The 2012 Credit Union Watercooler Symposium in Nashville, Tennessee left me thinking about the future of credit unions. That future will be defined by two parallel tracks: the future of consumer banking and the future of cooperative banking ideals, and the effectiveness with which the two are integrated.
In the age of social media and high mobility the future of consumer banking seems ready to be defined by the consumer, not banks. At CUWCS 2012 the American Bankers Association’s Keith Leggett made opening remarks to the effect that the reason he doesn’t bank at a credit union is because we've never given him a compelling reason to do so. This is fair comment, even from an ABA guy. Two years ago at CUWCS 2010 I heard something similar from a young vendor: he liked credit unions (“Y’all are so nice!”) but in the end he just wanted a chequing account and an ATM card. This is banking reduced to utility. Good brands and healthy organizations defy this reduction and create emotional resonance, even in the face of commoditization. We need to find ways to add value back into a banking relationship. What does a more “compelling reason” look like? How do we leverage “nice”?
Our size should give credit unions an advantage here. As small brands we have an opportunity to get close to our members in ways that may be difficult for large brands. By investing in and acting upon our own understanding – business intelligence programs, voice-of-the-customer initiatives, empathetic employees with good listening skills – credit unions can understand exactly what banking consumers need and respond with agility to what we hear. Credit unions can be better bankers than the banks. Let the banks worry about providing value to their shareholders; credit unions can spend their energy on providing value to our members.
Let’s be clear, though, that great pressure to change will come from outside the banking sector. Google, Apple and others are joining eBay in the payments space. Their ambitions make sense: payments is about moving large amounts of data across broad networks, and these guys know how to do that. Technology behemoths also control access to the channels along which services – including banking – are increasingly delivered. Small brands like credit unions need to understand that their members increasing dependency on these channels means that credit unions, too, will become dependent on them. There is opportunity in this: by being assertive technology players credit unions can follow – and even lead – their members into cyberspace.
As consumer banking changes credit unions will be challenged to continue living the cooperative principles. We will need to identify the essential elements of cooperative banking. Is it membership actively involved in governance – and can governance create a compelling message? Is it a focus on local communities – when we’re competing against national brands? Is it working with other cooperatives on joint initiatives – even as we develop our own differentiation strategies? Is it making an investment in consumer education – as consumer debt levels rise? Is it all of the seven cooperative principles equally – and are they all still relevant?
In the end credit unions need to convince the marketplace that credit unions make banking not only better, but differently better.
We need to be careful that that we don’t use a narrow view of our own communities or our own cooperative principles to inhibit creative change. The homogenous communities from which many local institutions were born – including credit unions – have become diverse. In response credit unions are merging and expanding and transforming to compete against large and powerful brands in their own communities. Credit unions need to consider all of the levers they can pull – including branding, innovative cooperative structures, consolidation, and healthy vendor relationships – that will keep them relevant as bankers to their communities. There’s no shame in reinventing ourselves: the cooperative principles are living principles and they need an opportunity to speak as powerfully to our communities as they did to our parents communities.
In the end credit unions need to convince the marketplace that credit unions make banking not only better, but differently better. That means that we need to be able to define the cooperative difference in new and creative ways, not just to ourselves but to our communities.
After CUWCS 2012 I’m convinced of two things. First, the organizations best equipped to find creative ways to articulate the cooperative difference are credit unions themselves, each one a sandbox of transformation as they respond to the needs of their own communities. Our parts will transform the whole.
Second, finding and developing new thinkers and leaders who appreciate what we are while challenging our sacred cows is the key to our transformation. CUWCS gave me the opportunity to talk to some of these leaders, and it’s one of the reasons I’m happy to be a CUWC editor.
Ambitious credit unions combined with energetic new leaders: these will be the reasons that cooperative banking in the future looks different, and better.
Ed Brett lives in Surrey, British Columbia, Canada. He is Manager, Product & Service Delivery of Westminster Savings Credit Union. Ed's worked in the credit union industry for 15 years, beginning in the teller pool and migrating over time into the Ecommerce channel (via I.T.). He didn’t find the Ecommerce channel, it found him, and he's glad to be there.