DFW AIRPORT, Texas - John Tippets is CEO of the highly successful $4.7-billion American Airlines Federal Credit Union. He’s been at his post for the last 17 years and will retire in June. Credit Union Journal recently spoke with Tippets about his career and the road ahead for CUs.
CUJ: What was it like for you starting out as CEO 17 years ago?
Tippets: When you step into any new job you have a long list of things you don’t know and can’t anticipate. When I came here 17 years ago, I found we didn’t have shredders, internal auditors, and a whole bunch of things I thought were important to the business. I learned there were a lot of things that needed to be changed and that I was learning on the job.
We needed more processes and controls. I remember coming in on a Saturday and finding deposit checks with letters addressed to half the members of the staff asking them to deposit the money. So I began initiating processes that I thought were needed in running a financial institution. We hired an internal auditor and a general counsel a few years later. We added depth to our staff. And we put in a shredder!
CUJ: How would you say you’re different as a CEO and manager as you retire versus when you were first named to the post?
Tippets: I am much more open to the ideas of my staff. I’ve noticed in the last few years that everyone has been even more comfortable coming to me and saying, “You know that idea you had, we just want to change it a little.” They improve it to where it makes a lot more sense. And I’m enjoying that. Team dynamics are wonderful. You don’t go to a baseball game and count on the same athlete to play shortstop, pitch, and catch. You shouldn’t try to do that in a credit union.
CUJ: Your credit union has obviously been among the most successful. Is there a particular strategy or two you would credit as primary growth drivers?
Tippets: Staying closely aligned with American Airlines and building that relationship over the 17 years I’ve been here has been an extremely positive thing. Having that core relationship, that core brand, and staying true to the definition of who we are has been a good success formula. It helps our efficiency–from marketing to branching expenses. It’s just a good business model. What most credit unions had years ago we still enjoy.
We also haven’t tried to mimic everyone else. Your differences are your advantages. One of our differences is that we pay an extraordinarily good dividend. It’s part of our brand. Members know this is the best place for savings and returns. And that is a nice perception to have. That doesn’t mean that if you see a very good idea you don’t mimic it. But if you see others going off with a fad or so-called progressive idea, you should question if it really makes sense.
CUJ: You talked about staying true to who you are and having core principles. What are some of those principles for your CU?
Tippets: We are here for one reason–to make the lives of our member owners better. If you are a for-profit business model, that’s not in your mission statement. I know very few members who want the credit union to grow big and fast. What they want to see is stability, safety, value, and fair rates. We never looked at growth as the be-all and end-all. You want healthy growth, and adequate growth to fund new technology and products. But you do not want to grow for growth’s sake.
CUJ: Has serving a single sponsor been a hindrance or a blessing to growth?
Tippets: It’s been a fantastic blessing. You’ve got a shared brand. You have marketing strategies that are very targeted. Every business spends a lot of time and money trying to figure out who their best customers are. They have loyalty programs, conduct financial research, and they spend a lot of money. We know who our best customers are and it is a great advantage. Others spend a lot of time and money on something we know automatically.
CUJ: How do you view the future of credit unions for shops of your own size and those that are smaller?
Tippets: It’s a mixed bag. You have some credit unions that have decided they want to be like banks and that will be their ultimate loss because there are too many banks. They will have higher costs of serving their members and will lose some of the economic advantages of the credit union model. And maybe some, sadly, will convert to banks. That segment of the industry troubles me.
On the other hand I see some really fine credit unions that will thrive for a long time–credit unions that will do well as niche players. There are some great models out there because they are true to core sets of principles, core sets of FOM definition, and core sets of how they run their business.
By the way, there is really no such thing as a large credit union. Look at the trillion-dollar banks. We are just small niche players in financial services. First of all you have to understand that and then you have to ask, “How do I stay successful as a niche player?” You make your differences strong and you make those differences valued by members.
CUJ: What management advice would you give to a CEO starting out today?
Tippets: Recognize that a CEO is a leader more by example than anything else. Everyone in the credit union knows everything about you. That’s the nature of the job. So you have to walk the walk. You are an example of hard work and you show that you care about your members. You also have to have a high set of principles for your credit union and capture them in a vision statement–and stay true to those principles. And, finally, be a servant of people. Remind yourself of that every day.
You also want your credit union to stay current with technology. We think the giant banks’ powers are in lobbying and in marketing. But I am concerned about their skill in technology. We have to figure out ways to stay current with our members’ expectation around what technology can do.
