The Death of Collaboration

By ignoring our most significant point of differentiation, we manage to do what our opponents in the banking community could not.


"Credit unions hold hands." This gem was offered as one of five points of differentiation during the first annual CU Housing RoundTable meeting last May. "Holding Hands" is another way of saying credit unions work together. And we do. Go to any credit union conference. Observe credit unions sharing best practices, swapping ideas that help serve members better. Industry veterans, those of us with ten or more years invested, know this is not a recent phenomenon – quite the contrary. Throughout our history, during chapter meetings, league annual meetings and at national association meetings – where credit unions gather, ideas are shared for the betterment of our industry. Our willingness to brainstorm with and to help one another may be our greatest strength and our most significant point of differentiation. Don't believe it? Attend a conference of some of our banking brethren (there’s as numerous as ours) you'll find they're not nearly as transparent.

If holding hands is collaboration, then hostile takeover attempts by one credit union of another is akin to throwing punches. Let's face it: CRA could hobble us, taxation would weaken us, the next version of diabolically anti-credit union legislation the bankers dream up might slow us down. Antagonism such as this brings the death of collaboration. Antagonism breeds adversity. Once we become adversarial we begin keeping our strategies to ourselves. And we're all the lesser for it.

Lest you think holding hands is overly sentimental, think again. The credit union-to-bank conversion mavens eat this stuff up. One credit union -- uninvited and unwelcome – soliciting another's members after their credit union said no to a merger? How much happier could this story possibly make them? Why are they jumping for joy? The answer is at least two-fold. First, they understand one of our strengths is our ability to rally, especially around issues that are deleterious to our industry. Why have we been successful fighting their taxation attacks for decades? Beyond the obvious reason - - we're cooperatives - - the secondary answer is we speak with one, united voice. Once divided, we become easier to conquer. The credit union-to-bank conversion process that we've made collectively more difficult also becomes easier. That makes them smile.

The other reason conversion vultures circle the hostile takeover territory is this: bankers realize when credit unions work together they are much harder to compete with. Over the past decade, we've reduced the cost of homeownership. Doubt it? Sub-prime lending, while still too expensive, was much worse ten and fifteen years ago. We also deliver a better real estate experience than bankers, mortgage bankers, and mortgage brokers. Many a credit union will close a home loan much more quickly than our competition. Our costs are lower - - not because we're not taxed, but because we're more efficient - - our service level is higher, our advice is better. How many credit union members, for instance, trapped members into those highly toxic hybrid mortgages so much in the news of late? Could we have made these improvements on our own, one credit union at a time? Not likely. That's what the bankers are counting on. This time we're playing right into their hands.

Holding hands isn't sentimental, it's good credit union business. And, while holding hands, we can't throw punches.



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April 9, 2007


  • For an article about not throwing punches, the author certainly did not hold any punches back. Good job!
  • "I wanna hold your hand"
  • Heady idealism coming from the large who are devouring the small, but don''t believe that it is true just because you read it on the Web. In twenty years working in small credit unions I have watched as credit unions got bigger and their numbers got fewer. There were 14,000 more when I started my career. Where did they go? Large credit unions did to them and for them what banks could never do, you closed them! And it still continues at the pace of 300 plus per year. So if you believe large credit unions still care about the issues of collaboration and taxation you are obviously not talking to small credit unions about these issues. In ten years when large credit unions have gobbled up the rest of the smalls you will have taxation and the pretense of collaboration will be your thanks for it. Then credit unions will be nothing more than a memory, just another bank.
  • CU industry vendors should have the right to express a point of view on topical issues, even though they run the risk of alienating potential clients. A CUSO also runs the risk of being perceived as representing its owners’ point of view as well. Most vendors pragmatically keep their heads down on controversial issues. Many CU executives want to keep the conversion option just in case, even though they much prefer to remain a credit union. I doubt they appreciate being called conversion vultures. There are also many CU CEOs who applaud what Wings Financial is doing and can’t wait to do it too. The author may not realize it, but his essay is exacerbating the growing battle within the industry between the purists and the pragmatists. The purists and those who profit from them have been in control for decades. The pragmatists will be the ultimate survivors because they recognize and respond to market forces. The purists are forcing everyone to pick a side rather than respect diverse points of view. When the CU purists cry loudly for “unity” and “cooperative values” it usually means that their business case is weak. Perhaps the purists should be holding hands with the pragmatists.
    Marvin Umholtz
  • Excellent ... points well taken. Hopefully, Wings has provided a wake-up call to many of us.
  • Wonderful article, we have to start working together and not worry about whose territory we want to take over!