Archive for November, 2008|Monthly archive page

Pie in the Sky: Financial Self Improvement at Your Local Credit Union

In regards to my thoughts on Principle #4 and Credit Unions as self-help organizations:

With Americans apparent obsessed with all things self-help, how is this not a focal point of American CUs?

If there is a National Brand that could weave CUs together, I’d make a strong case for this as “the one”.

Principle #4: Autonomy and Independence (Part 1)

It’s time to jump back into our ongoing discussion about the 7 cooperative principles. If you need a refresh, the other articles in the series are located here.

Autonomy and Independence
Cooperatives are autonomous, self-help organizations controlled by their members. If the cooperative enters into agreements with other organizations or raises capital from external sources, it is done so based on terms that ensure democratic control by the member and maintains the cooperative autonomy.

There’s so much jammed into Principle #4 that it looks to be a 2 parter for me. Let’s start by looking at “Cooperatives are autonomous, self-help organizations controlled by their members”

Credit Unions are autonomous.

Each Credit Union is self-governing. Each has it’s own set of rules. Your CU can’t tell my CU what to do. (I do what I want!) But not really.

CUs do have levels of governance above them. No CU is an island. They are subject to local and federal laws and in most cases some kind of regulatory body. (I would say all cases but don’t really have the time to research the credit union practices of every country.)

This isn’t necessarily a bad thing. We certainly can’t have credit unions making up rules that supersede federal law. But, have you seen the 428 page beast of a document that is the NCUA Regulations? That’s a lot of regulating for entities that are supposed to be self governed.

In addition, the recent incident with TDECU and the FDIC clearly shows that Credit Unions can and are influenced by forces beyond their member controller.

Credit Unions are self-help organizations.*

For me this could be one of the most powerful and differentiating ways to look at Credit Unions. Instead of seeing CUs as Financial Institutions that are member controlled, it very much within the CU DNA to be seen as places for financial self improvement.

This means more than just good auto loan rates. (Though it’s probably under the self improvement umbrella.) This means helping members with things like budgeting and retirement planning and making that feel like the norm instead of the exception. It means educating members of their financial options in ways that are engaging, maybe even fun.

Credit Unions are member controlled.

This is the 3rd principle that mentions member control. It’s kind of big deal. (See Principle #2 and #3 for more thoughts on that.)

What’s your take?

My big questions for members of the Credit Union community in regards to part 1 of Principle #4 are:

  1. Do you feel like your CU is really autonomous? Is there too much regulation? Is there not enough regulation? What are the areas where you feel free to self-govern and write your own rules?
  2. Do you view your CU as a self-help organization? Do your members view it that way? What would you need to do internally and externally to act more like a self-help organization

* I’m not 100% sure about the original intentions of “self-help organization.” Self-Help could be an adjective to describe the organization or part of the noun. It could make a difference in one’s interpretation of a credit union as a self-help organization. Is a credit union an organization that provides for itself and solves its own problems (an organization that is “self-help”) or is it a place where people go to help better themselves? I prefer the later.

Stop Saying Structure

Last week over on the CU Warrior Blog, Matt wrote an interesting piece about a more perfect union, domestic tranquility, and promoting the Credit Union Way (my paraphrase not his) in which he draws some parallels between the way the great US of A is structured and the way that credit unions are set up. He claims (of credit unions) that “It’s our structure that attracts members by the millions.”

I really like a lot of what the CU Warrior has to say, but I think he’s really missed the mark here. People do not care about how your organization is structured. They just don’t. They don’t care about your org chart or the size of your marketing team or who the shareholders are. They don’t care.

If you were asked the difference between your CU and the one down the street, can you imagine responding with “Well our IT department has 6 people, including a C level position, while they only have 3 in IT with no representation at the C level? I didn’t think so.

People care about the products, services, and experiences you offer them. Now your org chart and marketing team and yes, even who your shareholders are can influence these things, but make no mistake about it, people care about the WHAT not the HOW.

Instead of touting “structure” as the “difference”, I believe credit unions need to tout WHAT that structure allows them to do. For Member’s CU in North Carolina (home of the CU Warrior), their structure allowed them to create the “Holiday Skip-a-Pay“. Now that IS a difference.

Our “CU Difference statements” need to evolve from “We are owned by our members.” to “Our member ownership allows us to (fill in what a local/awesome cu is doing)”

If we can’t fill in that blank, well then we’ve got bigger problems than just our verbage. :/

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After thought: If people cared about the HOW, then why do credit union memberships vote for mergers and conversions that ultimately take away or lessen the impact of the structure on their financial institution. I’m just sayin…