Using the cooperative difference to succeed in lending

Competition never takes a holiday. If anything, it works longer, tries harder. These days, credit union mortgage lenders (and in a larger sense, all credit unions) face more competition than ever. And the challenges are not only from traditional rivals.

As I see it, the marketplace for home loans is very congested. Credit unions compete with major money center banks, community banks, and more and more often now, non-banks like Quicken Loans and Lending Tree. As regulations loosen, players like Amazon and Apple could also join the race.

In order for CUs to reach consumers, we need to do a better job explaining why we are better than our competitors. That means we must help them understand our Cooperative Difference as a financial services intermediary.

There are many types of cooperatives. In addition to credit unions, you probably have come across grocery co-ops and farmer co-ops; other examples include energy, health care and housing. They all have some things in common—important things I have learned and practiced for 45 years.

What is a Cooperative?

A cooperative buys and sells products or services just like any other business. The difference is a co-op is owned and governed by its members, the people who use it, rather than by stockholders. And profits are reinvested in the co-op or distributed to its members.

This definition resonates today because consumers really want to trust their financial institution and to be a part of a group working together for the good of all. Use it as your “elevator speech” on differentiating credit unions from banks and other for-profit lenders.

Furthermore, according to the National Cooperative Business Association, co-ops are democratic, transparent and fair. They adhere to a set of principles that guide how the business is run and how decisions are made.

The Cooperative Principals 

Here’s what the NCBA lists as “The 7 Cooperative Principles.” They work well for every type of cooperative, including credit unions. In fact, I would like to see these guiding principles displayed in every CU lobby and on every CU website:

  1. Voluntary and Open Membership
    Anyone can join a co-op—they don’t discriminate based on gender, social, racial, political or religious factors. (In certain cases credit union membership can be limited to a field of membership, but most are open to anyone who lives or works in an area.)   
  2. Democratic Member Control
    Members control their business by deciding how it’s run and who leads it. (In a credit union, each member has one vote.)
  3. Members’ Economic Participation
    All co-op members invest in their cooperative. This means people, not shareholders, benefit from a co-op’s profits.
  4. Autonomy and Independence
    When making business deals or raising money, co-ops never compromise their autonomy or democratic member control.
  5. Education, Training and Information
    Co-ops provide education, training and information so their members can contribute effectively to the success of their co-op. (Credit unions regularly hold educational sessions on financial topics and provide information through websites and other communications channels.)
  6. Cooperation among Cooperatives
    Co-ops believe working together is the best strategy to empower their members and build a stronger co-op economy. (A strength of credit unions is working together—an all-for-one, one-for-all strategy.)
  7. Concern for Community
    Co-ops are community-minded. They contribute to the sustainable development of their communities by sourcing and investing locally. (Giving back to the community is important for CUs and offers an opportunity for members to participate.)

Promote the Difference

It’s so important to share these principles with your members and potential members.  It’s really an invitation to join with us, to be a part of our organization; in essence, to be an owner, to share in the positive difference we make for all of our members.

When you think about growing your membership, think about talking up the Cooperative Difference. It can go a long way toward attracting new members and keeping the ones you have.

Bob Dorsa

Bob Dorsa

Bob Dorsa is the President of the ACUMA (American Credit Union Mortgage Association) a professional trade association (co-founded by Dorsa in 1996). ACUMA is one of the most unique niche ... Web: Details

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