Educated, confident tellers or member service reps can initiate conversations that go a long way toward helping a person who’s living paycheck-to-paycheck avoid falling into debt traps at payday lenders.
But signs that the credit union cares also must come from the higher-ups, in the form of lending flexibility, commitment to stressed communities, and an improved appetite for risk in general that hasn’t always existed in the board rooms and C-suites of reflexively conservative credit unions.
Signs Of Mission
Displaying signs isn’t always easy. It requires helping people with bankruptcies and low credit scores as well as serving neighborhoods that some might call “sketchy” but are clearly in a credit union’s FOM, home to its members and potential members, and thus within its field of concern.
It requires senior managers to stand before their boards and argue the credit union needs to dedicate X percent of its lending to a certain group of members, or X percent of its resources to finding members who are struggling and committing to helping them.
The credit unions that display these kinds of signs are making a conscious effort to stand up against what is happening to many American households and doing what they can to make it better.
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Some signs that display the credit union’s mission to members and the community might be relatively easily seen by large swaths of members who have steady, decent pay and benefits and live in supportive communities.
But what about everyone else? The elderly who need help. Immigrants who are struggling. Recent college grads who are looking for their place in the economy. Very small businesses no one else wants to help. How are you signaling to them that you’re there to help?
Signs Of Inclusion And Service
You know where your heart is. It beats in the chest of those who come to your credit union every day. Equip them with the tools to tell the credit union story and to identify those who need to hear that story, especially those who don’t want to tell theirs.
People in financial distress, especially those new to it, can be reluctant to share that. But your numbers show it, and I’m hearing more and more from credit unions who are doubling down on ways to do something about it.
These proactive institutions are using life coaches and financial coaches to offer hope, products, and services that lighten the burden for members. They’re also willing to take a bit more of a chance on a lot more people, knowing their ROA could take a small hit or their delinquencies might somewhat rise.
Is that a risky investment? It depends on the perspective.
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Evidence is building that A- and B-paper loans don’t perform better overall than the lower tiers. And if you see your credit union as inclusive — a cooperative there to serve everyone, not just those who need it least — then it’s an imperative as much as an investment.
One small northern Virginia farm took a stand with a couple of signs. If one small farm has an impact, think of the impact thousands of credit unions could have if they banded together to signal that they are standing up for financial access and equality. That would be one powerfully loud sign.
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