Brett King, author and strategic advisor, focused in his second appearance at THINK on the role of branches in the 21st century and how the credit union business has to change.
Banking used to be about physical things: checks, branches and marble floors. While customers still like the feeling of big, shiny building as a safety net, average in-branch transactions per month across the United states will plummet 56% between 2006 and 2015. Change is everywhere and even speeding up: In 2000, 59% of all retail payments were done by check in 2000, in 2011 only 3%. Cash usage will be reduced by 17% in the US in the next few years. Still, humans tend to underestimate the rate of change.
To illustrate that, Brett King walked the audience through a day in the life of a 100,000 member credit union:
300 members will call or email the credit union. 850 members will use an ATM machine. 2,25o will use an app to check their balance. 7,780 members will visit their credit credit union website. 80,000 members will use a plastic card. 100 members will visit a branch: 0.1% of your members visit your branch.
What if we create better branches?
Could credit unions adopt the Apple store model? While people want branches to satisfy their need for security, branch usage goes down. Brett King made the analogy that you buy your Apple product at the physical store but you don’t go to a physical story to buy apps. The same is true for members: They want to start the relationship in a branch but the transactions will move to the virtual space. Banking is no longer a space where you go, it’s a thing you do.
How is your credit union answering these facts?
The fastest growing financial product? $202 billion in pre-paid debit cars in the US in 2011. 1 in 2 members will use the smartphone for banking by 2015. 63% of teens send a text message daily. 31% of teens never use a landline.
Digital natives have changed their behavior forever (as Brett King called them the “De-Banked Generation”), now credit unions have to change their business model and the way they behave. The great advantage of credit unions compared to banks is that members trust them. The biggest challenge for credit unions is to make the initial connection with customers because credit unions still rely on old behavior.
Behavior is at the ‘core’ of new banking: mobile + behavior = context. Because banking is no longer a space where you go, it’s a thing you do.