This year I will celebrate my 38th year in credit unions. The year I began my career as a teller at Pacific NW FCU in Portland, Oregon Jimmy Carter was the president. The Consumer Checking Account Equity Act had just been passed allowing credit union members to access their share balances by writing drafts on their accounts. Mortgage rates were at their all time high of 17% in an attempt for the Federal Reserve to wage a war on inflation. NACUSO hadn’t been formed yet. Every State still had their own trade association. Mergers were unheard of. There was no such thing as a smart phone, or mobile banking or P2P payments. It all revolved around the branch, cash for P2P payments and the good old US Postal Service.
Life was pretty simple. One of the many reasons I love working with CUSO leaders – they have the cooperative heart combined with a shrewd business mind … A winning combination. For example, it’s 1989 and 15 big credit unions in California started toying with the idea of “sharing their branches.” What a cooperative and brilliant idea!
One of the biggest expenses any credit union will encounter is the building of a new branch. If you’ve ever been involved with building a branch, or in charge of the task, it’s daunting to say the least. Once the branch is built, hiring and training the staff and the ongoing operational costs can be a big challenge as well. Building and operating the branch is often a huge operational distraction and significant risk. Using “other” branches, or sharing branches, seemed like a no-brainer. Having conveniently located shared branches certainly would have been a wonderful differentiator for the credit union movement. So why was it not immediately and widely adopted?
The early arguments against it were:
- I don’t want those credit unions to “steal” my members. Okay – then just wait a few years and they’ll “merge” your members in.
- I don’t want to clog our teller lines with other members. And as branch usage continues to decline, you’ll wish you had more traffic – and the kind that gives you fee income like a shared branch does.
I get so frustrated when I hear a credit union professional say “Members don’t care that we are a cooperative and most people don’t know the difference between a credit union and a bank.” We need to own that. In my opinion we’ve not given them a compelling reason TO care. Can you imagine if every single brick and mortar branch in the US was open to every credit union member in the US? The banks wouldn’t have had the huge competitive advantage of nationwide branch networks! To CO-OP’s credit, with shared branching they have finally surpassed the big banks in number of US branches. But still the perception is we aren’t “convenient.” What if we had a national symbol for Credit Unions that was as recognizable as say the Red Cross logo, or Mastercard logo. So if you see that logo, you know you’re welcome and you understand it’s a better way of banking because it’s a financial cooperative.
There is a new “movement” afloat that I believe has the potential for a real differentiator. It’s a CUSO, of course, called CU Ledger and the technology they are testing is Blockchain based. I know just enough about Blockchain technology to know it’s a smarter, safer way to guard member data, with significantly lower costs for participating credit unions. The massive Equifax data breach showed us that the game is over. We HAVE to find a better way to protect our member’s identity. I learned the phrase “honey pot” at a recent meeting. That’s how data is currently stored. All the data is in one big pot (i.e. location) with a “large fence” around it. That makes it too tempting and apparently too easy for hackers to gain access. Which is why you hear almost daily about data breaches. Nothing is sacred, even Arby’s got breached.
CU Ledger’s challenge is two-fold: first they need credit union investors who understand and believe in this technology. And second, they need credit unions to participate on a large enough scale and soon enough that we can show the public that we are a better, safer solution to banking.
Why is it so hard for us to work together? Here are just a few reasons that come to mind.
- Ego. Some executives see cooperation as a weakness or an admission that they can’t go it alone.
- Bankers that come into the industry and don’t know or care we are a cooperative
- Confusion – let’s face it, sometimes we’re just plain lazy and if something seems too complicated we’ll pretend we’re not interested when in fact we just don’t understand.
- Not enough time – most credit unions feel the pressure to be full service, so a CU with 70 employees is doing the same level of service that 300 employees do at a much bigger shop.
- Not a priority . See number 4
If you have a cooperative heart, and mind for business, come hang out with the cool kids at the 2018 NACUSO Network Conference in Anaheim, California on April 16th – 19th at the historic Disneyland Hotel. You’ll learn more about the real opportunities to differentiate credit unions, provide better service at lower costs and competitive solutions to online lenders. Come and talk with innovative industry leaders, learn about how you can collaborate and strengthen your credit union’s future … you’ll be glad you did.