On paper, credit unions are remarkably successful. By mid-2001, 10,366 credit unions accounted for $484.9-billion dollars in member funds. Today, the average credit union has $47 million in assets serving 7,700 members with 18 employees.
However, these statistics tell only part of the story. For example, 7,125 CUs (68.7%) are under $20 million in assets on one end ,and 51 CUs are over $1-billion on the other. It's the old story of the haves and the have-nots. While the industry seems to be on track overall, the "competitive relevance" of even large credit unions in today's financial service marketplace is becoming more and more threatened. What is needed is a new model of cooperation or networking that can outflank traditional problems of size and limited resources.
One answer may be "Networked Credit Union Communities"-a new style of operational cooperation based on today's improved technology.
For the past 15 years, I have been personally involved with credit union operations and have witnessed their evolution in the marketplace. Drawing from past experience and today's prevailing issues, I would say it's obvious that today's most successful CUs are harnessing new technological resources to grow more rapidly. But for the rest, new efficiencies gained through technology cannot be leveraged effectively without scale and opportunity. This new model allows CUs to form a "community marketplace" coordinated by technology and, most importantly, business leadership. Using today's network capabilities and Internet standards for communicating interactively, credit unions can present solutions with both scale and guaranteed opportunity for participants.
Networked CU Communities Offer a Competitive Edge
Credit unions are fiercely loyal to their members. Today they are also incredibly diverse, offering memberships to the general public and providing the same financial products as the local bank. However, most CUs still operate independently, which translates into limitations and disadvantages for their members. Operating independently stagnates growth and can discourage out-of-the-box thinking. Credit unions need to shed their "George Bailey" image of fierce independence and get exposed to the thousands of organizations across the globe that provide long-term competitive advantages.
To be successful, I believe credit union network communities should interactively combine consumers, solution providers, technology and the culture of the corporation to create a fertile environment for an ever-expanding stream of ideas. Combining the technology and talents of everyone involved, network communities can achieve far more. In fact, retiring the concept that operating independently will gain economies of scale for the organization is the first step in broadening your marketing scope and enhancing your commerce opportunities.
Key Elements to Creating Competitive Advantage
"Networking is an old-new way of doing business," says Dr. Ivan Misner, founder and CEO of Business Network International in La Verne, Calif. Yet everyone knows that in business, good ideas alone are not enough. The problem lies with implementation, which is where the network principle comes into play. There are numerous other CUs already locked into the broader community with the very answers you may need. Tapping into those network communities provides the mid-sized CU with a solid backbone of databases, including readily obtainable information.
But how do network communities create competitive advantage? The answer lies in the three key elements to any networked community:
* Creating solutions. First and foremost, more and better solutions are within the reach of each individual credit union when participating in a community. Participants realize savings through shared ownership and lower investment risk. Implementation costs and barriers are lower as each participant breaks new ground. The greater capabilities of the group can now be marketed as the capabilities of the individual.
* Creating access to partners. Where the doors to opportunity are closed for an individual, network communities can open those doors by enticing partners with the potential of doing business with a larger entity. Access to new marketplaces and new partner capabilities further enhance the individual CUs credibility, marketplace power and competitive relevance in the eyes of its membership.
* Creating potential. Keeping an eye on the future is as important as what you are doing today. Credit unions that act independently are often bogged down in the present, and are left in the position where seeking new opportunities and potential takes a back seat to yesterday's ideas. Network communities add partners and a visibility that is always positioned for new opportunities. Actionable solutions, expanded resources, and an eye on where we're going are all key components in creating competitive advantage. Network communities give an individual credit union the edge.
What's Different About Today's Network Communities?
Many would say, "Been there, done that. I've tried cooperation and partnerships, and they were more work than they were worth." What's different about today's opportunities is the world's rush towards truly network-capable organizations. Business leaders are becoming more comfortable with technologies that allow almost instant partnerships. Many industries are now focused on self-service strategies that even allow consumers to come and go on a much more fluid basis than ever before. It is as easy today to interact with organizations halfway across the country, as it was to talk to a co-worker down the hall fifteen years ago. Not only do businesses have an address, every PC and workstation can be designated as part of a network community. Business leaders are becoming more aware that every organization's capabilities can have a "virtual" presentation value much further reaching than their physical street address.
Today's technology makes an old idea worth a second look. Today's business climate makes capitalizing on this old idea far more feasible.
A Common Technology Framework
The key here is to mesh business networking with today's enhanced technology and the world's physical networking capabilities. By adding a common technology network to the power of credit union cooperation, CUs can take a simple idea and turn it into a wave of activity based on a common foundation. To achieve a common foundation, we must again challenge an old idea with a new one. The power of network communities will not be realized by trusting that the marketplace will develop standards. Credit unions must move towards the creative power and invention that is granted to those who have equity in technology and create these foundations.
"I believe that a common technology framework is so important," says Chip Filson, president of Callahan & Associates, Inc., a credit union consulting and financial analysis firm located in Washington, D.C. "It simplifies all of the elements of implementation in terms of fulfillment, consistency, learning from the initial trial or rollout period, and in terms of training personnel who must communicate its importance. All of these things are done more effectively if there is a common framework for the implementation or activity."
I am convinced CUs know the power of cooperation. From business conferences and trade organizations to simply keeping in contact with their elite business partners, credit union leaders already have a jump-start on the power of strategic networking. But, to think network communities will be successful because of a new technical environment is naive. Technology is only part of the answer. Technology networks are simply a tool. It will take new business strategies and tactics that say credit unions can overcome their operational differences to capitalize on these new tools. Today's leaders must prioritize finding ways to do things that are beyond the scale of their own organizations. With these new priorities, they must act. Today's tools and partnerships require focused and managed vision as to the direction, resources needed, and the desire to complete based on scale, accessible opportunity and realized value.
Says Filson, "Success depends on the ability to implement great ideas in a compelling and efficient way in the marketplace to which the service or product is directed." Exactly true-while shared technology can simplify and amplify your efforts, it is the recognition of the need for models that can "act" on creative ideas that will better position CUs in the future.
Randy Karnes is president and CEO of WESCO, Inc., a Kentwood, Michigan based CUSO owned by more than 50 credit unions nationwide and providing services to more than 115 credit unions. For info: 800-327-3478, wesco cubase.org.