Already this year the credit union industry has seen tangible illustrations of compelling change. In response, every credit union must engage in no-fear, taboo-free strategic thinking in 2007. Anachronistic concepts like "movement unity" and "cooperative values" are impractical strategic launching pads. Despite movement purists' pleadings, consumers see no value there. The financial services marketplace has no mercy and boards that deny marketplace realities will fail dismally.
The importance of a clear-headed, reality-focused CU strategic vision has been heightened by several striking developments this year. As 2007 began, 14% of all federally insured credit unions held 82% of all assets and served 72% of all members irrefutably demonstrating that large CUs dominate the industry.
The Credit Union Regulatory Improvements Act (CURIA) has been introduced in the 110th Congress and appears to be dead on arrival due to its controversial provisions and heated opposition from the banking industry.
The IRS has heightened the threat of Unrelated Business Income Tax and some in the credit union industry fear massive conversions away from the state charter as a result.
For thousands of the smallest credit unions, voluntary liquidation may be the fairest way to reward their loyal baby boomer and senior members' ownership interests since they are too small to be sought-after merger prospects or thrive in a competitive marketplace.
A small number of dissident members forced University of Iowa Community CU to halt a name change and the CU faced down a renegade member-driven board coup like Columbia CU, DFCU Financial, and Lafayette FCU before it.
Wings Financial FCU went directly to the members of Continental FCU with a merger proposal that included an equity payout to members and a possible forced membership vote. Continental FCU reported that it received an alternative merger offer from a bank.
Lafayette FCU is suing anti-conversion dissidents and has subpoenaed other individuals and organizations that assisted the dissidents. Think FCU's members legally approved a conversion to the mutual savings bank charter although fewer than 30% of members bothered to vote despite their "cooperative ownership" of the institution.
Beehive CU in Utah, 1st Priority CU (formerly Postal Community CU) in Massachusetts, Community CU of Lynn (MA), and First Basin CU (formerly Medical Center CU) in Texas have announced their intent to explore converting to the mutual savings bank charter and reportedly additional credit unions will make similar announcements soon.
A credit union board's refusal to diligently address the strategic importance of these urgent new realities raises questions about that board's stewardship. No fear, taboo-free strategic thinking leads to pragmatic business plans and yields marketplace success. For credit unions, there is nothing to fear but fear itself.
Marvin C. Umholtz, CEO, Umholtz Strategic Planning & Consulting Services, marvin.umholtz
