A Mandate For Discovery

Credit unions are exceeding goals and breaking records quarter after quarter. In such an ideal environment, why are some still looking for the next challenge?

Terms like discovery, exploration, and innovation can mean different things to different people, with connotations both positive and negative.

For example, some people push boundaries for their own benefit, looking for an edge on the competition. Others push boundaries to find solutions for others or to contain, reduce, and eliminate the world’s ills. And a lucky few push boundaries just by chance and happen upon new and wondrous things.

These terms, however, are not synonymous with evolution, which occurs out of a need for survival and in reaction to outside events. You don’t choose to evolve; outside influences forces you to evolve. And once you adapt to an acceptable amount, that pressure subsides.

By comparison, people choose to be an explorer or innovator, which requires a willingness to take chances and play the long game; to be driven by simply discovering the answer to a single question: What If?

Maybe that’s why Albert Szent-Gy rgyi, the biochemist who was the first to isolate the Vitamin C compound, described discovery not so much as a process of expanding the corners of the map but of expanding the corners of the mind.

Discovery, he once said, is looking at the same thing as everyone else and thinking something different.

The Danger In Standing Still

It’s worth remembering that the free market is not kind to those who refuse to keep moving.

Credit unions were the original defectors from a for-profit banking world and spent their early history changing that model. But for an industry that is exceeding or rapidly approaching all-time highs in loan originations, membership, and share balances, is it possible this call to keep pushing might become muted behind the walls of comfort and status?

Credit unions must not forget the starting point of their journey or the alternative horizon they are pursuing. However, the paths by which they get there and the allies with whom they travel can and should change from time to time.

It’s a lesson the small but mighty Chrome Federal Credit Union ($131.0M, Washington, PA) has taken to heart. In just five year’s time, the credit union has transformed itself from an analog-based remnant of the long-removed steel industry it once served into what CEO Christopher George calls a technology company that provides financial services and products with a credit union charter.

A bold claim to be sure, but it’s one backed up by cutting-edge online and mobile capabilities, double-digit loan growth, and even a dedicated incubator room in Chrome’s flagship location for the area’s small businesses and startups.

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Another example is Greater Nevada Credit Union ($563.6M, Carson City, NV), which attributes more than one-third of the triple-digit business loan growth it achieved through the first half of 2015 to direct government agency referrals.

Accompanying loan guarantees of 50% to 80%, depending on the product, help shield the credit union from risk, thus preserving its primary mandate of creating and maintaining member value.

But Greater Nevada’s willingness to offer what many for-profit competitors won’t including a new, online-accessible, $25,000 or less SBA microloan has caught the attention of powerful allies who also have the best interests of these communities at heart.

In a time when adversaries are prodding the cooperative industry’s tax-free status for weaknesses, forward-thinking credit unions are searching for an airtight defense of this birthright.

One possibility exists in a closer alignment with and borrowing some best practices from the self reported Benefit Corporation movement and the third-party certified B-Corporation program, both of which were created to help businesses develop and demonstrate the positive impact of their operations on the public.

According to one large credit union, although these standards were largely designed to serve for-profit, global businesses, with some adaptation, portions of their reporting structures can complement and enhance credit unions’ own communication strategies, increasing transparency and expanding philanthropic efforts to demonstrate more value to members and naysayers alike.

If At First You Do Succeed, Try, Try Again

The difference between a master and a beginner is that the master has failed more times than the beginner has even tried, or so goes the popular saying. Likewise, for the best in the industry, trying something new isn’t always about reaching a defined destination as much as finding the next waypoint on the never-ending path of progress.

Take, for example, BECU ($13.6B, Tukwila, WA).

Most financial institutions offer loan rate reductions only to borrowers who request one and only to borrowers who have established a history of on-time payments and responsible behavior.

But starting in 2010, BECU began flipping that model on its head by reviewing all card and line of credit accounts and automatically lowering these rates for qualifying members without them ever having to lift a finger.

Even when you do succeed in breaking new ground, you should already be looking for the next way to break it again.

In 2015, the credit union took things a step further and added qualifying auto loan holders to this re-pricing program. Nearly 300,000 members received a lower interest rate in September 2015, according to the credit union, and BECU is on track to save members close to $2.8 million this year.

The often-publicized Savings Race from Wright-Patt Credit Union ($3.1M, Beavercreek, OH) is another example. Started in 2007, this annual competition pits selected member families in a game show-style competition to see who can increase their household net worth and win a grand prize of $10,000.

The Savings Race has greatly improved the credit union’s brand recognition, says Tracy Fors, the credit union’s vice president of marketing and business development. Yet each year, Wright-Patt Credit Union reevaluates and revamps the race with a fresh and relevant focus, including 2015’s theme of the Road To Retirement.

We’re telling the story of people’s lives and how the credit union fits in, Fors says. Running out of ideas is not the challenge, but we do want to make sure the race is still resonating with our audience. We don’t want to continue it if people aren’t paying attention anymore.

If there’s a lesson to be learned from these credit unions, it’s that even when you do succeed in breaking new ground, you should already be looking for the next way to break it again.

It’s Never Too Late To Start Playing The Long Game

Nearly four decades ago, NASA boldly launched the Voyager 1 and 2 satellites. The former has just recently become the first human-made object to travel to interstellar space, the zone beyond the edge of our own galaxy.

Three decades later, a new generation of engineers launched New Horizons, an unmanned spacecraft that is currently providing us with incredible, high-resolution images of neighboring worlds we could once only imagine.

For the best in the industry, trying something new isn’t always about reaching a defined destination as much as finding the next waypoint on the never-ending path of progress.

Although some called these ideas foolish at the time and others still refuse to see their value today, these long-ago efforts just now coming to fruition are a perfect reminder of the spirit of discovery hardwired into our DNA as well as the value in starting such efforts early.

Not all of the world’s mysteries have been discovered yet, nor have all the good ideas and innovations in the cooperative industry been discovered either. But one thing is for certain.

Credit unions that are pushing today’s boundaries will spend the next the next 10, 20, or even 30 years better positioned than those who wait until new adaptations are forced upon them and new innovations become too commonplace to hold any special value.

There’s no better time than now to take smart risks and test boundaries. And if you do choose to step foot out into the wild, we hope you’ll do so armed with the right equipment and knowledge including the contents of this annual resource to ensure a long and prosperous journey.

October 28, 2015

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