Don’t Be a Boiling Frog

When trends show that markets are changing, does your CU adjust?

November 1, 2011

Most of us are familiar with the “boiling frog” anecdote. It metaphorically illustrates the danger of not recognizing the aggregate impact of incremental change until it’s too late to do anything about it.

While there’s scientific doubt about whether a frog immersed in cold water actually will stay put as the water gradually heats up, the boiling frog metaphor for inaction or ignorance is spot on.

How many of us in the credit union movement are boiling frogs? Back in 1994, CUNA, CUNA Mutual Group, the National Cooperative Bank, and the National Cooperative Business Association commissioned a survey by Gallup on the public perception of cooperatives, including credit unions. At the time, Gallup showed that 36% of American adults belonged to credit unions.

That’s just about the same percentage as today. Of course, because our population has grown, that 36% translates into millions more consumers who are now credit union members. And we’ve also increased our share of members who now consider credit unions to be their primary financial institutions.

But as a percentage of general market share, credit unions haven’t seen much growth. In fact, during the past decade, credit union membership growth has been far slower than during previous decades. In the 2000s, so far, it has measured 1.5% annually, compared with almost 4% annually in the ’80s and 2.5% in the ’90s, according to data from CUNA’s economists and the CUNA 2011-2012 National Member Survey and Survey of Potential Members.

One statistic underscores this concern: When asked recently if they were eligible for credit union membership, 45% of surveyed adults weren’t sure. We’ve made some progress: In 1994, 44% of consumers said definitively that they weren’t eligible, even though most were.

This isn’t anything to write home about, considering the emphasis credit unions supposedly place on marketing programs, the growth of community charters, and the vast number of small employee groups now part of the credit union family.

The facts are even more concerning when applied to consumers ages 18 to 24—crucial future borrowers. Fully 79% of these young adults aren’t sure if they’re eligible to become credit union members. How do we move that number in the right direction?

When we did the Gallup survey nearly two decades ago, about 30% of members said they joined credit unions primarily because services were available through their work. Another 16% cited the work relationship between payroll deduction and direct deposit as reasons for joining.

But young adults today have easy access to financial services remotely and through innovative technologies that have revolutionized delivery channels. They have little patience for time-consuming processes when they can get what they want with the click of a button.

Have you ever watched someone take a picture of a check with a smartphone and then remotely deposit it into their account? This is not your father’s credit union—to steal from the old Oldsmobile campaign (a brand, by the way, that no longer exists).

When I think about boiling frogs, I think of:

  • The importance of attracting more young people and ethnic communities to credit unions. Want a glimpse of your future members and potential members? Walk down to the nearest elementary school. Soak in the ethnic diversity.
  • The phenomenal rise of check cashers and payday lenders in the ’90s, right under our noses. Now there are reality television shows celebrating pawnshops, and the Pawn America brand is as slick as Best Buy.
  • The critical need to create jobs in America, and the importance of an education while we’re simultaneous¬ly cutting school budgets. These workers and students are our future members, too.

Pay attention to the trends and consider how they affect your credit union. Don’t assume that these things don’t affect you or that you can put off dealing with them until tomorrow.

Don’t be a boiling frog.

MARK CONDON is CUNA’s senior vice president, business and consumer publishing. Contact him at 608-231-4078.