✅ Credit Unions: "... were supposed to discipline the financial system by proving that finance could be organized for people instead of profit. Instead, much of the movement now behaves as though its highest goal is to become indistinguishable from the institutions it was built to reform." **
✔ "And worst of all, you have forgotten that credit unions were not built to win a market share war. They were built to change the rules of the game."
✔ "In your system, they are sold — politely, with paperwork — but sold, nonetheless. That is not cooperation. That is market logic wearing a cooperative costume."
✔ "The cooperative movement was never meant to be efficient at the cost of being just. It was meant to be just even when inefficient. Because justice is the point."
** AKA: "industry standard"
The real issue is CU leaders like this that don’t recognize or appreciate the reality of the world they are in. There is a point of view that mergers of healthy credit union is a symptom of a sick or broken system. Not so. It’s a reflection of an industry adapting to the market and trying to survive.
ReplyDeleteTrying to become a taxfree bank.
DeleteExactly the mentality that harms the industry. Many credit union leaders don’t accept reality, can’t adapt, and think they are part of a movement (or even want to be, for that matter). They come up for air just long enough to claim everyone else is becoming a bank.
DeleteNot a cu leader. "just a member". Banking ideas are rampant in the credit union leadership nationwide. Credit unions no longer see their role as serving the underserved in the financial sector. Industry standard wants to directly compete with banks, but with a taxfree advantage.
Delete8:53... what banking ideas? ideas like offering mortgages, checking accounts, investments, car loans...? The problem is the mentality of many CU leaders that they think other CU's chose to compete with banks and therefore becomes like one. We get to chose we compete against, but we don't get to chose who decides to compete with us. As an industry we offer largely the same products as banks. We complete with them whether we think we do, whether we chose to or not, and whether we like or not. True with Fintechs and non-bank competitors. They are eroding bank and CU growth in many asset classes, and they are making simple HE loans on blockchain in the fraction of the time for fraction of the cost (Figure). Just two years ago no one was even talking about tokenized deposits and stabilized coins, including whether FI's can pay yields on them. Many believe bank and CU deposits are at a grave risk. CU leaders that aren't acting on this threat today are sealing their fate. Not hard to predict the dialogue on this blog.. when SECU gets around to getting into this stuff to stay with industry standard, we'll all read all about it, in how we're losing our way, acting like a bank, and getting away from the original mission. CU leaders need to wake up. The industry is increasingly irrelevant, and CU leaders (current and former) who complain about mergers and clinging to some stupid movement notion are discrediting the industry and are sealing their own and others' fate...
Delete3:49pm The Chicken Little Troll Hissy
DeleteOh my! Cluck, cluck!
3:49pm Support from Henny Penny , Cocky Locky, Ducky Lucky, Goosey Loosey, Turkey Lurkey and of course "Newy/Newy".
DeleteThey issue is not about the products that are offered, or about keeping up with new technologies. The issues are how we choose to do it, whether it is through cooperation and shared infrastructure, or through competition among each other and cannibalism.
DeleteWhen someone says big credit unions are acting like banks, it means a lot of things, but some of the worst things about how big credit unions operate is the constant gaslighting. You hear over and over about healthy small and mid sized CU's getting pressured, and often then threatened to merge. You see big CU's using undemocratic practices to either buy off boards, or to get stooges in place who will hand over the shop. You see big CU's move into a small CU's area and try to squeeze them out or hire away their employees.
Those are "Banking Idea's". Do you not see that happening? Do you see it, but think it's a good thing? I honestly don't understand how people can see that as defensible, and still think that they belong here.
Last note..... If you really have that much derision for the Credit Union Movement, you are in the wrong industry. We are different for a reason, and its not just a place for second class bankers to avoid actual competition. If cuthroat competition within your industry is the model you want, there is a whole group of financial institutions built for it.
Cooperation and shared infrastructure is the legacy movement thinking that harms the industry. Cooperation, for progressive credit unions, now takes the form of investi in, and partnerships with fintech. If you’re a cu who is too small and can’t invest and grow, and therefore is dependent on some cuso to keep operating, then you know what you need to know.
DeleteMany make this about big and small.. haven’t met a small Cu that merged against their will. If you’re a CEO and overtures are too stressful for you, you’re in the wrong job. Threatened, with what, bodily harm? If bug CU’s are like banks, they are not going into small CU territory to compete with them. Small CU’s like to claim they serve those markets when the banks don’t, then accuse large cu’s of coming in and being like banks. Which is it?
Boards being taken over by outside interests? Who, the mob? Big Cu’ds have accomplished professionals on their boards and their fiduciary duty us no different than with small cu’s. Small cu’s are littered with 80 year old board members that have been in the board for 40 years because the board pays for them to go on vacation twice a year (oops, I mean conferences)
Smaller Cu’s need to stop blaming large CU’s for their lot in life. Those that do and can’t grow and self-sustain should dissolve and pay members, or merge with a CU that can offer them the predicts and services they need.
When people say "banking Ideas" I tend to think of two things.
ReplyDeleteThe first is that growth is the primary metric for success. I don't think it is. It's not inherently bad, but it is not the goal. The goal is how we can best be a vehicle for our members to help each other. Scale does matter, especially in our ability offer new technologies and to stay relevant. That scale should not come from cannibalizing and consolidating our own industry. It should come from cooperation and shared infrastructure.
The bigger problem is a consequence of the first. Big CU's are choosing to compete against small and mid sized CU's. They see easy targets, and they use incredibly predatory means to absorb them. Almost every Small and Mid sized CU CEO i know gets escalating offers / pressures / threats to merge. We are hearing more and more stories of board members being offered buyouts to sell out their credit union members. Stories of boards being taken over from outside interests, who then immediately seek to merge a healthy CU into a larger one. We see big CU's expand into saturated markets to intentionally try to steal members from smaller local CU's who lack the large marketing budgets, or who lose the abilty to function once the Big CU hires away key talent.
It's not that we should not compete with banks, or other financial institutions. It's that we should not compete LIKE banks. We are not meant to. We exist to be a counterbalance to their excess, like the article says.
Lastly, your disregard and derision for the notion of a "movement" puzzles me. Why are you here then? If your mindset aligns with banks, why not be a banker? What do you see about what you do that sets you apart from them?
The only people talking about growth is the small credit unions. They see big CU’s grow and then say their only focus is on growth. It’s not true. If it were we would see more of it.
DeleteMergers will save this industry. There is horrible capital inefficiency among small CU’s. 14%+ capital being hoarded and boards being unwilling to give it back or invest it because they can’t execute and must if their members use them fir cd’s and maybe a car loan. In an any efficient and public market, that capital wouldn’t be trapped. CU industry obviously isn’t public, but it’s becoming more efficient through M&A.
Now we’re accusing Boards of crimes of taking and receiving payoffs? I guess if truth and substance don’t work, we need to add drama to the mix. Maybe the NCUA will allow hostile takeovers. It’ll speed up the process.
We exist to counter-balance banks existence? Wow. Where did that come from. We e hat to serve our members, and banks and Fintechs are doing it better than us - or at least the small Cu’s. If your whole value prop is a 1/8th better rate than a bank, then you know you won’t survive. My mindset doesn’t align with banks, it aligns with progressive, strategic, and forward-thinking CU’s that recognize the reality of modern day financials services, and invest member capital to thrive, grow, and position themselves for the future. I’m not aligned with the CU’s and leaders who blame other Cu’s for their situation, that don’t recognize the need for change, and pin their Cu’s hopes on a silly movement notion that was over a long time ago.
Credit Unions are going to fail because they are no longer guided by principles. B
ReplyDeleteWell the small ones and those led by myopic CEO’s and boards that do see the tsunami coming will certainly fail.
DeleteCurious on the opinion of others on the "moving into small CU territory". If big, small, mid sized CU's are all community charters who's territory is it?
ReplyDeleteIn this big vs small rhetoric the type of charter gets lost in the noise. Most small CU's have become community charters, therefore they are competing with every FI that does business within that area. This whole CU's don't compete is non-sense, the members are deciding based on what's best for them. Therefore, CU's have to compete on tech, lending standards, etc to obtain and retain members.
Some of what I’m reading is poppycock! Just absolute poppycock. As someone who has worked at both banks and credit unions, the difference is stark. Banks are all about making profit off of their customers. Credit unions serve their members. Plain and simple. Is it possible to do both? Yes. However, banks will throw every customer they have all the way under the bus, if it helps them increase profit. They have to do whatever it takes to increase shareholder value. There is no choice about this. On the other hand, credit unions don’t operate that way. They take care of their members, which often equates to less profit.
ReplyDeleteI’ve been a member of SECU for a long time, and they’ve ALWAYS taken care of me and my family. ALWAYS. I’ve been very alarmed, though, about some of the recent changes which make them look more like the banks. And I’m very worried about this. (No transparency, dishonesty from executives, changes that will ultimately cost the members much more money, etc.)
I follow this blog and expect that there will be lots of comments (many of them will be very mean-spirited) about how wrong I am. However, I’m not wrong about what I see and about how it makes me feel.
And I hope I’m mistaken and that SECU will continue to ALWAYS serve the members well. Members first - this is the credit union difference
7:14: you’re not wrong. We compete with banks whether we chose or not. We’re also regulated a lot like banks. We, at least the wise among us, also embrace principles like scale, innovation, digital transformation - etc, just like banks. But we’re not a bank and nothing like it, even though small credit unions say we are just because of our size. Many CU’s survive because of this - especially the large ones. Those < 500 million that won’t merge but think they matter? Not so much.
ReplyDelete@714; Isn’t funny how folks that never worked for a bank claim were like one? Just because we want to do business lending, offer rewards cards, etc? I worked for a bank and a CU like you and know the real difference. We are nothing like a bank, no matter how many ignorant members or employees say we are on this blog.
ReplyDeleteWell. Tell us how you are different. As a member not a worker I’d love to know. Business lending. Like a bank . Rewards cards. Like a bank. RBL. Like a bank. Centralization. Like a bank. Open membership. Like a bank. So inform us ignorant members what makes SECU unlike a bank.
ReplyDeleteYou mistake the noted as derogatory differences between banks and credit unions, when they are actually just improvements to business efficiencies made within the financial services industry, which credit unions are a part of.
Delete7:06... Checking accounts, like a bank. Mortgage loans, like a bank. Investment advisory, like a bank. Car loans, like a bank; etc, etc, etc.. We've offered those products for decades. If it's about products we offer, then I guess we've always been like a bank. So yes, you are ignorant. It's not about the "what" it's about the "how". We offer the virtually the same commodity products as banks (except the ones they are too wise too avoid), but we go about it differently, and we price it differently. Pretty simple concepts.
ReplyDeleteAnonymous name calling from insecure trolls.
DeleteWell. Anonymous name “ acknowledger” if you want to get technical about it. Called themselves ignorant. We agree.
Delete“ to be or not to be” that is the question ...
ReplyDelete