How to market a groundbreaking brand when the product does not exist? (Photo: Unsplash)
The idea for the Ofek Credit Union was conceived by Tom Darumi-Hakim sometime in 2011, during the tent protest days.
The general public began to understand that the banking system in Israel is significantly responsible for the cost of living, lack of competitiveness, current costs and interest rates.
The Trachtenberg Committee gathered and calculated that the banking system costs the average Israeli family about NIS 3,000 per year.
"Against the background of these events, we asked ourselves what could be done and realized that the situation in the world is different," says Tom. "Cooperative banking is based on the idea that the customer is also the owner of The bank and therefore there is no conflict of interest here where the bank is trying to profit at the expense of its customers." "
In the US, 43% of banking operates in a cooperative model, and approximately 120 million Americans manage their accounts in credit unions. In Europe, approximately 30-50% of banking is cooperatively, with the leading countries being Germany, the Netherlands, Spain and Italy."
"From our point of view, banking is a social service that is necessary for our lives and is important for the advancement of the economy. Whether it means allowing a person to acquire a profession, open a business or buy a house, this is an important service for the advancement of the national economy. For this we need a banking system that does not have a conflict of interest with the customer ."
"The cooperative model means that every customer who joins becomes an owner of the banking institution, that is, the credit union or the cooperative bank, and therefore this institution is obligated to it. This may sound revolutionary, but in the past it was very common. When the state was established, there were approximately 137 banks and credit unions operating in Israel cooperatives, but in the 1970s the supervision of the banks led to the fact that the big banks bought the small entities and we reached today's situation, where there are barely 6-7 banks."
"Besides the social-value aspect, we also see that it pays off. We have comparisons made by the American Administration of Credit Unions between the commercial banks that operate for profit and the American credit unions, showing that almost all services are more profitable with the credit unions, at a rate of up to 25%. Recently We also see a significant increase in people opening accounts at credit unions, especially after the crisis of 2008, when it was clear that in the end the main consideration of the banks is short-term profit," Tom continues.
"In the end, we promoted legislation under the leadership of former finance minister Moshe Kahlon, and the supervisor of banks Hadva Bar, which reopened the possibility of establishing credit unions in Israel in the model that exists today. We started the licensing process in 2017 and it was long and tedious, but in the end we received a license from the market authority The capital to set up the systems, and recently also an identification code, number 15, from the Bank of Israel, which allows us to participate in the accepted payment systems. We are currently in the process of setting up the systems, which is mainly technological, and very soon we will start providing the services to our customers."
How do you market to the public an idea that is relatively new and revolutionary?
"One of our significant challenges in the field of marketing concerns the need to explain new ideas to the public and bring into the discussion concepts and models that it is not familiar with," says Thom.
"For example, although our goal is to provide services as in any bank, we must not call ourselves a bank. We have to use the name 'credit association,' and only after a few years of activity can we officially become a 'bank.' It makes marketing very difficult because there are a lot of concepts that we haven't cracked yet. For example, what do we call 'bank transfer' or 'bank account' without saying the word bank?"
"The cooperative movement is also challenging because although it is very common in the world, in Israel in recent decades the cooperative world has been reduced mainly to the areas of agricultural settlement and hardly touches on financial activity. In fact, we are bringing back to the public debate concepts from the beginning of the state and the establishment of the kibbutzim, which, although long forgotten from the public consciousness in Israel, Very common abroad.
However, unlike entities that have existed since the founding of the state, Ofek is going to operate fully digitally and without branches, based on the most advanced technology."
"Another significant challenge is that we are small, lean (LEAN), and we don't have huge sums to spend on advertising. It is clear that if we were to launch a campaign on the television channels it would cost millions and we would reach a very large circulation that is not sure that it is all relevant. That is why we focus mainly on digital advertising and the challenge is Crack the audience that is interested in the horizon and has the potential to be interested and join. At the moment we are not trying to achieve comprehensive national publication but to reach a few thousand additional members, beyond the 13,700 that exist today, so that we can open the activity at the end of the year."
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The power of community
What Ofek does have is a strong and significant community.
Everyone who joins is enthusiastic about the idea, most members add more friends and the word spreads by word of mouth, in home circles and on social media, like wildfire.
"Many communities recognize the need and want to be a part, usually motivated by a desire for change and an understanding that there is something new in the air.
These are the initial joiners, the Early Adopters, and they are very necessary to create change and a fair economy." "
Many people who understand the importance of this move become ambassadors of Ofek.
We see customers who purchase company shares for their grandchildren or children, understanding that this gift has two things: on the one hand, the potential for economic liberation, on the other hand, a pioneering social movement of national importance." Today, Ofek is just before opening. 13,700 members have already joined and bought shares
, When the target for opening the services is to exceed 15,000 members. And here is the catch.
The cooperative model requires an initial investment from the customers.
How do you overcome this obstacle?
"Since we are a cooperative body, our establishment model is the opposite, and this of course brings explanatory challenges because when you establish a credit union, you raise the money from the public. It is not that we come with a group of investors and have a ready bank, and invite the public to become customers. Instead, we invite the The public to join the joint effort of establishing Ofek by buying a company share that costs 1,000 shekels. All those who joined have already done that and we are in a movement that calls people to join and be partners in the process of establishing Ofek."
"Since it is an egalitarian body with values of fairness, we must not discriminate between different customers. For example, we cannot guarantee special benefits in the future for those who join early. This is another challenge that differs from other models that encourage quick joining."
It is important to note that Ofek's shares are not traded on the stock exchange.
Unlike normal banks, this is a non-profit credit union, so the value of the company's stock is not the significant thing in this story,
"Fairness, transparency and interest-free activity, these are the principles thanks to which we see people coming to us. We will not try to give gifts to catch people and then raise the price for them.
I too, as CEO and one of the founders, own only one company share, and I have no more control or profit from other members, who join to receive fair financial services."
This is called modern economics.
Marketing and digital
Entrepreneurship
Tags
banks
cooperative
Bank of Israel