A 49-page report released by the Filene Research Institute predicts what credit unions will look like in 2025: “In the year 2025 credit unions will operate on a financial landscape that bears little resemblance to the system of today. Technological disruption, increased regulation, changing consumer behaviors, and asset growth will all contribute to the reshaping of the global financial ecosystem.”*
For many financial institutions, the future doesn’t look friendly. Perhaps the greatest threat faced by credit unions is the threat of becoming a commodity as technology devalues physical branches and enables all banking to be done digitally. We currently have a client undergoing a credit union website design who told me his concerns about this threat. Read our conversation below.
My conversation with a credit union marketer about credit unions becoming commodities
As whole, credit unions haven’t quite caught on to the digital transformation that’s happening in the world—most are still clinging to the traditional brick-n-mortar business model. In most cases, today’s consumers prefer digital interactions over physical interactions, but credit unions are still investing millions of dollars in their physical branches and only thousands in their digital branches (aka websites). The institutions that see the digital revolution that’s happening and start treating their websites like full-service digital branches will be the winners in the end.
CUInsight recently published two articles I wrote about this very topic 🙂
So, this is something I have given some thought to. And, it’s actually troubling to me. Take a look at [the attached] report from Filene.* It suggests that in the not-to-distant future, credit unions and banks won’t be branches, or a call center, or a website. They’ll be apps. At that point, they will essentially become commodities. Meaning, they’ll all have the same products, services, features. One credit union or bank app will be the same as the next. When that is the case, how do you differentiate yourself? I actually [asked an instructor] this question . . . at [a CUNA event]. When I did, [the instructor] basically answered the question like a politician. Meaning, he gave this drawn-out, circuitous response that didn’t actually answer my question. That wasn’t very re-assuring.
I think the answer might be niche and product-related. That is, what if we had special proprietary money-saving products that only [our field of membership] could get?
You’re absolutely right about the danger of credit unions becoming commodities. We are constantly talking with credit unions about their brands and I’ve realized that most credit unions have no idea what their competitive advantage is. Right now, un-differentiated credit unions are surviving because they have local presence through their physical locations and, while that advantage is on the decline, it’s still working to a degree. But that’s changing—brick-n-mortar locations won’t be a sustainable advantage for most credit unions as consumers continue to ditch in-branch visits in favor of digital interactions. That means credit unions will have to offer real advantages to their members if they are going to survive.
We’re currently designing a new website for a credit union called NW Preferred FCU (NWP). NWP got the nation’s first TIP (trade, industry, or profession) charter and now specializes in serving insurance agents. They offer their members industry specific loan products that agents can’t get from most financial institutions. For instance, there are only two credit unions in the nation that typically loan money to agents to acquire other insurance agencies, and NWP is one of the two. Accordingly, I think NWP is going to do very well even as technology changes because they have a real, tangible advantage to offer to their members.
If I can be completely honest about [your credit union’s] brand, I think you guys have a better competitive advantage than most credit unions, but I’m not sure it’s good enough to keep [your credit union] from becoming a commodity. The fact that you have branches in the offices of [your field of membership] gives you a real advantage. Due to your branch locations, in-person branch visits could actually be more convenient than digital experiences in some cases because [your members] are already in that physical location for work anyway. Beyond that, your differentiating factor is that [members] feel they can trust you. Feelings and beliefs are powerful for brands, but also intangible. I mean, [your members] might trust other financial institutions, too, right? So, if trust is to remain your competitive advantage, how do you get [your field of membership] to trust [your credit union] more than any other financial institution in the world?
So, how can you prevent your credit union from becoming a commodity?
A commodity is a basic product that is essentially the same as other products of the same type. For example, regular share savings accounts are almost identical from one credit union to the next.
There’s only one way to not be the same as other credit unions: be different. Give serious thought to these questions and figure out how to stand out from the crowd:
- Why would a consumer bank with your credit union instead of any other financial institution?
- What makes you different from every other financial institution?
- What are you the best in the world at?
*Source: Filene Report, Credit Unions in 2025