Small Credit Union Doom Nothing but a Fairy Tale
Nothing gets under the skin of successful leaders of small credit unions more than the “small credit unions are doomed” mantra.
The message comes frequently and is delivered in many ways: Credit union consultants eager to sell “merger” assistance, well-intending bloggers trying to paint a vision of a potential future scenario that does not include smaller credit unions, and even arrogant talking heads who naively think that innovation, growth, profitability and best practices only exist in the realm of larger credit unions.
The Problem with Fairy Tales
Fairy tales are fun to share. While they can be gripping and inspirational, they are also subject to interpretation. The “all small credit unions are doomed” fairy tale is based in some truth, on newsworthy events we are all aware of. Truth: Many smaller credit unions have a tougher time competing and navigating change. Truth: There are more small credit unions liquidated for fraud and other mismanagement issues. Truth: Many smaller credit unions are quietly fading away through mergers. When considering these truths, consider that we should expect these results, since small credit unions make up a larger representation of our entire industry. If you are alarmed by the high number of credit union consolidations, remember it’s really about the same rate as those experienced by community banks.
Unfortunately, it seems as though most of the good credit union headlines we read about feature larger credit unions. Though smaller in number, it’s the large credit unions that get the most attention from the media, consultants and perhaps even our trade associations. I get it: Individually, smaller credit unions represent less revenue for consultants and some trade associations. They are overlooked because of their size and because far too many people have bought into the fairy tale that small credit unions are doomed. If you’re reading this and you disagree with my assessment, do some research on your own and have a few honest conversations with small credit union leaders. I hear from so many that are just fed up and tired of hearing that small credit unions don’t matter. They are tired of being overlooked.
Smaller credit unions are frequently characterized as inefficient, declining, resistant to change, lacking technology, non-innovative, unprofitable, not knowing how to grow and not strategic. My experience is that while there are many small credit unions that could be justifiably characterized this way, far too many deserve more of our attention for their success in these and many other areas.
Tales Worth Sharing
My team witnesses small credit union innovation and success every single day. Newsworthy small credit union best practices that are relevant to our movement regardless of their size. Stories that are amazing and inspiring. Collectively, I believe we need to tell more of these stories. Here are some examples:
- Leveraging technology:Mobile technology, remote underwriting and digital advertising is alive and well in many small credit unions. Smaller credit unions such as Greater Abbeville and Spartan Federal Credit Unions are leveraging digital media for double-digit loan and membership growth. Credit unions such as Cove and Lion’s Share Federal Credit Unions are leveraging technology to remotely underwrite and disperse up to 99% of all loans and new memberships. These credit unions are thriving and relevant, and managing to stay on top of technological advances. They know they don’t need to be bleeding edge, they just need to catch up as quickly as possible.
Why the Story Matters
When we focus only on asset size, we risk further polarization between the small and the large. There is significant value in telling more of the good stories about smaller credit unions. Many times, its these stories that can be most impactful at the individual and community level. Sharing more small credit union success stories may also encourage more small credit unions to change and evolve. It beats a depressing story where all are doomed. Many of these best practices can be shared and taken to the next scalable level by our large credit union brothers and sisters. Sharing more of the best practice stories coming from our small credit unions will also help us tell our collective and unique story to our elected representatives to help ensure a viable long-term credit union option.
After all, not all of our small credit union stories are Grimm; far more are Cinderella than we may think.
Scott Butterfield is the principal of Your Credit Union Partner, PLLC. He can be reached at 253-507-2443 or email@example.com.