By Frank J. Diekmann
Will your credit union ultimately be shaken out by the coronavirus pandemic, or will you survive to do the shaking? Ultimately, it’s likely up to your board—as a lesson from some 20 years ago teaches us.
There is little doubt that after the pandemic passes, and we don’t know when that will be but let’s offer a hopeful mid-2021 date, we are going to see a shakeout in the number of credit unions due to mergers. And that will happen for a reason many never or don’t want to discuss—a lot of boards don’t respond well to change (if they respond at all).
As Gary Perez, CEO of USC Credit Union, observed during a recent webinar, neither he nor anyone else has attended a credit union meeting in the past 25 years at which the “alarming rate” small credit unions are disappearing hasn’t been mentioned.
But it isn’t just small CUs that are doing the alarming. Many so-called “mid-sized operations” have also merged, with the boilerplate template reasons cited usually pointing to “increased products and services.” But that’s the thing about templates—they don’t always fit and the temp stands for temporary.
More than 20 years ago the whole concept of field of membership began to change in credit unions. Those who weren’t around at the time may find it odd or funny that many in the movement took offense and strongly pushed back against what was known as “FOM overlap”; the very idea another CU might expand its membership field so that it includes the FOM of another was an anathema to many. For lack of a better word, it pissed off a lot of CU leaders and board members who liked their worlds just the way they were and who felt the entire idea was contrary to credit unionism.
Like it or Not
Yet whether they liked it or not, the world of credit union chartering changed, especially while Dennis Dollar was chairman at NCUA in the early 2000s, and some boards and their management teams changed with it.
But many others did not, either because the board and management clung to a rapidly fading idealistic view of whom a CU should serve or—much, much more likely—board members wearing blinders never looked outside their boardroom tunnel. And on those rare occasions when they did, they concluded the changes taking place in Credit Union Land just didn’t apply to them, and besides, they were comfortable.
But the CU landscape did change, and it wasn’t comfortable.
Now we’re seeing another one of those real-time evolutions taking place, a rapidly accelerated “digital transformation” that for so long sounded to many like it was somewhere out in the future with flying cars and friends coming to dinner as holograms. Until it wasn’t.
In just six months we’ve seen much more than just fundamental lifestyle changes in the way consumers interact with their financial institutions (if they do business with an “institution” at all). The word "literally" is literally overused, but we did see what was literally an overnight shift in how employees interact with their employers, and that especially includes credit unions.
The New Hassle
How much of a change? Remember, the drive-through was once added to FI branches and fast-food joints as a revolutionary convenience, a faster way to quickly transact business without having to get out of the car. Now, even having to go to a branch or a fast food place and use the drive-through is seen as a hassle (with the exception, of course, of Chick-Fil-A, where customers continue to willingly enter lines longer than most parades).
Like you, I’ve heard many people wondering, “When will things go back to normal?” The answer is around the same time CUs return to those narrow, protected fields of membership. Those credit union boards that really get this, that realize they are now “payments unions” as much as credit unions, that understand the premium there is on creating a “personal” e-experience, and which understand they may never “meet” their best employees and job candidates, will be doing the shaking.
The remainder will be shaken out and be sending future press releases about their mergers to CUToday.info. (Speaking of which, I’ve received two merger releases in the past week in which it was also announced the CEO of the disappearing CU was retiring. That kind of a lack of succession planning/future planning is another board failure for another column.)
A Picture Tells a Story
One of my favorite examples of a picture-tells-a-thousand words—and unparalleled irony—is the photo at right showing people, many of them former employees, shooting pictures of the demolition of a Kodak plant in Rochester, N.Y.
Kodak was a pioneer in digital photography, but its management and board sat on the innovation because it didn’t want to cannibalize its lucrative film sales business. They were comfortable. They liked the world the way it was, thank you very much. And what are some of the people seen here using to digitally photograph the plant's demolition? Their cellphones.
It’s easy to cite an example like that, to laugh and consider ourselves superior, to think we would never make such a colossal management misjudgment—I mean, how could a company not see such a disruptive shift coming when it was right there in front of them?
After all, all those board members suddenly meeting virtually via Zoom would never miss something like that, right?
Frank J. Diekmann is Cooperator in Chief of CUToday.info and can be reached at Frank@CUToday.info. Diekmann is also the author of 501 Name Tags: How Everything You Need to Know About Business Can be Learned at a Conference and Forgotten in the Trade Show. For info: www.501nametags.com.