By Sarah Snell Cooke, Principal, Cooke Consulting Solutions
“Small credit unions can’t let others define them by their size. Serve your members. Collaborate to thrive. The return your credit union provides to your members is all that matters,” Credit Union League of Connecticut President/CEO Jill Nowacki told attendees of the Underground Collision conference hosted by Mitchell, Stankovic & Associates. She cited an article from the Harvard Business Review condemning company’s addiction to growth. “Growth for growth’s sake compromises earnings,” Nowacki said.
Size truly doesn’t matter when it comes to service, California/Nevada Credit Union League President/CEO Diana Dykstra said. She highlighted the third largest credit union in California has the highest return to members. “Size doesn’t matter! Return to members does. Small and huge credit unions alike can do that,” she concluded.
Tyler Valentine completely understands as the CEO of $46 million Laramie Plains Community FCU. He said small credit unions have a real inferiority complex, but many advantages exist working at a small credit union. “You see the immediate return of your work and own the success of your work.” Valentine pointed out, which can be an important recruiting tool for millennials. He added, “We have to do a better job communicating that we have values that align with the millennial generation, it’s amazing the response.”
“We focus too much on what the big boys are doing and try to do the same thing but don’t have the resources to do it as well,” Valentine observed. Step back and align with the value you provide to your membership.
Collaborate with the big credit union around the corner, Dykstra recommended. Don’t be afraid. “It’s funny how credit union don’t jump up and down when a bank opens a branch but if a credit union opens a branch, you’re jumping up and down,” she quipped. Dykstra chastised that as soon as you start acting like a victim of the large credit unions, you’ve lost.
Nowacki recalled, for example, when she was at MAPS Credit Union, it created a reciprocal relationship with a local credit union to help alleviate pressure on their net worth. MAPS planned to hold the deposits of the other credit union, but the other credit union would continue servicing its member deposit accounts. The credit union ended turning around without having to implement the program, but that sort of little hand up is sometimes all a credit union in trouble needs. Nowacki advised using your data to truly understand your members, and create a member-centric experience. And retain the right talent.
Valentine agreed, “Our goal is not to manage to a CAMEL 1; it’s the serve the members.”
But sometimes a merger is right for a credit union if it really creates member value, too, Valentine acknowledged.
Consolidation is a natural progression of any industry, Dykstra said, but credit unions are not a shrinking industry. They’ve consolidated similarly to the banks, she pointed out.
And every time credit unions want to try something new or growing too large, some start whining about being taxed. “If we start offering checking accounts, we’ll get taxed. Bullshit! If we start offering business loans, we’ll get taxed. Bullshit! If we get too large we’ll get taxed. Bullshit!” Dykstra exclaimed in frustration.
The truth is, she continued, is we’re too slow and too careful. Our boards are getting old, and they’re not focused on the people we’re not getting. “Failure is when you take no risk. You risk more, you fail faster, but you succeed,” said Dykstra, who has several patents to her name.
A board chair in the room agreed with Dykstra. “We have to revolutionize our board rooms and make sure they’re relevant to the members we want. If we want to breathe some life into our credit unions, we have to breathe life into our board rooms.”