Market Trends

Immerse Staff in CU Philosophy

When there’s no longer a 'CU difference,' there will be no more CUs.

December 1, 2011

The current environment looks promising for credit unions. While they suffered through the past few years’ economic woes, they fared much better than other financial services providers. Credit unions are still strong and getting stronger, for the most part.

With big banks falling out of favor with consumers, the media, the administration, and even members of Congress, many are touting credit unions as the best available alternative to banks.

Big banks’ penchant for high fees has alienated millions of consumers and business borrowers. Not to mention their apparent disregard for the role affordable credit (both consumer and business) must play to create jobs and improve our economy.

Credit unions now have tremendous opportunities to increase membership, grow depos-its and loans, and become widely recognized as real “players” in the communities and membership fields they serve.

Interestingly, credit unions’ future success lies in their roots and philosophy. The eco-nomic environment today isn’t greatly different than the period from 1935 through the 1960s, at least in terms of ordinary working men and women seeking financial services.

In those years, banks generally didn’t provide consumer credit to workers, at all, and were very reticent to provide mortgages.

Subscribe to Credit Union MagazineThese needs were filled by loan sharks, finance companies, and relatives. High unemployment often was a major factor, as well.

The emergence of credit unions provided a source of consumer credit. And mutual sav-ings banks, such as the fictional Bailey Building & Loan Association in the film classic “It’s a Wonderful Life,” provided modest mortgages for the working class.

During the ’70s, banks discovered the gold mine in consumer credit, and began offering credit cards with high rates and fees to ordinary working people. Competition among banks provided introductory offers and rewards, but the rates and fees continued to fuel huge earnings. They still do today.

Credit union philosophy dictates that character is an important factor in granting credit. As democratically controlled cooperatives, credit unions’ business model demands fair and good service to members, good returns on deposits, and lower interest rates and fees than those available at for-profit institutions.

The typical credit union takes pride in its quality of service and its commitment to help members of all socio-economic levels and ethnic origins.

It’s this philosophy and commitment that have enabled credit unions to weather the recession, gain respect and endorsement from the media and financial advisers, receive accolades from the legislative and executive branches of government, and garner surging acceptance from consumers.

Most credit union employees, managers, and volunteers are doing the right things because that’s the credit union way. But many have had very little or no exposure to the history and philosophy that brought the credit union movement of the ’30s to its current success, size, and acceptance.

There’s danger in this ignorance, because changes that look good in terms of profit might be contrary to credit unions’ philosophical fiber. In the long run, such changes could destroy credit unions’ image, value proposition, and ability to withstand tough times. Awareness of the movement’s history and philosophy, on the other hand, might avert making unwise decisions.

Here’s a wise investment: training and orientation for employees, management, and volunteers. The purpose: to acquaint them with the rich history and evolution of today’s credit unions and the philosophical beliefs that form the moral fiber of the credit union difference. Actual costs and time for training are small, and the benefits are great.

When there’s no longer a “credit union difference,” there will be no more credit unions. The difference has nothing to do with size, products, or delivery methods. It’s about core values, attitude, and service.

JOHN FRANKLIN is CUNA’s executive vice president and chief operating officer. Contact him at 608-231-4266.