A funny thing happened while I was in the process of writing my last blog post. Zopa teamed up with a list of credit unions in the U.S. Now, part of this strategy is marketing based, to get their name out there and to make a presence. But, a big part of it is also market based. As I stated in my last entry until they had a way to tap into the wider market Zopa would stay a minor force. This strategy also gives Zopa access to an existing funding source with an established market presence, in the form of their CU partners.
Based on the following quote the forward thinking institutions, like these CUs, recognize that they need to do something now to tap into the needs of Gen Y, “The merging of financial services and social networking is a great way to reach the younger generation,” says Doug True, senior vice president of FORUM Credit Union of Fishers, Ind., one of Zopa’s launch partners. I applaud Zopa and their credit union partners for attempting to get the ball rolling and experimenting with new products for the market. Again, to reiterate what I mentioned in the last post the cost of establishing a program like this isn’t very great. Not to mention, by being new and innovative they are getting a lot of press, me included, off of this offering. The jury is still out as to whether this will be successful. There are a couple of barriers to wide acceptance. The first question is, will a large enough segment of the general public want to get involved and be direct lenders to strangers, in order to make this a worthwhile program? How about the timing of this offering? With all of the credit issues in the news lately will this also put off potential lenders? Most of the market of potential borrowers, for these high rate installment loans that this program is offering, are exactly the same people that are having difficulty today making mortgage payments. The best I can say for now is “stay tuned”.
Getting back to the subject of Gen Y…
They may be youngest generation in the workforce right now and yes, they take to new technology and social networking easily. However, they are still just consumers who want the same service like everyone else. Heather Peters of Pleasanton, CA based Javelin says, “It is a common misconception that Generation Y is a web- or digital-only generation who sees no value in face-to-face interactions or traditional channels, such as ATM, branch or phone…”. As most of us who have been in the industry for any period of time will attest, this is one area we can improve on. There are many reasons for some quality deficiencies in our industry and I would be interested in hearing your take as to which ones are the most critical and how they can be addressed.
Lastly, I would like to point you to a very good blog post I ran across from Tim McAlpine’s entry on the Open Source CU site. He also touches on a lot of the subjects I’ve spoken about here. The main one being, no one in banking organizations in general are taking ownership or sees the importance of these new ways of doing business.
