Banking in the Information Age – part 2

Banking is undergoing a metamorphosis that started with the mass consumer adoption of the Internet. As the chart below shows, more and more people are opting to conduct their day-to-day transactions online and steering clear of the branches – even for ATMs

When it comes to basic transactions, convenience is the name of the game. Members want to conduct business on their time – not your branch hours. Credit unions must effectively respond to this trend or potentially face irrelevance, replaced by financial service providers (traditional and/or non-traditional) that fill the void. 

In view of these statistics, it is conceivable a member might interact with a credit union 500 times a year through mobile, web, tablet, and ATM and fewer than 5 times with a person. Which raises the burning question:

How are credit unions to respond if their future hinges on a member experience, loyalty and relationship that is defined by just a few annual branch visits?

We need to maximize every single in-person interaction and position the branch experience around providing expertise and advice rather than focusing on routine transactions. As I see it, two major factors driving this trend and creating behavioral change:

One: Psychological impact of the Information Age

• I am in control
• I am better informed
• I get better deals
• I get a better quality solution

Two: Process of diffusion – increased acceptance of technology & innovation

• Moore's law – technology innovation doubles every two years
• Diffusion is the rate of speed which new ideas are spread from one consumer to the next. We are accepting new technology at a much faster rate.
• Telephone – 50 years to achieve mass adoption.
• Television – 25 years to achieve mass adoption.
• PCs and cell phones – 12 to 14 years to achieve
  mass adoption.
• Internet – 7 years to achieve mass adoption.

The disruption that is occurring stems from removing friction in outmoded or outdated processes so that the consumer can do business on their terms, time and conditions.

In Part 3 of this series, we will focus on the 4 phases of behavioral disruption affecting credit unions.

EPL, Inc.