Since the passage of the Credit Union Membership Access Act of 1998, the number of federal community charters has more than doubled, from 421 to over 900. Why do more than 14% of all federal credit unions now have community charters?
Over the past 25 years, credit unions have naturally evolved to more open charters from a single sponsor or multi-seg group approach. In some cases, the industry has seen sponsors disappear through plant closings, military base realignments, corporate mergers or even occasionally sponsor bankruptcies. In other circumstances, corporate downsizing and relocations have left the majority of a credit union's members with no relationship to the organization that originally sponsored the credit union.
This field of membership evolution is also driven by internal decisions. Through family membership expansion, once-a-member and selected SEG additions, credit unions increasingly serve diverse members even when the primary focus is a sponsor's employees.
From Affiliation to Value
The field of membership heritage of credit unions has created an impression in the public's mind that individuals cannot walk in and open up membership - even when credit unions advertise that they are open to all. Thus, there are numerous business processes that need to be reassessed to serve a community. Some of these are revitalized branding efforts, effective use of public media such as newspapers, radio, TV and billboards, and creation of marketing messages in which the credit union's distinct value is communicated. The overriding challenge is to attract new members based not on affiliation, but on superior value.
Yet the biggest difference versus sponsor-focused credit unions may be the time-horizon that a community business model entails. Most credit unions spent years, even decades, building a sustainable base of services for their original FOM. For some, the change to a community charter is immediate, that's merely adding throughput for the existing organization. However, whenever an organization changes its intended market, this is not a one-time event or campaign; it is rather a reinvention that will continue - perhaps forever.
A Long-Term Implementation
A community charter is much more than creating a new message for incremental volume gains. It entails becoming an integral part of the community in terms of understanding the community's needs, the credit union's strengths and how the two can grow together. Ultimately this will entail working with other organizations that serve the community - such as hospitals, schools, sports teams and even local governments - to carry out aspects of their plans.
A community charter means becoming a full player in the community. It is not strategy but a starting line.
How do we know when the change is working? The earliest results may be close at hand; the energizing and revitalization of staff and members as the credit union expands its vision.
Callahan & Associates will host a two part series of webinars on January 22nd and February 10th discussing key success factors for Expanding to a Community Charter. Click here to learn more.