ORLANDO, Fla.–Credit unions face three “existential” challenges, one of which is a self-inflicted “heart attack,” according to CUNA’s CEO, Jim Nussle.’
In remarks to the trade group’s America’s Credit Union Conference here, Nussle suggested it’s easy for credit unions to get complacent, noting that CU membership growth grew at five times the pace of the U.S. population during 2018, and that while it sounds nice to talk about “people helping people,” he added, “It can’t just be something that rolls off the tongue, it’s has to be something you think about when you say it.”
But that complacency belies risks to the future of credit unions he said, summing up the challenges as the Model Attack, the Market Attack, and the Heart Attack.
The Model Attack
The model attack, said Nussle, is all about the efforts by the banking industry to attack credit unions, particularly by having the tax exemption revoked or changed.
“In Iowa, for instance, banks are coming after us because they see their market share consolidating, especially the smaller banks,” said Nussle. “The banks aren’t just coming after us in Washington, they are trying to find a state legislature that might be receptive to attacking credit unions.”
Those attacks are coming, he told the audience, even though banks received $30-billion in tax breaks in 2018, have paid $321 billion in fines since 2008, and recorded big layoffs, record profits and record dividends over the past year.
The Market Attack
Nussle said he finds “infuriating” the commercial currently being aired by Capital One Bank that gives the impression the branch is a coffee and donut shop, not a bank.
“They’re trying any way they can to get people to walk in their door, and they can’t do it by saying, ‘Hey, we’re a bank’,” said Nussle. “We need to look at what’s happening in the market and decide what we’re going to do about it.”
To illustrate a point Nussle acknowledged he makes at every presentation, he highlighted a chart showing how the market share of smaller banks has shrunk to 17.2% in 2017, from 53.3% in 1992. The inverse is true for the largest banks. Credit union market share since 1992 has grown from just more than 5% to a bit more than 7%.
Credit unions must also not overlook the legitimate gains banks have made in improving consumer satisfaction, which has steadily risen over the last decade, while that of credit unions has declined slightly, all but eliminating the satisfaction gap between the two providers.
The Heart Attack
The heart attack facing credit unions is one that is being self-inflicted, according to Nussle.
“If we forget who we are and forget why we do what we do; if you forget why you’re going to that darned board meeting yet again, or think it’s about spreadsheets or ROI or ROA, you’re missing it,” said Nussle. “This is special. This is different. We’re not a bank and we don’t want to be a bank. We’re different, let’s stay different.”
Nussle said he hears all the time about the importance of “removing friction” in member interactions, yet he believes a little friction can be a good thing.
“Yes, we have too much friction if it takes 30 clicks to do business with you,” he said. “But there is also good friction. If you sit down with a member who is up to their whatever in debt and say we can help you figure this out, that takes some friction to sit down and do that, and that friction comes from heart. That’s what we have to make sure to maintain. “Sometimes, that heart gets some plaque on it,” he continued. “One thing I have noticed and it’s been related to me by others, is credit unions competing with each other. There is 90% blue ocean for us to go after; we don’t have to poach each other’s members. Don’t put in your strategic plan you’re going to poach some other credit union’s members; that’s ridiculous. To me, ‘co-opetition’ is an abomination. Our cooperative super power comes in working together.”