Posts Tagged ‘history’

The business value of personal connection

May 23, 2014

Who are you striving to be?

10275516_705648832830172_5588543601566778944_oThanks to this photo of Roy Bergengren recently shared by credit union advocate Matthew Cropp of Vermont, I realize that we now have fewer credit unions in the U.S. than at any time prior to NINETEEN THIRTY-NINE. Think about that for a minute…. what does that mean? Now some would explain that away saying that overall membership in the U.S. is at an all time high. So let’s put those two equations together: more people, but fewer institutions. Is that a good thing? A bad thing? Just a thing?

What would Ed Filene and Roy Bergengren think? That after the past 75 years of credit union advocacy, we now have fewer credit unions serving all of America? Are the products better than before? Is the service worse than before? Is the differentiation between credit unions and banks better or worse than 75 years ago? Do we still have a need for credit unions, or has the reason they were founded pretty much gone away? Is there more opportunity than ever before for smaller CUs to succeed? Or is it just too challenging, and every CU below $10m in assets should just get merged into a larger one until there are none in this size range anymore? Do you need to offer every financial product and service that your competitors do in order to succeed? Or does that pursuit just drain time and money resources away from your CU’s core mission?

What is the mission and purpose of your credit union? Who are you trying to be? Who are you serving? What is your connection like with the members you serve? Tight? Barely there?

One of the reasons I bring up this topic is that it seems to me that more and more credit unions are basically operating as tax-exempt banks; attempting to grow no matter what, and becoming more generic in appearance and attitude (and losing connection with the group that founded them). To operate this way may serve the needs of the institution (although it may actually not), but in any case seems a disservice to the membership, and perhaps just as importantly, a disservice to the CU movement as a whole. If a credit union is going to operate like a bank, it should just acknowledge that fact and change charters and switch to being regulated and insured the FDIC instead of NCUA. That tax-exempt thing is not really that a great a business advantage anyway.

But the other surprising thing about credit unions operating like banks (aside from failing to live up to its mission statement) is that in many cases, the trend is away from generic large institutions and stores, and TOWARDS unique, local, and independent organizations. So-called “big box” stores are on the decline; while one-of-a-kind shops find their niche. Many people avoid chain restaurants in favor of unique eateries.

But being different, in and of itself, is not a sustainable business model. To increase success in business, you need to provide something different for which there exists a customer base. One way to approach this differentiation is to employ technology to make it easier for your customers to do business with you, whether that be in facilitating the process of ordering products and services, the delivery of those products and services, or help in using those products and services. From our own point of view; we’ve found that every time we make our own technology easier to use, more streamlined, and more personalized, it pays dividends immediately.

How are you using technology to differentiate and personalize your credit union? Are you using technology to strengthen the connection between your employees and your members, or is it weakening that connection? Who are you serving, and how are you making their experience with you easier and better? If providing “better, more personal service” is the differentiation point of your credit union (as many state), is your technology living up to that promise? What are your thoughts?

Let’s give the kids a boost

June 15, 2010

Watching an 8-minute video created by St. Mary’s Bank Credit Union, the first CU in the United States, about its history (thank you again Andrea!), I learned that from the very early days, the credit union had a kids savings program. Children walking home from school could stop at the credit union and deposit their pennies into a tin cup, and the savings were carefully recorded.

Here’s an idea: How about if in your credit union kid’s club, you paid a FANTASTIC rate of return for these tiny balances…. say they got a quarter back in one month for two dollars deposited as a term deposit. Yes, that’s a sky-high rate of return, but the credit union would cap this great rate on a maximum of $10 or $20, and limit it to only kids 14 years old or younger. Kids would be incredibly eager to save their money, and probably track the date of maturity like a hawk. What a boost, and good life lesson.

You could give this term deposit a fun name like the Lollypop Certificate, and explain to the kids they can use their quarter earnings on anything like, or of course, to reinvest it in more savings.

We know that kids have a very short attention span, and one week seems like a year to them. One month feels like a decade. And psychology 101 tells us that the sooner the reward comes after the desired behavior, the more connection there is between the two.

Let’s help our kids develop better savings habits by rewarding them big, and relatively swiftly. They will be thrilled with their earnings of a quarter, and the credit union will be paying out a relatively tiny amount.

A Love Note on Your Special Day

October 17, 2007

So here we are on the eve of International Credit Union Day; a time to reflect and celebrate the credit union movement. In just over one month, it will be 99 years since the first credit union was founded in the United States.

In these days of trying times for credit unions, where interest margins are being squeezed, technology is progressing at dizzying speeds, and community charters are making competition stiffer than ever, I thought I would write a little love note to Edward Filene, Alphonse Desjardins, about why I get so fired up and passionate about this crazy movement, and why I love the people in it and those fighting to keep it fresh, relevant, and successful.

Consumers have changed dramatically over the last centuy. And credit unions need to change and keep up with the times, and with what their members expect of them today. Because broad things change slowly over time, we often miss the bigger picture.

Here’s the 30,000-foot view: The first credit union in the United States was started in November of 1908, and the majority of CUs were founded during the Great Depression, despite the banking industry’s best efforts to prevent them. During all of that time, life was hard for average working people, where men worked in mills for 10 hours per day, six days a week, and took home one dollar per day. Banks did not make loans to these workers. If you were very prosperous and somehow could get a bank loan, the rates would be sky-high, in some cases 25%. Banks were only interested in commercial lending, just as many still are. Regular people were simply not able, or could not afford, to get loans.

That’s the environment in which nearly all credit unions were founded. So the larger picture is that this wild and crazy idea that we could pool our money and make loans to each other, bypassing for-profit banks… well, it WORKED. The banks HAD to become more competitive in order not to lose ALL their personal business to credit unions, and they remain neck-and-neck competitive on rates with credit unions to this day.

So if credit unions did not exist, far fewer people could get loans, and those that did would have to pay far higher rates, thus slowing down our entire economy. So THANK YOU Credit Union professionals who go to work every day to make this country stronger by helping all of us help ourselves. Membership/ownership in credit unions is REAL and truly makes a difference to all of us, even if not all of our membership fully understands how special we are, and how important the work we do is to each member we serve, the community that we live in, and our entire economy.

Thank you to each of the thousands of credit union professionals across the world making a difference every day. May every credit union thrive and flourish for another 99 years.