The Unseen Revolution

When the credit union movement began - long before the Federal Act - it was dependent on a structure that sought out good organizing principles for credit unions, then chartered credit unions and fostered them in their growth. That structure was essentially the leagues and then CUNA.


When the credit union movement began - long before the Federal Act - it was dependent on a structure that sought out good organizing principles for credit unions, then chartered credit unions and fostered them in their growth. That structure was essentially the leagues and then CUNA. This was a vital and essential arrangement that accomplished immense good.

With it, the credit union gospel spread throughout America and brought millions into membership to the great benefit of them and their families. But now it seems that in the 21st century the movement has matured to a newer and higher plane. It is not looking to CUNA and the leagues for innovation, growth and taking the message to new people. Rather, it is the credit unions themselves - in groups as small as two or as large as several dozen - that are thrashing out ideas in meetings and then cooperating to get new things done. These groups are doing this independently of the old structure. The American Economy Shifted Most of us can recall the old days. Credit unions were built around large employers like steel companies, auto companies, railroads and the like. No one worried too much about competition because credit unions were protected - no one could join unless he or she met strict requirements. Leagues and corporates were organized one to a state.

But in the late 70s, many large industrial companies imploded; they disappeared altogether; they replaced American workers with ones overseas; or they shrank to shadows of their former selves. The only way for corporate-sponsor credit unions to survive this extraordinary change in the country's economic fabric was to look beyond sponsor dominated fields of membership. This had the effect of saving the credit unions but also of dissolving the protective barriers to competition that came with the stringent common bonds. With liberalized FOMs, credit unions began to compete one against another in local regions, or even across vast regions. Small Groups, Big Rewards This could have been pretty tricky - even troublesome - territory for the movement.

Instead, the nimblest credit unions tended to turn adversity into opportunity. They saw that they could do better than in the past. But they also saw that scale and cooperation were needed to gain the most back in return. And they also realized that they had to give up a little in order to reap back much more for the good of members. The result has been that in small groups credit unions have cooperated both to draw nearer to their mission and to bring the credit union mission to more people than ever.

The worldwide competitive organizations that credit unions have become are more the result of these small and innovative collaborations than they have been the result of CUNA or league action. An example is what Bucky Sebastian did in Tampa when he headed the GTE Federal Credit Union. ATM settlements were accomplished for credit unions individually. He and others around Tampa Bay realized that if they cooperated and sacrificed a little they could in essence establish their own local switch. They did it and collectively saved lots of money. In the same way credit unions around the country created multiple cooperative ATM networks. Some are still small. Nearly all started out small. But one has evolved into the fourth largest ATM network in the country. In addition, small groups started shared branch networks. These have been consolidating. In five to ten years, we'll have more shared branches in a single network than the number of branches of any financial institution anywhere in the world.

There must be hundreds of such cooperative stories, of credit unions and credit union CEOs getting together and saying “Why can't we do this?” then going ahead and doing it. They are organizing around communities, products, technology, anything they think they can use to achieve scale and make life better for their members. They are starting trust companies, forming technology consortiums, organizing investment services, and creating research and development entities.

These have been the success stories of the last two decades, and the little efforts today are going to be the big success stories five and ten years from now. In large part, however, no one has paid much formal notice to them. Much has gone on outside the formal organizing stream of the credit union movement. But everyone should know about them. In fact, we hereby encourage readers to tell us about ones they are familiar with - we'd like to start a list.

Competing: No Excuse for Not Cooperating The old structure of one league in a state, of geographical corporates, was a good idea of the founding fathers. But times and technology have surpassed it. Innovations are coming out of small groups of credit unions getting together and doing what they think needs to be done. This is the wave of the future. To those who would say that credit unions shouldn't cooperate because they compete, let me remind them that credit unions enjoy a mere four percent of the financial services industry. When we get to enjoying fifty percent, then it might be time to think that cooperation might not have its beneficial effects.

That's a long way off. In the meantime, let us recognize the fleet-footed, innovative work of small groups. They are the engine propelling the movement forward




Nov. 18, 2002


  • This trend has not been noticed by the trade press...kudos to you!
  • Ed does a great job pointing out the great potential that can be achieved through innovation and cooperation.
  • I couldn't agree more - the more we compete instead of cooperate - the smaller market share we will have