Recapture the Passion

An evangelical fervor drove the CU pioneers—a fervor many lack today.

April 16, 2012

Are credit unions indispensable? That was the provocative question asked of participants at CUNA’s National Credit Union Roundtable meeting last May.

And despite the exceptional service credit unions provide to members and the important role they play in enabling social and economic mobility, the candid answer is no. Credit unions are relevant, good—even great—but not indispensable.

They’re uniquely beneficial to consumers, important, and critical in their role in the financial services marketplace. But they’re not indispensable.

Then again, few things are. But roundtable credit unions and the movement’s leadership understand the importance of credit unions being more essential to American society.

They realize it’s important to move beyond relevancy toward developing a 21st century vision and road map for credit unions that ensures their future and increases their value to society as a whole.

That’s a worthy task but not an easy one, for many reasons, including:

  • The exponential impact of technology on financial services, combined with the movement’s relatively small size and its limited resources, is a major competitive issue for credit unions. It can be overcome, but it underscores how essential ongoing collaboration and cooperation are among credit unions. Pooling the movement’s resources for the benefit of the whole is, and always will be, crucial to credit union success.
  • Momentous economic, financial, and social trends are affecting the financial security of many American households. For credit unions to determine their long-term role as financial cooperatives, and to successfully fulfill that role, they must understand just how substantial these trends are, how they interrelate, and how they affect consumer households.

A couple of important and forward-thinking initiatives are underway to help credit unions sort through these issues. One is a project that roundtable credit unions are sponsoring with Silicon Valley’s Singularity University.

It’s an immersion process planned for a 10-week period this summer and fall. A Singularity cohort of thought leaders will be assigned to focus on the future of consumer finance and the role credit unions will need to play. The Filene Research Institute has agreed to oversee the project.

A second project, spearheaded by CUNA President/CEO Bill Cheney, includes a geographically dispersed series of focus groups to help craft a 21st century vision for the movement.

Regardless of their importance, however, technology and innovation alone won’t make credit unions indispensable. And vision without action is a daydream, according to a purported Japanese proverb. Vision is meaningless unless it’s grounded in the core values of a business. That was the lesson of the Jim Collins and Jerry Porris book, “Built to Last,” and the foundation of the authors’ subsequent books.

I recall a debate a few years back among credit unionists over the word “movement” and whether it should be replaced by “industry.” I’m glad “movement” won the day, because it implies a value that “industry” does not.

A movement is about ongoing action and progress on behalf of economic and social good. Think of the civil rights, tea party, and “Occupy Wall Street” movements.

Credit union core values are rooted in their past. The seed that became the U.S. credit union movement was planted in 1908—when a Catholic priest in New Hampshire called upon a social reformer in Quebec to help found the first credit union in the United States to serve struggling mill workers.

Then in 1921 Edward Filene hired a lawyer named Roy Bergengren to head the National Credit Union Extension Bureau in Boston. Bergengren called the credit union movement a crusade and a fight for economic democracy.

Before there was a CUNA there was The Bridge—the forerunner of Credit Union Magazine—created by Bergengren to spread the word. Its masthead depicted a road named “Credit Union Way” leading over a bridge to the “land of opportunity.”

An evangelical fervor drove the credit union pioneers—a fervor many lack today. In the words of Bergengren, credit unions were emblematic of “the brotherhood of man.”

Granted, you can dwell too long in the past and fail to grasp the implications of transformative change. But fast forward to 2012 to see that the vision that propelled the first credit unions is as relevant as ever, given the challenges our society faces.

You can feel it in early mottos, such as “not for profit, not for charity, but for service,” and in more contemporary brand slogans, such as “America’s credit unions: where people are worth more than money.”

Recent events like the social media-driven “Bank Transfer Day” and its Huffington Post predecessor, “Move Your Money,” were successful because of public outrage over the business practices of large banks and Wall Street. That’s why several hundred thousand banking consumers moved their money to credit unions last fall.

Credit unions’ reputation for putting their members before profit has earned them a phenomenal amount of goodwill. While credit unions, alone, can’t reverse the

Transformative Trends Affecting U.S. Households

We live in an age of massive transformation, bringing dramatic changes to the nation’s consumers. Consider the most obvious ones:

  • A three-decade-long stagnation of wages paid to middle-class workers—particularly workers with only a high-school diploma or less—making it increasingly difficult to obtain and sustain a once-prevalent middle-class lifestyle.
  • An economy that has shifted from good-paying manufacturing jobs to lower-paying service or part-time work, and one that currently is unprepared to fill the growing gap between the well-paying jobs of the future and the educated work force that will be needed to fill them.
  • A growing disparity in household wealth not only between the richest 1% and everyone else, but between relatively or modestly affluent households and the rest of America. This type of disparity hasn’t been seen since the 1920s and the gilded age of the 19th century. While the left and right spiritedly debate the relevance of these trends, serious questions remain regarding the upward social and economic mobility of future generations.
  • A loss of retirement security as traditional pensions have been replaced by inadequately self-funded programs, such as 401(k)s and IRAs, while the nation simultaneously argues over the sustainability of entitlement programs such as Social Security and Medicare.
  • The always-persistent threat that credit unions’ unique status as tax-exempt financial cooperatives could be revoked as a misguided and minor part of a solution to fix the nation’s deficit and debt problems.

There are others, but the key point is that the trends mentioned here aren’t transitory but transformative. Credit unions must address them to meet their members’ long-term needs.

disturbing economic trends affecting American consumers and households, they have a role to play and would be remiss if they failed to drive a marketing truck through the antibank opening that currently exists.

Thinking that becoming indispensable is primarily a branding and marketing challenge, however, is equally remiss—as is faith that technology and innovation will do the trick. They all matter of course and, in fact, are high priorities if the credit union movement is to prosper for another 100 years.

Bergengren closed his autobiography “Crusade” with a quote from a short story that moved him: “The world goes on and the dream persists, not because of blind faith and young enthusiasm, but because there are those…who’ve known the pain of heartbreak (and to whom) the dream is more important than the pain—those who have faith despite the illusion. What other meaning does history have except continuity of some kind, the persistence of this dream of mankind?”

Capture that depth of passion again for the credit union idea and what it can mean for the aspirations of man and woman, and we might achieve that elusive goal of indispensability.

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