This interview is one of five interviews with former bankers who are now credit union executives that were published in the Voices of the Industry section in the 3Q07 issue of CUSP.
Addison Avenue FCU began as the credit union for Hewlett-Packard. About five years ago, it separated its corporate functions from HP, and combined several HP credit unions into one entity. Addison Avenue remains a SEG-focused credit union whose principal sponsors in addition to HP are HP spin-off Agilent Technologies, CH2M HILL and Philips Electronics; there are about 30 companies all together in its field of membership. Addison Avenue has more than 20 branches across the United States and continues to seek national and global companies in the technology field. It has assets of over $2 billion and 140,000 members.
Tell us about your career in banking.
BP: I began my banking career in the state of Washington in several regulatory and public policy positions involving the commercial banks, thrifts, and credit unions. These positions enabled me to obtain a pretty good sense of the differences and similarities between the industries and charters.
Then I joined Key Bank, which had acquired the largest independent bank in the Seattle area (Puget Sound Bank) as an in-house counsel focusing on regulatory and legislative matters. It was during my time at Key Bank that I became more involved in the business, working as a teller and then participating in their management training program.
After three years at Key Bank, I was recruited by Washington Mutual (WaMu) in Seattle. WaMu was starting to grow very rapidly but still had a culture based upon its mutual savings bank heritage. I held a variety of positions over my 12 years with them. My last job with WaMu was as Chief Administrative Officer where I oversaw corporate affairs, regulatory relations, community programs, and a variety of operational areas such as corporate real estate, call centers, procurement, and the quality performance program.
What did you know of credit unions at this time?
BP: I probably knew enough to be dangerous, but I did have a fair sense of their benefits, having worked in the regulatory and public policy positions with the state of Washington. I also had been a member of a credit union and knew some of the Washington State credit union leadership. And from my work in the mutual thrift environment, I understood the benefits of the cooperative ownership model.
How did you make the transition from WaMu to Addison Avenue FCU?
BP: I had a long-term goal of leading an organization that was focused on serving people. I had already moved from a commercial bank (Key) to WaMu, which had a mutual mindset to get closer to the customer side of financial services.
A former colleague of mine gave my name to the recruiter working with Addison Avenue in a search to replace their retiring CEO. I joined Addison Avenue about a year ago and think the benefits of and opportunities for credit unions are even bigger than what originally attracted me to credit unions.
What do you see as the major differences between credit unions and banks?
BP: I think the financial services industry is homogenizing. The products offered by everyone – bank, thrift, or credit union - are pretty similar. But credit unions are more focused on service and on people – both members and employees. At banks, the ownership structure separates the interests of owners and customers, and customers’ interests can be outweighed by other considerations in key decisions.
And at credit unions, the focus is exclusively on the owner/member. It is much easier to make long-term decisions and long-term investments. Not having the capital markets as one of your chief constituencies is a difference that should not be underappreciated.
Do you see a downside to the credit union charter?
BP: Some people would suggest that the FOM structure is a limiter. But we don’t see it that way. We are SEG-focused, and we see the FOM structure as an opportunity to build affinity and a stronger trust relationship with people. It is really a core value proposition.
Do you think credit unions are well poised for the future?
BP: Yes. I think you are seeing a shift away from the big-box retailers to more personal entities. People seem to be reaching out for connections -- just look at the booming involvement in social networking websites. Credit unions have been in this space for a long time with their common bond heritage. If I’m right and there is a renaissance of personal connection, credit unions stand to grow with the trend.
In addition, banking seems to be concentrating either at the very large model or the small model, a sort of barbell effect. Mid-sized entities are disappearing. Credit unions can fill this void by playing to their strengths of offering outstanding service to people and of connecting to them through a common affinity, cause, or community.
What are the challenges in getting there?
BP: Our big challenge is branding and education. We have to build a halo brand for the credit union industry as a real and viable alternative to other providers. We have a very compelling story, but we need to build branding and education efforts so more people will hear it.
What could you bring from your banking experience to your new work in credit unions?
BP: I learned a lot about managing a growing, increasingly complex institution, which WaMu was. These experiences serve me well here in Addison Avenue, which also is growing and increasingly complex – half of our assets under management come from our investment advisory business, the other half are associated with the credit union, and we own a securities broker/dealer that serves other credit unions. The skills that I learned in managing a diversified organization are very transferable. My work in the regulatory and public policy areas has allowed me to gain a relatively broad perspective of the financial services industry and develop an opinion about where there is a great opportunity for credit unions.
Will credit unions be able to compete with banks in the future?
BP: Banks are concentrating at the ends, opening up the mid-sized area to credit unions, if we can seize the opportunity. We have the right model and right philosophy, but we have to do a better job of getting our story out. If we spread the word properly, we should do very well.
Five Thoughts from Former Banker Benson Porter
1. I believe there is a trend toward more consumer-centric retail, social networking, and personal connections. Because of the premise behind our charter of people helping people, credit unions have been delivering this value for years. If I am right about this trend, credit unions will grow with it.
2. Credit unions have to work at branding and education. The model is right, but more people need to hear it.
3. Credit unions best differentiate themselves with delivering education, building trust, and providing superior service.
4. At credit unions, we do and should continue to focus on making the best, long-term decisions for our owner/members.
5. Credit unions can step into the widening void of mid-size, service-oriented institutions within the financial services industry.