Credit unions are holding their own in the competitive financial services marketplace, thanks to their sound business practices and superb consumer value proposition, CUNA Board Chairman Rod Staatz says.
But as he looks at the metaphorical scoreboard, the CEO of $3.1 billion asset SECU in Linthicum, Md., wonders why credit unions aren’t putting up bigger numbers.
“If you ask me the state of the credit union industry, I say it’s strong,” Staatz says. “We survived the Great Recession while still serving members well, and we’re still growing.
“But if we’re so good,” he continues, “why are we still at 6% of the American financial services industry? Why aren't we 20%? Why aren’t we 30%?”
Credit unions must set their sights on expanding that market share, says Staatz, who defines the movement’s measuring stick in three words: “Growing is winning.”
To achieve that end, credit unions must focus on the means, which is serving your field of membership better than your rivals--which Staatz defines as community banks, not megabanks.
“Assets are the result, not the motivator,” Staatz says. “If you can remember who your members are and you can serve them well, you can naturally achieve economies of scale that make a difference.”
According to Staatz, directors should intensify their efforts in two key areas:
1. Collaboration. Boards should ask themselves and senior management about potential partnership opportunities that would improve operational efficiency, cut costs, and deliver better member service.
For instance, SECU formed a CUSO with two other credit unions outside its geographical area—Bethpage and Belco—to combine significant portions of their operations, including mortgage origination, servicing, and collections. They also formed a joint contact center.
“We’re set up to break even financially,” Staatz says. “We want better member service at a better cost.”
The three credit unions created uniformity throughout their processes, which created an opportunity for improvement. Staatz recalls sitting through a meeting where the parties evaluated each other’s turn-down letter for a loan application and selected the best one to use jointly.
“Here’s something out of that collaboration that doesn’t get talked about: When practically every level of staff works with people from other credit unions, you breed better ideas and processes,” Staatz says. “And we truly collaborate on ideas throughout the organization. Nothing gets held back.”
Credit unions should explore business partnerships on an a la carte basis, too, to provide services that one credit union can’t afford to offer--or can’t offer at a competitive rate, Staatz says. For example, Aberdeen Credit Union clears some checks for smaller credit unions in its area.
“Larger credit unions need to work with smaller ones,” he says.
Collaboration also can occur as an exchange of ideas, notes Staatz, who meets regularly with other credit union leaders in his area to talk about competitive pressures, market opportunities, and other factors all institutions face.
“There’s more you can do with collaboration because credit unions will share practically everything,” Staatz says.
2. Advocacy. To realize credit unions’ full potential, directors must participate in system-wide advocacy efforts that hammer home consistent messaging emphasizing that credit unions are Americans’ best financial partner, Staatz says.
“If we’re going to get changes through Congress, if we’re going to get regulators to slow it down a bit, it’s CUNA, the leagues, your credit unions—it’s you,” he says.
“What do banks have, more than we do? Handouts. What do we have? People,” Staatz continues. “Our success will be due to all of us working together—credit unions, leagues, CUNA, and when necessary, members. Interdependence: We’re stronger together.”
Why is advocacy important? Staatz outlines several reasons:
The need for vigilance at all levels of government has been underscored in recent years by attempts to alter credit unions’ tax status at the state and event county level, according to Staatz.
That’s why it’s important for credit unions to encourage local officials to visit your branches and meet with senior executives, staff, and perhaps most important, members. “You need them to see real people, real voters,” he says.
Joint advocacy efforts continually make an impact on regulatory bodies, notes Staatz.
Regarding the Consumer Financial Protection Bureau, Staatz says, the agency isn't going away. “It’s not going to happen. But can we tone it down a little bit? What we are pressing for is exempting credit unions from new regulation where it make sense. Take new home mortgage disclosure. If you think putting a couple boxes on a form is going to help members, you’re wrong. CFPB’s take is, credit unions just need to pay the costs because they’re going to create a fairer playing field. Where is the happy medium somewhere?”
Staatz is more optimistic about NCUA, which is “really trying hard to do the right thing to protect the National Credit Union Share Insurance Fund and help credit unions help members. We’re really looking forward to working with them.”