Size Doesn’t Matter When it Comes to Credit Unions


By Jill Nowacki, President/CEO, Credit Union League of Connecticut

Countless credit unions are out there with some variation of the same goal: Reach the next asset level in order to succeed. Whether it’s achieving economies of scale, keeping up with regulatory burden, or attracting top talent, there is a clear belief that bigger is better. In the meantime, some fear that as a small number of credit unions keep getting bigger, the future of a not-for-profit, tax-exempt, financial cooperative system is in jeopardy. Whenever talk turns to the tax exemption, there are arguments—from bankers, from Members of Congress, even from credit union executives—that the size of some credit unions might create a target for taxation. It’s an argument that I am comfortable standing up against in any audience. There is no restriction on how big a credit union may grow as it works to improve the lives of its members.

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Here’s the reality: Anyone who thinks size matters is just plain wrong. There is no magic number that guarantees success (or an asset threshold under which all are doomed), nor is there a size that suddenly deems a credit union “bank-like.” Our industry has developed an obsession with size that can lead to blind pursuit of growth simply for the sake of growth.      

This concept of “Curing the Addiction to Growth” was explored in the January-February 2017 issue of Harvard Business Review as it relates to the retail industry. While not perfectly applicable to credit unions, there were certainly some lessons to learn, particularly related to strategies that help organizations move successfully from an aggressive growth-mode to maturity. Many of these same strategies could be adopted by small- to mid-sized credit unions (by any relative definition) to ensure long-term sustainability. Value is added by focusing on pursuing the right (rather than all) real estate opportunities, using analytics to gain efficiencies and improve user experience, developing better and more affordable products, staffing with the right people and training them well, maximizing multiple delivery channels, and creating policies designed with the user in mind. The user does not benefit from an organization chasing growth in pursuit of some arbitrary target metric.

A credit union’s mission is to serve its members: It is woven into the structure of each financial cooperative by charter. In some cases, the members are many, spread out in locations around the world. Others form their cooperative with smaller, tight-knit groups who deeply understand the financial needs of the other members of the co-op. The size is irrelevant; the reason for being makes a difference. When members’ needs remain core to the business strategy, there is no reason to debate large vs. small. The credit union that adds actual value to its members is the one that will be strong, sustain, and keep the industry intact.