Key Question to Ask Yourself About Today’s Credit Union Movement

 I have been working with credit unions the bulk of my professional career and it’s been rewarding on so many levels. But one thing never changes: we deal with the same old issues over and over. Whether it’s 1995 or 2012, the issues rarely change, and unfortunately we haven’t done enough to put some big issues to bed. As I scan today’s credit union system, there are lots of good discussions about the impact of social media, new ways to serve members, the threats to non-interest income sources, etc. etc. But we still have some big questions to answer. Consider the following question:

Do People Care About Our Cooperative Principles?

This question has never been more important. If you read the parting shots op-ed published last week from a high-level Goldman Sachs executive about why he was leaving the firm, you know why this question is as relevant today as it was 100 years ago. The Goldman Sachs exec described a Wall Street firm solely focused on making money and maximizing investor return, but having very little regard for client needs. He told a tale of the firm caring so little for the clients that he was confused about who he was even working for anymore.

That same story plays out in the banking industry every day. Even after Bank of America was publicly rebuffed for its $5 debit card fee, it recently announced it is evaluating new ways to make money on the backs of its customers through various monthly fees. I heard one analyst say consumers should get used to it, and that there’s nothing wrong with this fee philosophy in our capitalistic system. Maybe, but have bankers ever considered that their profit margin model may be changing. Maybe they can’t make the same level of profits they’ve been making for decades using the same business model. Or if they don’t want to change, and here’s where we come in, they should be prepared to lose business to other competitors.

Credit unions are the safe haven that can protect consumers from this growing fee-based model of banks. Credit unions don’t have the profit-driven system where shareholders rule. We have no outside interests to please. We are democratically controlled. Members contribute equitably to the capital of the credit union. Benefits of the credit union are returned to the members, reinvested in the credit union or used to provide member services. Shareholders aren’t cashing in on the backs of credit union members. Credit unions are also part of a bigger cooperative system where cooperatives “cooperate” amongst each other to better serve members. Shared branching is truly an amazing cooperative structure that shows credit unions will work together to help better serve their members. Credit unions also collectively believe in the same value of educating consumers to make them better stewards of their financial lives.

Credit unions have heard all these white hat principles before and they are all true and worthy. We all value these principles, but it’s time to find out if it means anything. Do consumers really care that credit unions operate this way? We are in a marketplace now where fees are going from being almost invisible, buried in the fine print, to very transparent. When Verizon tried to add a new $2 fee, the news spread like wildfire over social media and through our 24-hour, always-on news services. It’s a viral world now for fees. You can’t hide them. Consumers are tired of being nickled and dimed by giant corporations. Credit unions have a good story to tell on fees and overall value. Can we create the discussion where consumers want to know how credit unions do it? How is it that credit unions can operate with lower fees, but mega banks, with many more resources, can not? These are the questions we need to answer for consumers.

The problem is we have yet to do it on a grand scale. While the credit union system is home to brilliant marketing minds and great individual campaigns, we still lack a cooperative effort to tell our story. It’s been so unfortunate to watch the debate about branding credit unions or telling our story turn into a debate about CUs not being able to agree on a tagline! Or even worse, that branding or awareness only benefits big CUs who can handle an influx of new business, or only helps small CUs that benefit because they don’t have the marketing dollars big CUs have to do their own campaigns. Both are wrong. It helps everyone. It’s about turning credit unions from a niche market to an everyday consumer option that people actually realize is out there. I’ve watched this play out forever and we continue to fail on this level as a united cooperative system. It’s not about branding or a tagline. At the basic of levels, credit unions should be singing from the same song sheet as to what our collected value proposition is to the consumers. Sure individual credit unions all offer different things, but what are the common cooperative principles we should be reciting chapter and verse to consumers in our individual markets. Do we even agree on that?

Here in New Jersey we aggressively tell our story through our “Banking You Can Trust” awareness campaign. We believe those four words truly wake consumers up to who credit unions are. “Banking” instantly cuts through confusion and tells consumers what it is credit unions deliver, while “trust” is our value proposition as nonprofit financial cooperatives. That is just how we try to raise awareness. Many other states have even better campaigns, as do many credit unions.

The true power of our cooperative message would be to see it play out across the system with all players having common cooperative principles to rally behind and benefit from. The backbone of our cooperative messaging should be the same if we are to ever answer the question: Do People Care About Our Cooperative Principles? When people hear about credit unions you want them to say, “Yes, I know them. They are credit unions. They are all about serving you because they are…….(insert your cooperative principles here!)”

I believe consumers will value our cooperative principles once they understand the power of being a credit union member. What a relief to know you are doing business with a financial institution where you have a voice, is run democratically, does not answer to shareholders, and cares. That’s powerful in today’s tough economic climate. Unfortunately that powerful story hasn’t reached the masses. It’s never been easier and more affordable to reach those masses in this era of online communications. We’ve made strides on consumer awareness with Bank Transfer Day and efforts like aSmarterChoice.org, but we need to do a better job aligning on the cooperative messaging we deliver.

Paul Gentile is the president/CEO of the New Jersey Credit Union League, the state trade association for New Jersey’s credit unions. New Jersey is home to 215 credit unions serving 1.2 million credit union members and with a combined $10 billion in assets. Gentile has helped re-energize the New Jersey Credit Union League by launching new branding efforts, programs, and political action. Prior to his role with NJCUL, Gentile served as the editor and publisher of Credit Union Times, a national weekly publication covering the credit union movement. He is a well-know figure in the credit union industry and has written hundreds of stories on all aspects of the industry. www.njcul.org