As Credit Unions Are We Missing The Signs ?

This weekend I was reading an article in which the author described driving his car as drops of rain from a thunderstorm began to fall on his windshield. Over to the side of the road an electronic warning sign displayed “Standing Water Ahead”. The driver looking ahead of him noted that the road ahead appeared to be safe. However, because he had taken notice of the warning sign he was able to slow down and to prepare for potential unseen hazards ahead. For most of us this scenario might seem common place because for many of us the ability to notice and monitor early warning signs has become part of our normal course of being adults. We have been raised and conditioned to think that a fever could be the first symptom of some undiagnosed illness. Hence when we have a fever that is too high or lingers too long we seek out medical assistance.

This same logic can also be applied to us as a industry. As I have been reading various blogs and articles it is interesting to take notice of the subtle early warning signs that are showing up before us. For example in a article posted in CU Times author Claude R. Marx wrote, “President Obama’s Economic Recovery Board raised the possibility in a report issued this summer on ways to simplify the tax system and raise revenue. Unlike other financial institutions like banks and thrifts, credit unions do not pay corporate taxes on their income," the report notes. "Eliminating this exemption would raise revenue and level the playing field but would clearly raise taxes on credit unions."

Then I read a prominent credit union blog (http://creditunionwarrior.blogspot.com/) that commented on the credit union industry, “In many ways we've lost sight of what it is to be a credit union.” The author then does a excellent job of comparing how credit unions could find themselves in the same position as labor unions…grasping for relevance in a world that has forgotten the impetus that created them in the first place. How so ? Consider our own choice of how we describe ourselves. Too often we see credit union marketers trying to rebrand their credit union as a “better bank” or “a better way to bank”.  These attempts at trying to dummy down the message to consumers only dilute the value proposition for credit unions as a whole. When we start to refer to ourselves as “banks” we undermine the uniqueness of our corporate structure and the value we give back to our members.

This shift in language is driven in part by the flood of new talent moving into credit union space. Ten of thousands if not more of bankers have lost their jobs as the recession has bitten into the financial services industry. This flood of talent has brought with it new people who spent years working for Big Banks and who have taken company business plans from hundreds of banks. These business plans are then used a page at a time in key meetings as the new employee tries to impress incumbent management teams. Suddenly credit unions that have never done commercial banking are doing participation loans in “sand states” far outside their field of membership. Everyone is seeing money signs as old tricks become new again.

I was disappointed to read an industry consultant's 2011 strategic report about "high yield strategies" that was in fact nothing but a sales presentation on how credit unions need to raise noninterest income by creating more fees.  Five dollars for every member call to the call center or visit to the teller. Using fees to drive away the undeserved seems counter to the credit union movement.

Each of these events might seem non connected. Yet, I worry that we are not taking notice and collectively connecting the dots. That in our zeal to make the most of consumer backlash on Big Banks we are running straight to the very behaviors that we used to shun. Please don’t get me wrong I am thrilled for all new bank employees that find their way to credit unions. For many people, myself included, who have worked in financial services finding a credit union is like finding an oasis. That being said not every new tactic from borrowed business plans is worth following.

Some people will not like to hear it but “No, a killer iPhone app will not replace your branch network or the need to provide sound personal advice to your members” and now that you mention it, “Yeah, those hot shot commercial bankers you hired for cheap… well they are watching the market like hawks. Once they see the uptick some of them are gone. Remember how thrilled you were that they brought their whole book of business worth millions when they joined your credit union? Well that works both ways.

As an industry and as leaders in the businesses that support our members we have the ability to act and not to just be acted upon. We have an opportunity to really highlight our difference from Big Banks that are staggering from scandal to scandal. We should welcome every new idea we find on blogs, forums, and conferences. New blood and talent coming into the credit union industry is exactly the shot in the arm we need. That being said we still have to pay for the “tuition” of this new knowledge.  We still need to teach the philosophy and culture of cooperative financial services. We have to do our own due diligence and study the downstream impacts and personally “own” these next great ideas. Only in this manner can we know in mind and in heart what we are putting forward. We also need to pause and make sure we are taking notice of the early warning signs around us and managing our businesses accordingly.  

Don't just read the bog become part of the conversation. What are your thoughts ? Leave a comment and as always thanks for taking time out of your day to read and share your thoughts.