Fintech disruption continues to challenge traditional financial institutions, forcing banks and credit unions to reevaluate how they attract, engage, and retain customers. As digital-first providers expand their offerings in lending, payments, and personal financial management, institutions are increasingly looking for signs that customers may be shifting their financial relationships elsewhere. Research highlighted by Mercator Advisory Group points to several key indicators, including declining product penetration, shrinking engagement among younger consumers, lower branch productivity, and increased transactions with fintech platforms, that may signal growing competitive pressure from emerging financial services providers.
While CUNA Mutual Group Chief Economist Steve Rick did not quantify how much disruptive financial services startups hurt individual credit unions in 2014, he told an October online conference audience they had certainly harmed credit unions overall.
The article further outlined with some interesting thoughts on how to discern whether fintech is successfully attracting members or customers within a particular institution. These indicators hold true for banks as well as Credit Unions:
• Your average number of products per member has declined
• Your membership has been declining in recent years.
• Your assets per branch have been falling steadily.
• Your percentage of members with draft accounts has been declining.
• Your share of members 30 and younger has dropped in recent years.
• Your members’ outbound ACH payees include disrupters such as Lending Club and Prosper
Whether fintech firms are truly disrupting a financial institution is not always visible in headline growth numbers. More often, the warning signs appear gradually through declining customer engagement, reduced product usage, and weakening relationships with younger consumers. Financial institutions that closely monitor these indicators and respond with improved digital experiences, competitive products, and stronger customer engagement strategies will be better positioned to defend their market share. As fintech innovation continues to reshape financial services, success will increasingly depend on an institution’s ability to adapt to evolving consumer expectations while leveraging the trust and relationships they have spent decades building.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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