Wolves Need Not Apply

Despite new challenges to their business models, credit unions are choosing to be progressive rather than predatory.

Martin Scorsese’s raunchy, based-on-real-events blockbuster The Wolf Of Wall Street has drawn ire from some critics, who see it as a sort of leering totem or at the very least, a painful reminder of exactly the kind of loose, self-serving corporate ethics that dealt a near knockout blow to the national economy.

The financial transgressions depicted in the film, and many other real-life occurrences like them, have indeed triggered a lasting feeling of mistrust in the American psyche. Today, consumers are wary of wolves not just at the headquarters of rogue Wall Street firms, international megabanks, and the ever-present payday lender, but even at their community financial institution down the street.

It’s no secret that credit unions did not cause the financial crisis. In fact, our Annual Report now in its fifth year anniversary is an ongoing testament to the kinds of proactive, selfless actions cooperatives took to support their membership throughout the recession as well as the investments they continue to make moving forward.

Credit unions are no doubt considered the sheep in this scenario, as evidenced by the consumers who continue to flock to their ranks. However, this industry is also in the throes of momentous change, and a proactive vision to ensure that distinction remains clear is more important now than ever before.

Individual brands may struggle to hold fast to traditional values and practices, while at the same time absorbing new challenges, engaging with new leadership, and otherwise seeking to avoid stagnation. Example of these concerns were frequently captured on a region-by-region basis as part of our 2014 Economic Outlook, a credit union alterative to the Federal Reserve’s Beige Book.

In fact, two of the biggest desires expressed in our 2014 CU Resolutions which captured credit union leaders’ plans for the industry in the years ahead were for cooperatives to act less like big banks, while simultaneously competing more effectively with these institutions. Yet these accomplishments are much easier said than done.

Our Anatomy of Hope Credit Union shows how one Mississippi institution successfully manages this modern balancing act every day, working in an intensely local fashion while also recognizing that it must achieve massive growth as an organization in order to achieve any type of lasting impact.

In an exhaustive effort to serve those others deem too risky or simply not profitable enough, Hope has created a new business blueprint that fully maximizes reciprocal partnerships, makes extensive use of grants and government credits, and even engages directly with local and federal policy makers to address shared issues on a broader scale all without straying from the safety net of its original mission and fundamental cooperative values.

Earnings are another key area of focus for the year ahead, as increasing these funds will allow credit unions to invest in the next generation of financial service and technology for their members. Yet cooperatives are still very much in the lab at this point, seeking safer, more mutually beneficial ways to boost their income in a changing environment.

Our Ideas In Action section was designed to take an honest and realistic look at some of the more progressive of these experiments, including the use of new pricing strategies, advanced hard-dollar reporting for marketing campaigns, and even the seemingly controversial move of charging membership dues.

Making the right investment choices with these earnings will also be critical to staying in members’ good graces long-term. In our Technology@CUsection we provide best practices from early adopters of the soon-to-be universally applied Europay-MasterCard-Visa (EMV) chip card technology, as well as highlight other opportunities to ramp up payment securitythrough options such as mobile wallets.

By addressing these shared issues together, credit unions can lessen financial barriers to adoption and create a more uniform, enjoyable user experience than their more proprietary counterparts.

Lastly, our Diversions section reinforces the ultimate anti-wolf sentiment i.e., the more you give back, the more you get. Here, we take a look at how offering freebies can be an affordable wayto not just create a happier membership, but a more engaged one as well.

At the end of the day, credit unions won’t win out by virtue of all the bad things they haven’t done, but rather all the good things they have.

By working together to creating a true, lasting alterative to the greed formula, credit unions can ensure that no one need be thrown to the wolves ever again.

April 15, 2014

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