Credit union data collected through the past few years confirms what the industry knew all along: Credit unions fulfilled their role as a countercyclical force during the economic downturn. Members and consumers have witnessed firsthand the importance of this public policy-facing role, of being open for business when others in the financial services industry pulled back. In every loan category and every geographic market, credit unions stood by their members. Credit unions offered a safe and sound harbor for members to park their deposits as well as a fair and reasonable solution for members seeking credit.
The past two years were tough, but credit unions shines. Now, the industry must move forward. One way to identify strategies to strengthen the countercyclical role and continue on this impressive path of growth is to look to other exemplary performers in the cooperative movement. Whether it's groceries, tires, active wear, or financial services, players in the cooperative industry have much to learn from one another.
“The co-op business model is the best for economic and social progress,” says Adam Schwartz, vice president of public affairs and member services for the National Cooperative Business Association. “Co-ops are unique, but they face some of the same challenges. Whether they are a credit union or housing co-op, Boards can swap ideas about issues and challenges."
Listen to the Market
Unmet needs abound, but it is up to individual credit unions to listen to their market and identify those needs.
Calgary Co-operative Association, a Canadian retail co-operative that offers groceries, pharmaceuticals, liquor, gas, and more, grew its sales from slightly less than $1 billion in 2007 to $1.05 billion in 2008. During the same period, it grew its assets from $351.9 million to $374.2 million. How did the retailer achieve this during the midst of the economic crisis?
It listened to its market and identified the opportunities.
“People do have a tendency to stop going out to eat as much when times are a little tougher,” said then chief executive Ken McCullough in a Calgary Herald February 2009 article. “We’re gearing our marketing programs to re-emphasize with our members that eating at home is healthy.”
Although sales slid in 2009, the company remained optimistic in 2010. CEO Deane Collinson told the Calgary Herald the company’s structure, which returns profits to members, is a “fantastic advantage” when it comes to attracting younger members who are just starting careers and families.
Offer More Value
In tough times, consumers look for more, and so should credit unions. While credit unions are offering more to their members, they should also be demanding greater value from their vendors.
“One of the greatest strengths of being a co-op is the ability to take the long view,” says REI Board chair, Anne Farrell, in her message on the outdoor gear store’s website. “While so many companies are required to think quarter to quarter and even day to day, your co-op is able to focus broadly on our organization’s purpose … we have the ability to balance profits with investments in the business and truly ensure members are well served.
REI prides itself on the quality of outdoor gear it provides its members. It offers a satisfaction guarantee and designs its own line of gear and clothing. However, the company’s dedication to “get outside and play” does not end there. To reduce the environmental footprint of the company and its members, REI also donates millions of dollars to conservation efforts across the country.
“Your Board understands the co-op also must use its strength as a business to support outdoor stewardship …find ways for more people to engage in outdoor activities, and … be a leader in advocating on behalf of our public lands,” Farrell says.
Credit unions form partnerships with their vendors, communities, and SEGs. Now use those ties to offer better financial education and greater financial services, i.e., more value, to ensure members are well served.
For more best practices from other cooperative players, read:
What REI (and Other Co-ops) Can Teach Credit Unions (Part 2)
An Interview with the National Cooperative Grocers Association