WASHINGTON–The “drug of overdrafts,” waiting on regulators to turn CUs into failed Blockbusters, and other tough issues were examined during a discussion here.
The discussion was part of a session titled “Stand Up Revolution” at Mitchell Stankovic’s Underground meeting here, held ahead of America’s Credit Unions’ GAC. Sharing their views were Brandon Michaels, president and CEO of OneAZ Credit Union; Amber Harsin, president and CEO of Prodigy; Jamie Strayer, founder of CU Strategic Planning, and Fernando Zandona, president and CEO of Mambu.
Here is some of what was discussed:
Q: Credit unions have been known for representing all people. That’s been the mantra for as long as CUs have existed. That hasn’t changed, but the world has, and how we address it has. Are there areas where we need to stand up and stir a revolution for credit unions to not just survive but thrive that is different from what we have done on this problem?
Harsin: There are two areas of this to me. One is the heart of credit unions, and the other deals with the head.
At the heart of credit unions are some of the societal issues, such as the income gap in communities. I think credit unions are uniquely positioned to help serve those members and to help find financial equity. Housing access is becoming a challenge. How do we deal with the things that cause bankruptcies? That costs all of us money in credit unions. One of the largest reasons is health-related issues. So, how can we as an industry maybe impact health care?
On the head side, we get into technology. I think as a technologist we are leaving small credit unions behind. We are outpricing them. It’s expensive for them to access technology. There is a misnomer in my opinion in a lot of companies that small credit unions don’t know how to adopt or manage technology. We leave them in the dark and in the process leave the communities they serve in the dark, as well.
Michaels: One of the drugs we have an industry is overdraft. I want to see us get off that drug. That’s not easy. How do we do that?
There are so many things credit unions do so well, but overdraft is a problem. But if you take OD away, most credit unions would be unprofitable. How do you transition away from that?
What’s scary to me is that credit unions in large part as an industry are missing the mark on consumers. We are making them come to us and we are not going to where they are. We are trying to be all things to all people instead of choosing a strategy and going after it. That means maybe irritating some people who have been with us a long time.
The Right Perspective
It’s about not going after them from a product perspective and it’s a challenge, because we don’t have the scale to service everyone.
The other aspect I think is worthy of talking about is technology. We are unable in the credit union community to buy part of the technology menu. It’s outdated, it’s legacy. So, we’re stuck with the technology we have. It’s time for us to put pressure on (vendors).
Strayer: Raiz Credit Union did a show recently with Opportunity Knocks, a PBS TV series that is all about credit unions. But it is not all about credit unions. It speaks to what Brandon is saying and that’s having financial wellness at the center of all we do. Sixty-percent of people are living paycheck to paycheck, 40% are on survival budgets. Yet our financial education tells them you have to save, cut out the Starbucks. But they’re not having the Starbucks.
Many of those consumers do not trust institutions. When you look at our websites, they are not solutions-focused. It’s home equity loans and refinances. Are we speaking to them? Are we talking to them about how to pay down credit card debt, pay less on car loans.
When (we started CU Strategic Planning) credit unions thought CDFI (funds) were for really large marginalized communities. But credit unions were created before the CDFI fund. Yet consumer satisfaction right now with credit unions is below banks, and we’re all looking at each other with our white hats.
We are doing the loans. How many do character loans, or below 640 credit score? Many do. Raiz Credit Union saved a woman’s home from foreclosure.
Talking to Ourselves
We did the show because we credit unions are speaking to ourselves, not to (consumers). And they are hearing from banks about how we are addicted to this drug of overdraft.
Are you going to wait for Netflix to come and put us out of business like Blockbusters while we wait for regulations, or are we going to put financial education at the center of everything we do?
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