credit union friends in Colorado on Facebook, Twitter, LinkedIn.  You could even give them an old fashioned phone call or send a text or email.  Whatever the case, shout out to them and let them know they have a chance to attend an amazing event for free.

You have until 11:59 PM PST on Friday, 9/30/2011 to share your thoughts.  On Monday, 10/3/2011, Bryan and I will announce who will be attending the Open Thinking Summit for free.  We will decide based upon your answers about innovation and attending so have fun, be creative and destroy the box!

For the past few weeks I have had the line "fail fast and fail cheap" in my head.
 
I have the opportunity to attend many credit union conferences throughout the year due to my position at CUinsight.  Almost every conference has the paid business motivational speaker/comedian who is trying to sell a book.  Normally after 10 minutes I am sneaking out the backdoor to check email, return calls or update the site.  The vast majority have the same message and stories that anyone who's attended conferences have listened to a hundred times.  And then there was Doug Hall at CUNA's America's Credit Union Conference & Expo.  Picture George Costanza from Seinfeld without shoes walking on stage.  Needless to say on first impression I thought I was out of there in five minutes.
 
Mr. Hall is the founder of Eureka! Ranch, The Ranch is an “invention & research think tank” that specializes in helping corporate leaders and real world entrepreneurs develop Measurably Smarter choices for growth.  A few thoughts from the presentation that have made me think, maybe they'll do the same for you.
 
Fail Fast and Fail Cheap: I use the phrase throwing spaghetti at the wall and seeing what sticks about our success with CUinsight all the time.  I have a legal pad full of ideas that I would like to try but haven't YET.  Some have been checked off.  Some successful and some not so much.  Why are there still so many on the legal pad?  How many more hour long discussions can we have before we see if they work?  What is there to lose?  It's time to stop talking and start doing.  Do it fast and if you fail make sure a bad idea didn't cost to much.  If it works, invest in it and take it to the next level.
 
20 Minute Rule: Think of all the conference calls, meetings and personal discussions you've had about the ideas on your legal pad or in your head.  In Doug's presentation he put the rule out that if you spend more than 20 minutes discussing an idea it is either time to put it in motion or stop to examine the idea and study it more.  How many times have you had the same discussion over and over with no new information and not taking a step to bring it to fruition?  I can think of a couple off the top of my head.  No more talking.  Time to move them forward.
 
Small Business Success: As a small business owner and someone who has worked in the corporate world this one hit close to home.  Credit unions and community banks work with small business in their community every day.  We've all heard the statistic that half of all small businesses fail.  Mr. Hall put this statistic in a different perspective.  He stated that in corporate America one out of every five ideas fail.  Small business batting .500 looks pretty good when you compare them to corporate America.  I would consider the vast majority of credit unions and community banks small businesses as well.  Many have the same issues that any small business owner has.  How many hat's do you wear?  Are you the CEO, HR department, director of marketing and so on?
 
Where do we go from here?  I know from personal experience that one of the perks of being a small business is not having to deal with the bureaucracy that comes with a large organization.  If I want to try something new at CUinsight I just need to get David on the same page and vice versa.  What's stopping your institution from trying something new?  On Share What You Fear have often written about the new competition in the financial services industry.  Who can move faster with new ideas to provide value to our members?  You or B of A?  Are you willing to try and fail?  The way I look at it is with every failed idea I am one step closer to a winner.  The law of averages says so.  Just make sure the winners are more rewarding than the cost of the losers.
 
What idea are you going to stop talking about next week and get off your legal pad?

AMEX thinks theirs is and showing it with real tweets from card holders.  It's all part of their membership rewards points program they are calling "The Social Currency".  AMEX is simply sharing the stories of their card holders as more people are likely to listen to others experience than an organizations marketing.

In fact, 78% of people make buying descisions from listening to stories/referrals from friends and family vs. the 22% who make buying decisions from direct advertising. Maybe AMEX is onto something with this social currency thing... is your financial institution?

As credit unions and community banks try to connect with members and customers through social media including Facebook, it’s important to note Facebook’s changing strategy.

You may or may not know that Facebook has a social currency called Facebook Credits. Facebook touts credits as, "The safe and easy way to buy things on Facebook."

These credits can be purchased with real life dollars and used in Facebook social games like Farmville, Mafia Wars, etc.  One can even purchase credits while waiting in line at Wal-Mart.  While you personally may not be into growing virtual crops, many are.  But I digress as that’s not the point.

The point is that Facebook is starting to diversify and experiment with currency even though it may still be virtual currency for a virtual world.  This is the one of the first steps in the evolution of social media into social commerce.

According to Business Week, “If only one of every five Facebook users adopted Credits to buy things, Facebook would be as big as PayPal. And once Facebook makes us comfortable with Credits, it could then transition to a "traditional" global bank, storing your financial assets like gem points in Bejeweled Blitz.”

Facebook understands the need to evolve and change to survive and be more than a social network.  How will this evolution affect your credit union or community bank?

An American Banker (AB) story today by Sara Lepro and Sean Sposito caught my attention this morning. It's was more of a jolt than a double expresso.

I have always viewed Wal-Mart as a threat to retail banks and credit unions, but am reminded how agressive they have become in the retail banking space. They are actually doing a lot of the things I have heard banks and credit unions talking about over the past 15 years. Wal-Mart already has more than 1,000 MoneyCenters located in the United States that provide check cashing, bill payment, wire transfers and other services. Now the massive discount retailer is rolling out kiosks nationwide.

From the AB story:

"Retailers should shake in their boots, banks should shake in their boots," said Brian Riley, a research director in the bank cards practice at TowerGroup. "Because if Wal-Mart starts linking their kiosks to doing reloadable gift cards, they have the power to move a lot of transaction money."

Retailers? Walmart is making a move to attract millions of unbanked or underbanked consumers in the US. Credit Unions particularly should be watching and learning from this move. Walmart is bringing this market segment affordable financial services and has the reach and distribution to have a direct impact on credit unions future.

Convenience, accessibility, affordability ... promises many credit unions have made over the year. Now found at the Walmart near you.

Like so many of you, I have been following all the Finovate action coming from the West Coast this week. While my preference would have been to be there, live and in person, it just was not good timing. Twitter and the Finovate loyalists keep me and hundreds of others, well informed. Kudos to NetBanker, their supporters and all the presenters for what appears to have been a fantastic event.

Innovation within the financial services industry is on a roll. Technology firms, start-ups, marketers and technologists, recognize that retail banking, as we know it, has changed little in the past 20 years. From a consumers’ perspective, banks and credit unions are about as exciting as the dry cleaners. They go there, take care of a chore and then move on. New players in the industry hope to change this perception by building a variety of services, products and channels that shake up perceptions and challenge the retail banking establishment. Great, I’m all for it.

I noticed, however, a common thread in the Tweets; an emphasis that those presenting at Finovate were “solving consumer problems”. Of course there is nothing wrong with that. But, as retail bankers, shouldn’t we be working to help the consumer avoid problems?  We, no doubt, want to take the chore out of banking and empower consumers. Technology alone won’t do that. As an industry, we need to find that blend of purposeful technology and human interaction that let’s us better anticipate consumer need, so we’re engaging consumers in meaningful ways making them feel empowered and in control of their finances, and ultimately avoiding problems.  

Innovation in the FinTech space, should lead to “winovation”, where all players in the retail banking space win, and so does the consumer. Technology alone will not do the job.

Consumers taking on auto loans in April were faced with the fewest new car incentives in five years. A report released by Autodata Corp. shows that automakers reduced spending on discounts and incentives by 14 percent in April to an average $2,320 per vehicle.

So why am I telling you this? Because I don't think bank or credit union lenders follow the auto industry. Instead, they focus on the "mechanics" of lending, and frankly, I think that is a mistake. American's have great passion for vehicles, yet that passion is typically not reflected or seemingly shared in the bank or credit union lending or marketing departments. Instead, we focus on the loan rate, credit policy or application process. We're conditioning consumers, your members, to view credit unions as undifferentiated commodities. 

Why not bring some passion and excitement to auto lending? I am talking about going beyond educating your audience about how to buy and borrow. I'm talking about demonstrating that you also have a passion for cars and trucks. What is the typical payment on a Ford 150? Does a hybrid live up to the hype? What is the most popular vehicle your members purchase? Have you ever sponsored an on site car show (aside from Enterprise)? Do you help your members sell their old car or truck, so they view you as a resource? Have you ever posted current nationwide car incentives on your website? Obviously I could go on and on (and I gladly will if you want to reach out to me).

People want cars. People need loans. They connect emotionally with the vehicle, but not the loan. As consumers, we all love that new car smell or the thrill of driving off the showroom floor. These are experiences that are meaningful to us. So let's bring some passion to your auto lending efforts and show members that we also enjoy the open road and an open sunroof on a warm summer afternoon.

Shawn Temple shares his fear with us and what keeps him awake at night.

"That change will come so rapidly, we will not survive it because we didn't look to the horizon and plan for its arrival.  You can easily see the writing on the wall, yet most FIs are playing "ostrich" with their heads in the sand. 

Every industry evolves and changes; however, I am certain all those former music executives were not prepared for the speed and scale of the change they witnessed in the way consumers access their media. 

Rapid, sweeping change can destroy the current model, and only the prepared will be left standing."

Are you like an ostrich sticking your head in the sand to avoid change in the financial industry? Do you share the same fear as Shawn? Shout back and leave your thoughts and comments to join the conversation.

I was reading an article in the USA Today: Consumer satisfaction with banks up for first time in 3 years and it got me thinking (smell smoke) about how public opinion swings like a pendulum. Over the past few years BANK has become a word that didn’t sit well with consumers. Blame the banks for everything. This isn’t the first time in history people had a strong dislike for their banks. The swings of public emotion can be seen in business as well as politics. Think of the difference in political opinion and mind set between what propelled President Obama to be elected and the Tea Party taking over the House two years later. Swings of a pendulum have to hit extremes before they change directions and head to the center.

So now that the bank satisfaction pendulum may be turning did community financial institutions do all they could to spread the word and bring new members in? Has the tide turned? Is it too late? I personally don’t think so. I think there is a change happening: change in opinion, change in technology, change in patterns, change in the way banking is done. Change brings opportunity. Technology bridges the gap on what credit unions and community banks can offer their members/customers. Everything you can do (big banks) I can do better.

What are you doing today to take advantage of this? Cut spending on new technology? Slashing your marketing budget? Sticking to the way you have always done things?

I have the unique opportunity to talk to people in the credit union movement on a daily basis. The ideas flow freely. Many of the frustrations I hear are taking the ideas and putting them into motion. The fear of the last few years has paralyzed a great opportunity for growth. It’s not too late. What great ideas have you talked about that you should be working on now? What do you need to get started and put them into action? What are the barriers to change? Have you looked at some of the dedicated partners in the community that could help? There are some really smart people out there with a passion for helping you grow. Could you work with another institution in your area to move it forward?

What can you do today?