2 Cos. Worth Praising, 1 CU Turning Point Worth Noting

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Last week the CUNA Marketing and Business Development Council had two excellent keynoters as part of its annual meeting, San Diego-based Dr. Kevin Freiberg and Quincy, Mass.-based John Graham. Both were speaking to the trendy business culture issue of differentiation of the brand, both provoked self-examination for credit unions, and both also exhibited a point that has been raised here before: is it now federal law that you're going to speak on this issue you are required to cite Starbucks and Southwest Airlines? Repeatedly?

It wasn't just the CMBDC meeting and it isn't just Freiberg and Graham. It's every meeting and every speaker on the issue of, ironically enough, differentiation. Are there no other companies out there worthy of emulation? Are Starbucks and Southwest the only two to ever get it right? Perhaps they should just merge and let the world domination begin. After all, there's a Starbucks on every corner and flying Southwest often feels like you're stopping at most of them.

There was another development last week and it's far more worthy of noting. The credit union community may have turned a new corner when it comes to charter conversions to banks. With one significant exception at Columbia CU, the history of the three-dozen or so CUs that have converted to banks has been one-sided, with the insiders at the credit union holding all the cards (not to mention everyone's equity). The converting CUs have controlled the process, the message and the budget, while in most instances, especially early on before The Credit Union Journal began unearthing the payouts going to management and directors, members either didn't fight the conversion because they didn't know what was going on, or, in the instances where they did respond, got such a late start and had so few resources there was little they could do.

That's changing, and none too soon.

The attempt to convert by DFCU Financial in Dearborn officially marks the first time the credit union community has organized and brought resources to fighting a conversion attempt (with the exception of Michigan, in the past there's been little more than lip service pronouncements from the trade groups about the value of disclosing more info to members). More than 60 members turned out at a meeting at a church (there's apparently more than one way to get religion) as part of an ongoing effort by a group calling itself DFCU Owners United. A law firm has been hired to represent the interests of members. A chapter of the Michigan league and another local credit union have donated money to DFCU Owners United. And GTE FCU CEO Bucky Sebastian and SECU CEO Jim Blaine have formed the National Center for Member Trust, which more important than anything else, has more than a quarter-million dollars in resources behind it to help groups of members who don't like the idea of their credit union becoming a bank to buy the kind of media that to date only the credit union (ironically, the members) could afford.

Speaking of the message by the way, DFCU Owners United has been distributing signs that read, "Don't Make Our Credit Union A Bank." That's good, but changing one little word would make it more powerful: "Don't Make OUR Credit Union THEIR Bank."

As The Credit Union Journal reports in this issue, an employee of DFCU Financial was on hand at the church meeting (rumors the holy water started boiling have not been proven) where she repeated an erroneous statement the credit union has trotted out before, which is that DFCU wanted to disclose a lot more information a lot sooner to members, but NCUA regulations wouldn't permit it. Not that any of the statements made by converting CUs have a lick of credibility, but that may be the most preposterous claim of all, as NCUA pointed out in a recent letter to the credit union. The regulations prohibit a democratically controlled, member-owned financial institution from acting democratically and informing one group of owners about another group of owners' plans!!? If ever there is an Oscar for Best Job Keeping A Straight Face, I have a nominee.

Finally, if this conversion is stopped and a new board that actually represents the membership is elected, a new name would be worth considering. It already sounds like a bank. Why not a new name and a little tribute, something like, "Owners United Credit Union."

A couple of other notes: Equifax, Experian and TransUnion recently held a joint news conference to announce the new shared credit score, "VantageScore." But while reps from all three firms were on the line, reporters who had questions had to call them back individually...Remember when the "audio-visual" at a conference consisted of the speaker and an overhead projector? At the recent CUNA Marketing Council meeting, the AV required five people wired up like air traffic controllers...At the same meeting, Dr. Kevin Freiberg provoked some uncomfortable fidgeting when he observed, "85% of financial decisions are made by women. Does your board reflect that statistic and does it reflect the market you serve and are trying to reach?" Later Freiberg shared a vision of a future world in which your health will be constantly monitored and even the toilet will perform analysis on diet and condition. And who will monitor that data, he asked? "Homeland Security," shouted an audience member.

Frank J. Diekmann is Editor of The Credit Union Journal.

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