In these days when claims of fake news have people wondering if objective truth still exists, the credit union movement can’t count on old allies or old tactics. We need to step up and meet this new challenge head on.
Based On A True Story, But Still Phony
The bank lobby argues that today’s credit unions are different, so different they aren’t really what was intended when the federal charter was created in 1934.
Of course most credit unions are vastly different from what they were in decades past. There just aren’t all that many shoeboxes, portable safes, or attic offices left. But banks are radically different, too. The only retail services most banks offered in the ’30s were passbook savings and small loans, the same things credit unions could provide.
The difference is that banks only served the favored few — men who literally did wear starched white collars. When Depression-era working-class folks needed to borrow money, they’d likely as not end up dealing with a loan shark.
And that’s not the only difference. As small, member-run operations, credit unions faced tremendous risk management challenges. The cooperative ownership structure and the common bond requirement gave them structural tools that compensated for a relative lack of professional underwriting.
It’s Time For Tough Questions
Asking tough questions helps the credit union movement flourish. Make Callahan’s Tough Questions commentary on CreditUnions.com a regular stop for insight on thinking differently about the movement and framing strategies for success.
Simply put, the common bond requirement was the nucleus around which people could work together to access basic financial services. It was meant to empower, not limit.
Today, the opposite has become true. At a time when most Americans no longer work for the same company or live in the same community for their entire lives, complex, Depression-era rules limit access to financial cooperatives.
Worse, when combined with the near impossibility of chartering a new credit union today, it’s the American working-class — the people who are treated the worst by banks and other for-profit financial services companies — who are most harmed by these obsolete rules.
It’s Un-American To Punish Success
The other bit of nonsense bankers are peddling is that big is bad. Kind of rich coming from an industry in which the fourth-largest player is nearly half-a-trillion dollars larger — on its own — than all American credit unions combined.
To be fair, the accusation is that big is incompatible with mission. But that’s even more bizarre.
Few credit unions in the country are more mission-focused than the second largest, State Employees’ Credit Union ($37.3B, Raleigh, NC). It’s so committed to building financial wellness among state employees that it has branches in 168 different cities across the Tarheel State — at least one in every town with more than 4,000 residents.
Likewise, No. 5, SchoolsFirst Federal Credit Union ($14.1B, Santa Ana, CA). It rebranded itself to emphasize its mission, serving school employees. It’s also a credit union that got big by being successful at fulfilling its mission and meeting the needs of its member-owners.
Mission drives success, and, often, success drives growth. This is echoed by successful credit unions big and small across the country. The movement just has to tell all these stories better and more aggressively. Stories about who credit unions are. Not who they aren’t.
Managing day-to-day operations requires a strategic mindset, but making time to talk about strategy is difficult. Callahan & Associates helps leadership teams focus on what’s important. Learn more at Callahan.com/strategylab.
Beyond David And Goliath
Bankers are trying to pin credit unions into a 1930s service model that they themselves have long abandoned. The credit union response must be about more than David versus Goliath; more than leveraging a tax break to charge less for loans and pay more for deposits.
And common bonds.
We must tell these stories. Happily, none of this depends on size. As cooperatives, credit unions have a unique ability to collaborate in the service of members. The CUSO model empowers every credit union to deliver top-quality service — meaning safe, simple, speedy technology AND a friendly smile — but effective collaboration requires enthusiastic participants.
This is the call to live the sixth cooperative principle: Credit unions must learn to cooperate even better than they do now because just “giving a damn” is no longer enough. Call the bankers campaign fake news. Call it propaganda. The effect is the same if our movement doesn’t come together to fight back.
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