3 Continents, 3 Viewpoints
At no gathering of credit unions is the issue of credit union "values" discussed, debated and disagreed over more than when the World Council of Credit Unions hosts an event.
That was the case when WOCCU held its World Conference at the Cavalieri Hilton Hotel here with more than 1,000 people from more than 42 countries on hand. The session used a talk show-like format with the topic, "Credit Union Values: A Discussion That Needs To Happen." The moderator, Liam O'Dwyer, president of the Irish League of Credit Unions, posed questions to Jim Blaine, president of State Employees Credit Union in North Carollina, and Rob Nicholls, CEO of Australian National Credit Union (in both cases the second largest credit unions in their respective countries).
Below is a look at what was said:
O'Dwyer: At first I was disappointed in this topic. But this is a discussion that does need to happen. It needs to happen because it's at the heart of what makes us different. It's about governance. It's about cooperation. It's about codes of conduct. It's about corporate leadership. It's about taxation, mutuality, democracy and intra-credit union competition. All of that goes back to the core of what we are. So what about the personal values that permeate from you and into your business?
Blaine: Our credit union is a little bit unusual in these days, and what's least interesting is the size of our assets ($13 billion). Mission statement? We don't have one; we don't believe in that foolishness. If there is one, it's "Do the right thing." Strategic planning? Horsefeathers. Our strategic plan is cheaper, better or both. Advertising? We don't. Staff development isn't about training, it's about indoctrination. Practice what you preach. Service is very, very, very personal and local. Sales culture-another bit of foolishness. We still believe credit unions are very relevant because there are more people who need credit unions rather than fewer. We still believe credit unions are about changing the world.
O'Dwyer: What do you bring to that?
Blaine: I preach that philosophy; it's a cause, it's not a business, and I think we've forgotten that over the years. Running a credit union is a lot harder than running a for-profit business, because people are messy, numbers are neat.
Nicholls: My personal values are based on the family, which is what sustains me and what is my life's priority. And credit unions are family. I think my personal values are aligned so closely with the credit union movement. I left the credit union movement once, working for a finance company and a building society, but my wife and I missed the credit union family.
O'Dwyer: What would make you quit?
Nicholls: If the credit union was forced into a conversion or demutualization, I'd see it through, but I would quit. I've worked for for-profit companies, and that's not what I'm about.
Blaine: I would quit when I was asked to do something I didn't believe in. If you sell yourself out you sell out the only thing you've got. I think a for-profit financial institution is the direct opposite of a non-profit. I'd make a very poor banker, I have a heart.
O'Dwyer: Scope and size can begin to take over a credit union. Has that been an issue for you?
Nicholls: You need scope to be able to provide cooperative financial services in a large city such as Sydney and North Sydney. Our board made a decision to serve both cities and for that you need branches and advertising. For us that's expanding credit union access, and you need critical mass to do that.
O'Dwyer: You're a huge credit union with enormous scope. Has that cost you in credit union value?
Blaine: I don't think so. I believe that growth and scale is a result and should not be a goal. In 25 years I've never had a member come in and ask how large are you and why don't you get larger?
O'Dwyer: But what is it that attracts the member, the service or the values, the chicken or the egg?
Blaine: If friendly is a strategy, then strategy is choice of direction. If friendly is the strategy, then what is the other choice, rude? You do what's in the best interest of your member.
Nicholls: The most important value you have is your mutuality. All of our surpluses are reinvested in the credit union for the benefit of the member, and that's our most important value. However, members don't join us because you're a mutual. They come and join us because of our service culture, and yes, it's friendly. And we say banking, because people say banking.
Blaine: I think you confuse your members. You say you're a bank. If your members don't understand what you are, it's because you mislead them. You're sending a false message. And then you say you're a friendly bank, and there isn't such a thing.
Nicholls: We're not saying we're a bank; we're saying we provide banking services, and it's working very well for us.
O'Dwyer: Is putting the organization first the beginning of the slippery slope?
Blaine: It is so bizarre. There is no organization; there is just the membership. It's oxymoronic; you can't do something that's good for the credit union and bad for the membership.
Nicholls: I commend SECU on its local advisory boards at each of its 180 branches as a way to be large but also locally strong. I think we can become quite large but remain the mutual credit union.
Blaine: If you think being large is difficult it's because the board and the management have given up. It takes courage.
Nicholls: I know (Jim) isn't real keen on the word sales. The values that we have for our staff, we call TRIPS: Trust, Relationship, Innovation, Performance, Sales and Service. We combined sales and service because everything we do is sales, including our culture. We view sales and service as a value. Out of our 100,000 members, just 8,000 have a mortgage with us. So why shouldn't we ask the other 92,000 to let us provide their mortgage?
Blaine: I think sales is like banking-it confuses your member. Sales is an adversarial process. Sales is saying I may be trying to sell you something you don't necessarily need. We are not salesmen; we are supposed to go to the market on behalf of our members and aggregate services for them and give them the best deal. Why don't we teach our members what they need? Why don't we educate them, and let them make the decision?
O'Dwyer: How have you held participation in your credit union given its size and scope?
Blaine: Well, first I think it's an attitude of management and the board. Local branching means you've got to be in the community and go to church with them and see them in the grocery store. We have local advisory boards who meet four or five times a year; they are not compensated. We have 13 loan review committees across the state. We do secret shopping with our own staff. We use a lot of grassroots solicitations and surveys. We're also very accessible as management.
Nicholls: We have just about 6% of members who vote. So we do a lot of surveys and seek their input and feedback. The chairman and I are accessible on our website; I've gotten two e-mails since I've been here. I think participation at the larger credit union level is a bit of an issue; the larger you get it becomes more of a challenge.
O'Dwyer: Do other CUs see you as a bit of threat?
Blaine: The marketplace does prevail in credit unions. And regardless of your size, if you're not delivering what your members want you're going to fail. Credit unions do not have turf and territory that they are entitled to. Yes, we do impact other credit unions when we move in. We work very closely with smaller credit unions to make sure they're viable when we move in.
Nicholls: The American credit union movement represents 3% of the market. There's 97% you haven't got, so the banks can't be all bad. In Australia, we've got 1.7%. So the reality is we're very strong niche players in our marketplaces. To get to 20% to 25% of the market we have a long, long way to go. If someone is your friend, they will give you good advice.
O'Dwyer: What about taxation?
Blaine: Taxation comes when credit unions fail to be credit unions, and that's pretty obvious to members and boards and politicians. If we get taxed in the United States it's because we've started to look like what we were created to correct.
Nicholls: If we still had the tax exemption in Australia, we'd be fighting like hell to keep it. I see a very strong argument for a tax exemption for credit unions that provide social services. But when you're a mature movement and you're operating like another institution in the marketplace it's going to be harder and harder to preserve it. And let's face it: there's a cost to that tax break. We don't have any limits on who we can serve and what we can offer.
O'Dwyer: What about demutualizations?
Blaine: This to me is the No. 1 problem and issue in the United States. We are at the crossroads in our movement, and it's going to be decided in the next year, I think. If demutualization is allowed I think a lot of the credit union movement will go to a mutual bank charter due to greed. It is a Rev. Jim Jones 'Come Down and Drink the Conversion Kool-Aid' situation.
Nicholls: I'm opposed to demutualization and so is our board, and we have a constitutional rule that makes it very difficult and restrictive. However, having said that, provided that the proposition is put to the members and it is fair, then the members own the credit union and should decide.