Dodo birds and you: Why credit unions might face extinction

About 500 years ago, early explorers first came across the dodo bird on the island of Mauritius. Due to a variety of factors (not the least of which is that dodos were apparently slow and delicious) they went extinct about a century later. With no natural fear of humans and increasing competition for limited resources, the hapless dodo didn’t stand a chance.

What is the lesson for credit unions in this? The parallels are frightening.

  • Complacency. Like the dodo, credit unions have grown too complacent in their niche. For the dodo, this niche was a small island. For credit unions, it is serving small but established membership pools. This is definitely a thing of the past. Credit unions must (and many are, much to their credit) look beyond the membership pools of the past and embrace larger and more open community-type charters. If you are content on your little island and fail to see danger on the horizon, extinction is your destiny.
  • Limited resources. Like the dodo, credit unions now compete with other financial service providers for an increasingly small share of resources. This is definitely not like the old days, when all credit unions had to worry about was the bank down the street. Now it’s nontraditional financial service providers like Walmart’s GoBank and Bluebird, insurance companies, payday lenders and Lending Club. Anymore, credit unions have to scrap and fight with a growing variety of upstarts and retooled traditional financial service providers for member wallet share. Just like the dodo found itself sparring with (and losing to) invasive species like dogs, pigs and crab-eating macaques, credit unions now find themselves scratching and clawing for the last crumb of a small pie.
  • Taste. Like the dodo, credit unions (apparently) taste delicious. How, you might ask, can a credit union taste delicious? Just ask the larger credit unions that absorb the smaller ones via merger. Or ask the big banks and alternative lenders how all those former credit union members (and now their new customers) taste. Whether your credit union is swallowed in one big bite (merger) or picked apart a little at a time (due to increasingly shrinking market and wallet share), the result is the same – you tasted delicious to somebody that just ate you.

Of course, this exercise in comparison is just that — an exercise. Your credit union is not a large, flightless and delicious extinct bird. However, due to factors such as complacency, limited resources and heightened market competition, credit unions can face a similar potential fate.

What can your credit union do to help stop this process?

First and foremost, credit unions must continue to adapt. Credit unions are notoriously slow to change. In many ways, this is a positive trait (especially when it comes to running efficient and tightly-controlled fiscal shops). However, when it comes to tardiness or outright refusal to change in the face of overwhelming shifts in technology and consumer preference, you run the risk of looking old, stodgy and decidedly un-cool. This is definitely not the way you want to appear in front of potential members.

Credit unions must also be open to new products and services. People now interact digitally with their financial institutions these days. Is your credit union able and willing to interact with members in the technology arena? If not, you risk losing them (and their wallet in market share) to the competition.

Credit unions can embrace this learning and adaptation curve in a variety of ways. Developing and retaining a forward-thinking executive management team and board is a great way to start. Keep them talking, reading up on current events in financial services and reporting back on what they find. Credit unions should also actively listen to their members (and potential members). And this doesn’t mean the typical old-school way of listening (such as suggestion boxes, hardcopy surveys and visiting with whoever straggles into the annual meeting). Again, meet your members where they are – and where they are today is online via social media channels. Establish a social media beachhead for your credit union and use it to both listen to and interact with your members and potential members. Their feedback and suggestions (even when painful to hear) can be a terrific way to help shape the direction in which you take the credit union in the future.

Credit unions are an important part of the financial services scene. Increasingly, they serve the underserved and address consumer needs in ways those big banks and other competitors simply won’t. However, this service cannot continue if credit unions fail to adapt to the changing world around them. Don’t be like the dodo — adapt, learn and change your fighting stance to take on new foes.

Jeff Kjoller

Jeff Kjoller

Jeff has extensive experience in branding, art direction and graphic design, having served employers and clients in a creative capacity for more than twenty-five years. After graduating from the University ... Web: Details