Monday, February 8, 2010

The Time Is Right To Re-Discover Our Roots

When future generations of credit union folks look back to the Great Recession of 2009and the havoc it created for credit unions everywhere, what do you think will be their ultimate assessment?

Now lest we forget, credit unions are financial co-ops based on a business model predicated by seven cooperative principles. Membership is voluntary and without discrimination. Co-ops are democratically controlled—-one member, one vote—-formed to be an aggregator where the benefits of membership come in the form of lower fees and better rates, not soaring profits. Co-ops are autonomous, self-help organizations that educate their members, cooperate with other cooperatives, all the while focusing on member needs and demonstrating a concern for the community.

But what was the reality of U.S. financial cooperatives during the first decade of the new millennium?

OK, let’s not kid ourselves. Can we be honest? Although credit unions still demonstrated a strong presence with the underserved, I am of the opinion that the push was on to see where the best yield could be achieved on many credit union investment portfolios. One investor was shopped against the other to see which could deliver the higher yield. All along, we failed to realize the consequences induced by the competition this practise created, affectionately dismissing it as co-opetition.

All the while, credit unions focused their attention on the bankers who were constantly trying to undermine credit union business, pushing for limits on the range of products and services that we might offer, in addition to advancing calls for taxation.

Bankers, increasing regulations, decreasing margins, and now the need to compete for members with the credit union up the block all mounted a formidable pressure on everyone, prying our focus from where it rightfully belonged——on the cooperative values and principles that are at the heart of credit unions. Why should we care about a national branding strategy we asked ourselves when our first obligation is locally to our members and the success of our own credit union?

In retrospect, it’s ironic to think that the more our business flourished, the more our behavior became like the bankers we so firmly abhor. To me, it appears we as an industry drifted from our real intrinsic nature as defined by those seven cooperative principles.

So, I only can wonder if future generations will be of similar opinion. Today, somehow, some way, I believe we have to find our way back to those principles and values that truly distinguish us within America’s financial services marketplace. I believe our survival depends on it. Wouldn't you agree?


  1. Well said. Also, glad to see you've started this blog. Definitely on my reading list now.

  2. Well said, Walt. As you and I sit outside the hard and fast numbers of the biz, I wonder what CEO/CFO/COO types think when you (or I) write about things like philosophy trumping cold, hard financial figures and “progress.”

  3. I couldn't agree more with you, Sarah.

    In general, CEOs and CFOs tend to be more analytical in mindset, thereby not naturally attracted by a philosophical discussion on the meaning of credit unions; too touchy-feely in their mind's eye!

    However, there are exceptions and many are truly inspirational in their embrace of our cooperative values and principles. It’s apparent when you look at their leadership style and how their credit union is perceived in their marketplace and within our industry.

    Nonetheless, the discussion must be had, otherwise we can easily drift from what we are suppose to stand for as credit unions.

    All I'm calling for is a healthy balance. Otherwise, the question then becomes, why be a credit union. Would a community banking charter more appropriately capture the “ethos” of the organization?

    Reminds me of the talk back in the day about "Cafeteria Catholics;" just pick and choose what you want to believe in and how you want to practice the faith.

    Well, we know that doesn't hold water. What club or HOA with its rules defining what it stands for, tells its membership that you can follow what you want and disregard the rest of the rules? Are credit unions any different?

    There is a certain ethos associated with an organization that defines it and its members. You cannot say you are a member and at the same time disregard the implications of that ethos.

    More to come. . .