Big vs. Small CU, SEG-based vs. Community Charter; CUs An Industry Divided?
It depends on how you define success. If it’s bigger assets (and more losses from overstepping risk limitations) then we succeeded.
When we started adding bankers to our midst, you have to ask… “Did the bankers become CU people or did they turn their CU into a Bank?” Regrettably, it appears the latter happened. It’s not about charter, it’s not about size… it’s all about serving our members. Once we focus on that, this discussion topic is pointless.
1st Valley CU
Many (not all) larger credit unions have a tendency to become ‘bank-like’ in their management style and business operations.
The larger they are, the more they appear to get further away from basic credit union principals and instead get hung up on corporate “for-profit” stagnation structure. (I miss Ed Callahan, he used to say: “Every credit union should have a large sign in their boardroom: “It’s about the Member!”);
Add to that some management, leagues, and volunteers with head-in-the-sand attitudes towards change/evolution – (these are our industry leaders??) we will continue to have problems with achieving true success as a movement.
However I am hopeful. After-all, 2012 is the International Year of Co-operatives - perhaps that can remind every credit union to review the 7 principals of co-operatives and re-visit their own reason for being. (again – It’s the MEMBER). Not for Profit. Not for Charity. But for SERVICE.
Vice President of Marketing/Business Development
Carolina Postal CU
As a director who continuously thinks of the labels attributable to her credit union, I understand the nature of the question.
At the outset, it would appear that credit unions are divided as there are multiple labels that any one credit union can carry. This multitude gives the illusion that the industry is divided when in fact it is just diverse.
The diversity of our credit unions affords "something for everyone" -- that is, big or small, employer or community based, there is a credit union out there that fits the needs and ideals of every American. When I speak about credit unions to strangers, neighbors, coworkers...basically all potential shareholders, I start off by saying that there is a credit union that you can join to suit your needs.
Whether one wants a credit union with brick and mortar locations for face to face interaction or an institution to access accounts online and do transactions without ever stepping into a branch, there is a credit union out there for that. If someone loves his job and wants to have even more in common with coworkers or wants a community based organization that provides grants, then there is a credit union out there for that.
It is our diversity that has allowed many credit unions to cast a wide net and capture a high number of new members who were affected by the recent financial crisis -- caused by banks! Credit unions are not held back by such diversity; we are successful because of it.
XCEL Federal Credit Union
Excellent question, and you will get many different views. My observations of the industry include the following:
- The weaker leaders of credit unions will focus on perceived barriers such as legislation, capital, compliance , SEG limitations etc…as obstacles to their success. This conversation tends to remove accountability for excellence off the credit union and places accountability on external factors.
- The stronger leaders focus on member experience, value, compelling work environment, and a general up tempo corporate aroma that breeds excellence.
- I do not know why the Pork industry (the other white meat) and the Dairy industry (Got Milk!) are able to fund national awareness campaigns and we cannot. I have not read research on this. We do know that a rising tide lifts all boats. My intuition is that weak leaders are afraid of making bold moves, and we may have a disproportionate number of weak leaders in the CU space. I have said this in public speeches and received the expected reaction. Then I ask: With the story we have to tell and the story that research confirms regarding value, price, service and trust, why are we only 6% of the retail banking market? It’s because we act more like the medical profession, which is a cottage industry of thousands of small physician practices.
So having a conversation about the merits of SEG based, community based, is a good way to avoid the better question regarding quality of leadership.
CIO/Senior Vice President of Information Technology
Credit unions initially, of course were organized for contained employee groups and their size was dictated by the size of the employee group they were serving. I think maintaining this attitude does limit the movement in that even pursuing SEGs, the number of people having credit unions available to them is very limited.
I like and support the move to community based credit unions simply because more people have the opportunity to use credit unions. Those members that prefer staying with their employer-based credit unions is ok as long as there is a community based credit union also available for those who choose to use them.
The movement is about people helping people, it makes sense to reach more people in that effort.
Fort Sill FCU
I've heard the same complaint for the last 40 years - so I'm approaching my response from a different perspective this time. Quite frankly, it is time to stop worrying about "how we are different" and work with "how we are the same".
We are not so much an industry divided - but, like an orchestra, we are musicians playing the same piece of music; however, each with our own instrument and paying attention to our own part of the score.
That is the beauty of our co-op origin. Not everyone can be a violinist - the music would suffer and, occasionally there is a soloist that we can support and highlight. In the end, it is the efforts of all that transform the score from cacophony to music.
If size were all that mattered, the tympani and the bass would lead the band. But what about the trilling notes of the piccolo? Wouldn't they be overshadowed by the blaring trombone if the both tried to play the same note? Is the clarinet better than the trumpet because they use more fingers? Are treble clef parts superior to bass clef scores? Of course not!
However, just like a symphony orchestra, our movement conductors have to be well-informed and have an outstanding score to direct from - if we find people that can lead each individual member of the symphony to their best performance, then the resulting sound is superior.
We should quit worrying about trying to make all players equal and to play the exact same notes - and begin to celebrate the differences and utilize each musician and their instrument for what they can best do.
The conductors in our industry (NAFCU, CUNA, NCUA, NASCUS, CUES, etc.) should realize that musicians working together (each to their best ability - some playing furiously - while some keep the time - while some rest - while some solo) is the only way to keep the audience engaged. After all, 6% of any pie isn't much of a bite - especially when divided between a few thousand players.
CU eMentor who prefers to remain anonymous
In 1974, Wisconsin had over 700 credit unions. This year, only 200 or so remain. In 1974, a large credit union had assets of $750,000 to $1,000,000 plus. Most were part-time operations and many were mom and pop shops. Then, a few visionaries decided that a credit union could do things as well as, if not better than, a bank or S&L. We all know what happened to S&Ls, with there attitude of dedicated customer service and commitment to the financial stability of their customers. Banks on the other hand remained stoic in their belief that they were and would continue to be the only show in town. In a few smaller cities in the state, a few men and women took it upon themselves to convince their directors that their communities were made up of people they all knew and had grown up with, and with the proper facilities, these visionaries could develop a financial institution that could serve the community better and cheaper than the existing “traditional” banks and S&Ls.
So it began. The growth of the credit union industry with everyone helping everybody else.
So it began. The downfall of the credit union industry. Volume generated income which generated more services which generated power in the marketplace and the elimination of those who couldn’t or wouldn’t keep up.
With power came great responsibility and many of those early credit union “managers” remembered where they came from and nurtured a cooperative spirit in the industry that was truly amazing. This spirit we may never see again. As time passed and credit unions grew, it was, of course, impossible for many to continue. Those that did grow to mega financials made all in the industry proud. Their growth, services, pricing policies were a shining example of what the industry stood for. Many credit unions, on the other hand, decided to remain dedicated to their specific employer, foregoing mega growth to repay those sponsors for their years of continued support, through good times and bad. Many “smaller” credit unions remain to this day, dedicated to principles only they can understand and relate to. Those who believed “smaller” credit unions were not as complex as the “big” credit unions and literally laughed at those people who dedicated themselves to their specific employees and sponsor never truly understood the mission of credit unions and their founders.
With great asset size came great power and with this power many credit union executives lost their way. Whether it was caused by greed, insufficient education, misinformed directors or a combination of all these factors, the one overwhelming result was a rift between those large and small and almost resulted in the loss of the entire industry in the last few years.
There will always be competition. There will always be winners and losers. Human nature is what it is. The credit union industry is what it is. History speaks very loudly. Credit unions have never been a major player in the financial industry and probably will never be. Is that a bad thing? I think not. Remembering where you came from and what your true mission is seems to me to be far more important than having a fifty story building from which you look “down” on your customers. Besides, it always was fun being a “thorn” in the sides of the other guys.
V A Credit Union
From Tough-talking Troy’s perspective, the industry is held back by its lack of “collaborative effort.” This should not be confused with “cooperative spirit,” which credit unions have a marvelous and successful record of achieving. In a cooperative spirit, entities share best practices, ideas for meaningful solutions, and offer reciprocal visitation opportunities between participating credit unions.
What is lacking is the “collaborative effort” where credit unions actually pool and leverage resources. This could be in the form of shared talent, co-located technology usage, or simply combine buying power to influence pricing of vendor partners. Our latest rallying cry of Every day is Bank Transfer Day ™ is a step in the right direction toward a more collaborative effort and the possibilities are endless. Earlier this month, the local credit unions here (big and small) met and discussed strategies to incorporate the “Every day is Bank Transfer Day™” message into our existing marketing efforts. While our session was productive, just sitting down together in the same room helped us collaborate on a variety of marketing topics. If we can get CU marketers in the same room, sharing ideas, imagine what credit union leaders in other areas might accomplish.
Now, Tough-talking Troy suggests to mentees, “Tell me your story.”
Chief Operations Officer
South Carolina FCU