In a break out session at the World Council of Credit Union (Woccu) conference in Belfast, Mark Sievewright, president of credit union solutions at Fiserv, looked at 10 predictions for the future of retail financial services.
Mr Sievewright described the current climate as “the most exciting yet challenging time of my 30 years in the financial industry”. As technological and demographic changes shake up the way credit unions do their business, they must respond and react.
There are several trends, according to Mr Sievewright, which can be grouped into four principal areas: regulation, technology, new entrants and demographic.
Read more from the 2016 World Credit Union Conference
A young and growing population means that the financial services industry is being redefined. By 2050, the global economy is expected to triple in size, with a shift in power away from traditional powerhouses such as the USA and Japan.
For example, by 2040 India is expected to be the second largest economy in the world in terms of purchasing power parity, and the majority of that population will be young.
“We have witnessed a massive generational change taking place across the world,” said Mr Sievewright, citing millennials as a large and influential group of people more inclined to bank with non-traditional players.
This can be seen as an advantage for credit unions, and is something with which they must engage. “Credit union philosophies of people helping people has a remarkable tie-up with what these young people want, and the values they hold,” Mr Sievewright said.
In order to harness this younger generation, digital engagement is key and the consumer experience at credit unions should be “easy, fast and convenient”, as most younger people favour an online and mobile approach to banking.
When pressed by moderator Carla Altepeter (president and CEO of Numerica Credit Union) on what that meant for the future of credit union branches, Mr Sievewright stated his full support. “I firmly believe branches are the cornerstone for building relationships with members,” he said, adding that branches should be places of sales and service, instead of places of transaction.
Tying in with a younger generation as potential members of credit unions, there is also a new wave of people innovating in the financial services world. “Someone in a shed could be inventing the next big payment method right now,” said Mr Sievewright. Start-ups were increasingly focused on ‘frictionless experiences’ which could attract new members. The level of innovation is something that traditional providers cannot compete with presently, and so credit unions must find a way to partner with them, or at the very least to learn from them.
Payment is undergoing significant change, with money now capable of being moved through technology that we wear, for example smart watches and the VISA wristbands being implemented for the Rio Olympics.
With change comes the burden to remain relevant and provide members with the service they need, when they need it
Large scale data analysis, or ‘Big Data’ has the potential to “be the lynchpin of how we grow our businesses in the future,” said Mr Sievewight, but he stressed that the desire to analyse data was threatening to outstrip the amount of data available.
The willingness to learn and adapt is key; even, or perhaps especially, from so-called disruptors in the financial services industry. Five years ago the idea of the world’s largest accommodation provider not owning any property would seem far-fetched, but the rise of Airbnb shows the different value system now in place. “We can learn a great deal from the companies that are operating in our space,” added Mr Sievewright.
There were also reasons to be positive about the future of credit unions. In the last 10 years, assets in the credit union sector have increased by 80%. Membership has also increased, by almost 25%.
Technology has a key role to play in credit union development, as does engaging a younger, digital-savvy demographic. The field is changing, and credit unions must look to evolve with it.
Mr Sievewright said: “With change comes the burden to remain relevant and provide members with the service they need, when they need it.”
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