The Internet is changing the way we do business. Accordingly, it
should change our attitudes, but unfortunately, some old ones are
hanging tough. Ossified thinking usually does.
I know of one credit union at which 13% of its loans, its largest
source of loans, comes to it via the Internet. At another one, the
level is 30%. At many credit unions, the Internet serves as the
fastest growing source of loans. Younger members are gravitating
to borrowing in this way; they are used to the Internet, and the
thought of applying for a loan using a personal computer and a modem
is no more daunting than ordering concert tickets that way.
The Internet offers speed, convenience and accessibility. It changes
everything. No more the walk to the credit union with the passbook;
no more the drive and the search for a parking place; no more the
slips of paper to move money from one account to another. A personal
computer does this without you having to move from your chair, allows
you to do it between sending email and checking out plane fares.
As they say, capital now moves half way around the world in the
blink of an eye, and that includes moving money into and out of
a credit union.
Old Protections are Not Going to Work
Despite the global nature of financial services our attitudes are
still stuck on local geography. We try to wall out groups of people
from certain credit unions. We say that because you are in one group
you cannot be in another's field of membership. Of course, electrons
don't recognize geographic or similar artificial barriers. People,
only with great difficulty, could move from one side of the Iron
Curtain to the other. But ideas and electrons moved across it practically
at will. Eventually those who tried to maintain the Iron Curtain
understood that it was obsolete for everything except bodies, and
So it is with credit unions and similar financial institutions.
Regulations and boundaries imposed during the era when local geography
counted for something are poor barriers today-ineffectual to ideas
and needs but obstructions to the wishes of people. Nowadays, they
tend to stump only the honest.
In an age of electrons, it is increasingly absurd to dole out and
take away fields of membership. Generally, this is attempted in
order to 'protect' a credit union, to bolster safety and soundness.
Brokering FOMs can now be seen for what it is: dealing in artificialities
that can only forestall the day when inefficient credit unions face
the music and are forced to close.
We now live in the 21st century. We cannot continue to operate with
the expediencies of the 1930s. FOMs were used as a means of organizing.
The largest masses of people were employees at large factories;
it only made sense to organize around them.
Long before the federal government even considered a credit union
regulatory role, the defining group was people who cared to join,
be they from the parish or the neighborhood-if you agreed to abide
by the rules of the credit union you were in.
Freedom to Choose
Now, after a century, we should be able to choose a credit union
based not on factory, or even parish, city or county, but on compatibility
with our own needs. We should be able to log on the Internet and
choose the credit union, no matter where it is, based on its services,
and continue to be members so long as we abide by its rules. The
technology, of course, is already there; in the way is out-of-date
law and regulation.
Regulators cling to the notion that they should be power brokers
handing out markets, taking away markets and trying to build protective
walls around inefficient operations in the name of safety and soundness.
This is not only out of date, it is dangerous and pompous.
Truly, the old notion of common bond should be put to rest, because
no one really knows what it means any more anyway. Those who think
they do are dangerous, because they want to restrict which credit
unions Americans can choose as right for them.
Fact: People in an electronic age will go where they want
to go. Thus, trying to herd them artificially is unconscionable.
Individuals want to be able to decide which credit union is going
to best for them. The sooner we wake up to that reality, the faster
we will follow people where they want to go, the better we will
be able to serve them-which is our mission-and the better off we
are going to be.