ASHINGTON - To stand out and to differentiate ourselves from the crowd is part of the human and organizational condition.
But in the commoditized world of financial services, credit unions and banks are running out of ways to differentiate. To most consumers–and many members–bank and credit union products are birds of the same gray feather.
Many credit unionists still insist that “great service” is the differentiator between credit unions and banks. Others suggest it no longer is, if it ever was. Banks and other financial institutions know this: service is essential if they want customers to return to their doors. The American Banker annual surveys show that banks are catching up with credit unions in the service arena.
Dov Seidman offers a convincing point of view in his book, “How.” Even though retailers of all types are running out of ways to differentiate, there is one place that cannot be commoditized or copied, he writes: “The realm of human behavior–how we do what we do.”
“The best and most certain and most enduring path to success and significance in these dramatically new conditions lie not through raw talent and skills, but through behavior over time,” he said.
Seidman argues that it is behavior you can control by reaching out and inspiring more people through your global network. “If you collaborate more intensely with co-workers you win. If you keep your promises 99% of the time and your competitor keeps promises only eight times out of ten times, you deliver a better customer experience and you win.”
‘Out-Behave the Competition’
“The tapestry of human behavior is so varied, so rich and so global that it presents a rare opportunity, the opportunity to out-behave the competition,” Seidman said.
Thanks to the Internet, organizations no longer control their message or information about themselves or their products. If a consumer is treated badly, it will be on the Web immediately for everybody to view, according to Seidman.
Credit unions have a competitive advantage in this environment. They have “out-behaved” banks and other financial institutions for the past century. They wear the white hats for a reason.
Credit unions have been notably absent from the subprime chaos of 2007 and 2008. They were also absent from highly publicized credit card predatory lending practices. Many consumers and members alike would be surprised to learn that well-known financial institutions are engaged in questionable credit card practices.
The National Consumer Law Center, for example, issued a report in November 2007 that credit card issuers, such as Capital One, were “quietly collecting hundreds of millions of dollars in profits selling nearly worthless predatory credit cards targeting vulnerable consumers, including those with bad credit.”
The report stated that some companies issued credit cards with the sole intent of collecting fees from gullible consumers by not offering them cards. An example of this was a card issued with a credit limit of $250.
After a $95 program fee, a $29 set fee and a $6 “participation fee,” and a $48 annual fee the consumer had an automatic debt of $178 and buying power of $72.
This is precisely the type of bad behavior that credit unions avoid; the American consumer should be made aware of this–credit unions have their members’ best interests at heart.
Today’s credit unions’ organizational behavior and social mission have also evolved with the times, according to Tom Decker, national program director, CU Center for Social Impact Management, National CU Foundation, Washington.
“Credit unions never left their social mission,” said Decker. “Historically, credit unions helped people who didn’t have resources get loans. Today, credit unions are helping their members and their communities as well as the environment and the educational system.”
The Center has been sponsoring workshops on social responsibility for credit unions stressing the “triple bottom line,” of social, environmental and financial, he said. “All three concerns are concentric circles that intersect with each other in the community; you can’t measure one without the other.”
Social responsibility includes more than just funding, it involves changing behaviors. The $142-million Prospera Credit Union in Appleton, Wis. is an example of this type of behavior change. It teamed up with Goodwill and offers an alternative to payday lending in a Goodwill store.
“Social responsibility has to be part of the fabric and culture of the credit union,” said Decker. “It can’t be isolated acts; it has to be part of the overall business strategy.”
