Posted July 14th, 2016 No Comments
Disrupting the Credit Union Experience

With billions of investment dollars being poured into the insurance and financial technology (FinTech) sector, disruption is already having serious implications for credit unions. Disruptors, such as Lending Club and Prosper, are capturing members’ financial business at an exponential rate. To change the game, these disruptors are pairing underwriting standards with mobile and online technology platforms and improved efficiency models that make it challenging for traditional financial institutions to compete.

Disruption comes from both new entrants as well as existing technology providers, such as Amazon and Google, who are testing working in the FinTech space. While some of these experiments have failed, history suggests that there will be breakthroughs that will significantly disrupt the financial sector. What are credit unions to do now to prepare for this future?

Steven Rick, chief economist for CUNA Mutual Group, presented to a group of credit union lending leaders at this year’s Growth Symposium, presented by CUNA Mutual Group, and likened credit unions to waterbuffalo. “Credit unions are walking in a stream filled with piranha, and they need to move faster or they risk getting nibbled to death,” Rick commented in reference to these disruptors.

How can credit unions combat these lurking threats? The answer lies in uncovering a deeper understanding of member psychology, and building a member experience that differentiates credit unions from other financial options. The group not only explored some of the unconscious biases that significantly impact how people make decisions, but also how that might impact their member experience.

For example, research consistently reveals that consumers become immobilized by what is termed “the tyranny of choice.” In the classic “Jam Study” conducted by psychologists Sheena Lyengar and Mark Lepper, consumers who were offered 24 types of jam purchased at only a 3% rate, as opposed to consumers who were offered a selection of only 6 jams, who purchased at a 30% rate1. Understanding the “tyranny of choice” raises questions about the number of similar products offered at credit unions. Offering four checking products might actually confuse potential members and impede them from joining a credit union.

This year’s Growth Symposium also examined consumer engagement with businesses. To get beyond blanket statements about good or bad experiences, participants took on the role of a consumer who engaged with a national chain, for a specific purpose.

The exercise helped upend preconceptions of the national chain. By focusing on specific elements of the customer journey, participants’ uncovered seemingly subtle factors that could destroy an experience, from lack of deeper product knowledge to a sub-par online or mobile user experience. This illustrated that a customer’s perception of abrand is comprised of many small components, and not performing consistently on each of them can damage the overall brand experience and a consumer’s desire to do business with a credit union.

The FinTech industry is capitalizing on these small inconsistencies and growing exponentially by addressing consumer needs and identifying voids that many traditional financial institutions are not, or are addressing slowly. FinTech disruptors are identifying a specific element of a consumer’s financial needs and delivering a transformative experience, which starts to erode the consumer’s need to work with a traditional financial institution, such as a credit union.

To tackle the disruptors head on, the key is to be disciplined in your approach to creating a strong member experience through constant assessment and adaptation to your members’ greatest needs. Start addressing this today, or you may risk the same fate as the water buffalo.

CUNA Mutual Group helps people plan, protect and invest for their future. The company was founded more than 80 years ago by leaders who were looking for an insurance partner they could trust. Today, CUNA Mutual Group helps credit unions and hardworking Americans build financial security. To learn more, visit

CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates.


1., “The Jam Study Strikes Back: When Less Choice Does Mean More Sales,” Jan. 29, 2015.


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