4 minutes
Even with disruptors less of a threat, credit unions need their people’s ideas. Hire them.
A lot can happen in 12 months.
Interest rates are rising. Recession worries are mounting. But there is one concern that’s on the decline from executives at financial institutions across the country—challenger banks.
According to the new What’s Going On in Banking study from Cornerstone Advisors, only 21% of executives said challenger banks are significant threats, a notable decline from 33% last year.
For these small retail banks set up to “challenge” (or disrupt) bigger, more established institutions, a reckoning is here. Regulators have been scrutinizing how neobanks operate. Fintech funding is returning to pre-pandemic levels. And neobanks’ profitability model is elusive. Even when they have millions of customers, neobanks are challenged to make enough money from interchange fees.
But just because challenger banks are under serious pressure right now doesn’t mean it’s time for credit unions to take a break from thinking outside of the box. According to a new report from the Consumer Financial Protection Bureau, more families were having difficulty paying their bills in 2022 than in 2021. As families face all kinds of financial health challenges that are becoming more pronounced, credit unions need to dial up the development of their digital experiences to help members improve their finances.
Over the years, neobanks like Simple (now closed) and Chime set the marketing tone for better banking, helping drive financial institutions to drop (or rethink) their overdraft fees and debut account features like early payday.
According to the Cornerstone survey, 70% of credit union respondents said growing retail deposits will be a top priority in 2023, almost a four-fold increase from 2022. As credit unions seek more deposits, they ought to keep pushing forward on newer products and services. CUES member Jim Watts, CCE, CEO of $594 million RIA Federal Credit Union, Bettendorf, Iowa, says: “When consumers choose between feeding their kids, putting gas in the tank or paying their loans — something has to give.”
Hire Talent for Innovation
There are all kinds of people out there for credit unions to hire to innovate. Neobanks, like so many tech companies, have been laying people off. Credit unions have an opportunity to recruit creative people to help with a job that never ends: rethinking what a financial institution is in a digital age.
As Stacy Armijo, chief experience officer at $1.5 billion Amplify Credit Union, Austin, Texas, put it: “To me, digital transformation isn’t a destination or even a journey, it’s a highway. We’re all driving at different speeds, and where we fall at any given moment changes depending not only on what we do, but on what everyone else does. That’s why digital transformation will never be done. We’ll never be ‘transformed’... because if you are, you’re stopped dead on a highway watching everyone pass you by.”
Find the Flex
Just remember: It will require flexibility on the credit union’s part to appeal to more of a free spirit. Here, anecdotes from survey respondents in the Cornerstone report highlight some areas that can help credit unions woo tech talent (beyond just paying more):
- Refrain from being too rigid about where someone works. In the past, putting a foosball table in the office was considered a recruitment strategy. Nowadays, it raises an alarm bell because of what appeals more—letting people work from home.
- There’s no reason to force someone to move for a job unless it’s to, say, work as a teller. Consider remote hires for some of your roles like your peers already do. According to the study, nearly two-thirds of firms said they let staff members split their time between remote and office work.
- Networking events are expanding beyond happy hours and golf. Attend a fintech event these days and a newer networking strategy is clear: Yoga classes and mountain hikes are also where businesspeople are building professional relationships. So, dream up a range of business networking events when seeking new talent.
- Expect some moaning about using common tools, like Microsoft Outlook. Here, you don’t have to compromise but realize your communication tools are likely different than what a startup’s employees are used to using. Be gentle as they adjust.
- Rethink your wardrobe policy. Don’t underestimate how off-putting it can be to require people to show up to work in more formal business wear is when they’re used to building products in hoodies and jeans, if not workout wear. Relaxing a dress code is only becoming more important. Just look at Gen Z. They’re even showing up to work in crop tops.
Bottom Line
You need all kinds of talent on the ultimate industry quest: transforming your institution. In hiring someone who worked at a challenger bank, you might just drive the next innovation your members need.
Mary Wisniewski is an editor-at-large and director of content at CUESolutions provider Cornerstone Advisors, Scottsdale, Arizona. She’s covered digital banking and fintech for more than 12 years. Previously, Wisniewski worked as a senior editor for Bankrate. She also covered fintech for American Banker and edited op-eds for the publication's BankThink section. Her work has appeared in the Associated Press, the Los Angeles Times, MSN and more. She is a frequent speaker at a variety of leading digital banking events, including the Money Experience Summit, Finovate and Fintech South. She's also the judge on Fintech Uncut, a weekly Zoom quiz show on fintech news.
