Advocacy, Education and Compliance: NAFCU Revamps Strategy
NAFCU has a new strategic direction: Cut the fluff and focus on anything that can help its credit union members increase revenue, control compliance costs and lobby for the interests of the industry.
The unrelenting pressures of the marketplace, the heavy costs of regulations, the threats to revenue from banking reforms and the contraction of the industry through mergers are compelling the national trades to change and focus solely on their core competencies.
“From a branding perspective, we are known to have the best in advocacy, the best in education and the best in compliance,” Dan Berger, president/CEO of NAFCU, said in an interview with CU Times. “Our members have said to us over and over in our surveys that they want more in the realm of advocacy. They want more education and they want more in compliance assistance. But in order to do that something else has to go away.”
While NAFCU started its new strategic journey about a year ago, CUNA recently proposed making major changes that would alter the trade association's structure and governance and affect every league, as well as hundreds of credit unions.
Despite the contracting credit union industry, however, NAFCU attracted 59 new members last year and signed up 27 new members this year so far, Berger said.
What's more, NAFCU's membership dues grew from $6.6 million in 2010 to $7.5 million in 2014, according to the trade association's annual reports. And because of its once-a-member-always-a-member policy, the trade organization collects about $1 million in membership dues from state-chartered credit unions that were once federally-chartered cooperatives.
Berger declined to speculate about whether a shrinking credit union industry would need two national trade groups in the future. However, it is a question the NAFCU board has discussed, according to Debra Schwartz, president/CEO of the $2.7 billion Mission Federal Credit Union in San Diego, Calif., who also serves as secretary for NAFCU's board.
From her perspective, Schwartz sees consolidation as a good trend because it gives surviving credit unions economies of scale, placing them in a stronger position to cover the costs of compliance and helping them deliver the expensive technology-based products and services members demand.
She also sees the two national trade groups surviving and adapting to the industry's contraction, which can benefit credit unions.
The first benefit is that two trade groups give cooperatives the option of choice. The second benefit is that two trade organizations provide the industry with two opportunities to advocate.
“I don't think there is anything wrong with two national trade groups walking into a Congressman's office with two messages that are similar in direction but also offer slightly different viewpoints,” Schwartz said. “I think that is a good thing.”
Whatever credit union market changes may bring in the future for trade organizations, Berger is confident NAFCU's focus on advocacy, education and compliance will continue to attract new members and help the trade group thrive for years to come. Berger said he receives several calls every month from state-chartered cooperatives asking how they can join.
“Credit unions become members of NAFCU because they love our federal lobbying,” he said. “That's what we do.”
When Berger is walking on the streets of Washington, it seems he knows everybody and not just all of the men and women in Congress, noted Jeanne Kucey, president/CEO of the $171 million JetStream Federal Credit Union in Miami Lakes, Fla. She also serves as NAFCU's board treasurer.
“He even knew the names of the wait staff at the Capitol Club,” Kucey recalled. “That impressed me. He really is a relationship builder. It's in his nature.”
Kucey believes those NAFCU relationships in Washington will pay advocacy dividends over the long run.
Read more: Berger is analyzing NAFCU's internal operations ...
“Even though the economy has turned around and I think most credit unions have benefited from that to a certain extent, we still have very complex and real concerns,” Kucey said. “That's why we really do need to advocate our point of view and gain some wins. Our income is being threatened from the CFPB. The NCUA is thinking about increasing its regulatory field to include third-party vendors, which amounts to more time and expense and more compliance all the way around.”
To redirect more resources to support advocacy, education and compliance, Berger said he's using qualitative and quantitative analysis tools to review all of NAFCU's internal operations.
“We’re looking at the entire system and we’re still doing it,” he explained. “Let me be very clear, this a process. This is not something you can turn on and off because there are so many moving parts in a national trade association. If it doesn't fit in one of the three buckets we are focusing on – advocacy, education and compliance – then we’re not going to do it anymore.”
One of the first things cut was NAFCU's marketing awards.
“Marketing awards are nice and there is nothing wrong with them, but when you look at the back-end of it from a cost accounting standpoint, it made no sense whatsoever,” Berger said.
The marketing awards program took a lot of time and required staff and board volunteers to process hundreds if not thousands of entries, review them and decide on the winners.
“It would shut down our marketing department for weeks if not months,” he said. “So how does that help my members?”
NAFCU also is taking a close look at its webinars.
“We are really focusing on getting rid of the fluff and stopping the webinars that are nice and may interest certain people, but don't fit into one of the three buckets of advocacy, education and compliance,” Berger explained.
The webinars, which would fall into the education bucket, should help credit unions learn how to grow revenues, because even though the credit union industry continues to post membership growth, market share remains stagnant.
Instead of producing webinars on increasing a credit union's social media footprint, Berger said, a better approach may be developing webcasts on how to increase noninterest income through social media channels.
“It's a tweak, but it's an important tweak because it's all about credit union growth,” Berger said. “Credit unions have to have growth in different products and services and that's hard to do because there is a lot of competition in the financial services space.”
Although revenue growth and containing costs are important for all credit unions, it is particularly critical for small cooperatives.
Michael Warrell, president/CEO of the $129 million Solano First Federal Credit Union in Fairfield, Calif., said that even though credit unions are facing many marketplace and regulatory challenges, he pointed out that cooperatives have always faced challenges and still found a way to adapt with assistance from trade groups.
He noted, for example, that the compliance advice and assistance Solano First FCU receives from NAFCU and its CUNA-affiliated state league enables it to adapt to new regulations and control compliance costs.
“While the burdens seem overwhelming now, I firmly believe that with NAFCU and other trade organizations, such as the California Credit Union League, we are going to be able to adapt,” said Warrell, who was recently named NAFCU's executive of the year. “NAFCU focusing on what they are really good at makes sense.”