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I hear it all the time – our members don’t CARE that we are a cooperative. And why should they? What have you done besides state the antiquated rhetoric “A credit union is a not-for-profit owned and operated by our members with a volunteer board of directors…blah blah blah.” We seldom even USE the words Co-Op.
Raise your hand if your credit union URL ends in .coop! Did you know you can’t just willy nilly buy a .coop on Go Daddy? Nope. You must APPLY for it and prove that you are indeed a cooperative.
When we asked a random sample (statistically significant) of our members on a scale of 0 – 10 “How likely is it they will recommend the credit union?” and “Why?” the answers were astonishing. Almost 30% of our members love us because we are local, not a bank, a credit union, or a financial cooperative. They do care.
Armed with this information we designed a logo – cuz that’s what we do in marketing.
Like to say we had a master plan, but we didn’t. Thinking we would slap that on our web, maybe a t-shirt, we really didn’t know. Then it came to us – let’s find local Co-Ops and see if they’ll partner in on the message. In Santa Fe (which is like liberal-granola-eating-Subaru-driving Portland only with sunshine) had only ONE Cooperative, the La Montanita Co-OP Market.
But up north in Los Alamos (where we started) we found two! The LA Co-Op Market and Little Forest Playschool, a parent run co-op since 1951! We met with them to brainstorm on how we might work together. Little Forest Playschool has an annual sale to raise money to run the pre-school – we offered free advertising. We put it up in our lobby on our InLighten Screens. LA Co-Op Market asked if we could partner with them to do a membership drive. We opened 83 memberships at our Los Alamos branch in one day for the market. Then it happened – the word got out and a delightful woman named Micheline approached me about adding the newly formed—- wait for it —- Los Alamos Beer Co-Op to the campaign!
Armed with these amazing partners we approached all of the Northern New Mexico credit unions and asked them to join in. Not a hard sell. Last week-end we sponsored the first Keep It Co-Op Community Concert in Los Alamos and on August 21st will host the First Annual Keep It Co-Op Community Concert in Santa Fe. The city of Santa Fe liked the idea so much they kicked in some serious coin to support the event.
All Northern New Mexico based credit unions participate in shared branching – so guess what we’re doing next?
Anywho – feels good to blog again. I haven’t been able to because I always felt like I’d be revealing credit union strategy or the code to our super powers – but damnit – we need to cooperate!, not compete.
Cooperative Principle Number Six: Cooperation Among Cooperatives (it’s a good thing)
Can you imagine if the Don’t Tax My Credit Union effort was renamed to Don’t Tax My Co-Op! ?
It’s becoming harder and harder to find the original credit union stories. So many CUs have eliminated them from the “About Us” section of their website. But I remember the story of Portland Teachers CU. In 1932, sixteen school teachers pooled six dollars each to create PTCU (today called OnPoint). In 79 years PTCU has grown to serve 244,000 members with assets of just over $3 billion. Not bad.
Now let me be on point. We all started with about the same amount of money. I don’t know if there was a credit union that started out with $50 million dollars or anywhere near that. These were all tiny upstarts. Yesterday The Financial Brand posted an interesting article about the future of the industry – 20 years out. Like so many, the prediction is mass consolidation and the end to the small credit union.
The show was meant to debate a hot topic that appeared in the CU Times last week. GTE Federal Credit Union changed their name to GTE Financial. Although I applaud the fact they did not kick their sponsor name to the curb (like Portland Teachers did) – to drop the credit union moniker was a point of contention with me.
During the discussion the largest credit union in the world was mentioned. Navy Federal Credit Union. Their “About Us” page says they were founded in 1933 with seven members and today serve over 3 million members with assets of almost $50 billion – with a “B”. That makes OnPoint look small. They no longer serve only the Navy. The serve all branches of the military and yet they remain true to their founders in both the brand “Navy” and the category “credit union.” Sarah said they grew because they had tremendous resources and that most small credit unions don’t have those.
Here’s where I get confused. The 1930’s was the boom age of credit unions. The majority of credit unions still standing were founded well over 60 years ago. And if they all started with a group of wide-eyed optimists plunking down six bucks each – how is it they all aren’t huge?
To be fair – Navy has a great field of membership because every year there are new recruits. A fresh batch. Many credit unions that were founded by say, the railroad workers, didn’t have it so lucky. But in the 80’s we were allowed to expand to family members and retirees. That’s how credit unions like Boeing boomed.
And after HR 1151 passed in 1998 – credit unions were allowed to have multiple common bonds. Anyone who lives, works or worships became the phrase that pays. But did it? Credit unions began to change their names in an effort to show the world that anyone could join. And when all of the good ones were taken we shifted to synthesized or pharmaceutical names. “Ask you doctor if Aventa is right for you.”
My dear friend Gene Blishen posted a brilliant blog yesterday in response to all this madness. He cited the Financial Brand article and the “shrinkage” of credit unions in America. Here’s a quote:
“I believe the key component to losing credit unions is their own belief that they are no longer relevant to their membership based on criteria that they inherited from outside sources. They begin to drink the wrong coloured Kool-Aid.” He goes on to say “By following the Pied Piper of ‘bigger is better’ they forget the culture they have and the history they have come from. To put it bluntly, they just give up…”
I would hate to tell one of the 16 teachers in Portland that put up what was a ton of money in 1932 that their vision was in vain. It’s too hard for a small credit union to stay in business in 2012. What with all the regulation, and technology, and competition.
Because it was so easy in 1932 – right?
Are you paying attention to what is happening? I blogged some time ago about the distraction that was Dodd Frank.
I’m not bragging or anything but I think I was pretty spot on. Credit unions are still enjoying their exemption from the interchange amendment (as promised) and instead of worrying about potential loss of income we should’ve been preparing for the opportunity of the decade – new members that are going to finally move their money from the big-bad-TARP-taking-too-big-to-fail banks. As I predicted, banks WILL find a way to make up for that lost income. B of A’s decisioin to begin charging for the debit card was the salt rubbed in the wound of their reputation…..game over.
Let’s face it – checking account promotions haven’t worked for years. Bill pay did its job. It is sticky. Most people feel stuck in their current relationship. The only time a person is willing to move their checking account is if they are so pissed off at their current financial institution.
Thank you Bank of America for pissing off your customers. Again.
But here’s the rub.
1. Most credit unions don’t need deposits right now. They need loans.
2. Most credit unions new member process is cumbersome. Frontline folks are either not trained or not given permission to qualify new members for credit. Fix that.
3. Switch kits suck. There, I said it. Everyone says they have one but no one has a decent one – that I’ve seen. It doesn’t help me “switch” it just illustrates, in brochure fashion, what a nightmare this is going to be. How about a human switch kit? Be the concierge for the checking and help them move these over.
4. Most credit unions don’t instant issue debit cards. At the center of this opportunity is the beloved debit card. B of A wants to charge their customers $5 a month to use it and if they switch to a credit union it’ll take them two weeks to get a new one. Fix that!
5. Most credit unions are open from 9 to 5, Monday through Friday. And that wonderful woman Kristen Christian has declared Bank Transfer Day as a Saturday. Open your branches!
This is just the beginning of the marketer’s dream. You see, we have time. About two months and 10 days to be exact. To improve our onboarding experience. The earthquake hit when B of A made the announcement. The tsunami will hit on January 1st of next year when they actually begin charging the fee.
My husband Mark has always said that B of A’s tagline should be: “We Bank on Inertia.” And until now, it’s worked in their favor.
But I predict that our time has finally come. We are TARP free, self-funded, financial cooperatives with a volunteer board. Somehow that has meaning again.
Sunday, Feb 27th, 9:06 am (EST)
feels like 7:06 am (MST)
I don’t think I’ve ever flown into Ronald Reagan Washington National Airport (DCA) before. I was on the right side of the plane so I got to see all of our Nation’s Capitol as we came in for an alarmingly close landing.
Have you ever noticed how phallic the Washington Monument is? From the air that’s all I could see but upon landing and remembering its position from the US Capitol Complex it could be a giant flip-o-the-bird to the rest of the world. I like that idea.
Last night I ventured into the lobby bar for I had hunger pangs from my long day on a plane (row 30 over the engine). I find that a vodka martini with two olives is the most efficient way to a) curb the hunger and b) catch up. Mission accomplished. Gradually the bar filled up and I was surrounded by my people….credit union professionals from all over the map.
I am proud to be representing the great state of New Mexico at my first GAC. And no, we didn’t need our passports to fly to DC. I’m still amazed how many people I talk to in my travels think NEW Mexico is some exotic portion of Old Mexico. If you turn to The Weather Channel you’ll notice we’re not even on the map. No, we’re behind the weatherman(woman’s) backside. As they forecast the Southwest region they usually highlight So.Cal and then Phoenix annnnd we’re over to West Texas.
New Mexico – the best kept secret in America. Shhhhhh…..
Anyway – I’m very excited to be here. My dance card is filling up with power breakfasts and receptions and meetings and Galas and of course I cannot miss the keynote address by Captain Sully Sullenberg and ………wait for it……..the return of Thunderpunch.
Should be a wild ride. Stay tuned……
(a follow up to my last blog post about trying to start a credit union in New Mexico for Artists & Craftstmen)
Last night was the night. I had been preparing for a week. I was to get up in front of artists and craftsmen and explain how hard it is to start a credit union today. I work for a trade association that was founded to do just that. Nine years ago was the last time a new credit union was formed in our state. Only 2 years ago they meet their capital requirements. It’s hard to start a credit union today.
Naturally I began the presentation with a brief history of credit unions in America. Edward Filene, the signing of the CU Act in 1934 by FDR, the alarming stats that showed the peak of credit unions (1969 – almost 24,000) to the dismal fact that today there are less than 8000. I showed a brief alphabet of the regulations that will haunt them. In the spirit of transparency (in case anyone googled corporate credit union) I carefully laid out the recapitalization of our system by the NCUA. Sigh.
Is it really possible that we’re done with people helping people?
Everyone I talk to politely scoffs at the notion of starting a credit union today. It can’t be done. Why would you even try? I can only assume their filter for this reaction is the credit union of today. Struggling to remain all things to all people in an interest rate environment that is strangling the bottom line. A financial coop that finds themselves shoring up the system (again) and fighting off legislation (again). I see a tired movement. One that is willing to not only allow big mergers, but encourage them. But to what end? For the last ten years I constantly hear the predictions of the next ten years: There will only be (insert shocking number) of credit unions in the US. So, are we done?
What is our long term plan for people helping people?
Rein Whitt Prichette is an artist. It’s not a hobby, it’s his life’s work. He told the story last night of how a $1200 loan would have made all the difference in his life. He’s been banking at Wells Fargo. There’s no way they would give him a loan. He has no credit score. He has no W-2. But he does have art in the Albuquerque Art Museum. His serigraphy is featured in a first edition Franklin Mint collectors book. Would your credit union give him a loan? Not likely. So, I have to ask again, “Are we done?”
I see a movement hanging on – not planning for the future. I see CU leaders squinting down the lane to the finish line, blinders on, clutching what’s left of their 401k. I experience tellers that have a job, no hope for a career. Loan officers that are trained to pull the credit score lever and belch out the A+ paper and toss the rest in a pile of doom.
Wow – that was bleak. I know not all credit unions are like that. But let’s be brutally honest here for a moment. Size breeds anonymity. And the larger the financial institution the more they rely on technology to make decisions and sort the masses out. We’ve stopped talking to our members. Listening to their stories. Assessing their character. I fell as if we’ve stopped helping people. We make loans. Non-risky, middle market, credit driven, A paper loans. I know a lot of this has been driven by the regulators. I get that. But it’s not lost on me that we may become the reason credit unions were started in the first place. Rein cannot get credit. He’s the little guy of the 21st century.
The future does not bode well for the small credit union. So it begs the question: Are – we – done?
Rein was very nervous telling his story last night. He does not want charity. He wants to leave behind a system that will enable artists to take care of each other. He’s lost everything at this point, except for his passion. He ended with this proverb:
For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.
I’m not done. Stay tuned.
Last month I got a call from Rein Whitt-Prichette, an Albuquerque artist. He heard about this thing called a credit union and needed information on how to start one. His vision is to have the First National Artists & Craftsmen financial cooperative. This would encompass everything from jewelers to actors to cabinetmakers to weavers. He asked if he had the right place and person.
I work at a trade association for credit unions. I’ve been in the movement for 30 years. I’ve never chartered a credit union. But, he had the right place and person. Our particular trade association was formed in 1955. Twenty years earlier Father E.J. McCarthy formed the first of many credit unions in our state. At the peak (1967) there were 141 credit unions here. Today there are 51.
I googled “How to Start a Credit Union.” The NCUA.gov page was very resourceful. I killed about 2 1/2 trees printing out the instructions and three-hold punched them into a nice big notebook. I even made a snappy cover page “How to Start a Credit Union.”
I googled Rein. He has pieces in the Albuquerque Art Museum. He illustrated a first edition book for the Franklin Mint. He’s an expert serigrapher. And this economy has kicked his ass. It’s hard to say how old he is, but I would venture to guess late 50s early 60s.
Rein is not pursuing this for his own interests. He has a simple list of goals:
- For artists and craftsmen to be recognized as business owners – not hobbyists. A bank, for instance, will make a loan to a peach farmer for next year’s crops – but not to an artist.
- For artists and craftsmen to have a place where they do not get charged $25.00 to receive a wire transfer (payment for a piece) and get charged $2.00 to make an ATM withdrawal.
- For someone to see beyond credit score (Rein does not have one – at all) and recognize the booms and busts that the art world experiences.
Before meeting with Rein I was prepared to refer him to one of our community chartered credit unions. And not in anyway to offend these open fields of membership but, let’s be perfectly honest – the chances that they will lend Rein money – no credit score and the only collateral is his art – zero.
So how about taking in the artists as a SEG with a select employer group credit union? That’s possible – but unlike the law firm, or the retail outlet or daycare centers we’re used to scooping up – artists don’t have paycheck stubs.
Then it hit me. There’s nothing to preclude them from starting a financial cooperative the good old-fashioned way. Or, as I like to call it “shoebox on a shoestring.”
Show of hands if your credit union started this way. Chances are, if you were chartered in the 1930’s your hand has to go up.
It was after the Great Depression. Credit Unions were growing at break neck speed. People with a common bond (and we are NOT talking lives works worships in a five county area) would pledge a portion of their pay to be held in a shoebox in a drawer. A ledger kept track of their shares. A credit committee, or a jury of their peers was formed. Loans were granted based on character, capacity, and collateral. Credit scores did no exist. Losses were minimal because of the shame of non-repayment. Early credit unions were like borrowing money from your friends and co-workers – only a little less awkward.
The average credit union in the 1930’s had 187 members. Many of those credit unions are still around today – over $1 billion in assets.
The billion dollar credit union of today is largely serving the steadily employed, A+ credit, low-risk, middle market member. Banks take care of the elite, high wealth population, and payday lenders are thriving with the underserved.
In this economy the middle class is shrinking – so are the number of credit unions. Sure, many offer payday alternative loans and courtesy pay products with less than loan shark level fees. But who’s taking care of the little guy? Who’s looking out for Rein?
My new year’s resolution is to find a way to pool the resources of the art community in New Mexico. Tourists come to the Land of Enchantment for the arts (and the green chile cheeseburger). An investment in the art community is good for our entire state. We can’t afford to lose the art of Rein.
I’ll keep you posted on this journey…
I’ve done a fair amount of strategic planning over the years. Mostly facilitating, some participating. On either side of the board table I always went in with this filter: How can we thrive? How do we plan for overwhelming success? Lines out the door, phones ringing off the wall, media coverage out the butt kind of success. Sure, some people look at me like I’m insane – especially in this economy.
But I’ll bet Steve Jobs thinks that way. So does Tony Hsieh. Even Ford is optimistic right now. Southwest Airlines posted another profitable quarter. Starbucks has righted their ship.
How about your credit union? Doom and gloom? Still pissed off at the corporate assessments? Held hostage by your DP vendor’s inabilities? Do you blame NCUA for your lack of innovation? Afraid of losing your job?
According to Jim Collins, author of Good to Great, if you are not a Level 5 Leader, you will likely not thrive in this recession. A level 5 leader “builds enduring greatness through a paradoxical combination of personal humility plus professional will.”
Take 2 minutes and 35 seconds to watch this clip of Jim describing what it means to be a Level 5 leader. I got choked up.
Tony Hsieh does not have a corner office on the 32nd floor. Instead he parks his Level 5 butt in a cubicle in the middle of his call center.
Steve Jobs quietly took sick leave to battle a severe illness while still introducing the iPad to initial media criticism.
Howard Schultz admitted publicly that Starbucks grew too big, too fast. He lost sight of their original vision and posted his strategic plan on their website so the public could hold him accountable.
Yet in the credit union land we see massive mergers, not just among member credit unions but now trade associations and of course the corporates are seeking this shelter from the storm. Credit unions continue to be followers rather than leaders when it comes to innovation.
Edward Filene was a Level 5 leader. What would he tell us today? He put cause before his own ego. He made sacrifices physically, professionally and financially for the movement. Because of his leadership credit unions did not just survive the Great Depression, history showed us they thrived.
Are you a Level 5?
Ultimately our members will decide if THEIR financial cooperative will survive or thrive.
I got a message from Bill Butler, CEO of Ohio HealthCare FCU this morning. I did brand consulting for Bill and his gang many many years ago. Unlike the plethora of credit unions expanding their fields of membership to include anyone who lives, works or worships in a five plus county area, Bill decided to kick up his affinity. He decided to buck the trend and stay true to his founders. Some would say it was a very bold move.
The Ohio Healthcare FCU is limited to health care professionals (and their families).
Their tagline: We care because you care.
His members care for the sick, the elderly, the dying, the suffering. The credit union cares for their financial well being. OHCFCU launched an amazing contest this month to celebrate their members. It’s called the Next Top CU Member.
Check out Sandy’s Jessberger’s video. It’s simple and sweet and tells of her affinity with OHCFCU. She’s a trauma nurse – and when she’s not saving lives she’s raising her kids and remodeling her home and saving for Christmas and a dream vacation. Her kids and grandkids are members of the credit union. It’s all about the affinity.
2. An inherent similarity between persons or things.
All credit unions were founded on affinity. Or common bond. In the last ten years the trend has been to expand territory and target anyone. Lately the trend has been merger – yet very few are based on affinity. Some are out of necessity, others out of rapacity.
But beware — when you lose affinity, you will likely become a utility.
1. something useful or designed for use
2. a program or routine designed to perform or facilitate especially routine operations
Also known as a bank.
Observations on credit union trends.
The re-branding (let’s change our name and logo) trend
Somewhere along the way a speaker or consultant or, dare I say, and ad agency posing as both, convinced credit unions that their biggest obstacle to growth was their legacy. It’s too specific. People will still think that they have to be a Portland Teacher (for example) to join. Even though the evidence to the contrary was staring at them on their balance sheet.
And so the name changes began.
Altana, Aventa, Aspire….
Community, Community Driven, Champion Community….
Encompass, Encore, Extra….
Meridian, Meritrust, Milestone….
Wildfire, Red Canoe and wait for it…….Salal.
This trend thankfully has slowed down. But only to be replaced by: Merger Mania!
Now I get that in this historic bottoming out of our economy mergers would increase. But if you are paying attention, there are many mergers in the works that don’t HAVE to happen.
Here’s my theory. When a trend begins, panic ensues. Those that are not considering changing their name or merging begin to think that maybe they should. After all – everyone else is doing it. We must be doing something wrong. We should change our name. Maybe they know something we don’t know. Let’s merge. That must be the right decision.
Before you know it, bad economy, poor heathcare, gulf oil spill, tornadoes, hurricanes, increased pat downs, cats and dogs living in sin.
(insert needle across the record album noise here)
(Now insert birds chirping and a harp playing softly)
What if we decided to take a deep breath. Assess our situation thoroughly. Focus on what we do well. What we’re known for. Can we sustain ourselves with a simpler model? Get back to basics?
Our members need us now more than ever. We have 100 years of history that has proven we can make money in a devastating economy.
Remember, we not only survived the Great Depression we thrived. The years following that historic event resulted in a credit union boom.
If you don’t have to merge – don’t. It’s a bloody distraction.
Oh, and “economies of scale” is math. It’s not a strategy.
You hear the word merger a lot these days. So to clarify, here are the many meanings:
1. To merge – as into traffic. Necessary to freeway on-ramps. Often mistaken for yield by little old ladies in Buicks with AAA bumper stickers. Honk politely.
2. To marry – join in union because of love and extreme compatibility. The goal is often to grow the union. (i.e. have some kids, procreate, expand).
3. To cover up or stave off failure. Typically the phrase “achieving economies of scale” accompanies the marketing message announcing this type of merger.
Don’t confuse them.