THE UNDERLEVERAGED COMPETITIVE ADVANTAGE FOR …

THE UNDERLEVERAGED COMPETITIVE ADVANTAGE FOR CREDIT UNIONS

WHAT'S INSIDE?

Discover how credit unions compete and compare to big banks Explore key insights for driving predictable growth Leverage these insights to increase member share of wallet

| THE UNDERLEVERAGED COMPETITIVE ADVANTAGE FOR CREDIT UNIONS

The classic tale of David and Goliath reminds us that smaller opponents can outcompete bigger, stronger adversaries in often surprising ways.

This is because great leaders see things differently. They understand that the real keys to battle are sometimes obscured by misconceptions. A powerful competitor's perceived advantages can often mask their even bigger disadvantages.

In financial services, big banks continue to own greater market share over credit unions. They leverage their size to increase share of wallet (SOW) and have more products per customer. Their size, however, can often preclude them from being agile, flexible and even customer-focused. In employing numerous strategies that don't always put the customer first, interactions with big banks can feel transactional, leading customers to feel less valued.

Putting the member first, however, has always been at the heart of the credit union value proposition. Yet DoubleDigit Sales Research shows that credit unions are not achieving the results they want. Although they have the strongest service reputation in the market, the research highlights that:

of credit unions studied did not make plan in 2016

50%

and only

of these credit unions achieved 100% or more of their

13%

plan and had 70% or more of their Member Facing

Professionals (MFPs) meet or exceed their goals.

So how can credit unions leverage their strengths to drive predictable growth?

Credit union leaders must see things differently and support change. They must, as an organization, better understand their members evolving needs more holistically and fully, to correctly perceive the "real keys to battle" ? opportunities that can be leveraged to outcompete big banks.

Perceiving these opportunities correctly can result in a sustainable competitive advantage. We therefore set out to better understand what members want and need so that as a leader, you can leverage these insights to drive meaningful growth in your credit union.

2 | THE UNDERLEVERAGED COMPETITIVE ADVANTAGE FOR CREDIT UNIONS

Research Background

We studied over 200 banking customers and 50 credit union members who have $100,000 - $500,000 in investable assets. These financial decision-makers represent affluent customers and members; a promising market for credit unions. In this research, we sought to understand:

? Why affluent members do or do not consolidate financial products with their primary financial institution

? What role does or could financial planning play in these members' decision to acquire additional products

The research points toward an enormous opportunity for credit unions to gain share from existing affluent members. The following pages highlight 3 key strategies that you can employ to leverage the strengths of your credit union and achieve new growth.

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Insights and Opportunities

INSIGHT #1

A Favorable Member Experience Alone Won't Drive Growth

It comes as no surprise that credit unions provide a significantly more favorable member-focused experience to their affluent members than the big banks. This strong reputation in the marketplace represents a significant competitive advantage for credit unions. However, this alone won't deliver growth.

The research reveals that intangible and personal aspects of the interactions are driving a strong member

experience. Intangible aspects include service, reputation and security. Personal aspects include needs,

self-image and recognition. Interestingly, the personal aspects of the member experience remain largely

untapped.

80% of members studied expect their credit union to understand their needs and goals.

Rather than being responsive to immediate member needs, such as opening a new checking account, the MFP must strive to become a proactive trusted advisor and understand the member on a deeper level ? their financial needs, goals and aspirations. This will allow the MFP to earn the right to recommend additional products and services that would be of value to them.

In their own words, affluent members want to feel:

Accomplished ? I did something that I know will be good for the future of my family and myself. Empowered ? because I am smart and am making good choices. Trusting ? to know that the people I'm dealing with share the same morals to do the right thing for me.

Pairing good service with a deep understanding of the member's needs, goals and aspirations is essential to enabling growth. Question is, how can credit unions ensure growth is achieved?

OPPORTUNITY

Leverage your leaders to drive increased business results

The focus must be at the branch level where leaders equip MFPs with new skills and tools to have better conversations. Leaders are the linchpin to change and set the tone and direction for new behavior and increased results. Through the right management disciplines, such as monthly one-on-ones, effective coaching and instilling a growth mindset that benefits the member, leaders will be able to expand the skill set and confidence of their MFPs to help members with their financial wellbeing today, and in the future.

4 | THE UNDERLEVERAGED COMPETITIVE ADVANTAGE FOR CREDIT UNIONS

INSIGHT #2

Credit Unions are Significantly Behind Big Banks in Achieving Higher SOW

The research reveals a second startling insight. Over 30% of big bank customers are bundling beyond

basic banking products.

15% Only

of credit union

members, however, are doing the same.

A QUICK STORY

One of our Relationship Managers was visiting one of our credit union partners at one of their branches not long ago. Upon arriving, he noticed a MFP speaking with a member as he walked

past the lobby to the conference room where he would be meeting the CEO.

When the meeting ended, they walked back to the lobby. The CEO turned to our Relationship Manager and said "See, that's my issue right there". He was pointing to the same MFP and

member who were interacting before the meeting. It was clear they had been speaking for over an hour ? the same duration as the meeting.

The CEO explained that his MFP knows everything about that member, from his family's BBQ this weekend to the vacation he is planning. However, he does not know his broad set of

financial needs. The MFP is missing opportunities to bring additional value to the relationship and bundle beyond basic banking.

Credit unions are excellent in building personal relationships, trust and loyalty. To grow, however, they must leverage these strong relationships to have better business conversations and provide additional value to members.

The opportunity lies in how MFPs engage with members. By being curious and asking thoughtful questions, MFPs can uncover unknown needs. Perhaps the weekend BBQ is to celebrate his son leaving for university. Is the member aware of the small loan offer on promotion this month?

This type of conversation allows MFPs to provide solutions that help the member with their financial wellbeing. In doing so, the MFP can become a trusted advisor, deliver a superior member experience, and in turn increase share of wallet.

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