The largest credit union by asset size and in membership currently sits at $111,986,000,000 and 10.8 million respectively. This behemoth of a shop is uber-deserving of kudos, with an endless supply of lessons on “how to do it right” from leadership on. Though while the growth, service expansion, and investment portfolios sparkle with hope for the financial cooperative movement, where does the hundred-billion-dollar credit union fall in the future of this system as, say, compared to the $50 million credit union, or even the $500 million credit union? There are a few hundred credit unions in the United States with assets exceeding one billion dollars, but this is only a fraction of the overall 5,416 shops in the country.
Though at the opening of 2022 there has been an uptick in the total number of credit unions in the US, the trend for the last ten years has been a startling average of 200 credit union closures per year. As of August, 2021, amongst an outbreak of conservatorship mergers and involuntary liquidations, de novo credit unions in the system are few and far between. According to the NCUA, only 10 new charters have been granted since 2016. Coupled there is a sizable number of branch closures (roughly 400 locations annually) as COVID continues to disrupt operations, as the workforce circumnavigates the ‘great resignation’, as direction in digital investments swells, and as the needs for physical locations transform.
I began this article by picking on the largest shop in the world, but consider it good-natured ribbing. However, as Freud once said, “There’s a grain of truth in every joke.” Not to sound like the younger brother who’s been picked last for the kickball team, but sometimes the biggest kid on the block causes the biggest problems for everyone else living there. Sure, poor management decisions, weak leadership succession planning, acts of God, and operationally unsound behaviors are all potential proverbial thorns in the sides of what comes next. It feels odd to say this, but I have found myself wondering if there isn’t some validity to what many of the megabanks are pleading for. Do we as a cooperative movement really believe that the growth of our individual institutions outranks the survival of our sister shops? Do we really believe that profit has overtaken the little man’s decree of “not for profit, but for service?”
Credit unions must grow to survive as we all know very well. Growth provides competences and capitals for more success in competition, not to mention a greater ability to serve effectively. And attaining new members at the level needed for healthy growth is becoming more and more difficult with technology continuing to overtake the more traditional means of service. A member, for example, is not going to wait 48 hours or longer for a loan decision if they can get instant approval from an impersonal app that also delivers their new car. But back to mergers and another sobering tidbit: the largest growth in membership for credit unions today is not from updates in service, but instead from merging other credit unions.
My favorite of the 8 cooperative principles is number 6, which I consider the most golden on the list: cooperation among cooperatives. Every shop, big and small, benefits from collaboration; collaboration can turn one credit union into a thousand. And don’t get me wrong, not all mergers are bad, but it’s the mergers that are forced, which can leave consumers convinced that credit unions are not the answer. Strategic and collaborative mergers; homegrown de novos (a credit union within a credit union); CUSO implementation for marketing and membership growth; and more openness amongst the mega credit unions out there for capping their sizes or distributing their resources to smaller credit unions to truly support the movement and our intrinsic mission of people helping people are all opportunities that we as a system should be discussing with one another.
In the end, cooperation is key to the survival of all credit unions. Leaving one another in the dust in an emerging dog-eat-dog industry just doesn’t ring true to a Kool-Aid gulper like me. When do we come to the table, beyond the GAC, to advocate for one another over ourselves? When do we acknowledge that reaching that $1 billion mark, while a huge victory for your shop, is really a victory for all credit unions and, more importantly, a special occasion to ask, “how can we help one sister credit union reach that $10 million mark?” There seems to be a lot of room for dropping the ball as a movement and our leagues and coalitions have done excellent work in reminding us all that we are in fact part of the same movement, but the time to work together is not when a merger is at your door, the time to work together is today, this instant, right now.