When Google/Microsoft/BofA/Wamu enters your market

Bank of America is still building out branches and their ATM structure like crazy.  Wamu is every where.  We even have super tough competition coming in from CU’s that historically have been in other cities and are 5 times our size.  What is a credit union to do?

Google just stepped into the browser marketplace with Chrome.  Building on other open source projects, they’ve thrown their development staff and large stash of capital behind launching a new browser project.  It is different then most other browsers, is smokin’ fast, and combines many common tasks into a simple process, like search.  Go figure.

The competition in the credit union space is only going to get worse.  In my CUSO side of life, there is really only one main competitor and they own the entire marketplace.  They are the Microsoft of my market.  So what are small CU’s, or small CUSO’s, going to do to stay alive?  Can we really survive based solely in niche markets?

3 thoughts on “When Google/Microsoft/BofA/Wamu enters your market”

  1. I believe that smaller CUs / CUSOs can survive in niche markets. However, it may not be the same niche market that they started in 80 years ago. To survive, they will need to innovate and sometimes create new niche markets… not wait for a market to approach them. By focusing on niche markets, CUs can build personal relationships with members and communities unlike the bigger, national players.

    What won’t work is for these CUs to continue to do the same thing. If they do, they end up being a commodity. Everyone has free checking.

    Think about all the Starbucks that came into towns where there were local coffee shops. Some local coffee shops folded up and died but some changed their strategy, continued to build relationships and are still thriving.

  2. James Robert Lay,

    You are brilliant. The Starbucks comparison is so right on. AND unlike WalMart whose goal was to drive out the mom & pop stores, Starbucks actually helped those (that chose to stick it out and not freak out). Many people discovered the “coffee shop” through the hype that came with the Starbucks brand, and then realized they could buy a similar experience – but it would be from local people.

    That was a niche that Starbucks helped exploit.

    While I agree credit unions (in most cases) lost their original niche (sponsor) they can find another one by applying the same values of “people helping people” and “common bond.”

    You just have to work a little harder……

  3. Remember that although some of these big banks look intimidating, they are having to be propped up by government bailouts to stay in business. In contrast, credit unions as a whole are financially sound. There has actually never been a time for credit unions to gain more confidence from consumers and bring in new membership.

    The Google Chrome and open source market was an interesting parallel due to Google and Mozilla (makers of the most popular open source browser, Firefox) are actually big supporters of each other. Mozilla knows that some of their users might convert to Firefox, but both companies are actually competing together against Microsoft. Their fight for open source is somewhat similar to our fight for the credit union movement.

    Take credit unions in Austin, TX for example. Even though they are competitors, they often work together in the community. Most of the CUs here are part of a local network of free ATM machines. If a member of credit union A goes to a credit union B ATM, there is no fee. There is also a nationwide shared branching network of credit unions that allows members of an Austin credit union to make deposits or withdrawals at a credit union clear across the country or an Alaskan credit union member to make transactions here in Austin.

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