DENVER — "We all share the same name."
That's how Alexandra Marquez-Massino Rojas, general manager of COOPE-ANDE in Costa Rica summed up the importance of credit unions of all shapes and sizes remaining united.
Rojas, whose CU serves 56,500 members with 301 employees, was among the panelists discussing small credit union sustainability and growth at the combined America's Credit Union Conference and World Credit Union Conference here.
Regardless of size, Rojas said, CUs are facing the same challenging environment, and the community should face issues together, rather than becoming a house divided over size.
Lily Newfarmer, president and CEO of Tarrant County's CU, Fort Worth, Texas, agreed, noting that she has seen the distrust that can spring up between CUs of differing sizes. At about $75 million in assets, Tarrant County's CU would be considered "small" if NCUA raises its definition to $100 million as it is expected to do, but is also still just big enough to sometimes draw a wary eye from smaller CUs, Newfarmer said.
"We need to realize that every big credit union that offers to help [a small credit union] isn't doing it just so they can merge," she said. "We really have to work on building these relationships, building this trust. You have to be able to prove that you're there to help them, not merge them."
But that's not to say that competition, regardless of size, isn't also a good thing, noted Shelley McDade, CEO of Sunshine Coast CU in Canada, noting that such competition pushes everyone to be better. Located near the large and well-known Vancity CU, McDade said one of the most common phrases she hears is, "At Vancity, they have [fill in the blank.]" The answer, McDade said, isn't, "we're too small to do that." The answer is to find a way to do it. "We have to hop on bandwagon and be an agile follower."
The bottom line, according to Jon Hernandez, is that regardless of size a credit union must remain relevant to survive and thrive.
Among the other topics the panel considered: recruiting and retaining top talent, tackling technology, merger mania and the power of differentiation.
Attracting (and Keeping) Top Talent
A key component to recruiting and retaining good people that is often overlooked image, according to McDade. "The better our brand is in our community, the better talent we attract," she said. "Especially millennials — they see what we're doing in the community, and they want to be a part of the organization that is doing that."
Another challenge is demonstrating there's a vibrant career path. "If you want to bring on good talent, you have to give them a real opportunity to grow in their careers," Hernandez said. That's why he works with his employees who are ready to move beyond the confines of either CalCom, Mattel or Nikkei and help them find either a CEO position at another small credit union or as a tier two executive at a much larger CU with significantly more responsibility.
To be sure, another big issue is compensation. "Consider paying for talent," Newfarmer suggested. "Look at the compensation surveys (which are typically broken down by asset categories) and go up one or two categories when you're determining what their pay should be."
Tackling Technology
Technology is one key investment small credit unions need to be ready to pay for, Newfarmer said, particularly for solutions designed to protect members form data breaches. "We budget for it," she said. "The cost of not doing it is far greater.
Hernandez agreed, noting he has hired a third-party intrusion company to try to hack into his credit unions' systems to see where the weaknesses are and how to plug those holes.
At Sunshine Coast CU, McDade shared, practically all IT functions have been outsourced. "We found a vendor who does this as a core competency because we cannot pay the talent we would need to make this a core competency," she explained. "When there was a breach recently, it kept other CEOs up at night; I was sleeping."
And sometimes, the biggest challenge is recognizing when it's time to stop offering an outdated technology to invest in a new one. "How do you invest in new technology when you're still paying to provide automated telephone service?" Newfarmer asked.
Merger Mania
Credit union consolidation is happening at a rapid pace in a number of countries, not just the U.S., and it doesn't have to be a bad thing, the panelists noted.
"I think small credit unions need to remember that merger is a choice," Hernandez said. "Even if a large credit union comes to you looking to merge, it's still your choice. Unless the regulator is involved, you're not being forced to merge."
When asked what red flags indicate that a small institution may need to consider merging, the panelists agreed the biggest one is a lack of growth — but that includes growth in a number of key areas, not just asset size.
Other areas to monitor would include membership growth, loan growth and member service usage stats such as number of account relationships per member.
"After you look at the numbers and trends, ask yourself what you are willing to do, what you are willing to change," McDade said. "We see credit unions fail because they couldn't make the change."
Small CUs also need to be ready and willing to seek out — and accept — help.
"There's a lot of help being provided, but many credit unions are not aware of it or haven't taken the time to avail themselves of it," said Hernandez.
Collaboration is another vital resource that is often left untapped. "Five years ago, we looked around and said we cannot stand still — that's death," McDade said. So Sunshine Coast teamed up with some other credit unions to form a CUSO.
"Now we have three CUSOs and we're three to four more ready to go," she noted. "That has really saved the bacon. We're saving money, and now we're even making money, too."
The Value of Differentiation
The panelists also encouraged CUs to select causes that resonate with their specific fields of membership.
COOPE-ANDE in Costa Rica has chosen to champion environmental awareness and sustainability, Rojas said. An education-based credit union, COOPE-ANDE holds an annual contest for student projects on perfecting water management. Rojas said the CU works with contest winners to ensure they are able to follow up on their projects.
Tarrant County's CU focuses on housing and hunger, having won a Dora Maxwell Award for its program that purchases bread, peanut butter and honey and then makes sandwiches for an area homeless shelter. Employees helped deliver 6,000 sandwiches one year, according to Newfarmer.
Hernandez said each of his three CUs has participated in and sponsored a variety of community events, including cooking for battered women in Los Angeles, participating in a charity walk for the local children's hospital and sponsoring Special Olympics.
Sunshine Coast takes a slightly different tack. "Every time we are asked to sponsor something, we look for how our members can benefit from it," McDade said. For example, if the CU is going to sponsor a special event of some sort, perhaps members can get discounted tickets to that even, she explained.
Getting involved in the community is one of the primary ways credit unions can differentiate themselves, and that differentiation can help attract and retain strong employees, profitable members and political allies, all of which are integral to small credit unions' continued success. And that success isn't just important to those individual credit unions — it's also important to the credit union movement as a whole.
"The existence of viable, healthy small credit unions is vital to the political strength of credit unions," Newfarmer said. "Lawmakers need to hear more voices, not fewer."
