NEW YORK - It's no coincidence that credit unions survived the Great Depression, so it should come as no surprise that the increasingly gloomy economy may actually mean even better times ahead for the cooperative financial movement.
"In general, I think the continued trouble in the financial markets will be good for credit unions," said Sherief Meleis, managing director with the banking consulting firm Novantas LLC. "First, I think we're going to see a return to good old-fashioned intermediation instead of all the fancy, off-balance sheet stuff. It will be a return to the business of taking deposits and making loans, and making money off of that spread, just like in 'It's A Wonderful Life.'"
Since that is what credit unions have long been good at, Meleis said, a return to that type of business model should suit them well. But there is a second reason Meleis believes credit unions are on the precipice of big opportunity, and "big" is the operative word.
"As banks get bigger and bigger, there's a segment of the market that will really appreciate community banks and credit unions," he suggested. "Sure, there will be a set who really like the big banks their product depth and networks, but there will be a greater set who will really appreciate credit unions.
"What people are caring about now is safety and security. Credit unions should emphasize their safety and soundness and go after the big banks and really emphasize that they are local; use smallness to their advantage," he added.
Meleis' Tips & Strategies
* Play to your strengths. Don't try to emulate the big banks.
* Differentiation is key. "There's a lack of trust in banking, and whether it's warranted or not, there's a perception that people are angry," he said, noting that this is one time where not having the word "bank" in your name could really be a benefit.
* Act fast. "It's hard to take away market share in a normal market, but when there's dislocation in the market, that's the time to try to take your share. The cyclical portion of what is going on right now will only last a year to a year and a half," Meleis warned. "Remember, after the tech crash, people 'gave up on Wall Street,' but just a few years later, they were back. People forget. This window of opportunity is open for one to two years."(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
