Confessions Of An Ex-Banker
Credit unions couldn't have been too surprised by the "confessions" of two ex-bankers here.
Coming clean before the California/Nevada league annual meeting here were Rick Dannelley, senior VP with The Golden 1 Credit Union in Sacramento, Calif., and Kim Taufer, COO with Cumorah Credit Union in Las Vegas, both of whom had long careers with Wells Fargo and who addressed credit unions as part of a session entitled "Confessions of Recovering Bankers."
As Dannelley summed up having now come to work for a credit union, "The short-term focus of the banking industry versus the focus of the credit union difference is a huge difference."
Taufer said he spent most of his banking career was spent creating value for senior managers, who were also shareholders of the institution. In a theme he returned to several times, "Now I create value for members, our members, and value for the community, our community."
As for his previous career, Taufer said, "It was always profit first, and you never knew where the customers or employees stood. When I first started at Wells Fargo we were told that everything at the bank is for sale, including you. But at the credit union I was told it was the member first, employees second, and the profit second. And what I learned was that the profits would follow."
What Dannelley said credit unions do not want to learn is what it's like to report to a higher power-Wall Street.
"We don't want our member decisions to be driven by third parties-particularly Wall Street. And I keep coming back to that because I kept seeing so many short-sighted decisions at the bank driven by Wall Street," he said. "In this regard you can't even compare banks and credit unions. And for that reason we need to have members stand with us."
Dannelley noted that banks manage their customer base according to segments, and that many, many people get left behind as a result.
About Credit Union Boards
What might surprise some is that Dannelley has positive reviews for reporting to a volunteer board of directors.
"The thing I've been so impressed with in the credit union industry has been the passion with which our board members advocate for the membership. They are committed to making sure every decision made is for the members."
As for board members, Taufer noted that bank directors are not only compensated, they are usually shareholders as well, which further motivates them to act in their own best interests. But he noted that in many instances these same shareholders are not customers of the bank. Here's how they view other issues:
What Lies Ahead
"In short, I see the level of aggression against credit unions much stronger within the community banks, but I'm concerned we're going to see that spread to the regional and superregional banks," said Dannelley.
Marketing: "There is a temptation for banks to 'push products' in their zeal to maximize cross-sell ratios and meet analyst expectations," said Dannelley. "But now that I'm in credit unions I see that you really need to earn the right to sell. Great service can lead to sales. Sales may not lead to great service. The perspective I have is that within credit unions we are really trained to satisfy the financial needs of the member. That's a big difference between banks and credit unions, and one I think that over time will come back to hurt the banking industry. People are being treated to a case of financial malpractice in the way they are being sold. There is nothing wrong with leading with consistent, extraordinary service."
Taufer: "We're a fairly small credit union, but where I see the differences from Cumorah Credit Union is that the banks talk about marketing from a standpoint of sales, sales and more sales. For banks it's the flavor-of-the-day marketing and selling. Credit unions sell in more of a needs-based environment. At Cumorah we serve both the personal and business member needs, which is a total solution concept. At Cumorah we try to offer EMS-exceptional member service-and to serve the member from their perspective."
Market Fluctuations: When it comes to real-estate secured loans, Dannelley noted that as is often the case with auto loans, the bank customer doesn't know who's going to service their loan until the coupon book arrives. He noted that banks can drive tremendous volumes during market upswings, and with it significant income from loan servicing. "But what happens when the pipeline begins to slow down," he asked. "You begin to see the financial performance of the banks begin to wind all over the place, and what does that do for the consumer if they have to make up for lost income and lost volume? Do you see those things happen within the credit union industry? I don't."
Bankers' Motives: Dannelley said there have been differences between the community banker and the regional bankers in their level of angst over banks. "Without a doubt, community bankers are not pleased by the entry of credit unions to the business banking segment," he said, noting he still hears from friends at community banks who are unhappy with credit unions. "But you know we're not the real problem for those community bankers. Yes, we can price a deal here and there competitively, but structurally, we can't play long and hard in that marketplace. If I were a community banker I'd be more concerned that some of the big guys are learning how to bank the business banking market. Now they're getting efficient. I think if you're a community banker you really ought to be looking back in the mirror at some of those community banks."
Taufer: "When I was in banking, what I would see happen is that a lot of times the bank would go after a business market and if you didn't fit into that box, you lost the deal. Community banks are not serving our members' needs. We can work with that business member and work for that total relationship. Now, we can't do every loan, but we can fit their needs."