HONOLULU -
The growing trend toward global markets means an increase in competition from all over the globe, said Reich, during remarks last week to more than 2,000 attendees to NAFCU's annual convention.
That means, banks will be increasingly poaching customers from credit unions and stepping up their fight against the credit union tax exemption, he asserted.
"Banks and all other financial service companies are in greater and greater competition," Reich said. "At the same time, the barriers to entering into markets are going down."
"Banks are trying to get into your business and steal your customers," Reich asserted.
Credit unions can benefit by this trend, which is irreversible and inexorable, he insisted. That's by stressing the concept of personal relationships with customers/members, or relational capital.
"Trust is becoming more and more valuable. Personal knowledge of someone else. That bond creates relational capital," Reich said.
"Relational capital over the long term will provide you with a competitive advantage," Reich said.
"Many of our large banks don't have it at all. They do not provide the services that you are providing. They tend to treat their customers as if they are fungible," he said.
Reich, who served as secretary of labor during the Clinton administration and has been a best-selling author about worldwide capital trends since then, said current economic trends are helping the wealthiest Americans and burdening the middle class, where credit unions should focus their energies. "Middle class America is under more and more stress," he said. "They, in the economic system are being treated as fungible costs."
Reich is the author of 10 books, including The Work of Nations and the best-selling Locked in the Cabinet, and is currently a visiting professor of economics at the University of California at Berkeley.
