Infomediaries will win members’ loyalty
The battle is on. There is tremendous competition for our members. Banks, nonbanks-even other credit unions-want our members. Everyone seems to be fighting for member loyalty. But on the Internet, the fight is especially intense.
How do we protect ourselves and our members from the onslaught of competitors? I’d like to address some strategies you can employ to protect your credit union against these assaults, focusing on the World Wide Web. The Web is where credit unions are especially vulnerable.
First, you must have a Web presence. You probably have a Web site. But at what stage is your site? There are three stages Web sites go through:
1. The static, information-only Web site. Too often, credit union sites stay at this level. You describe products and services but don’t move beyond “brochure-ware.”
2. Some interaction. Besides home banking, you may have some simple applications such as loan applications, check orders, and address changes. These provide added functionality and value to members and will encourage members to return to your site.
3. Substantial interaction. Such Web sites of fer extensive interactions and transactions. Look at sites like www.my.yahoo.com, www.charles schwab.com, and www.msnbc.com. These sites go beyond the strict and narrow focus of their original business purpose and offer a wide range of services, including financial products. They are becoming an area for one-stop e-commerce; a portal to members’ needs, wants, and desires. Few credit unions are at this level. Unfortunately, many competitors already are.
What can credit unions do? Leverage the biggest advantage we have: members’ trust. This is where we can beat the big boys. As e-commerce becomes more prevalent and as the range of products available through the Internet increases, consumers look for someone they trust.
We are in a unique and coveted position. Members trust us and value our advice. We can position our Web sites as portals not only for financial products and services but as links to reputable third parties.
“Net Worth,” by John Hagel and Marc Singer, is an excellent book that maps out a winning Web strategy. The authors describe how companies can become “infomediaries” for consumers. Infomediaries are trusted third parties that aggregate members’ information “with that of other consumers and use the combined market power to negotiate with vendors on their behalf.”
We at Community Credit Union are in the process of building a portal and plan to introduce offerings beyond strict financial services. As we decided what to offer on the site, there were the obvious questions about why members would come to us for Internet shopping, for instance. The best answer came from a member who said he’d be extremely interested in shopping through our site because of the trusting relationship he already has with us. This is our leverage.
How do you build a portal? First, partner with a company that has the volume to negotiate agreements with third-party vendors members will find attractive. There are several credit union-friendly vendors that can provide this kind of partnership. We’re working with Digital Insight (www.digital insight.com), but several others can fit the bill, such as www.totall.com, www.cushopper.com, and www.good2cu.com.
I’m sure there are others. To decide, look at the vendors they’ve partnered with, possible revenue sharing, and the relationships such vendors provide.
As you move toward a portal where you can act as the infomediary for your membership, remember trust. Member privacy is paramount. Maintaining trusted relationships is critical to success. It’s what distinguishes us from Yahoo and other commercial sites. Be absolutely sure members’ information stays within your portal.
The primary benefit we can give members is to act as infomediaries for their needs. We already do this for their traditional financial services. We can act as trusted agents for other services as well. This is the where we can distinguish ourselves from competitors. The timing is right to seize the opportunity before someone else steals our members.
JoHN BOCK is senior vice president and chief information officer for Community Credit Union in Plano, Texas.
Copyright Credit Union National Association, Inc. May 2000
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