During a recent strategy session, a credit union executive proudly told me that their soon-to-be-implemented digital banking platform was going to be their primary competitive differentiator.
I had to remind him of an uncomfortable truth: hundreds of other credit unions were already using that exact same platform.
If you can buy a solution off the shelf from a vendor, it is mathematically impossible for it to be a competitive moat. It is simply table stakes. Upgrading your digital banking platform just means you are finally meeting the baseline expectations of the modern consumer. It prevents you from losing members due to frustration, but it doesn't give them a new reason to stay.
Across global markets, we are witnessing a brutal recalibration regarding this exact concept. Recently, major enterprise software companies lost billions in market value in a single day simply because artificial intelligence companies announced new capabilities. The lesson from the broader market is clear and ruthless: When your entire competitive advantage is just the technology you built or bought, AI can now build it too.
In the context of the Business Model Canvas, when a key resource becomes easily replicated, it ceases to be a differentiator and becomes a commodity. For credit unions, basic financial products—checking accounts, standard auto loans, and functional mobile apps—are rapidly becoming commoditized by fintechs and AI-driven platforms.
If AI gives every financial institution the exact same tools, what decides who wins?
The answer lies in the fundamentals. The only remaining advantages are the ones AI cannot generate for you: deep member understanding, a sharp value proposition, and a resilient business model.
Here is how credit unions must shift their strategic focus to survive the commoditization of banking technology:
1. Moats are Built on Understanding, Not Just Code
AI can write code to spin up a digital lending platform in days. What it cannot do is sit in your community and deeply understand the specific financial anxieties of your local workforce.
The companies thriving in the current disruption are those embedded deeply into how their clients make decisions. For a credit union, your moat is not your core processor; it is your unmatched understanding of your members' "Jobs to be Done." Are you just offering a mortgage, or do you understand the specific friction your members face when trying to buy a home in your specific zip code?
2. Design the Ecosystem, Not Just the Product
The most successful modern businesses don't just sell isolated products; they layer services into an interconnected ecosystem where each part supports the others.
Credit unions must move away from isolated product pushing (e.g., a marketing campaign just for auto loans) and design an interconnected financial ecosystem. When your checking accounts, financial wellness coaching, local small business partnerships, and lending products all seamlessly support one another, the relationship compounds in value. That interconnected trust is incredibly difficult for a digital-only competitor to break.
3. Refine the Value Proposition
You do not have to invent a completely new financial product to win. You simply have to redesign the value proposition around what members truly want.
A national bank might offer a high-yield savings account, but a credit union can offer that same account wrapped in radical localism, personalized service, and community reinvestment. The product is the same; the value proposition is entirely different. AI can optimize a rate, but it cannot optimize a relationship.
Three Questions for Your Next Board Meeting
The fundamentals matter more than ever. At your next strategy session, put the technology discussions aside for a moment and ask your executive team these three questions:
- Is our business model built to adapt, or is it rigid?
- Do we know our members—their specific jobs, pains, and gains—better than the fintechs targeting them?
- Can we articulate a value proposition compelling enough to make members choose us over an AI-driven alternative?
The tools are changing, but strategy still decides the winner.
