What if credit unions lost tax exemption and courtesy pay?

Collectively and individually, our futures hold limitless opportunities and threats – some known, others unknown. We regularly consider these opportunities and threats, whether as part of the strategic-planning process or in an ongoing manner as we are faced with emerging events. Our longevity and vitality depends on our ability to prepare for and adapt to as many of these events as possible.

I like history. History helps me put things into context. Consider the following historical events and their outcomes, which dramatically changed the world. What if…

• Socrates had died in the Peloponnesian War of 424 B.C.? He would have missed the next 25 years, which where the greatest years of his influence. What if he had not met and taught a young Plato? The entire course of Western philosophical thought would have been radically altered.
• George Washington had been killed by a sniper’s bullet in 1777? Washington was the linchpin that held the struggle together, inspiring loyalty throughout the Continental army. The probability of finding another person with Washington’s stature and leadership abilities would have been nearly impossible.

Sometimes history is saved by luck, but usually it is saved by planning. A very important historical figure, Dwight D. Eisenhower said that “plans are nothing; planning is everything.” Operation Overlord, a.k.a. the D-Day invasion took one year to plan. What if the D-Day invasion had failed?

There are many opportunities and threats on the horizon that could have us scratching our heads and saying “what if?”

• What if in spite of heroic legislative advocacy, credit unions finally lose the tax-exempt status for all credit unions with assets of more than $100 million? What if the financial impact to credit unions is 30 to 75 BP?
• What if the Consumer Financial Protection Bureau deems Courtesy Pay Overdraft programs predatory, and regulatory required program changes reduce overdraft income by an average of 25 percent?

Are you prepared for these and/or many other potential “what if” scenarios? Do you have a plan for a variety of potential scenarios, or is your plan to just wait and see? How your credit union plans and responds will strongly influence whether you cease, survive, or thrive.

Are a review of these and other scenarios part of your strategic planning conversations? Or are you pursuing more of a “hope and a prayer” approach, and naively thinking some of the scarier scenarios will just go away?

Preparing for the unthinkable

It’s important that your team envision “alternate extreme futures” (worst/best case) and create strategies that works for all extreme futures. I recommend using CUES Scenarios for Credit Unions 2020 ( http://www.cues.org/professional-development/library/research/view/id/75) for your planning session environmental review. I was honored to contribute to this version of the CUES report, and I find it useful in guiding teams through the planning process.

Scenario-planning can also help innovators and entrepreneurs exploit the unthinkable

Case in point: Charles Darrow, who – finding himself out of work after the market crash of 1929 – spent a few years perfecting a little game that eventually came to be known as Monopoly. Within a year of his patent, Parker Brothers was selling 20,000 units a year, and Darrow became the world’s first millionaire game designer.

What future scenarios are possible for your credit union?

Scenario planning facilitates learning and prepares credit unions for the possibility of some level of failure while minimizing future risks. It will also give your team confidence and strategies that optimize the chances of success under all possible scenarios.