Colby Reflects on Decades of Change
It was 1977, the same year David Colby joined CUNA Mutual Group. A gallon of gas cost 65 cents, the average price of a new home hovered near $50,000 and the first Apple computer went on sale.
Colby, 59, who will retire from CUNA Mutual July 11 as chief economist after 37 years of service, painted a very different picture of the credit union movement back then. In July 1977, there were roughly 22,480 credit unions with average assets of $2.2 million, compared to today’s 6,700 credit unions with average assets of $167 million, he said.
“During my tenure we have lost close to 15,800 credit unions, but assets have risen by 2,200%. Put another way, today, Navy Federal’s assets are $10 billion more than the entire credit union movement when I began at CUNA Mutual,” Colby said. “Total membership is up 64.5 million since my first day at work and industry capital is up $115 billion or 4,783%.”
Colby will be succeeded by Steve Rick, a senior economist for CUNA, according to CUNA Mutual.
With a bird eye’s view of how the industry has simultaneously consolidated and expanded over nearly four decades, Colby has seen his fair share of trends, challenges and transformations. But it was during the 1980s and the 1990s, he said, when the credit union model was elevated by a few critical turning points.
“As a two-handed economist, I’d say on one hand it was the credit union transition into real estate secured lending in the 1980s, but on the other hand, it was the Credit Union Membership Access Act (H.R. 1151) and the work that Larry Blanchard did to ensure credit unions could help more Americans in the future.”
Venerable leader Blanchard led the Credit Union Campaign for Consumer Choice in 1996 in getting H.R. 1151 passed into law.
Anyone who has interacted with Colby can consistently hear the passion in his voice for credit unions, and his disdain for stagnation and mediocrity. He has long been vocal about unprofitable members who keep only meager funds in savings accounts, putting a drain on credit unions that have to maintain the sometimes insolvent and dormant balances.
“My goal was always to have a positive impact on credit unions and their members, despite how negative my forecast outlooks were for the past several years,” Colby said. “Motivating people to take action to ensure their future sustainability was consistently at the heart of all my communications.”
A native of Madison, Wis., who attended the University of Wisconsin-La Crosse, Colby’s credit union passion was ignited in the summer of 1976 when he interned at CUNA Mutual.
But even before then, he figured he would build a lifelong career involved with credit unions.
His grandfather opened an account for him at what was then CUNA Credit Union hours after Colby was born in 1955, he recalled. That cooperative has undergone several changes since then, from its early moniker, to Great Wisconsin Credit Union, and after a merger, to the $2 billion Summit Credit Union in Madison, Wis. Summit still has the CUNA Credit Union field of membership rules open charter, he pointed out.
“I liked the work I was doing and loved the passion employees had for doing the right thing and the credit union philosophy. It was a natural fit,” Colby said of CUNA Mutual. “Besides, my grandfather was a credit union pioneer in the early days, forming credit unions throughout the country. It was in my blood.”
Colby was hired by CUNA Mutual in 1977 as a corporate research specialist and has held various corporate, operational and strategic planning positions, the company said. He is also a founding member of the Credit Union Economics Group, which provides a broad perspective of macroeconomic and credit union trends. One of Colby’s most notable achievements is the Credit Union Trends Report, a monthly pulse check on the economic state of the credit union movement.
When asked what he considered to be one of the industry’s calamities, Colby said credit unions have drawn strength from adversity.
“While the system’s initial over-reaction to the shock of the financial crisis is a low point, our ability to work our way out of the crisis and at the same time help members, is a testament to philosophy and leadership,” he said.
It might be easy for some financial institutions, namely banks, to panic, scale back and hover in the corner during the recessions the country has experienced over the past few decades, Colby said. However, one advantage that credit unions had was their ability to leverage local knowledge to manage risk.
“They know what is happening to employment and collateral conditions within their fields of membership and are thus better able to manage risk, especially when other lenders leave the market,” he noted. “Credit unions’ dedication to members’ financial well-being sets them apart from other financial institutions.”
Even though he is well known for providing analysis on industry trends, he cautioned credit unions not to follow the pack.
“I’d prefer credit unions didn’t spend time watching trends; rather, (they should create) their own futures in the best interests of their current and future fields of membership,” Colby said.
For one, member demographics will continue to be an important factor in how credit unions operate, he offered. They will also need to closely watch the rapid evolution of payments systems and the role of traditional banking in the future of consumer finance, Colby added.
“As an industry, we need to do more than talk about demographics, we need to act, if we want to stay relevant,” he urged. “Credit unions really don’t have a lot to offer retired members or address the needs of the surge in baby boomers transitioning into retirement.”
Colby said these demographic groups trusted credit unions with their savings and borrowing needs and wondered why they can’t do the same for retirement and retirement planning.
“Much more needs to be done. On the opposite end of the age spectrum, we need to attract a new generation of borrowers,” he said. “There is a big gap between members knowing what they can do and what they should do.”
Besides providing economic analysis, Colby said he believed his insights were helpful to CUNA Mutual as the company laid out its own strategic planning. Knowing the people really made a difference and made his forecasts more valuable to the company, he added.
“This sharing allowed me to get out with credit unions and better understand the challenges and opportunities the leaders were facing,” Colby explained. “Interacting with the credit union leaders responsible for delivering services to members on Main Street helped direct my research and made my forecasts more accurate.”
With a slower pace in retirement, Colby said he’s looking forward to spending more time with his four grandchildren and catching up on things he hasn’t been able to get to for the past 10 years. Not having a hectic schedule means he can also carve out some time for some credit union projects and “of course, golf.” His zeal for credit unions may have passed down to one of his three daughters: One of them currently works at a credit union.
Colby reminded credit unions to stay true to their core but maintain flexibility on adapting to the constant swirl of changes in the financial services space.
“Remember, today’s major challenges will look like minor speed bumps when viewed in the rearview mirror, so long as you keep your wits about you and stay focused on the member.”