Credit Unions: What's the Best Measure Of Success?

    

                   Vintage opinion... from Bill Brooks

It was a pleasant surprise to be asked to ruminate on changes in credit unions based on my long experience with them.  Hopefully, this does not come across as a rant concerning some glorified remembrance of an old codger longing for the good old days.  

My first experience with credit unions dates back to 1969 when I joined the Safeway Federal Credit Union.  I was just about to graduate from high school and had a job as a clerk in their grocery store.  I used it as a savings account because I had little need for borrowing.  You could actually pay your college tuition and live pretty good on a party time income! 

The savings accounts were not federally insured at that time.  NCUA would not come into existence for another year.  To get a withdrawal, you had to drive to the other side of Washington, DC and sit in a lobby for about a half an hour to get a check so you could go to the bank to deposit it.  The world was very much different then. The old days were just old days.  You did what you did because that is how it was. 

I would say it is pretty amazing what credit unions can do today compared to 1969.  I can sit almost 130 miles away from the credit union I last led and move money around, get loans, and many other services while sitting in my easy chair.  My grandchildren will probably never know what a branch is.  They will never think of dealing with germ infested cash.  They will dine on a smorgasbord of choice when it comes to choices of services and providers.  

I do have some major concerns. Credit unions were chartered to be democratic cooperatives designed to make more available for people of modest means.  Here lies the question!  Are we achieving our mission?

The real answer about the success of a credit union should be based on a simple yardstick -  are we truly making more available for people of moderate means?  

If you are competing and evaluating success based on granting of A and B credits while giving lip service to those of modest means, then modern mega credit unions are a modest success.

Ever wonder why almost 50% of Americans do not use traditional financial services or choose to have a relationship with a high-risk lender?  It starts with pricing and not focusing on people of modest means!  Except for a few, most modern credit unions are failures if measured by the right yardstick. It is amazing how we have an app for pretty much everything but reaching out to people of modest means.

My anecdotal observations of the state of credit unions are based on years of working and volunteering at all levels.  I personally believe that larger is more impersonal. Truly, it is so much easier to deny a loan with an impersonal, electronically generated notice, than to look the member in the eye and tell them no.  I stretched every mitigating reason I could to approve a loan and avoid that conversation.  Rejection took more out of me than taking the risk.  I never made charity loans, but high-risk loans were made.  

The first credit union I led was in a plant.  You saw the members and they saw you on any given day.  My last credit union was much larger.  I did not see the members and they never saw me.  So my hands are not necessarily clean!

But, it is all about that yardstick.  If credit unions are focused on A and B paper, why be a credit union? 

 

Gold standard or industry standard?