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One of the joys of my job is the frequent contact I have with really sharp credit union CEOs. A prime example is Henry Wirz, CEO of billion-dollar SAFE FCU in California. Henry is one of those guys who definitely sees the big picture while managing a top-notch credit union on a day-to-day basis. Frequently he shoots off e-mails to give his take on all things credit union. A recent one contained so much food for thought regarding where credit unions are going, need to go, and how they can get there, that it is worth sharing at least some of what Wirz committed to writing. Entitled, “My thoughts about the future,” each of the 10 points Wirz addressed can be summed up with 10 individual words: difference, efficiency, cooperation, consolidation, growth, investments, consumers, legislation, community, and measurement. Talk about someone able to step outside the proverbial box! This is not blue-sky stuff. Rather, Wirz outlines what he sees as a challenge and then offers possible ways to meet those challenges head on. Take “difference” for example. To paraphrase liberally, Wirz said there has been a noticeable trend for many credit unions to engage in what he dubs the “me-too” strategy of credit union management. Let’s do everything the banks are doing only do it better and cheaper. Wirz and I completely agree that’s good as far as it goes, but credit unions also have a need to differentiate themselves from other financial providers. How? Wirz suggests that credit unions consider posting member direct deposits one day early, guarantee members closing dates for their mortgage loans at the time of application, offer members a checking account with automatic reconciliation, help members set up bill payer payee lists, and offer members an analysis of their credit reports and scores. From my vantage point, I see credit union folks talk about the credit union difference all the time. Add innovations like these to the mix and the CU difference will be unmistakable. Wirz also had some specific advice when it comes to consolidation, another of the 10 words listed above. Again paraphrasing, Wirz sees the continuing decline in the number of credit unions through voluntary mergers. It is something he favors if the eventual winners will be the members of the merged credit unions. He also sees obstacles to successful mergers such as CUs that have unnecessarily high capital levels that tend to prolong even more, mergers that are inevitable among credit unions not providing good member service. It is no surprise to me as Wirz points out that a major obstacle to a merger that should happen is often hindered by the self interests of the involved credit unions’ management and boards. As a direct result, Wirz says, “In some cases the credit union image of good service will suffer because too many underperforming credit unions will continue to operate for too long hoping to put off a merger.” All of which leads to a discussion on another of the 10 words: growth. According to Wirz, banks are doing a good job serving their retail customers and to think otherwise is foolhardy. He gives numerous examples to support his stance such as free home banking and bill payer products as well as a growing number of conveniently located brick and mortar branch locations. Credit unions need to face up to this bank advantage by working harder to get member growth in high gear again. That has to come first. Co-op ad programs can play an important role in fueling that growth. At the same time, credit unions need to enhance their convenience with an ever-larger number of shared branches and ATMs, and stepped up electronic delivery systems. Some like me feel Wirz is right, but also that credit unions face a daunting catch-up task. Because of space considerations, there is only room to include brief comments on the rest of Wirz’s words of wisdom. Efficiency: credit unions need to take advantage of the cost savings that can be achieved through Check 21, increase their involvement in indirect lending programs, and create Web sites that can function as virtual branches. Cooperation: Sharing is something banks are reluctant to do. Credit unions must do it to succeed. Credit unions need to cooperate even more than they are already doing through jointly owned CUSOs such as CO-OP Network, FSCC, CUDL, XCU Capital, and many similar entities outside the state of California where Wirz operates. Investments: More attention needs to be given to the over all value a full range of investment products can bring to the credit union. Or, as Wirz puts it, “Credit unions will learn that investment programs do not disintermediate deposits but actually help attract deposits.” Consumers: Credit unions will need to work harder to position themselves as a friend to the consumer by taking a strong advocacy role in bankruptcy reform, member privacy, elder abuse projects, spam, telemarketing, accurate credit reports, etc. Warns Wirz: “Credit unions should look carefully when they find that banks take the same side as CUs on a legislative issue.” Legislation: Here Wirz gets very specific. He feels an important legislative step would be for credit unions to voluntarily adopt the Sarbanes-Oxley guidelines that are mandatory for banks. This would lead to credit unions becoming the “gold standard” of the internal controls specified in that piece of legislation. Community: Community credit unions are the breakthrough for serving the underserved. Community CUs offer tremendous opportunity but also come with a long list of problems of their own. Whether you agree with any or all of these bold steps, the point here is clear that these are the types of issues credit unions and the multitude of groups representing them should be addressing rather than getting involved in not-invented-here squabbles, ego-driven petty politics, or board and staff micromanagement. Henry Wirz’s final piece of advice? “That which gets measured will get done!” Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected]

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Peter Westerman

 

Credit Union Times

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