Brick Walls and Scabs

Posted on July 22, 2012

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“The brick walls are there for a reason. The brick walls are not there to keep us out. The brick walls are there to give us a chance to show how badly we want something. Because the brick walls are there to stop the people who don’t want it badly enough. They’re there to stop the other people.” ― Randy Pausch, The Last Lecture

Two weeks and hundreds of dollars later, my son’s got a nice scab on his forehead. He got it from running into the edge of my parents’ kitchen table at pretty much full speed. It bled like Mt. Vesuvious, as all forehead cuts do, but after a trip to the ER, he didn’t end up even needing stitches. Medical glue did the trick.

But, looking at his scabbing forehead today, I realized something that surprised me: I don’t remember the last time I got a scab. I’m sure I’ve had one since elementary school, but that’s the last time I remember getting them regularly. From playing sports, wrestling with friends, and climbing trees, anything and everything seemed to result in scabs.

My face whenever I think of the scab eater

And, for the record, I didn’t obsessively pick at them or eat them. There was a kid in my class who did – everyday. He said his goal was to cleanly pick scabs in one piece and then eat them…ugh, now, I’m going to go throw up.

So, what in the heck does this have to do with credit unions? Hopefully nothing directly. If it is directly, then that means you have a scab eater you work with and you need to run away. Like now. Run. I’ll wait for you to come back…

Indirectly, however, I think it matters a whole heck of a lot. Scabs, by their very definition, show you’ve taken a challenge and lived through it. You stretched yourself a little beyond your “safe zone” to climb a little higher, jump a little further than you ever had before.  You’ve faced the brick wall, smiled, and scaled it. Inevitably, when you pushed yourself a little outside that safe zone you ended up a little dinged up. There’s always something down the less travelled path you couldn’t quite plan for so scabs are really a badge of honor marking someone who faced and scaled their brick wall.

Apparently though, I lead too sedentary a lifestyle such that I don’t get many, if any, scabs at all. When did I lose my sense of adventure or daring? Do I avoid the brick walls in my life?  Who knows, Dr. Phil, but it’s a question credit unions should be asking as well.

Even oil companies differentiate better than banks

As an industry we’re just as risk adverse as I am. No scabs around. Financial services, in general, are very stagnate. And a study referenced here indicates that “No other industry in the study – not even the oil industry – suffers from such a profound lack of diversity.” We are so gun shy that even our branding is almost exactly the same: a bank is a bank is a credit union is a bank. Partly it’s our regulators, partly it’s our leadership, neither wanting to upset the apple cart that got them there. However, it’s mostly on us. We do the same stuff we’ve done before, or others have before us. We write the same reports, we look for the same things, we hire the same people.

As an example, take the underserved market that is all the rage right now. Studies show anywhere from 60-90 million in this market. Many of these are even high credit borrowers and the highly sought after 18-24 year olds. Not only are these likely profitable members but credit unions were formed to address the needs of people outside the reach of banks that needed small dollar, unsecured loans. And yet, there are very few banks or credit unions creating products and services for this market. The brick walls then, to use the metaphor from the top quote, are a lack of understanding what this market needs, maybe even a mistrust, as well as an attitude of “we’ve succeed so far without them, why is there need to get into a new market?”

Problem is these people are turning to non-financial institutions like Walmart, Pay Day Lenders and Buy Here Pay Here dealerships.  And, these businesses are making a lot of money taking advantage of them.  Additionally, when does Apple or Facebook enter the picture?  It may seem farfetched, but mobile banking is taking on a life of its own overseas.  The most compelling story is that of M-Pesa in Kenya.  Safaricom, a mobile network operator like AT&T here, provides the gateway for branchless banking.  Basically, people use the cellphone company’s billing system to make people to people payments, deposit and withdraw money, and as a microfinance option.  This research paper deatils the success of this program: within two years 38% of the adult Kenyan population had adopted it and in the first year, there were almost as many transactions in Kenya on this mobile platform as at ATMs (107,000 vs 180,000).  Banks have now coupled with Safaricom and so are seeing their numbers soar.  Wiki M-Pesa here.  Youtube it here. Recent update in this article .

There is a lesson in Kenya for US credit unions about not being timid with this market. Rather, a scab approach is called for, a strategy of taking the chance and dipping your toe into this market. For example, a credit union could open a micro-branch in a strip mall where the underbanked frequent with specialized staff and a set of products only available there.  After an appropriate amount of time, you’d evaluate how the micro-branch does and then expand or contract accordingly.  Minimal staffing, set up cost, or exposure, but just enough to size up the brick wall ahead. A bit simplified, of course, but there are resources that can help with the details.  More than anything, moving forward and scaling your brick walls just takes a willingness to get some scabs.

And, we need more scabs. Our industry needs more scabs.

(ps – if you’ve never seen The Last Lecture given by Randy Pausch, treat yourself and click the link at the top)

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