Sadly our industry seems to have forgotten our own history. In going after expansion, have we turned our backs on the very reason for our existence?
Where is the loyalty to a select FOM that is our hallmark? Shared loyalty between the CU and members is another way to drive growth. This is achieved by educating members on the ways the CU can help them achieve a secure financial future, which stands in stark contrast to the behavior of bankers who have rejected long-term loyalty to customers in favor of short-term gains and annual bonus checks for themselves.
When CUs try to be "better" than banks they are forgetting what made them stand apart in the first place, and they reduce their ability to attract disenchanted bank customers looking for a better way to manage their finances. When we fail to make our members aware of all the ways we can help them build a successful financial future then we are not building our brand or living up to the faith our members place in us when they join. There isn't a magic product, loan rate or checking account that will drive new members in our doors. It's better branding and marketing communications that makes us successful because everyone today (even banks) provide good service. Good service is a standard expectation of financial consumers and cannot on its own drive growth and success. We must also have accountability for member education as measured by product and service penetration.
A good brand is never based on being all things to all people. Instead it delivers what it has better than the rest - or simply markets it better to build a loyal brand niche that can fuel growth through product and service penetration. In the early 2000s we were all about growth. Without it member equity slowly dies. During this decade community charters have been the latest flavor. Multi-state field of memberships prosper; large CUs get bigger, grow faster and dwarf competitors in their region.
Smaller CUs are now scrambling to stay "relevant" in relation to this new growth-driven, super CU model. And in their rush to expand their charters and their FOMs they also drive up operational expenses.
Growth abounds for some and then we all buy into the concept. But with growth and time comes the big squeeze of operational and margin management.
Now it is becoming evident that we need to grow even faster to stay ahead of the expenses we incur to fuel growth. The cost of IT infrastructure is never ending and the expense and expanse of brick and mortar branches still drives membership. Thus we are caught in an operational Catch 22. There is another model for success. Yet CUs with a culture of cross-selling based on effective member education are dismissed as too hard to emulate. They are built based on long-term management focus, training, staff retention and the lost art of accountability standards. In our desperate search for a silver bullet has our industry led itself down a potentially lethal path? Can it be that the large, multi-state, community-chartered CU model is not the answer?
The pressure for greater margins helped lead our industry into dangerous territory with some billion dollar entities teetering on failure. There is even talk that some may fail this year unless our industry taps into federal bailout funds - which means taking taxpayer money. Going this route will immediately threaten our tax-free status. Sometimes taking the surest path forward means backtracking a bit. CUs need to quickly get back to the basics of building a strong niche brand that is communicated effectively and measured by product and service penetration.
Paul J. Lucas is a national marketing and branding consultant. For more info: www.PaulJLucas.com or email paul@pauljlucas.com.
