Legislative Barriers Are Among Threats to Collaboration
The credit union system has long touted the merits of collaboration and cooperation. As clich?d and overused as the idea may have become, collaboration will continue to be critical to credit unions in 2011 simply because credit unions face a sobering reality.
The truth is that credit unions, small, medium, and large alike, are vulnerable. Painful reminders of the current operating environment include that credit union operating expense ratios exceed net interest margins, noninterest income is under legislative attack, corporate capital investments for many credit unions have been wiped out, loan-loss expenses are at an all-time high, and corporate stabilization and NCUSIF expenses, also at historical highs, may extend for as long as 10 years.
As the CEO of the recently launched CU Roots Cooperative, my biggest challenges are to distinguish between those back-office functions that require building new capacity versus those than can be delivered more quickly and cost effectively via credit union aggregation and the use of existing providers and to take back-office collaboration beyond a handful of credit unions to realize benefits of scale.
Second, without compromising a given credit union's own unique identity and local value to its field of membership, credit unions have the option of voluntarily collaborating on a collective, unified credit union branding and messaging initiative. One such opportunity is "Credit Unions: For People, Not Profit." This consumer-tested campaign, which was developed by the California and Nevada Credit Union Leagues in conjunction with Attune, the Filene Research Institute and credit unions in Arizona, enables credit unions to share the redundant costs of developing a consumer-tested brand while preserving their respective identities. To the extent that credit unions view mega banks, not credit unions, as their primary competition, cooperative branding can save credit unions enormous marketing dollars and give credit unions a greater collective bang for our collective marketing buck.