When Kirk Kordeleski, the one time Bethpage Federal Credit Union CEO, offered up his belief that the credit unions that will thrive are the ones that commit to doubling their asset size every five years, I asked him what credit unions he had been competing with on Long Island.
None, said Kordeleski.
I prodded, was this just the usual credit union cant where nobody competes with other credit unions (and of course that is nonsense because 95% of the credit unions that compete with other financial institutions mainly compete with other credit unions)?
Nope, insisted Kordeleski. He went to sleep every night dreaming and scheming about how to take away market share from the big banks and he woke up every morning excited about “beating the #@@&^” out of those big banks which, he said, dominated the Long Island marketplace.
Competing with other credit unions, he indicated, is tantamount to fighting over crumbs. To make a real difference for your institution go after the institutions that in effect have big slices of the pie.
Even better, said Kordeleski, the $1 billion or so you win from a Chase probably won’t even be noticed by them. You can dramatically increase your size by taking business from institutions that are so big they won’t even care.
(Hear my podcast with Kordelesky here. He elaborates in step by step detail on his growth plan.)
Don’t believe it?
As I mulled Kordeleski’s formula, I remembered a recent conversation I had had with Gary Oakland, the longtime CEO of BECU who grew that institution from assets of a few hundred million to many billions. His years were characterized by extraordinary growth. Did he get there by beating credit unions?
No, said Oakland. BECU’s big break came when Seattle bank Seafirst effectively went belly up in the early 1980s and Bank of America took over its remains. But B of A was not especially interested in dominating the Washington State market and, for BECU, growing market share was a matter of executing on credit union principles, focusing on member service and opening the doors wide to welcome the flood of new business.
(Hear the Gary Oakland podcast here. He recounts BECU’s growth strategy in detail.)
Then another thought hit me. You are who you compete with. Compete against a stumbling, failing small credit union and, guess what, you have set your standards very low indeed.
Compete against the best and that is the standard to which you are holding yourself and your institution.
Which standard do you think prepares an institution for significant successes?
Finally, I remembered an off the record conversation I had some years ago with the CEO of a large military focused credit union. Who’s your competition? Who keeps you up at night? Pentagon Federal? I badgered him.
Finally he interrupted and said, USAA.
The San Antonio bank, he said, was the one institution that worried him. Other credit unions, not so much. Was that arrogance? Nope. It was brilliant.
That is because USAA is bigger than any credit union except Navy Federal and when its ancillary businesses (such as insurance) are added in it probably is bigger than all credit unions.
It also – and this is key – is highly regarded by its customers and even its competitors.
USAA is a world class competitor. Measure yourself against it and you will perform at a very high level indeed.
That is a crucial reality. We become our competitive set. Try to beat the slowest runner in the next community 10K and you just may – but you’ll be the second slowest runner in your group.
Measure yourself against the best runners – from Ethiopia and Kenya – and you are talking about 10K times in the 26 minute range. You can’t do that? Probably not. But what if training against that standard cuts a minute, or five, off your time? What if??
Running is one thing, financial services is another? You bet. But know that in the case of banking (unlike world class 10K running) you very realistically can win. According to Kordeleski, you absolutely can beat the big banks. A credit union has significant advantages. It has tax exempt status. Management is not tyrannized by the stock market. Member service is baked into the DNA. And so a credit union that wants to can consistently beat the money center banks on rates and fees and service.
Kordeleski proved that at Bethpage. Oakland proved it at BECU. Jim Blaine proved it at SECU (Blaine’s podcast is here).
A credit union genuinely is a better deal for 99% of consumers who can get all their financial services needs met in most credit unions.
You can win and it starts with picking the competition that forces you to be better.
Do that and winning is the next step.