They say that whatever you do ON January 1st sets the tone for your entire year. So I got up last Friday morning, said my prayers, threw my black-eyed peas in a pot and jumped on the elliptical trainer. I like to listen to Pandora “shuffle” because I have crazy taste in music and I like to see what she dishes up for me. The very last song during this work out - the finish line song - Pat Benatar’s Invincible.
If you’ve never heard it go download it now. I’ll wait.
When Matt Davis and I founded 6th Story we did so to make sure that credit unions didn’t go down on our watch. Neither one of us “chose” to work for credit unions and yet we choose to continue to make it our life’s work. But I have to tell you, there are some things going on in credit union land that we need to talk about. So here’s the tough love.
I’m tired of the self-fulfilling prophecy predicting the ultimate demise of all small credit unions and that we will eventually have around 1200 goliath credit unions. Does that sound like the end of the movement? Absolutely. Think about it. Tax exempt status. Gone. But that’s not as big a deal as the fact that so many jobs are going to be lost. Credit union centric vendors out of business. Trade associations? Consolidated into something that looks suspiciously like CUNA? This “prediction” isn’t good for anyone. NCUA sees to it that it’s virtually impossible to START a credit union. And even if you’re lucky enough to have the backing of your state and a viable model the Feds are going to make sure you never open your doors.
Some small credit union CEOs have shared with me that as they near retirement the boards of the big CUs see blood in the water and start circling and go around the CEO to their board to try and make a deal. Not cool. Stop it.
The truth is there are many alternatives to mergers. According to NCUA the number one reason for merger is to “expand services.” The CUSO model is there to help credit unions gain access to affordable services. There are many examples of this, shared branching being the most obvious. I interviewed the CEO of The Florist CU in Roswell NM last year for a NACUSO blog. This $7.8 million CU with 900 member florists all over the nation has 5,341 branches and access to over 30,000 ATMs thanks to collaboration.
NACUSO is a great resource for small to mid-size credit unions. They have the Marketplace, a list of CUSO services and an easy way to submit an RFP, the Next Big Idea Competition at the annual conference where they showcase the greatest minds in collaboration and they have just announced they are adding Partner Connection Sessions. If your credit union has thought about joining or collaborating to start a CUSO, this is the place to do it. Check it out.
Another alternative I just heard about is The Network Credit Union option. It’s kind of a franchise model. It allows credit unions the benefit of collaboration, economies of scale, and diversification without giving up their brand identity. I think this is brilliant. You see when a credit union merges it’s like swooping in and closing the clubhouse. We forget that many members still have an emotional connection to their history. To their founders, who are teachers, postal workers, the guys down at the mill. That common bond that is so critical to building loyalty. The Network Credit Union option gives the small credit union access to all of those big boys features without the members knowing about it.
It’s time to face the enemy. Mergers. It’s a do or die situation. Collaborate and we will be invincible!