Small is beautiful – especially in credit unions

It’s become a common claim in the credit union circles that I move in: It takes at least $1 billion in assets for a credit union to hope to survive.

Lately, in fact, I am hearing the magic number push up – some say $5 billion, others are insisting on $10 billion.

Two facts about these claims: add all credit union assets together and the whole of the industry is smaller than the smallest money center bank. If this is a world where size is what matters in life or death, there is small reason for optimism about the longevity of any credit union.

And the face of the credit union movement – undeniably – is the small credit union.

Which is where Small Is Beautiful comes into play. That’s a book by economist E. F. Schumacher who argues bigger isn’t necessarily better and small in fact often is. The Schumacher book is this year celebrating its 50th anniversary – grab a copy and read it.

And know that, right now, in the credit union universe more voices are getting raised that we genuinely need small credit unions and indeed for some members they are the ideal financial institution.

Sure, the bigger institutions have many more bells and whistles – but how many members need them or want them? For instance: my primary credit union does not offer crypto currencies. Big deal. I buy the small, experimental quantities I want from Venmo (PayPal). In today’s fragmented financial services world it is very easy to piece together an extensive smorgasbord of services from a medley of institutions. That is, I can enjoy all the services of a Chase customer – but still call a credit union my financial home.

Then, too, CUSO resources have multiplied for small credit unions. Many are getting quite good. Think of rkGoBig a CUSO with a strong focus on smaller institutions for which it supplies a compliance toolkit – and right there it solves a major problem many small CUs have with NCUA – and it also offers a shared core system and still more. The guiding vision of rkGoBig CEO Peter Barnard is that with the right tools small CUs – and he is talking some with assets in the low double digits of millions – can very satisfactorily survive.

But small institutions can do much more and better than survival. They can be dazzling lights in their communities. That’s the loud message from Taylor Nelms, senior director of research at Filene, who insists many small credit unions are certifiably heathy and in fact some are tech pioneers.

Case in point: did you know the first mobile deposit transaction took place at a tiny credit union? I didn’t. But Nelms told me the details.

Let’s not exaggerate how cutting edge small credit unions are in tech – but also let’s not insist that all of them have tech that dates back to an era of carbon paper and calculators.

Let’s also not overlook the genuine strengths of many small credit unions. In a recent research report, Filene argues that the CEOs of thriving small credit unions see their job as solving a puzzle and along the way the successful ones focus on a clear target market, they know what their members want and they seek to provide it, and they seek out a niche although they aren’t afraid of competition.

With the right leadership a small credit union can prosper – not just survive but thrive – says Nelms if the leadership sees the institution’s purpose in the community and if execution on that purpose is pursued with a real passion.

Wake up in the morning with a sense that today you will be bringing good to the people who are your members and that is a terrific way to start the day.

Small credit unions also can often be more nimble, Nelms told me. Changing course in a multi billion dollar institution is a delicate, time consuming process. Doing it in a $100 million credit union just is easier.

It’s also a lot easier to know what a small membership wants than it is to guess about the wants of 100,000+ members.

Keep looking and there really are benefits to being a small credit union and, honestly, some of my favorite guests on the weekly podcast I host have been CEOs of small credit unions, precisely because they bring passion and purpose to their work.

Do you?

Robert McGarvey

Robert McGarvey

A blogger and speaker, Robert McGarvey is a longtime journalist who has covered credit unions extensively, notably for Credit Union Times as well as the New York Times and TheStreet, ... Web: Details