WASHINGTON -
"What causes people to be concerned are all these headlines we are seeing on conversions, headlines on hostile takeovers, the not-so-bold headlines about lower ROA and shrinking margins," observed Texas CU League CEO Dick Ensweiler, who nevertheless says he is "aggressively optimistic" about the future of credit unions. "Reaching out and serving immigrants has been a real positive, but then we see Congress asking questions about who should be served, and that gives people pause."
Ensweiler, then, would have been among the 37% of CUJournal.com readers who said they believe the future is bright for credit unions in a recent online poll (see related chart), but that doesn't mean there aren't problems to be solved, he said. Among those problems, perhaps the biggest is the sluggish membership growth that has plagued credit unions for the last few years. "One factor that has people concerned is that we are not attracting members as we have in the past," Ensweiler offered. "If you take away members gained through indirect lending, I believe our membership growth has actually been in the negative numbers." (See related story about CUNA's Membership Growth Task Force, this page).
Sometimes, the good news is also the bad news, and vice versa. "I recently read a quote where someone said, 'We live in exponential times,' and they're right. We live in a time of exponential change," noted NAFCU CEO Fred Becker, calling to mind the less exalted but equally pithy "we fear change" quote. "The two fastest changing industries are the pharmaceutical industry and the financial services industry, of which credit unions are a part. Change, especially when it comes very fast, brings uncertainty."
But that change doesn't have to be for the worst. Indeed, Becker, who said he is "very optimistic" about credit unions having a bright future, suggests the changes occurring in the credit union movement are for the better. "Credit unions are growing and are bigger. Historically, the majority of credit unions have been under $10 million in assets, and that is changing, and the day is coming when it won't be true anymore. But that's actually good news. No change is easy, but change is almost always better. No matter how you slice and dice the numbers, credit unions are not going away."
Chip Filson, whose Washington-based Callahan & Associates consulting firm specializes in slicing and dicing the numbers, agreed. "We think credit unions are in a great place, that they are a great place for members, and it's a great time to be a credit union manager," he said. "The for-profit motivation that drives the competition has led to, at best, predatory tactics, at worst, illegal tactics. I believe the fact that credit unions are not-for-profit organizations being managed in the members' best interests really resonates with people. They are looking for someone they can trust after all that has happened with credit cards, student loans, everything starting with the 0% auto loans, that were misleading and exploitative."
Filson wasn't the only one who suggested credit unions can leverage the amount of distrust in the consumer marketplace. "There is a tremendous opportunity for credit unions in the coming backlash from consumers at the way they have been treated by those who cater to debt," suggested John Weiser of Brody Weiser Burns, Branford, Conn., which says it is dedicated to strengthening the efforts of organizations to create a more just society. "When people realize they've been sold a bad deal, they become suspicious. When you look at the predatory mortgages and credit card fiascoes, people are looking for someone they can trust. Credit unions can be that trusted source."
The challenge is in getting the message out to existing and potential members. "I think the best way for credit unions to communicate this is through member testimonials," Filson suggested. "When real people share real experiences with their credit unions, that really means something. That gets the message out."
Weiser agreed, adding that credit unions need to do a better job of forging partnerships with the people and organizations that are already trusted by some of the markets that CUs are trying to tap.
Credit unions can turn to their fellow cooperatives to learn how to communicate the value of their structure to their members, according to Paul Hazen, executive director of the National Cooperative Business Association, Washington, who noted that just as credit unions are the largest single cooperative industry in the nation, they have also spent the longest time on the hot seat. "There isn't any other cooperative sector that has been as attacked as the credit unions have been by the banks," Hazen related, suggesting that as one reason some in the movement might be concerned about the future. "I believe credit unions have a bright future, it's just different from what the past has been. If they stay true to their cooperative structure, they will be fine."
The second largest cooperative group is the rural electric co-op industry, which has been very successful in making the cooperative structure a positive point of differentiation.
"There are 900 electric co-ops and 35-million members. At the highest level, they have made the decision that this was a key advantage. They created a national brand, Touchstone Energy," Hazen explained. "They have done an excellent job of communication cooperative values to their members, and they have had to. Electric co-ops are selling the exact same megawatts as the investor-owned utilities. They sell the exact same product, so finding ways to differentiate themselves is vital."
One way to really drive home the point to existing members: institute electronic voting. "Those co-ops that allow electronic voting have seen membership participation skyrocket," he said.
But it's not just about communicating the value of the cooperative structure to members and potential members-it's communicating that value to lawmakers so they will do what they can to strengthen the credit union movement.
Both Ensweiler and Becker pointed to the reforms in the Credit Union Regulatory Improvement Act (CURIA) that would go a long way toward bolstering the future of the movement. "CURIA is just huge," Ensweiler said. "It would address almost every single reason anyone has ever had to convert."
IT'S YOUR TURN!
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