By Fredda McDonald
Anyone who has had the opportunity to read Anthony Doerr’s prize-winning novel, All The Light We Cannot See, is struck by his incredible ability to move readers with his captivating characters and tragic themes.
Set in France during World War II, his novel tells the story of a young blind girl who has unknowingly been left in possession of a priceless blue diamond for safekeeping. The irony in the storyline for this novel reminded me at once of the treasure we have in credit unions. And it caused me to ask: “Do credit unions really know what they have?”
Value is an illusive concept, based solely on the judgment of the people who are willing to trade for the item they value. In the early days of currency, it was expediency that gave rise to the representative money we know today. The logistics of moving things of value from place to place – namely crops and cattle –inspired the citizens of Lydia to create the first coins, back in the 6th Century BC. The small round pieces of precious metal they minted held just enough value to represent the thing they ultimately wanted -- food.
But over time, the coins themselves took on inherent value because of the flexibility and ease they brought to commerce. People forgot what the money represented and they just wanted the money. Time and distance from the original concept shifted the value to the coin itself and away from what it stood for in the beginning.
How does this apply to credit unions? Well, credit unions have been around for a while. Enough time has passed to shift them away from promoting their true value proposition and the strongest differentiator they provide to members. And you can see it when credit union’s focus on promoting products that provide members with advantageous terms, interest rates or fees. This is more than a subtle nuance in marketing messages; often times these promotions cause people to miss the real value of credit unions.
Where The Value Lies
In the 1800’s, in Germany where the first cooperatives were formed, the thing of greatest value to those members was based on the concept of the common bond – anchored in democracy, equality and solidarity to provide each other with financial services in a way that banks did not.
By establishing a cooperative business model for credit unions and associating together as members, they have created financial institutions that provide opportunities for people to build a life for themselves. The fundamentals of the American Dream -- like an education, a car and a home --are what credit unions make into realities. And those fundamentals build communities, support families and enrich lives.
When times got tough, like they did during the Great Recession, credit unions came through. While big banks were focused on getting paid for bad mortgages; credit unions were focused on keeping members in their homes.
When young people were searching for a place to transfer their money on Bank Transfer Day – credit unions were an appealing choice for them. When hurricanes or tornados tear through a community today, members know they can turn to their credit unions for help. That’s how credit unions roll.
But do they really appreciate just how different credit unions are from banks? A recent experience with a friend of mine validated this to me in a fresh new way. My friend’s father died suddenly, but not before running up tremendous medical bills and depleting his cash resources along with a good deal of the available credit of his son. While he was waiting for his father’s life insurance reimbursement, the funeral home demanded immediate payment for his father’s service and this presented a serious cash flow crunch. My friend’s first stop was to ask for a short-term loan from the bank where his father had been a customer for many years. The bank turned him down, in less than 15 minutes. So where did he go from there?
The Next Stop
His next stop was his credit union, where he had only one product, a credit card at its limit due to the medical bills– but no other products with them, other than a car loan that had been paid off several years back. He was not very hopeful when he walked into the branch. That meeting also took less than 15 minutes, but with a much happier ending. The credit union temporarily extended his credit limit on the card to cover the funeral costs. Oh, and he later got a hand written sympathy card from the branch manager, which was signed by the staff. That credit union now has a member for life, along with the rest of his family and a growing number of friends who heard the story and decided to join!
So credit unions can busy themselves creating marketing messages about advantageous interest rates and low fees, for sure. And they can develop promotions advertising better deals for car loans and mortgages – because they have them. But if that is all they do, then they are just competing on the banks’ playing field. And that’s not where the credit union’s priceless treasure lies. They can beat banks in an area where banks can’t compete. Because not a single bank in America has a mission statement of “People Helping People.”
Let’s look at that light.
Fredda McDonald is with LYDIAN Management Consulting, St. Petersburg, Fla., and can be reached at fredda@lydianmgt.com.