MAUI, Hawaii -
That question, and several similar queries, were put to an audience primarily comprised of volunteers and directors by Mark Meyer, executive director of the Filene Research Institute, and a show of hands indicated that many of those listening were anything but optimistic about the future of credit unions.
For instance, when the audience was given multiple choices in response to the question posed above, most answered, “Maybe, but we are losing our edge.”
A separate question about how credit unions would grade their own performance in terms of growth, most of those attending the Volunteer Leadership Institute hosted by the Paragon Consulting Group here gave their CUs a “C,” with many others falling into the “D” category. Another question about what is an acceptable level of growth found a few saying 10% annual growth is their target, but most settling on 5% and a few on less than 3%.
“So are we relevant,” asked Meyer. “I’m not sure where I personally stand on that. I think some of the data suggests that opportunities are there. But I think it’s time to think about do we need to reboot the credit union model and move to Credit Union 2.0. Do we need to start thinking differently than we have for the past 100 years?”
Meyer made clear in remarks that ran for the next few hours that he does indeed believe thinking differently is just what many credit unions and their boards must challenge themselves to do.
One area where Meyer suggested credit unions “explore the power” is in “collaboration.” “We do have collaboration in the credit union industry, but I don’t know that we’re really hitting the potential we have,” he said, noting that of the country’s 737 Credit Union Service Organizations (CUSOs), 564 are owned by a single CU, and 173 have multiple owners. Some 6,400 CUs are not directly invested in a CUSO, he added.
He urged credit unions to consider the model used by the Desjardins movement in Quebec, Canada, in which nearly every back-office function is shared cooperatively and every caisse populaire (credit union) operates as a front-office operation.
Credit Union Parties?
Among the other points touched upon by Meyer:
* He urged board members to familiarize themselves with the emerging study of “NetPromoter,” that is, the likelihood of a credit union member to promote the credit union to another prospective member. When Meyer asked those in his audience of more than 250 how many were familiar with the concept, no hands were raised. “When I ask this question at other meetings I usually get something like a 20% response,” he observed. He said too many credit unions are content to simply measure member value and the often hard-to-pin-down member “loyalty.” “What I often hear when I ask what you are doing to measure is ‘We do a member survey.’”
“Something has been happening in the past seven years with this notion of direct selling,” Meyers said. “It’s where people bring friends and family together and have a party. Could you have some of your Net Promoters have Credit Union Parties at their home? I assure you there are some folks out there who have tried this at the credit union. One credit union reported a bank in its community was having ‘banking parties’ in people’s homes.”
* Meyer spent much of his remarks about transforming credit unions to make more than just incremental change and instead identify and deploy sustainable change. He urged his audience to read “Blue Ocean Strategies,” for instance. “There is no silver bullet in differentiation, but you want to look for something that is sustainable for a longer period of time,” he said.
* Meyer cautioned boards not to overreact to what their marketing departments might hear from a focus group. “The focus group is a trap for the unwary,” Meyer stated. “What people say they do and what people do are often very different.”
* Meyer asked boards how many were budgeting funds for R&D and to explore the next business model for the CU. “We need to look, fundamentally, for new business models,” he said, noting that the future of credit unions’ bottom lines may no longer lie in net interest margins, but in fees from electronic payments and other income.
