In light of the challenges small CUs face, I asked readers whether there is a fix to this problem or if the loss of small CUs is merely the nature of things, and we should let nature take its course, confident that if a CU is financially strong and is doing a solid job of serving its members, it will survive. Here are excerpts of what some of you had to say.
From Henry Wirz: I agree that many CUs are too small to survive. CUs don’t have incentives to merge. Banks are owned by stock holders who will profit from a sale. Bank boards and management own stock and are rewarded for maximizing the share price. CU management and boards see a merger as a negative. Management is afraid of losing their jobs. Board members are also reluctant to give up control of the CU. Credit union members do not behave like owners. They don’t have tangible ownership. If service is bad and the credit union is not successful they move their account. The result: these CUs are no longer relevant to their members.
From Ted Keith: It’s probably a combination of increasing regulatory burden and technology requirements. Fighting regulatory issues is a long-term battle with questionable positive results. If small CUs can focus on their core competencies, utilize supplier-partners that can remove some of the burdens and provide their members with great service, they can survive.
From Kenn Bell: As an $8 million CU serving the florist industry, our challenge is to provide services to a distant membership. It’s particularly difficult to gain the support of an Oregon or New York member when our only office is in Southeast Central New Mexico. We have a visionary board that realized we needed to be able to serve distant members, so we converted our core, implemented shared branching, and we now have a mobile app for iPhone and Android. Sometimes our greatest challenge isn’t from the bank across the street, but rather NCUA. The agency allows large CUs to move into areas well-served by small CUs. The results can be devastating for the small CUs. The larger CUs not only know this will cause the smaller CU to merge — it’s part of their plan. But the downside is the loss of person-to-person relationships. It’s common to forget the primary mission isn’t just to serve the community, but to serve the individual. It’s not just about products and services — it’s about people.
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