In a recent industry analyst meeting, the CEO of a large financial technology firm laid out his firm’s vision for expanding into new markets within the financial services space. I asked him “Who do you see as your primary competitors standing in the way of your quest for world dominance?”
His answer (as best as I can recall) was “well, we have a number of competitors in the variety of spaces in which we play.” He did name four firms — one of which I wasn’t familiar, another which I would never have thought he’d mention (since this particular organization doesn’t sell software to financial institutions).
My take: His answer was unsatisfactory. You’ve got to know who you’re going to knock off the pedestal on your way to world dominance. And this is of particular importance to credit unions.
Let’s say you’re the 250th ranked tennis professional in the world. There are 249 other pros ahead of you on the list, but only one matters — that Djokovic guy. If you beat Djokovic you might not jump from #250 to #1 (or #2), but if you beat him, you’re in the big leagues. On the map. On the radar.
It might take you a while to get a chance to beat Djokovic, but the other piddly-sh*t pros don’t matter. They’re just the peons you have to slay and step over on your way to the top.
In the world of financial services, the focus of your FI’s competitive strategy doesn’t necessarily have to be the largest provider in the market. It should be the one who has the best reputation, or best products, or best service, or best whatever it is that you compete on.
Why is this so important? In a word, alignment.
When you know who you’re (really) competing against — or better yet, when you know who you want to knock off the pedestal — your organization has a much easier time deciding what to invest in, and what not to invest in.
Why tell you all this?
I saw a tweet today, from someone attending a credit union conference, quoting Chip Filson telling CUs “Don’t try to be ‘nice’ banks.”
Excellent advice, I couldn’t agree more.
But it reflects a problem that credit unions have: They set their sights on knocking banks off the pedestal.
No offense to bankers, but people, allow me to let you in on a little secret: If banks are on a pedestal, the pedestal isn’t very high off the ground.
Every survey I see (not to mention do) shows that credit unions are seen as having better customer service than banks, and higher advocacy (that is, seen as doing what’s right for the customer) scores than banks.
And I doubt that every one of those surveys is spot on. But it begs the question: If it is true, then why aren’t credit unions tearing up the charts in membership growth?
The answer has to be: Because they’re not clear about who they’re really competing with. They don’t know who they have to knock off the pedestal on their way to world dominance.
When I observe and hear about credit unions’ strategic (or so-called strategic) planning efforts, I’m underwhelmed. These efforts quickly devolve into tactical planning efforts that determine which projects will get funded in the coming year.
Strategy isn’t just about how you compete, it’s understanding who you compete with. Sorry to be critical, but there are a lot of credit unions out there doing a lousy job of strategy creation/formulation.