Blue Oceans in Lending
In early January, I attended a Blue Ocean Strategy Workshop for approximately 50 credit union executives around the country hosted by Filene Research Institute. Being that Blue Ocean Strategy was my favorite business book last year, I was naturally hyped for this session and it did not disappoint. We broke into small teams and discussed the concepts of value innovation. One of the central themes from many of the small teams and especially the one in which I was involved was defining exactly what value credit unions really bring to their members. Basically, we boiled it down to the fact we help our members buy things. Yes, buy things like homes, cars, home improvements, college educations, etc... You know as I have said before on this blog, we take money in and we loan it out - simple, right? My small team had some fun discussing other industries and trends outside of credit union land. We talked a lot about Ty Pennington's Extreme Home Makeover (move that bus - I admit I sometimes TiVo this show), Oprah's Angel Network (I have never TiVo'd Oprah - honest) and other similar shows that get people together to help a specific person or family. It is a trend as people want to help others but they want to know who they are helping. When our small team was talking about this phenomenon, George Hofheimer from Filene, interjected in our group that he had heard about a cooperative bank in the UK that themed their whole marketing campaign around the fact that deposits in the cooperative bank go to help fund loans (dreams) for other bank customers. They even used specific testimonials. Scott Patterson might be able to clue us in on this through his UK research. Our small team built a new value curve on these concepts - it was fun and we might have been on to something.
As you know I have been watching Zopa and trading blog posts with Trey Reeme and Scott Patterson (both credit union bloggers) about this form of social lending and watching to see when it comes to the US. Well, Trey found a company called Prosper (They claim they are the first people-to-people lending marketplace in America) that just launched in the US with this social lending concept. I checked out their web site tonight and was blown away by the personalization and simplicity of what they have done. You can tell they have gone to great lengths to make it feel like a bit like eBay(they even brag about this in their About Us section) for the lending transaction. Please take the time to check it out. Some nice touches such as you outline your dream (why you need the cash) and your preferred terms and then lenders (other people) bid on funding a piece of your dream for a rate of return. Yes, bid like eBay. Prosper provides lenders (other people) with a credit grade and debt ratio (ahh, see lending can be simple) and then the auction ends and you have a pool of investors sharing the risk. The borrower makes payments through a deduction in their bank account and the investors are paid back. Prosper makes the fee structure simple.
Credit Union lenders - we can not afford to ignore this development. With shrinking net interest margins perhaps there is something to being more of a matchmaker between depositors and borrowers and charging for this matchmaking service and the servicing that goes along with the transaction. Is your credit union hurting for deposits like so many are? Perhaps, depositors are willing to take on some risk for a higher rate of return than we can offer in savings and CDs.
In early January, I attended a Blue Ocean Strategy Workshop for approximately 50 credit union executives around the country hosted by Filene Research Institute. Being that Blue Ocean Strategy was my favorite business book last year, I was naturally hyped for this session and it did not disappoint. We broke into small teams and discussed the concepts of value innovation. One of the central themes from many of the small teams and especially the one in which I was involved was defining exactly what value credit unions really bring to their members. Basically, we boiled it down to the fact we help our members buy things. Yes, buy things like homes, cars, home improvements, college educations, etc... You know as I have said before on this blog, we take money in and we loan it out - simple, right? My small team had some fun discussing other industries and trends outside of credit union land. We talked a lot about Ty Pennington's Extreme Home Makeover (move that bus - I admit I sometimes TiVo this show), Oprah's Angel Network (I have never TiVo'd Oprah - honest) and other similar shows that get people together to help a specific person or family. It is a trend as people want to help others but they want to know who they are helping. When our small team was talking about this phenomenon, George Hofheimer from Filene, interjected in our group that he had heard about a cooperative bank in the UK that themed their whole marketing campaign around the fact that deposits in the cooperative bank go to help fund loans (dreams) for other bank customers. They even used specific testimonials. Scott Patterson might be able to clue us in on this through his UK research. Our small team built a new value curve on these concepts - it was fun and we might have been on to something.
As you know I have been watching Zopa and trading blog posts with Trey Reeme and Scott Patterson (both credit union bloggers) about this form of social lending and watching to see when it comes to the US. Well, Trey found a company called Prosper (They claim they are the first people-to-people lending marketplace in America) that just launched in the US with this social lending concept. I checked out their web site tonight and was blown away by the personalization and simplicity of what they have done. You can tell they have gone to great lengths to make it feel like a bit like eBay(they even brag about this in their About Us section) for the lending transaction. Please take the time to check it out. Some nice touches such as you outline your dream (why you need the cash) and your preferred terms and then lenders (other people) bid on funding a piece of your dream for a rate of return. Yes, bid like eBay. Prosper provides lenders (other people) with a credit grade and debt ratio (ahh, see lending can be simple) and then the auction ends and you have a pool of investors sharing the risk. The borrower makes payments through a deduction in their bank account and the investors are paid back. Prosper makes the fee structure simple.
Credit Union lenders - we can not afford to ignore this development. With shrinking net interest margins perhaps there is something to being more of a matchmaker between depositors and borrowers and charging for this matchmaking service and the servicing that goes along with the transaction. Is your credit union hurting for deposits like so many are? Perhaps, depositors are willing to take on some risk for a higher rate of return than we can offer in savings and CDs.
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