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.
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!”);
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.
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.
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'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".
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.
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.