Hope the above series of three graphics comes across on your screen in a logical fashion so you can see the transition (">>>") which is underway as LGFCU moves toward "Independence Day" in June, 2025. "LGFCU" has disappeared and "CIVIC" has arrived.
Wandered onto the CIVIC playing field over the last few posts while looking at the issue of SECU introducing business/commercial services. This was one of the six original questions in the 2022 member-approved Annual Meeting resolution - as yet unanswered by the SECU Board. LGFCU was of course also one of the questions - the specious "no formal proposal proposal" SECU Board chair response. That question , however as you see, has been taken care of by the folks at LGFCU!
First, a quick story. Offering business/commercial services is a question of long-standing at SECU. Prior SECU boards have thoroughly reviewed the pros/cons and chosen not to proceed. Around 2014 the leadership at LGFCU had a unique idea about helping N.C. fire departments with fire truck loans and launched this commercial lending service. LGFCU also proceeded to acquire business/commercial software and to proceed with the formation of CIVIC, which would be a separate credit union focused on business service. With an open membership, CIVIC could serve a broad ranged membership - ready for this!! - including those who were SECU members and wanted a business account. Will leave you to contemplate all that.
But, as they say, that's not what we're here to talk about. We're here to consider the problems which arise when you combine a consumer-purposed credit union with business-oriented banking. Please note that the basic "logo" for CIVIC above no longer indicates it is a credit union, the ">>>" transition banner confirms the move away from "FCU" ("federal credit union") and the "Go to" banners now feature banking. Are pictures worth a thousand words?
What really struck me about all this arose in comparing member loan rates at CIVIC vs. SECU [see 1/29 post here]. What was more important, and perhaps bests defines the problem of combining a consumer-focused credit union with business/commercial services, was a look at CIVIC's own internal savings and loan rates:
✅ CIVIC induvidual member money market savings rate: 2.01%
✅ The money market savings rate for business: 2.76%
And from the NCUA data in the 1/29 post [see 1/29 post here] commercial loans were receiving the superior rates @ 3.25% (don't rely on this as current practice - check 2025 rates for yourself!).
😎 Should business/commercial interests be favored in this fashion over individual members if SECU ventures forth? Why would that be? Do you see the potential problem?
Well, at least CIVIC has been frank in telling its members "where to go"...
I think the money brokers of the world would like all financial networks under one umbrella for their control.
ReplyDeleteUnicorns will be unlawful ...
Good post and really good question. One school of thought is competitive market should be one of the inputs into pricing. So, if you choose to serve businesses, but then don't offer competitive pricing, what's the point? They could offer 2.01 to businesses, or 2.76 to consumers, and conceivably parity is a legit goal, but a tradeoff would be that you're under or over the market on one side or the other. Civic consumers are likely far more concerned that they are getting a fair rate to what they can get in the market (e.g. SECU at 2%), not comparing to what business deposits are. This is not a common tension within credit unions that offer both. Either way, it's not necessarily a situation where one takes from the other. Unlikely that the consumer rate would be higher than 2.01 if they weren't offering 2.76% on business. The pricing is always a choice.. SECU is a great example. Not in business, but made poor choice to pay uncompetitive consumer rates.
ReplyDelete12:16pm The comment is a logical whirligig when taken as a whole!
DeleteBut the: " So, if you choose to serve businesses, but then don't offer competitive pricing, what's the point? "... is spot on and is a truism for every business, especially if you add in quality product/quality service. No business is only about "pricing".
The conclusion of that thought though would be if SECU offered business/commercial services today it would have to pay 2.76% on its monet market account to "be competitive, right? If not, "what's the point" in offering a non-competitive product???
As an existing SECU member, I would strongly object to the practice of favoring a very small minority of business accounts a substantial premium (2.76%) over the 2.8 million existing members, wouldn't you?
Should we let the SE?CU membership vote on it?
12:16pm "Unlikely that the consumer rate would be higher than 2.01%..." Pure you know what.
DeleteA simple failure in understanding.of what a credit union is and what it is about.
You miss the point that a CU is not charged with paying no more than anyone else... that's a banker's mentality - "to pay no more than necessary". (The goal shouldn't be mediocrity or 'industry standard" if you prefer!)
In this example, 2.01% vs. 2.76%, it would appear that business "members" are more important than individual members . (Didn't George Orwell write a little book about this?)
Think this will be good for SECU?
This is something everyone should agree with. A credit Union created for individual members should not pay those members less than what it pays businesses. Seems like common sense at the core
Deleteeveryone should agree? so a coupla people declare what 2.7+ million members should think. is that how it works? so if business deposit rates were lower than consumer, would it be ok then?
DeleteI think deposit rates should be the same and lending rates would depend on the risk based on the collateral, ltv, length, credit, and if it is fixed or adjusted rate.
ReplyDeleteIsn’t there risk with deposits that impact pricing? Such as early withdrawal risk, rollover risk, run risk, concentration risk, etc.
DeleteSECU was established to serve people, specifically state employees, teachers, and the their families. No businesses. There are plenty of banks AND credit unions serving businesses in this state. SECU has been the only financial institutions who has maintained focus until recently on the person. Wildly successful, sound and never advertised! Now enumerate the reasons it’s going to be good for NC and the current members to compete with every bank in the state in a field in which SECU has zero expertise. Also, is the board going to limit it to NC? Those are our assets by the way!
ReplyDeleteSECU adds value with better rates and lower fees on the consumer, how is it not a logical and extension and expectation of existing business owning members to want to get the same value from the coop they are owners of?
ReplyDelete8:38am For the same reason that Chick Fil-A doesn't sell hamburgers. Apologize, thought that was a real-world comparison most readers would understand. It's the 1/14 post.
Delete"Now enumerate the reasons it’s going to be good for NC and the current members to compete with every bank in the state in a field in which SECU has zero expertise"
ReplyDelete8:45am Sorry can't make any case for such a move. Would seem to be yet another unforced error ... building on a clear, recent record of disarray..
DeleteSo your post says prior board have looked at this. Are those the same boards the agreed with your case not to provide a mobile app for members because they didn't think there would be adoption?
Delete9:12am Pure fiction. The mobile app was introduced before the new/new arrived. Check SECU's news releases to confirm! Sorry that the facts are confusing.
DeleteSeems to be doing real well running on that "1983 technology, too!
Skirting around the facts there. In 2014 I was told directly by two SECU leaders, in my Sr. FSO interviews, that there was absolutely no need for a mobile app then or on the future. And then I received an additional follow up from the other SECU exec in the form or a phone call, in which she further chastised me that the mobile version of our website WAS the same as a mobile app and basically I didn’t know what I was talking about.
Delete10:28pm I am sure what "you heard" 10 years ago was true, but here's a little more information.
DeleteEven in 2014 as you acknowledge, SECU services were already available on every member's mobile device (kinda shoots a hole in the great "1983 technology lie" too doesn't it!)
Member mobile access was website-based and not as easy to navigate compared to a mobile app. There was wide support across the CU for a mobile app and absolutely no opposition. That's right no opposition at all. That part of what you heard was wrong.
What occurred was a choice made by the then CEO ( happen to know him personally) to direct IT resources first toward implementing a highly complex, difficult, expensive, time consuming effort to reconfigure SECU's structure toward greater redundancy and security - multiple data centers, multiple electric/telcom grids, diverse geographic areas, enhanced monitoring/cyber security. It was an intensive, multi-year task.
The enhancement of the existing member mobile access with a new mobile app was put on the back burner - although teams started the review, analysis and planning.
Might have been the wrong decision by that CEO, but hope this correct information gives a clearer picture of what actually happened. It was a "timing issue" on priorities, not an either/or on a mobile app. Plenty of people can confirm it.
Would leave you with one thought. As far as I know SECU has yet to have had a major IT service failure or cyber-hack as many other institutions of all types have experienced.
At that time SECU chose safer over "slicker" when it comes to IT, wouldn't you?
If SECU ever chooses otherwise, the repercussions of a service/security failure will be endless.
BTW 10:28pm couldn't accept that answer and of course wouldn't answer the question... too slick to get trapped into a decision.
Delete10:28pm In case you missed it: https://www.bbc.com/news/articles/cd9qzg92g72o
DeleteAnd no. Absolutely the members should not vote on it. If tax services were put up for a vote, I wonder how the 2.6 million that didn't use the service and but had longer wait times would have voted? Members do get to vote. They get to vote for directors that have a duty to look at after the best interest of the membership, which as much as people would like, isn't an exercise in consensus.
ReplyDelete9:00 am Thanks for making clear your democratic ideas.
DeleteAlways easy to spot a bargain basement AI system at work.
Delete9:02.. You're welcome. One member, one vote. Doesn't get a lot more democratic than that. What's the saying? Elections have consequences? Members made clear their democratic ideas in the last election. Thank them too. Thank you for making clear your ideas on how governance should work for a large-highly-regulated financial institution. Let the owners vote on every decision, and then you can eliminate the Board altogether. Good idea.
Delete9:10am That SECU is a "large-highly-regulated financial institution" does not mean it is no longer a democratically owned cooperative.
DeleteThe "regulators made me do it" excuse is always a sign of weak management. Hate to defend the regulators, but it is also a slander against them - they only try to step in when boards and management are failing.
As to elections, the good news is they are held every year! Always another chance! An optimist might say at SECU - 2023 Grand slam! - 2024 Strike out! - 2025 m-m-m-m!
more predictable theater— boards masquerading as the 'members' servants while performing for their real benefactors...
Delete9:48am The value of the 2023 election was who we got off as much as who got on.
DeleteAdd to positive scorecard a ridiculous CEO sent packing.
sunlight IS the best disinfectant….
ReplyDelete