Five ways to serve communities at scale

Now is the time to lean into our purpose and mission.

A Wall St. Journal Opinion piece from September 2023 said:

“Credit unions across the country are veering from that mission as they expand into new markets, merge with other credit unions, make sponsorship deals, and even buy commercial banks.”

Is this simply another banking industry attempt to minimize the role credit unions play and undermine our tax-exempt status?

Perhaps, but a credit union CEO expressed this concern at a recent Board and leadership team planning session:

“We must continually challenge ourselves and think differently about how we make our credit union more relevant to new members and competitive in the marketplace. On the other hand, all our conversations tend to be about competing with banks through technology, new revenue streams, and mergers. How do we ensure our long-term viability without losing our soul?”

A disclaimer

There is nothing inherently bad about mergers, acquisitions, technology, and even sponsorships. The marketplace has changed. Serving members requires doing both old and new things in new ways. Economies of scale, technology, and non-traditional marketing are necessary. Expecting credit unions to ignore the new realities is unrealistic.

That said, we cannot ignore the fact that the organizational and structural lines between credit unions and traditional banks are increasingly blurred. Credit unions have purchased nearly 60 banks in the past 10 years according to the Wall St. Journal article.

It is inevitable that that the “Looks like a duck, walks like a duck” comparisons will continue. Truthfully, we have had this discussion for decades.

Gary Easterling, CCE, wrote this in a 2006 article for CU Management:

“For credit union movement survival, ‘enhanced value,’ ‘superior service,’ and ‘convenience’” are the cost of entry. Survival requires us to rediscover the essence of our common bond: our heart and soul. This is not about how we define our field of membership. This is about how our field of membership defines us.”

A comparison for perspective

The challenge of retaining the spirit that makes credit unions special is not a new challenge. It has been faced and overcome in other industries.

Howard Putnam, the second CEO of Southwest Airlines, told me that industry insiders looked at the Southwest culture as a nice addition that couldn’t be replicated at scale when the company started operating. The thinking was that building a service culture was easy with only 500 employees in a handful of cities. It could never last if the company grew to 5,000 employees.

When the Southwest culture prevailed at 5,000 employees, skeptics said that it could not be retained at scale when it reached 10,000 employees.

Nearly 72,000 employees work at Southwest today. Recent mistakes, technology meltdowns, and employee relations problems can lead us to believe that the company has maxed out its capacity to maintain its unique culture.

The longer-term view suggests that Southwest is at an inflection point. The assumptions and strategies on which it was founded need to be reimagined for a new reality.

Sounds familiar, doesn’t it?

And yet, the words of Southwest Founder Herb Kelleher still ring true: “A company is stronger if it is bound by love rather than by fear.”

It is the same for credit unions. We are stronger if we are bound by love of the members we were formed to serve rather than by fear of the traditional financial institutions.

Yes, but how?

Let’s be honest. Consistent caring and connection with the often-underserved population that credit unions were created to serve is difficult. There is no one right way. If there was, everyone would have done it by now.

There are ideas to be customized, tweaked, and adapted for your environment. Here are five to consider.

Don’t confuse the tool with the goal.

The conversation in a recent Board and senior staff planning retreat turned to the potential closure of an underperforming branch. This was the latest discussion about a multi-year focus on how to serve a population with limited access to technology and even less access to traditional financial services.

The CEO changed everyone’s perspective with this comment: What if we stopped worrying about the profitability of this branch and found other ways to make serving this population possible? It is unlikely to pay for itself for a while. Let’s acknowledge that serving this community is the right thing to do and find a way.

This idea begins with Board and leadership goals and extends to every area of the organization. Scale achieved through mergers and acquisitions is not the goal. Profitability for every segment served is not the goal, either. They are tools. Service is the goal.

Hire for purpose.

Experience and competencies are the minimum. Loving the purpose is the difference.

Bridgeway Capital Management is a purpose-driven company founded in 1993.

How purpose driven? They have given 50 percent of their profits to organizations making a positive impact on humanity every year.

“Hiring for fit” is a popular idea that is usually applied to an organization’s internal culture. It is—and must be—taken to an entirely different level when everyone knows that 50 percent of after-tax profits are donated.

Here’s the thing. Bridgeway attracts and retains exceptional talent that also appreciates the company’s commitment to a cause greater than itself.

Place caring, connection, and purpose at the heart of everything you do.

Great Britan’s eight-man rowing team won gold at the 2000 Olympics in Sydney. It was an amazing accomplishment considering that the team had suffered consistent disappointment for decades.

The team, led by its captain Ben Hunt, asked a simple yet compelling question to keep everyone engaged and committed to the purpose: Will it make the boat go faster?

Your purpose is your boat. Everything you do—onboarding, performance management, succession planning, loan approval, new technology, member service, you get the idea—must be filtered through this question: Will it help us serve the underserved member?

Plan for service when times are bad.

Serving underserved segments is easier when times are good. It requires a different level of commitment when the economy is uncertain and difficult.

Bridgeway saw its assets plummet from $6.3 billion to $1.7 billion during the Great Recession of 2008-2009. Fortunately, the company had thought ahead. Its decision to restructure and redefine giving was no less painful. It was, however, easier because of decisions made during the good times.

Be willing to go all-in.

The best leaders place the organization’s needs and purpose first.

Despite every effort, Bridgeway faced the painful decision of shedding salaries to remain true to its purpose during the Great Recession. The first person laid off was John Montgomery, the company’s founder.

Montgomery’s choice is symbolic not necessarily literal. Very few people will have the financial ability to voluntarily work without pay to protect your investment in serving unprofitable members.

The difference between the credit union leaders who talk about serving others and those who do emanates from a cellular level. They are a different type of leader for a different type of financial institution—one that is true to the mission of the movement.