Noted entrepreneur Kunal Shah poses an interesting thought experiment:
“Which product or service was more efficient 20 years ago than today?”
His question here is meant to expose the Hedonic treadmill any customer facing organization faces. Rarely does the satisfaction with consumer goods decline over time.
Whenever anything is notably* more efficient (or “better” in the eyes of the consumer), a few things take hold. The new behavior becomes irreversible, and consumers develop a very high tolerance for the negatives of the new thing. You may hate Uber, but you’re not going back to hailing a cab the old way.
This trend is only accelerated by technology.
The unquenchable appetite for convenience and cost also drives down prices. ProfitWell reports on the sharp decline in consumers’ willingness to pay for specific features. For many categories, it is well into the double digits year over year. This is the general deflationary aspect of technology.
So you’re probably telling yourself either, “Duh! No kidding, Henry Ford sold cars, not faster horses.” or “Why do you have to be such a Debbie Downer with the ‘You’ll never be good enough’ talk.” And in either case, you’re right. This can be both intuitive and depressing. However, look at it as an opportunity.
You provide a unique and valuable service to your community. If not, community FI’s wouldn’t be some of the oldest banks in the US. Being responsive to your customers, including their evolving needs and tastes, is a key advantage over larger rivals. Carrying the market’s trust as a reliable custodian of your customers’ wealth is a valuable position vs. new fintech competitors.
Accelerating that responsiveness is built on two key strategies. First is listening and responding to your customers’ needs faster than less flexible alternatives. Second is continuing to serve your communities while maintaining the trust you’ve built up.
In combination, these two capabilities create a wide moat that is hard to copy, relevant to your customers, and sets you apart from your biggest current and future competitors.
If you’d like to talk about your strategy and how to stay ahead of this curve, reach out. We’re always ready to talk about best practices and benchmarks for community FIs like yours.
*Shah uses the subjective measure of anything that improves by 4 on a 1-10 scale. So if the old thing was ranked a 2 and you show up with a 6 (or makes the old thing look like a 2) you have crossed the threshold.