How long will we singe the choir's eyebrows?
Posted by Charlie Trotter on May 8th, 2007
Well, thanks to some technical difficulties that couldn’t be helped, this story is old news now, yet, ironically, that somehow makes it even more timely.
What should have been an exciting bit of exposure for the CU concept actually, for Charlie Trotter’s money, sucks and is depressing.
First off, it took Brent posting last week about the co-op-y-ness of CU branches and ATMs nationwide for me to know that it was even an option. It was the major thing holding me back from moving every penny over to a CU. It also took my taking a job with Trabian to know why I should care about CUs.
That sucks.
We have this orgy of evidence across our many industry blogs, and it’s great to talk shop with each other and our members, but outside of my new friendships with CU people, the industry has not found me where I live. I half-jokingly say (I say it to irk people who think keeping up with the news is being responsible and civilized. I think that too, but that doesn’t stop me from getting a buzz out of making people get all “Harumph!” Don’t you judge me.) that my personal motto about news is, “If I don’t see it on the Today Show, either no one wants badly enough for me to know it, or I don’t need to know it.”
Second off, last week on Today, Meredith Vieira interviewed the Queen of Jordan about the apparently brand-dadgum-new concept of micro finance.
According to Vieira, who wore a look of marvel on her face like she’d just seen the wheel for the first time, the Queen was back in the US to bring attention to, ”…an issue of vital importance: helping the world’s poorest gain an opportunity to improve their lives through a concept catching international attention. It is called Village Banking.”
Her Majesty explained, ”…with Village Banking, it’s basically ten to thirty people coming together – mostly women – and they start to guarantee each other’s loans. So, in essence, they become their own bank.”
What is going on here? What are we doing? We have a concept that is awesome and hopeful and positive and we are bringing it Hell-Fire & Brimstone, but we are bringing it to the choir. Our blogs are great. Really. They are getting some great conversations going and are great tools for the education of people who are already members of a CU. But, last summer when I met the Trabian gang, all I knew was that I sent my car payment to a CU.
I know this may be odd coming from a Social Media advocate, but why hasn’t there been one of our top thinkers on the Today Show communicating the CU philosophy? Why isn’t there a nationwide campaign about why CUs are more than a harder-to-get-into bank? Why wasn’t one of us sitting next to the Queen of Jordan last week on Today telling Meredith Vieira to wipe that you-mean-we-don’t-have-to-slice-our-own-bread-anymore?!? look off her face? We let the Queen of Jordan scoop and rename our story.
That sucks.
You’re joking, right? You don’t really think the press, let alone the public, is going to buy this “credit unions are really village banking communities helping out the poor” story, do you?
The Queen of Jordan is talking about bringing banking to the world’s poorest people, and you’re equating what credit unions do to that?
Let me share some research stats w/ you. (Don’t give me any shit, Denise). In the US, credit union members are MORE WELL OFF than consumers who don’t belong to credit unions. One-third have more than $100k in investable assets (vs. 27% of other consumers), and 36% earn more than $70k (vs. 27% of other consumers).
Not only that, but when you think about employer-based CUs, it’s hard to put “third world micro-finance efforts” and “well-off employees from a Microsoft or HP lending money to each other” in the same sentence.
You ARE spot on, though, about the CU philosophy getting preached to the choir. But the reason it doesn’t make on the Today show is that PEOPLE JUST DON’T CARE. Lazy money, Charlie. And the “community” aspect doesn’t appeal to the masses.
And maybe not even to CU members. Going back to the research data, less than one in five CU members said they’re involved with volunteer/charity work (one proxy for community involvement).
Consumers turn to CUs for their financial needs. CUs need to start competing on THAT basis. And (I have said and written this many times in the past) they can by competing on “customer advocacy” (we do what’s right for our customers, not just our bottom line)—an important attribute for which many of the regional and large banks score poorly on.
Ok. thanks for letting me rant.
Charlie -
So true, so true! It’s really interesting to me how this concept of microfinance has gotten so much media attention since the fellow won the Nobel Prize last year for the program he started in (I think) Indonesia.
Despite all the stories I’ve seen, no reporter has made the connection between the cooperative principles involved in both microfinance and CUs. Perhaps it’s the degree of poverty in the third world, or the difference in terminology that steers people away from the connection with our “at-home” CUs.
But if you look at the work of especially CDCUs here at home, many of them are trying to accomplish the same goal of economic development that is happening with the microfinance program.
I’m betting as you are that the lack of awareness is at play here to some extent.
Provocative posting, Charlie. CU shared branching and CU shared ATM networks have emerged in the past 5-10 years, and they still aren’t successfully marketed to the public.
Perhaps this is because bank customers who have used most CU “Co-Op” ATMs have been surcharged? If they just paid a surcharge at what’s advertised as a “Surcharge-Free ATM”, they come away thinking CUs are just like banks.
IMHO, “Co-Op” should avoid the phrase “SURCHARGE FREE ATM” but substitute “CU WAIVED-FEE ATM”.
Ron (Shelvin-data-boy)
I will not give you crap about THOSE stats. It makes sense. Credit unions were largely founded around EMPLOYEE groups. People who earned money. Not the “poor” of today or the “little guy” of today.
Last night I attended the Women Advancing Microfinance (WAM – and you have to pump your fist when you say it) Seattle Chapter meeting. Carol Schillios (Herb Wegner award winner this year) was the host. BECU was gracious enough to provide meeting space and there were about 50 women in attendance.
The majority were from true Microfinance endeavors. Only a handful were credit union folks. It was not clear that credit unions “were” a microfinance operation at all. BUT, our founding principles are so similar….. that we deserved a place at the table. Plus they served wine.
Anyway – when we broke into groups to talk about what microfinance means.. I was at the BECU table and we started talking about promoting thrift, and making loans for provident and productive purposes only.
Credit unions promote debt. Period. They promote savings when they need more money to loan. But it’s not the same as promoting thrift.
We won’t be on the Today show until we do something good for our economy. Ron, correct me if I’m wrong on these stats but American’s are saddled with an average of 8 grand in unsecured debt per household AND the savings rate is in the negative (not including retirment savings but actual liquid cash-emergency-fund-savings) for each household.
If credit unions truly were chartered to promote thrift – we failed.
Ron S., your comment is harsh … and unfortunately too damned accurate (although I think you could have been nicer to Denise and said “crap” in this public forum).
I missed the “village banking” piece on Today, but if I’d seen it, I think I’d have reacted much as Charlie did. I’d probably have screamed “That’s a credit union!” at Meredith and been chastised by my wife. You’re absolutely right though, you cannot compare the plight of third world, poverty stricken people to even the most down-and-out homeless folks in this country, much less to credit union members. God sakes, it’s apples and watermelons, but that’s another argument and I don’t know that much about Oxfam.
Those of us who advocate for CUs with legislators and the media scream “Cooperative, member-owned, democratically controlled” from the rooftops until we’re blue in the face – it doesn’t matter. It should, but it doesn’t. We shout “Better rates on deposits, lower rates on loans and low or no fees” too, and that doesn’t seem to matter either, because until you actually HELP someone get out of a financial bind, they’re just words.
I hate to draw upon a Tom Cruise movie in a blog post, but whatever happened to “Show them the money”. Make that loan to the C and D paper borrower, waive or reduce a late fee for a non-habitual offender. Hit ‘em where it helps … in the wallet and pocketbook. Why any CU would be sitting on 15% capital absolutely boggles my mind, and there are examples out there that are worse than that. It offends me.
sorry, John—the side comment to Denise was in reference to a comment she made (on my site, I think) about me “staring so long at Forrester data that my eyeballs were bleeding”. So I knew what I asking for when I dared to cite statistics. In retrospect, “grief” would have been a better word to use.
So – how can we find ways to:
I’m with John C. that “hitting them in the wallet” is where it is at…
Good stuff, Charlie.
Ron, great stats. I think you missed the point, though.
I can’t speak for what the credit union industry has been trying to do with its marketing. I can’t speak for what they offer. I can’t speak for what they do or how they do it. Until I met Charlie and the gang at Trabian, I was in the same boat as Charlie, making payments to a CU on my truck. Until I read Ron’s response, I didn’t know the “stats” involved. Being a “member” meant and means nothing to me.
It’s obvious they haven’t communicated effectively and it appears Village Banking, which is freakin’ cool name btw, has set a new tone and caught the media’s attention. I dig it.
@V… There are a number of different default insurance solutions out there that can allow credit unions to loan to D, E, and F risk paper while still being prudent in lending out your members’ money. We can’t forget that we are lending out their money. We have done quite a bit of this subprime auto lending with this insurance. @Denise… this lending is promoting thrift as many of these members need an auto to get to and from work and our rates, even with the insurance, are better than they are getting elsewhere. It is not as sexy as micro-finance to an extreme poverty set, but it is serving a need. @Charlie… I care less about being in the national spotlight than I do about being relevant in the community I serve. Sure, being on the Today show would be fun and cool, but I am not sure it would instantly translate into an avalanche of new credit union members. Being known in your community for being a place where all members of economic means can better their financial lives is the focus.
Derek,
What an amazing and insightful comment.
Perception IS reality. We’re so caught up in our rhetoric we haven’t been listening. To the member (you) we are a bank. There is no real difference.
What if we were to start over? Prosper.com is Village Banking in my opinion. ZOPA wants to partner wtih credit unions (the UK sensation) Could we get any credibility back if we did this version of “microfinance?” or are we our father’s Buick?
PS – Ron (bleeding eyeball data guy), I actually LOL when I read your message to me. No worries. Bring it!
Ron S., I’m not saying that American credit unions are conceptually or literally the same as helping Jordanian babies buy new shoes. But thanks for all the stats. I’ll be using them to thrill my dinner guests later this week.
As for it not getting air on Today because people just don’t care, I agree. But people don’t care because we aren’t asking them to. I didn’t care either until someone told me why I should and why I would identify with the concept across several levels of my life.
And I disagree mightily that the community aspect (which WAS the similarity I was drawing in the first place, the hopeful message) doesn’t appeal to the masses. The “masses” are a many-splendored thing. There are some pretty massive groups within the masses that care deeply about community. Take the broad category of “people of faith” for example. Community, people getting together to help each other, is one of the major pieces of every faith, regardless of the flavor. Surely you have some data on how many people in America practice some kind of faith (I mean that non-bitingly, by the way.).
As for the less than one in five community-minded people who are already members, couldn’t you just as reasonably interpret that data to mean the people who would care about it don’t know about it? Or perhaps that the other 4.75 members in five might actually respond to the community siren if we just quit blowing through a dog whistle?
If the community aspect doesn’t have mass-appeal it’s because we’ve not told the masses why it’s appealing. You can’t have effectively hidden it under a bushel for so long and draw the conclusion that people just don’t care. They just don’t know.
Stats or not, my parents have no clue what a credit union is. And they don’t know why they should care. We need to be saying better sentences about it.
I don’t know about anyone else, but I’m feeling the edge of something here. I’m not sure what yet, a breaking point of some sort. Allow me to ramble for a minute. . .
I’m seeing some major threads here. Community . . . financial education . . . thrift . . . people helping people . . .
As a credit union, following the credit union philosophy, then yes, it should be microfinance. Have we strayed from that? Quite possibly. But there’s a song by 4Him (yes I’m giving a little away about myself now), but it says “we need to get back to the basics of life.” We need to get back to the “basics of credit union philosophy.” And I think to a certain level, when it comes to community involvement, we do this. But we do it in a “humble” way, as to not get much press, or media. Which is not necessarily a bad thing, because we are sincerely doing it without asking for a lot of notice, but on the other hand, what is wrong with letting people know that we are getting involved? And getting involved on a grander scale? Something that REALLY helps people and DOES get the attention of the Today show. What is that? I don’t know. Something radical! Something that really does show that credit unions are here to help, NOT make money.
As for the rest of it, Vselfridge – you asked how do we . . . How do we do all that? Good question. I have a passion for financial counseling, and I’m having a hard time figuring out why my credit union doesn’t just “jump in” and let me start a program. I am constantly working with members to figure out ways to help them, but without asking the credit union to take on too much risk. One thing I have come up with is a file of community resources. Can we necessarily loan money to someone when they don’t have a job to pay it back? Not really. But can we have a file of resources of organizations that might be able to help them? Why not! Tie into ALL possible resources! I mean, isn’t that somewhat what microfinance does? It’s all about working together. Don’t just leave it with, no, I can’t give you the loan. Take it to another deeper level. “No, I can’t get this approved, but the fact that you don’t have rent money is going to be a problem again next month as well, so lets see if together we can find a solution to your problem instead of a band-aid. I happen to know of a local agency that might be able to help place you in a job. Here is their address and phone number.” And even if we don’t get on the Today show, people in the community WILL start to find out that you’re willing to help, not just “bank.” And as for how we give “our ‘non-ChexSystems approved’ members checking accounts with training wheels, to teach them account management,” . . . Nike’s coming to mind . . . Just Do It!
Just using the stats to try to make my case, Charlie. If you want to dazzle your dinner guests, I have other data you might want to use.
I can’t agree with the statement that “people don’t care because we aren’t asking them to.”
CUs ARE asking them. The people who comment on this site are routinely talking about the “community” aspects of CUs.
But the “masses” who do care, get their community involvement from places other than a credit union. To the masses, a CU is a bank with a different name. They use a CU is because it serves a financial services or product need.
If I were the CEO of a CU, I’d hire my next Marketing VP away from a bank. Someone who knows how to compete with banks for deposits and loans. Not somebody who wants to fight upstream and try to change the masses’ perception of what a CU “is” or “isn’t”.
But Ron, if we hang all ten gallons of our marketing hat on rates alone, then a CU actually IS just another name for Bank. Why not balance it a little?
There are a few nuances to the concept of a credit union that people will identify with. Rates are one of them, but not the only one. We should be talking about all of it, not chucking the most romantic aspects of the concept to appeal to people’s wallets alone.
And I’m not persuaded that the community communication you mentioned all these other people are doing is good enough. The reason I’m not persuaded of that, is because I’m generally (if it wasn’t for my employment) not persuaded about CUs. Your satisfaction with the amount and quality of the communication of the of CU difference, oddly enough, doesn’t make me know or care more about credit unions than I do. Which tells me I either live in a cave, or it needs to be better and reach farther.
PS: Everybody, some of our comments got approved in a weird order which made Doug True’s comment appear in the order it would have appeared in had it posted when he hit “submit.” It’s the 9th comment down.
That’s all, I just didn’t want any one’s thought to get lost in the shuffle of our comment approval timing.
Thanks for all the conversation. Keep it coming.
I strongly agree with Jessica that credit unions need to get back to the basics that ordinary people are facing. Savings and thrift ultimately are the lifeblood of our communities over the long term.
Hey Doug, where can I get some information on that insurance you’re talking about? I’m sure our loan person knows about it, but I don’t really get into loans, and it’s something I’d like to research, more from a financial counseling standpoint. If you could point me to a reference, I’d really appreciate it. Thanks so much! :)
Many threads, many comments, too little time. Focus on two then …
@Doug – “I care less about being in the national spotlight than I do about being relevant in the community I serve.” – A-freakin-men to that! That’s something I can shout from the rooftops with pride. That statement ought to be paraphrased in every CU’s mission statement if it isn’t already.
We can’t hang our hats on any one thing, rates, service to the community, or otherwise. We can’t beat banks at everything, but we gotta look at what we do for our members like the FDA structures the Food Pyramid (egads, am I really citing a government agency as doing something right?) Yeah, I know, most people don’t even understand the food pyramid, much less follow its guidelines … so humor me while I try to make a point.
Childhood obesity is epidemic, right? So is “consumer obesity”, too much consuming, spending, and over extending with not enough prudence and saving. (Full personal dislosure, especially to Trey who met me in person last weekend, it ain’t just the kids that are fat. :-(
Anyway, back to the point. CUs should focus on basics and help members concentrate on the “whole grains, fruits & vegetables” – consolidate and pay off debt, live within your means, save something … anything … for the future. This also happens to be where the CU foundation of loans and basic account services lives. People willingly pay a little more for organic foods because they know they’re good for them. Taking the time to provide financial education and counseling will help members (potential and otherwise) overlook a 50 or 100 basis point difference in rates. Scoff if you want, but before you do, why do you consistently food shop at the same market when you know you can buy food cheaper elsewhere? Because you know the quality is better and worth a little more $, that’s why.
The next tier of the CU pyramid is the “dairy and lean meats” level – you gotta have them to survive but not at every meal. Online banking, billpay, SBL, CDs, shared branching … insert your own favorites. Yeah, they’re important … but you can’t get so excited about including these in your diet that you forget the foundation level.
Finally, at the top with the “use sparingly” snacks and fats, are the rest. Sure they taste good and you want them, but they don’t really provide any nutrition. This is where high capitalization, large marketing budgets, glitzy branches and the rest live.
OK, go ahead and shoot me down … but I believe that if we could get all CUs to subscribe to this “nutrition plan”, we’d be lean, mean, fighting machines – precisely what is needed to take on the fat cat bankers head on.
@ Jessica… please send me a request through my blog and I will get you the pertinent information on the default insurance. It really has enabled us to serve a new market and help members better their financial life. I am in the process of writing a blueprint as to how we have built this program at FORUM and will be posting this on the new FORUM Solutions web site (a Trabian production by the way) coming in late May.
John,
I am drawing up the credit union “food pyramid” right now. I would like to meet you in person and have you autograph it. Brilliant!!!!!
How’s this for whacky? I think the market is ripe for a checking account that COSTS money. Like your example of paying more for organic food (I’m one of those people BTW – LOVE Whole Foods – er, Whole Paycheck).
Anyway. Organic checking. It doesn’t hurt the environment. You pay $50.00 a month for cable television. Wouldn’t you pay $5.00 a month for someone to watch your money??
Thoughts???
Sounds good Denise, you draw it up because I don’t have the time right now. And then we can all post on it here and make it an open source nationwide … err, I mean continent-wide for our Canadian friends … project for credit unions.
Denise/John,
I love it! People happily plunk down $50-$100 a year to be in Costco. Give ‘em a good concept and experience, and they’ll flock!
While you draw up the pyramid, I’m going to unpack my 480 rolls of TP, and slide that 60 pound salmon steak in the freezer. :)
Jeff
Denise, John, and Jeff:
I wrote four blog articles in August suggesting that a NON-WAIVABLE annual membership fee, like Sam’s Club or Costco, would allow CUs to overcome the “lack of secondary capital” and to offer a truly best-in-class value proposition. Here are the URLs:
http://cbruen.com/blog/index.blog/1537980/ron-bensley-members-with-divided-loyalties-vol-i-series/ http://cbruen.com/blog/index.blog/1539112/ron-bensley-members-with-divided-loyalties-volume-ii/ http://cbruen.com/blog/index.blog/1542607/members-with-divided-loyalties-vol-iii-series/ http://cbruen.com/blog/index.blog/1542609/bensley-members-with-divided-loyalties-vol-iv/ http://cbruen.com/blog/index.blog/1542610/ron-bensley-members-with-divided-loyalties-vol-v-last-part-of-the-series/
Trey, perhaps you’d like to develop a discussion thread on this topic of CUs actually adopting a non-waivable (everybody pays) annual or monthly membership fee. Sam’s Club and Costco certainly have shown how the membership club concept, funded by an annual fee, truly allows them to be DIFFERENT than retail stores.
Ron,
I love it. And you know what a $25.00 or even $50.00 membership fee would do? The same thing the punitive “dormant account” fees are doing.
Getting the squatters to step it up or move along. It’s such an interesting idea. How many members are so loyal and/or see the value of their membership to PAY to stay.
That’s almost a better question than the one Wings Financial posed….you know the one about “Are your members loyal enough to say NO to a $200 bribe for a vote to merge?”
These are heady times.
Yeah, but are they really different? I mean, other than buying things in bulk, what advantage do you have shopping at “club” stores? You may save a little by buying in bulk at a cheaper price, but you’re paying for it in an annual fee. And that only works for people who have a need for large quantities of items. A single mom like me, or low income “paycheck to paycheck” people are more concerned with buying what they need at a price they can afford at the time, not saving $5 by buying a whole months worth of toilet paper at one time. We don’t have the $10 to spend at once, when we can pay $6 out of each paycheck. While it might cost more in the long run, it’s the only way to make it work when you’re on a really tight budget. So, what do you get for the membership fee? I mean, people are just now catching up to the whole idea of community charters and the fact that they DON’T have to work for a certain company to join. And now we’re going to charge people a membership fee? Why? What do they get for it? We take pride in having lower fees and fewer fees than banks. So, while a membership fee might set us apart, I’m not sure that it’s a good way to set us apart. How can we truly help the community and help lower income families become more financially stable if we charge them a fee just to use our services?
As far as the food pyramid, good one! I like that concept! :)
Jessica,
You brought up the most important point, in my opinion. Target audience.
Costco does not target you (or me for that matter). But they sure as heck target big families and small businesses. Those folks will PAY for the privilege of buying in bulk. Or as they say in the hillarious movie Employee of the Month. “Buying in bulk is our god given right!!”
Credit unions are trying to be too many things to too many people. Community charters exacerbate this.
If Costco let “everyone” in, as credit unions are beginning to, I think it would kill their brand.
Membership is a great marketing tool. People like to belong. But if there was a club, and everyone could join, and everyone did??? Would it still be a club? Why don’t WE (credit unions) want to be a club any more?
FYI much-admired State Employees CU of North Carolina does NOT offer “free checking”. Every member pays $1, part of the proceeds which finance.
With some sort of monthly or annual membership fee, your small LOCAL CU could offer the kinds of deals currently only available at “mega-sized” CUs like Pentagon Federal or BECU. BECU can offer its members a VISA card with generous limits at a 6.9% APR, most CUs simply cannot match that. State Farm Federal CU can offer its members 4.34% APY on Share Savings accounts, most CUs cannot match that.
As an individual struggling to stay ahead of the economic curve, wouldn’t I be willing to pay $25 annually in order to have “concierge” service combined with a 6.9% APR VISA, 4.34% APY Share Savings, free financial education and counseling, and identity theft protection services? $25 is cheap if it puts $200 to $500 a year more into my pocket, while allowing my CU to have adequate capital to provide far better pricing.
Ron Bensley in Seattle
Re: SECU (North Carolina): members have the option of donating their $1 monthly checking account fee to the SECU Foundation.
http://www.ncsecu.org/Products.aspx
SECU is an extraordinary role model for all credit unions, IMHO.
Ron,
Agreed about NCSECU – they are a terrific group of people. To Denise’s earlier point about promoting thrift, SECU tailors its products and services to help their members develop financial security.
To follow up on your earlier point, what do you think about CUs producing a “statement of benefits” that would be mailed to the entire membership once a year? This statement would provide specific information about how the CU delivered value to the individual members given their product/service mix?
When I go to Costco and I see 15 lamb chops for $15, I instantly know that’s a great deal. But its harder in financial services, because the true costs of products are hidden from view.
Perhaps an annual statement would help to better quantify “the value proposition” and set the CU up to come back and ask its members to renew their membership vows each year. Thoughts?
Denise,
You’re exactly right. It is all about who our target is. What are we here for? Are we here to help people WITH money figure out how to use it? Or are we here to help the “paycheck to paycheck” people make ends meet?
Yes, I agree, that paying $25 a year is a small price to pay if it’s going to save you $200-$500. However, it’s only saving me that much money if I qualify for the lower rates on loans, or if I have money to put into a certificate or savings account at a high interest rate. The flip side of it, is that if we are here to help the underserved, then we’re not different than any other “scam” if we’re charging a fee to save them money. I mean, who likes credit cards with annual fees? Nobody, because there are enough of them without them and you don’t get anything out of that fee that you’re paying. Likewise, who’s going to pay a fee to be a member of a credit union, when they can get the same services at the bank for free? Being in a “club” is a privilege, and those of us that struggle just to make ends meet can’t afford privileges. Even if it is going to save us money in the long run, we don’t have it up front to give.
So, if we’re serving the people with money, to help them save more money, then sure, a membership fee would weed out eveyone else. But then where’s the mission? If we’re here to serve the underserved and help people in a bad financial situation get on their feet and build their way up to a steady financial situation, then fees are NOT the answer, because those are the very people you are weeding out!
Jessica’s point is well-taken. A membership fee should allow the CU to maximize the value offered to underserved members. This would include: free check printing (typically $15 to $20 per order), truly low-cost overdraft protection for occasional overdrafts (not the $25 and up fee), free small safe deposit box (low-income people often need this even more than affluent members!), occasional no-fee stop payment orders, occasional ATM surcharge refunds, etc. These should be things which “modest means” members truly could use to make their daily lives simpler. An ideal credit union can help “modest means” households put more groceries on the table, and better keep their their families clothed and housed, plus be able to help “modest means” households avoid bondage to debt.
For modest-means households, their scarce dollars invested in savings should at least keep pace with inflation. The all-too-common Scrooge-like 0.25% or 0.50% Share Savings dividend rate means a “modest means” saver loses 3% or more of their meager savings to inflation and taxes.
Jeff’s suggestion about an annual “statement of benefits” is a good one.
Jessica,
And therein lies the biggest question of all. Who IS the little guy of today? What IS our cause?
I think we are divided. Our definition of “underserved” certainly varies from market to market.
There are some credit unions whose original field of membership is centered around an employer who pays well. Microsoft comes to mind. Johnson & Johnson is another good example. This “club” idea would make sense for these credit unions. They are building wealth.
But if you have a community charter, are you then obligated to serve the underserved?
Denise asked us to post this for your edification:
Wow, this pyramid is an example of how a simple idea (like CUs) can grow out of control. Here’s to CUs growing out of control! And thanks for the “copyright”, but I just stole someone else’s idea and applied it to CUs, so at the very least, Denise should get credit too. I can’t speak for her, but I’m happy to share with everybody on behalf of CUs and, to steal another idea/slogan, let’s “Just do it!”.
On Costco: As a loyal (twice a month usually) Costco shopper and reader of their monthly magazine, I have long thought that CUs opening branches in grocery stores and Wal Mart should switch to Costco, if the store would be willing. If you’ve ever read about Costco’s CEO Jim Sinegal, he really runs his company with a CU philosophy. This philosophy trickles all the way down to his employees and how they treat customers.
We’re onto something here with the membership fee. There are problems, especially with applying the fee to low income members, but I second the request to start a new post for group-think to hammer away at and improve the concept. Some ideas are floating around my brain, but they’re not clarified enough to post yet. If we get some more brains working on ways to do it, THIS could be big. CUs are trying to get away from membership by watering it down, but the Costco model clearly works. How do we make it work for credit unions? We need numbers people as well as marketers here folks.
Denise,
When I think of the “underserved” and the “Little Guy” I think of people who get nothing out of anything that anyone else offers. While some credit unions might be centered around well paying companies, I wouldn’t consider these members underserved. People with money can get anything they want from banks. That’s what banks are there for, people with money. They are widely served. Can a credit union help them save money? Most difinitely. But are they underserved? I don’t think so.
Now, take the person who walks through the door with 2 kids, no husband because they just went through a divorce, so they’re living on one income, and maybe a small amount of child support. They had to file bankruptcy to get out of all the gambling debt that the ex-husband got them into, so their credit score is rather low, but she desperately needs to get back on her feet and is doing everything in her power to do that. Is a bank going to help her out? NOPE! Now THAT’s the underserved. THAT is the member that I want to be there for.
Ron, I see your point. If the small fee can accomplish all that, and allow us to serve that underserved member, then I am all for it! If we can offer more to our underserved members (single moms, recently laid off employees, members with medical issues that are draining them financially, ect.) then I am all for doing whatever it takes to get there.
Incredibly interesting conversation. I have learned so much. I am going to bring you back to the original themes for a moment.
I sense by some of what I have read that there is this feeling that credit unions are not making their impact in this world. For those of you who are unaware, UMass Five Credit Union in Amherst, MA, https://secure.umassfive.org/info/azerbaijan.htm was recently the host for seven gentlemen from the Country of Azerbaijan who were here studying how to further the credit union movement in their country. To make a very moving story short, there are actually restarting the movement. They spent two very full weeks here visiting numerous credit unions, and the Massachusetts Credit Union League absorbing as much information as they could about everything; everything we do; and how we do it. Only one of them spoke English. However, they are so energized about being successful, they endured. They have the same conflict we do with banks, the country does not allow them to have savings accounts as yet, and only 50% of the country has internet access. Please see my posts on http://cuesskybox.typepad.com/skybox/2007/04/we_sit_day_to_d.html. They spent two weeks listening and watching through two interpreters.
While this story did not make the Today Show, it did make in several local media channels. I make this point because not only do we need to be talking nationally, but regionally and locally. And for sure, we need to be talking more.
Also, I applaud the Queen and her efforts, I applaud her getting on the Today Show, I am glad I didn’t come from a bank, and I agree with many of the comments about CUs in this conversation.
I have worked in this industry for just 2.5 years, and to what I have personally experienced and witnessed Einstein pretty much wrapped up in his quote: “Insanity: doing the same thing over and over again and expecting different results.” This is hanging up to my desk. I don’t give up and to those who are also trying to do things differently such as those who started this conversation and those who have commented, you have my deepest admiration.
This is one of the best discussions I’ve ever seen on what credit unions are and aren’t, should and shouldn’t be.
It’s quite interesting that some people believe credit unions should all move in the same direction together. Take any issue that people use to define a credit union (community, thrift, underserved, etc.) and you’ll find people at both ends trying to define what a credit union is or isn’t. No one really agrees.
But who says credit unions must all be the same thing—one thing for all people, according to one singular definition of “credit union?” Why can’t there be different kinds of credit unions for different kinds of people with different kinds of needs?
For instance, Tulip Cooperative Credit Union:
http://boomcreative.biz/files/tulip_onyx_b.mov
I love Tulip’s brand and the role they serve in the community, even though that credit union isn’t for me. But does the fact that they “serve the underserved” make them more of a credit union? Any more so than a $1 billion credit union that provides more affordable financial solutions to 50,000+ members?
Anyone waiting for 8,500 disparate organizations to all reach an agreement on which singular direction the industry should head will be waiting a long time. You can’t even get five people to agree on where to go to dinner.
Many of suggestions and recommendations I often hear regarding the “state of the CU industry” really should be handled by a CU association. Many people seem to expect each individual credit union to “do their part” to market the industry. Sorry folks, but these credit unions need to run a business—make loans, get deposits and stuff like that. They need to run ads that stimulate interest (specifically, in their organization), not “build a movement” (for all credit unions everywhere, including the CU across the street).
If the industry would benefit from ads and marketing that position credit unions in general (community, underserved, people helping people, etc.), this type of communications strategy needs to come from a CU industry organization, not the individual CUs themselves.