In the early months of the financial meltdown, credit unionswere being hailed as the silver lining around the dark financialcloud. Credit unions were-or at least seemed to be at thetime-largely insulated from the risky investments that plaguedother institutions. Credit unions were poised to turn widespreadcrisis into opportunity.
That all changed when the trouble at US Central and WesCorp came tolight.
Of course, all of this opportunity still exists. What has changedis that some credit unions have become a little reluctant tocapitalize on this opportunity. Faced with mounting and uncertainassessments from the NCUA, credit unions of all sizes are trimmingtheir budgets in any way possible. This makes absolute sense-to apoint. However, if credit unions allow themselves to becomecompletely paralyzed by budgetary fear, they risk missing thisopportunity completely.
For example, there's no doubt in my mind that many credit unionshave already greatly cut back on marketing. Credit unions aren'talone in this thinking. The value of effective marketing isdifficult to quickly quantify, so in a down economy, it's often oneof the first things on the chopping block, regardless of industry.That can be a mistake.
In an often-cited study of 600 companies completed by McGraw-HillResearch in 1985, organizations that maintained or increased theirmarketing budgets during the 1981-1982 recession enjoyedpost-recession sales on average 256% higher than those that cutback on marketing. Sure, it's important that credit unions bracefor some potentially trying times just ahead. But it's even moreimportant that they position themselves for success once theeconomy rebounds.
“It's all about building brand and building loyalty,” said PaulLucas, a long-time credit union marketing consultant, during arecent conversation. “The smart credit unions realize this is notime to crawl under a rock.” I couldn't agree more.
This brings me to another area of debatable budgetary reductions:technology.
As a technologist, one thing that's always impressed me about thecredit union movement as a whole is its commitment to superiortechnology. With credit unions, good enough really isn't-or atleast it wasn't. Right now, I'm sure plenty of credit unions arethinking that they can make it through with the technology theyhave now-that they can wait it out until the economy comes back andinvest in better technology later. Perhaps that's true to someextent, but is that really the most sensible approach?
The reasons credit unions change core processors, for example, aremany and varied. Yet those reasons can all be distilled down to onesimple premise: The old system won't do what the credit union needsit to do. Maybe it's not customizable enough. Maybe it's toodifficult to connect third-party products. Maybe the vendor'scustomer service stinks. Whatever. The credit union isn't gettingwhat it needs out of that system.
So if mediocre technology was never OK during normal times, whywould it be OK in a time of arguably tremendous opportunity?
What drives growth? Effective, aggressive marketing coupled withinnovative, must-have financial products. What drives these twothings? Technology. Right now, marketing and technology canbe-should be-your one-two punch.
To any credit union that claims it can't afford to upgrade itslackluster technology, I counter that at this most criticaljuncture, what you can't afford is to have the wrongtechnology.
Last year, credit union expert Marvin Umholtz told me he expectedthe number of credit unions to drop to around 5,000 in a relativelyshort period. I didn't believe him then, but now I'm not so sure.What I am sure of is this: some credit unions will freeze spendingentirely, others will continue to invest wisely in both marketingand technology, and the survivors will come from this lattergroup.

John San Filippo is marketing manager at Symitar. He can bereached at 619-278-0474 or [email protected]