top of page

What CUs can learn from Flip Flops

Technology advanced on average seven years thanks to the pandemic. While in many applications, this was a needed nudge, but it created bottlenecks and friction in others.

The Christensen Institute, a nonprofit, nonpartisan think tank dedicated to improving the world through Disruptive Innovation, recently studied 100 market-creating organizations and found that only 55% harness technology to create success. More importantly, they found that successful organizations reduced barriers preventing the consumer from buying and using products. Every organization in the research that removed at least one of the following barriers (cost, time, complexity, and accessibility) found success.

To be specific, it isn't technology that was breaking down barriers, but innovation. The research highlighted Havainas, a famous Brazilian sandal company. Havaianas innovated to create a new market for footwear in Brazil in the 1960s by developing a remarkably uncomplicated flip-flop that rapidly became the go-to footwear for the majority of Brazil's lower-income citizens, many of whom often went barefoot before. Recognizing that many of the company's prospective customers lived far from conventional retailers, Havaianas elected to distribute its sandals via a fleet of simple vans that traveled to the rural locations where its customers lived and worked. The sandals were developed with a flat rubber footbed attached to a one-piece strap to overcome a cost barrier, making them cheap and quick to manufacture. Rather than harnessing flashy technology to solve a problem, it was precisely the lack of bells and whistles that made Havaianas sandals affordable and accessible enough for average Brazilians to buy and use them. Today, Brazilians buy more than 200 million pairs of Havaianas sandals each year.

How can credit unions harness innovation to improve their businesses?


Unfortunately, the member has quite a bit of friction getting these problems resolved. Member friction falls into three categories.

Product frictions are a lack of product knowledge by the user. Common product frictions at a Financial Institution are; not understanding how a skip-a-payment affects the loan terms and how a check hold works and affects available funds.

Process frictions are obstacles found most commonly in the purchase journey. An example is the loan purchase journey. The loan process starts when the member first identifies the need for the loan. This is often called discovery. Next, the member/customer will evaluate their options for the loan and then purchase. Once the loan has been opened, the next phase is access/use. This is followed by the final step of either recommend or repurchase.

This process holds many potential friction points. Common frictions are:

  1. Members are not aware of the credit union option.

  2. The application process is obstacle-filled, resulting in abandoned carts and excessive length.

  3. Loan fulfillment takes too long.

People frictions

When nearly 600 credit union leaders were asked the following question:

Would you please describe the friction the member has doing business with the credit union?

The most popular answer was a surprising response. It was the word LACK — specifically, a lack of a data culture—the ability for credit union talent to have the capability to consume data and make iterative changes.

How to identify your credit union's member friction

This is easy. Just ask!

Ask your leadership team, your business units, and your member contact staff. They will tell you.


Prioritize these frictions by using the following criteria, 1) What friction will have the most significant impact on my member, AND 2) what friction can we work on right now without any additional resources.


Create your plan, don't forget to set a friction reduction metric to measure the success of this effort.

It's not the technology innovations themselves that create value, but the access to solutions that help members progress. This discovery found by the Christensen Institute has an encouraging implication: many impactful innovations don't hinge on the pace of technological progress but on the creativity with which innovators use the technology available to them.


Curious about the current state of data at your

credit union?

Take this quick

Found at the bottom of the page.


Where can I fill my data knowledge gaps?

With a stop at the

Data Education Center.

We believe that data transformation doesn't have to feel overwhelming or expensive to be impactful. After helping over 600 credit union leaders launch their data journeys, we have identified several consistent knowledge gaps. We have worked hard to fill these gaps with a variety of educational artifacts:


What if I want something more? Does someone offer data education classes with real-world applications?

Yep, that is what we do, of course, and so much more. To learn more, please review our data transformation institute

35 views0 comments

Recent Posts

See All


bottom of page