Who Needs Banks Anyway?
There is no need to fully rehash the banker battle, but here are the basics. The bankers have been unrelenting. The banking trade associations finally appear united against credit unions. The attacks are fierce, and widespread. That we know. We also know the credit union lobby is powerful and doing a terrific job battling the bankers on Capitol Hill. It's no stretch to conclude that thus far credit unions are winning the political fight. It's also safe to say banks see an opportunity to spur more credit unions to trade in their charters for that of a bank. That initiative, I believe, is being intensely pursued behind the scenes. I don't think bankers want to be too obvious about this effort. On the legislative front, we do know that America's Community Bankers is pressing Congressman McHenry from North Carolina to pass legislation that would limit NCUA's role in credit union-to-bank charter conversions. So knowing all these things, what else can credit unions do, aside from lobbying, to battle the banks? What other steps can credit unions take to wound their sworn enemy? Lobbying is vital, but there has to be more, doesn't there? Attention All Credit Unions, Stop Giving Banks Your Business!!!! That's right, stop it cold, dare I say boycott your enemy. Credit unions, unfortunately, do a tremendous amount of business with banks throughout the country, whether it's for their corporate accounts, wires, check clearing, broker/dealer services, ACH, safekeeping, coin and currency, and on and on. Many of these relationships were forged when the average credit union was much smaller and needed the services of banks. They were also formed when the credit union industry didn't have the strong corporate credit union network it has today. Trust me, corporates can satisfy just about any of these services for any credit union anywhere. If you haven't looked at the corporate credit union network, look again. Stop using the Federal Home Loan Banks, go to your corporate. Now on one level this is a simple concept, but it can also get very tricky. Case in point, Credit Union 24. CU 24 is a credit union-owned EFT network. Just recently it signed a major processing agreement with Fifth Third Bank, and thus CU 24's credit union owners are indirectly supporting Fifth Third Bank. Bad move, right? Well it doesn't help the boycott any, but credit unions also have to do what's best for their members. I happen to know that Fifth Third was very aggressive with pricing and other contract areas, which helped it land CU 24's business. They also like Fifth Third's openness and flexibility. There are other, credit union-friendly options, such as eFunds, but CU 24 couldn't really be expected to leave money on the table or sacrifice flexibility unless its member credit unions urged them to do so. So I don't fault CU 24, they wanted the best deal. Given the importance of debit and credit card transactions, CU 24 credit unions likely were all for going with Fifth Third, and CU 24's board is made up of CU owners who approved the decision. But all credit union-owned organizations need to explore this question: should the organization do business with banks if there is a comparable credit union solution out there? Let the credit union owners decide, and make their wishes clear to management about doing business with banks. In some cases, credit unions may be willing to take a financial hit in the spirit of the fight. Credit unions also have to ensure their entire team is on the same page. At very large credit unions, the vendor decisions are often made by members of management who may not understand the political landscape. Of course the CEO knows what bankers are up to, but often those below the CEO aren't as in tune with the banker climate. It is incumbent on CEOs and boards to let their decision makers know, that if possible, they'd rather see the credit union do business with a credit union-friendly organization, than a bank. There are anomalies to consider. In Hawaii for example, banks and credit unions enjoy a terrific relationship, but I think that has to do more with the Hawaiian culture and their concept of ohana (family) than anything else. Credit unions owe it to themselves to take a good hard look at how they are directly or indirectly supporting the banking industry, and ask the tough questions. Some credit unions may get all twisted up inside. They despise the bankers' political attacks, yet they've had a solid, 20-year relationship with the bank down the street that has treated them well. Why hurt that bank just because the banker trade associations are attacking credit unions? That's the point. If the bankers start feeling the effects of credit unions pulling away their business, they'll send a very clear message to their trade associations. I truly believe bankers and credit unions could do great things together, and I hope that one day there will be more collaboration, but until then, hit `em where it hurts. -Comments? E-mail email@example.com