For some time now, I've had
this nagging notion that all is not right in credit union land. It's been
bugging me to no end and so it's about time I get this concern off my chest.
What I'm going to say may,
for many, strike at the very heart of the credit union business model which I
so respect. Yet, I realize I'll have to risk arousing the ire of industry
associates and friends in raising the issue but, hopefully, they, too, will see
the validity of my concern. Perhaps some will even respond by sharing their
views for the benefit of us all.
What’s gnawing at me? I’m
concerned that credit unions, as financial cooperatives, might be headed toward
a destiny of failure. I fear they are moving in a direction that will eventually
see them become exactly the same as their for-profit banking counterparts and
this prompts me to wonder what is the threshold, which when crossed, determines
that the credit union is no longer a “credit
union.” Is it merely the charter that defines such an identity or does it
depend on something much more pervasive?
For instance, when a couple
is given their divorce decree, is it the decree that actually dissolves their
marriage bond or was it of the couple’s own personal doing, months and possibly
years before such a decree is ever issued?
As credit unions continue to grow—swallowing
up smaller shops at alarming rates, expanding their reach well beyond community
boundaries and providing their membership with the same products and services
that can be found down the street at the corner bank—will they one day
transform themselves and the movement into something no longer resembling what
Edward Filene had in mind when he crisscrossed the nation in the early 20th
century to sell his credit union model to others?
Let’s not be fooled. Just
because credit unions reach out today to the underserved in ways much more
profound than other financial service providers is no guarantee that our credit
union culture, philosophy and principles will stay the course to distinguish our
business model for decades to come. Let’s not think that our not-for-profit
status is what separates us from other providers, or that a continuation of the
feud with the bankers’ lobby is what preserves our heritage.
Think of it. Credit unions
were formed as financial cooperatives to help the common man and woman save and
secure credit. Being shunned by other service providers gave them fair reason
to pool their savings in a cooperative venture for the benefit of each member
of the group. Establishing a credit union afforded certain "segments"
of the population, defined by culture or employment or religious affiliation
access to affordable financial services which they, the members, owned and
controlled.
There were no community
charters where membership was essentially open to anyone who breathed the same
air as those running the credit union. Monthly chapter meetings were the town halls
for the movement where friendships were formed, information was shared and
learning was seen as a cooperative venture. In their struggle to survive,
credit unions showed mutual respect and support for one another in ways that
were without reservation. There was no co-opitition, competition or jousting
for supremacy. Regulations were manageable and more members than naught were personally
known and addressed by name when they entered the shop.
Today, after more than 70-plus
years of evolution, only a fool would expect credit unions in the U.S. to look
the same as they once did, untouched by a barrage of life's joys and sorrows, countless
discoveries and advancements, and most especially, a burgeoning
financial-services marketplace and its many sophisticated products and
applications. Credit unions have evolved but at what price?
As credit unions continue to grow
bigger, stretching out their reach throughout the populations they serve,
applying the latest apps technology has to offer, and expanding their mix of
products and services, will they one day find themselves unconsciously transformed
into their for-profit counterparts? Will their inherent design as financial
cooperatives be seen as an impediment to growth and sustainability? Stray too
far from the tenets of that cooperative model and credit unions will find
themselves flirting with a destiny of utter failure.
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