Bank Is a Four-Letter Word

Credit unions exist to improve their members’ financial lives.

One of the most offensive things a credit union can be called is a “bank.” Perhaps you’ve heard it in person when speaking to an agitated member or read a Yelp comment with that same sentiment. Or maybe your members routinely refer to the credit union as a bank and really don’t understand the difference between the two. The word is sometimes thrown in our faces, suggesting we’re no different than the trillion-dollar Wall Street banks that make headlines for their profit-driven motivations. Having previously worked at one of those banks and having an insider’s perspective of what that truly means, hearing comments like that is especially troubling.

As an SVP in charge of product management at a large global bank, I managed a relatively small portfolio of $35 billion in student loans and originated more than $10 billion annually in new loan production. The mindset of the bank was, and still is, profit maximization. So much so that I was responsible for chairing a committee specifically on that very topic. We would meet to discuss ideas on maximizing the profitability of each and every loan product, analyze various elements of those ideas, then implement and monitor our success. As an example, we’d discuss the impact of reducing the grace period on loan payments from 15 days to five days. Estimates on how many borrowers would be considered late would be translated into additional revenue from a lift in subsequent loan fees.