Credit unions could do more with less by applying smart, improvised solutions. The concept of frugal innovation, or creating quality products and services with limited resources, is the theme of Navi Radjou’s latest book, Frugal Innovation, co-authored with Jaideep Prabhu and published by The Economist in February 2015.
Mr Radjou, a Silicon Valley innovation and leadership adviser, thinks credit unions can play an important role in the emerging frugal economics.
Speaking at the World Credit Union Conference in Denver, he explained to delegates how credit unions could create economic and social value for their members by pioneering frugal innovation.
As growth and the share of the working population are going down in developing economies, frugal economics can help address the gap between supply and demand, he said. Millennials will be making up 70% of the workforce in a decade. According to Mr Radjou, they are cost conscious, tend to go for cheaper products and are also willing to share products.
“Frugal innovation won’t be driven by large companies, but by citizens themselves, especially millennials,” he said. They are also looking for products and services with social value, which means that credit unions are well positioned to provide something more than just credit.
“Disruption doesn’t happen by having one big company disrupting another, but a lot of small entrepreneurs armed with these digital tools are going to bring down big companies. You, as credit unions, should look at how to empower these Lilliputians.
“Learn to play new roles in the frugal economy, and play the role of connector – help build the communities of these entrepreneurs. It can also happen at a global scale – you have 60 nations in this room alone.”
Mr Radjou also thinks credit unions can act as transformers by using some of their space in their local branches as a ‘makers space’, a place where innovators can get together are create new products. This would help credit unions co-create value for their members, he argued.
“Share your resources, assets, data with each other,” he told delegates.
Mr Radoju added: “The 50 million low-income Europeans could repress the €220bn market. The 68 million under-banked Americans have an income of $1tn. To crack this market we need a frugal mind-set, something we can learn from each other.” He encouraged credit unions to engage all of their members in this process to unlock the fundamental human need for ingenuity.