While the value a credit union provides its owners is not always quantifiable, it is necessary to benchmark member value to measure its relative success at member service.
This past weekend, NPR covered the benefits of Allegacy Federal Credit Union's In-School Branches on youth's financial literacy, which served as a reminder to me that, like all financial institutions, credit union performance is measured by the value provided to owners. But, unlike for-profit financial institutions, credit unions do not exist to maximize profits for share holders. Instead, as member-owned, not-for-profit cooperatives, credit unions exist to serve members' financial interests, which often times isn't measured on a balance sheet.
Take for example, Chris Tissue's interview with A+ Federal Credit Union, which covered the value that some credit unions are providing their members through financial education programs. Both the NPR story and Chris' article are examples of cases where credit unions provide their members with tangible value that may never be fully recognized on the credit union's balance sheet. While the value a credit union provides its owners is not always perfectly quantifiable, but it is necessary to benchmark member value to measure its relative success at member service.
Callahan & Associates created the Return of the Member (ROM) Index in 1997 to help address some of the problems measuring member service. ROM, described in detail here, allows credit unions to benchmark the value they provide their member against the value their peers provide. The index is a good starting place for credit unions to measure the value they are provide their members, but it does not provide a complete analysis. To learn more about measuring the value you provide your members, consider attend our free webinar "The Power of Data: Measuring Member Value Creation."