Jeffry Pilcher at FinancialBrand.com has written an excellent article on the credit union industry outlook. I would recommend you read this but more importantly read the comments because they are the key as to viewing how individuals perceive the result of this information.
Here in B.C. we have already gone through a “shrinkage” of credit unions over the last 20 years. In 1992 when I came back into the system there were 107 credit unions, now there are 44. The larger CUs have an 80% + total of the BC system assets at large. That is held by fewer than 10 credit unions. And yes we heard the ‘economies of scale’ proposition put forward at least 1,000 times in the last 20 years in all its hues and colours. But what really happened to those credit unions? What is the unknown cost of this ‘shrinkage’?
I believe the key component to loosing 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. They are so preoccupied with the ‘system’ template on how to run their organization they forget to leverage their strengths and develop and reinvent themselves in this very different financial world. 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, ignoring the wealth both financially and culturally that their credit union has established in their community.
There is nothing wrong with numerous credit unions in the same market. We all agree on the free market concept. What is neglected is that as credit unions we must align some strategies as financial co-operatives. No credit union is an island. At the same time individual credit unions must develop strategies that are dynamic and relevant. Those strategies must come from the source of collective wisdom of their membership. The direction that they set will be unique, growing and vital to their own ongoing future.
Listening, formulating, innovating, creating, respecting, and working towards a common vision is not easy. It is work. The end result will be a credit union that does not worry about how many CUs there will be in the future as you will be too busy maintaining that relevance with your membership and also contributing to the health of the credit union movement.
The cost of loosing CUs is huge. There are too many ‘funerals’ and not enough ‘births’. I believe smaller CUs are sometimes the conscience of the movement. Being smaller also gives a huge advantage for innovation and quick time of delivery for products and services. There is a role for both smaller and larger CUs to tackle our aging and declining membership base. What I have seen recently in the BC Credit Union movement has given me a new direction and a very positive view of the synergy used by both ends of the spectrum. It begins with discussing our cooperative nature and respecting our strategic differences.