<p>Those who attempt to defend credit unions against accusations that credit unions are no different than banks, need to get out of the clich business and deal only in hard facts. After years and years of trying to explain what credit unions are and are not, why is there still so much ignorance on the subject? Who doesn’t understand what a credit union is and what makes them unique? For sure, banking industry lobbyists, all sorts of competitors, and politicians on both sides of the aisle, either don’t know the difference, or refuse to acknowledge that there is one. But even credit union vendors, the general public, and reporters from the mainstream and CU media consistently demonstrate that they don’t have a clue. Add to the list, potential and current credit union members, CU staffs and volunteer officials, elected leadership and paid employees of the dozens of national and state CU trade groups and special interest CU organizations, along with state and federal regulators, and thousands of credit union sponsors. Then there are credit union management consultants, attorneys, and a host of conference speakers. The list goes on and on. It seems to me that a big part of the reason why the credit union difference message has failed to get through is that credit unions themselves, as well as their supporters, simply don’t know the real difference. Instead, they spout cliches when someone accuses credit unions of being just like a bank except that they are tax-exempt. None of these cliches convince anyone that credit unions are any different than the bank down the street offering basically the same products and services. Let’s look at a couple of the most popular of the dozens of cliches CUs use to beat off attackers: Credit unions are different because they are “in the people business.” Such foolishness! What does that mean? Isn’t every business in the people business? Aren’t banks in the people business too? That is not to say that most (unfortunately not all) credit unions don’t treat members very well. They do. But so do many banks, especially community banks. Credit unions converting into community credit unions could learn a lot about being in the people business from many long-time community banks, especially those located in smaller or rural communities. Credit unions don’t have a lock on being in the people business. Then there’s this favorite explanation of the difference: credit unions are different than banks because they have a volunteer board of directors. First of all, some credit union “volunteers” do get paid directly, like so much per meeting. Secondly, virtually all CU volunteers get “paid” indirectly. Readers know the drill; meals, trips, trinkets, etc. Nothing wrong with that unless it is done to excess. Usually it’s a small price to pay for better educated and more effective directors. Granted banks pay their directors, but there are over a million not-for-profit organizations in the U.S. that don’t. With millions of volunteers toiling throughout the country, most observers don’t get all that excited in any why-credit unions-are-different discussions. Credit unions are more convenient is another cliche that is trotted out when any “difference” discussion comes up. But the fact is many credit unions are not more convenient, or in far too many instances, not even as convenient. Does your credit union have evening hours? Is it open on Saturdays? Sundays? Can members easily access your web site and use it to do their credit unioning? How’s your phone service? How long does it take to get a loan? How long are the teller lines? Some readers are from credit unions that really are more convenient, but across the board, the convenience argument may not hold up. Besides, in the difference argument, is it really all that relevant to an argument that always goes back to the CU tax-exemption? Convenience has no bearing on that. A major difficulty in explaining the credit union difference is the fact that there exists such huge operational differences between credit unions themselves. For example, some credit unions excel in service, convenience, efficiency, delivery systems, products, rates, membership expansion and retention, facilities, etc. Some do not. Yet, even none of that is important in explaining what makes a credit union different from a bank. So, cliches aside, what does matter? Here comes my definition again: “a credit union is a not-for-profit financial cooperative organized to serve the changing financial needs of the members who own it.” A bank is structured as a for-profit corporation, is not a cooperative, doesn’t have members, and is owned by individual or corporate stockholders who may or may not also be customers. What else needs to be said? Throw out all those cliches, the ones mentioned above and dozens more like them. Instead use this simple definition. And don’t be trapped by loaded and irrelevant questions or comments. They only send credit union advocates down a slippery slope into all those other things that really don’t count when you are trying to explain the difference between a credit union and a bank. I would like to see one of the trade groups get on my bandwagon and incorporate this definition in everything they do. For example, put it on the back of business cards, on wall plaques, on marketing materials, on statement stuffers, and on press releases. Include it in speeches and reports, in letters, in staff and volunteer bios, in audio-visual presentations, in conference materials, in annual reports, and especially print it on small cards that can be carried in a wallet or purse and be passed out as the occasion demands. Will any group grab this definition ball and run with it? Probably not. Therefore, for reader convenience, I’m going to include this definition at the bottom of my weekly column starting next week. Repeat after me:” A credit union is.” Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail email@example.com.</p>
This is part three of CU Times' request of CUNA and NAFCU to answer the same questions concerning a housing bill's impact on CUs. Both groups have differing views.
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