Tough Love Following A Harsh Year

Five ways to turn fiction into fact for the credit union movement in 2021.

2020 was a remarkably challenging year for members, business owners, and entire communities across the globe. 2021 is not starting much better. As credit union leadership teams and boards consider the economic forecast and brace for a protracted recovery, it would benefit them to take a long, hard look at their place among those they serve.

Many industry leaders hold certain truths to be self-evident. I want to turn those truths on their heads but also offer advice on how to reach these aspirations in the year ahead.

No. 1: You’re Not Unique

Almost every executive I speak with says of their credit union, We’re unique because we [put members first care more return value participate in our community serve a particular employee group].

You get the point.

But after more than 35 years serving the movement, Callahan & Associates can show nearly any credit union five to 10 peer institutions that are similar in charter, size, and operating philosophy.

If you’re disappointed to read this don’t be. There is strength in numbers, and your peers likely are navigating similar environments, tackling similar challenges, and welcoming similar opportunities. Their performance, however, might or might not be similar. And from that, you can learn.

The best way to win in today’s landscape is to drop that unicorn mindset and start looking for your doppelgangers. Critically examine your own financials through the context of peer performance to validate historical decisions or tweak future ones. Equipped with insight gleaned from your peers, you’ll have the confidence to become truly exceptional.

No. 2: Your Income Statement Doesn’t Care About The Coronavirus

The three to five years before 2020 were generally pleasing and prosperous, economically speaking, and the income statement reflected this.

But then COVID-19 hit, and consumer loan demand along with the benchmark rate shrank in rapid succession. A national lockdown and shuttered businesses forced many credit union members to stop swiping their debit cards while a federal aid package helped members avoid overdrawing their accounts. Unfortunately, the fiscal restraint torpedoed interchange income as well as non-sufficient funds and overdraft fees to the order of 25%-40% for most credit unions.

I often talk with leaders who blame the novel coronavirus for poor performance, but the income statement doesn’t care that a global pandemic blindsided us all. It doesn’t care about the election, Congressional (in)action, social unrest, and member anxiety. It doesn’t care that your credit union had to purchase personal protective equipment for half of your staff and work-from-home hardware for the other half.

The simple reality is: The income statement is a cold, relentless taskmaster that isn’t impressed by past performance. Frankly, it might use that prior success against you in the next board meeting.

Fortunately, the success of a credit union isn’t defined solely by its financials. As a member-owned cooperative, you have the power and arguably, the responsibility to look beyond the bottom line when defining success. Consider the ways you’ve created value for staffers, members, businesses, and communities across 2020. I bet you’ll find plenty of stories worth sharing. In doing so, you’ll shed a much-needed optimistic glint on an overwhelmingly negative year.

No. 3: Your Members Don’t Love You As Much As You Think

Callahan spends a lot of time in front of executive teams and boards, helping them cast a vision for the future of the credit union. In the course of our work, we often pose a provocative thought exercise that goes something like this: If you didn’t exist, would your members re-create you?

Now, you might be tempted to point to your Net Promoter Score or products-per-member count while mulling over this question, but those metrics can lull leaders into a false sense of security that members proudly wave the banner of their cooperative financial institution when, really, they just think it’s a better option right now than the bank across the street or down the block.

Great credit unions listen to their members needs and demonstrate an eagerness to respond. Consider BECU, now the nation’s fourth-largest credit union. It formed right after the Great Depression when 18 employees each chipped in 50 cents for a total of $9 and made a $2.50 loan to a fellow employee who needed to buy tools.

That was in 1935. What better time than on the heels of a year like 2020 to meaningfully show why members need you and would rally together to build an institution like you if they didn’t have you.

No. 4: The Banks Are Winning

At every point on the spectrum from national to regional and down to community banks have adopted messaging ripped straight from the ethos of the credit union movement. They’re touting their commitment to social and environmental values, personal service, and disenfranchised communities.

They’re connecting the dots between brand promise and retail delivery. They’re telling your story and getting better mileage from it.

What’s more, they’re deploying capital to improve digital access, they’re taking chances with fintech and payment innovation, and they’re leveraging customer data for better experiences.

The banks are bigger, and they’re making a good case for why they’re better and their customer satisfaction ratings are soaring as a result.

The playing field has perhaps never been so level, but for everything COVID-19 has taken away, it has also given credit unions the opportunity to promote the value they provide members and communities. During the pandemic, credit unions have acted as financial first responders. Case in point: More than 800 credit unions across all 50 states supported small businesses via more than 170,000 Paycheck Protection Program loans, and Callahan’s analysis indicates these loans saved more than 1.1 million jobs.

No one planned for the pandemic, but credit unions have navigated it while doing what they’ve always done even better than they’ve always done it. Now it’s time your members know it.

No. 5: You CAN Do Something About It

Words have power, and the words you use to describe your circumstances will either drive progress or excuse mediocrity.

American entrepreneur, author, and motivational speaker Jim Rohn said, If you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse.

As you prepare to lead your staff and members through 2021, ask yourself: Will I find a way or an excuse?

January 11, 2021

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