Corporate Competition: It Should Be About The Member

Stand around the water cooler long enough at any credit union in Indiana, Minnesota, Illinois, Wisconsin or Ohio, and I’ll bet you hear at least one person talk about “Survivor.” No, not Survivor the TV show, but the survivor left standing in the “competition of the corporate credit unions.” But as dramatic as all the talk has been from some corporate CEOs and “industry insiders”, the winners of competition will inevitably be America’s credit unions. So if competition is good, why are some corporate CEOs so adamantly opposed, and why do some feel “aggressed” upon? Good questions. We know that competition makes us all work harder, and makes us better. It’s what the premise of capitalism is based upon, and it’s why America is one of the greatest countries on earth. Competition makes us run just a little bit faster. In our society, competition boosts ingenuity. It creates economies of scale. It weeds out inefficiencies, increases productivity and generates excitement. In effect, it’s the fuel that keeps us moving forward. Without competition, corporates run the risk of growing obsolete and ineffective. Enter the NCUA. A few years ago, the NCUA started granting national fields of memberships to corporates so they could serve credit unions outside of their traditional membership. Nothing much happened immediately, but that changed when Corporate One became one of the first corporates to start approaching other credit unions directly outside of our traditional membership. Those credit unions were in Indiana, and thus began a new competitive era in corporate credit unions. Our initial discussions with Indiana credit unions ran the gamut from “Thank you for coming”, to “Get out! I would be disloyal to my corporate if I even talk to you.” But what has transpired since those initial meetings has me convinced that we did the right thing, and that competition is here to stay. After a few years of calling on Indiana credit unions, this much is certain, the overwhelming majority of them are better off because we knocked on their door. Many of them became members of Corporate One, and many didn’t. But those that stayed with their current corporate have told us many times over that even though they didn’t make the switch, they were better off because we were there. We not only gave them a choice, something they hadn’t had before, but our presence also gave them better negotiating power and helped them obtain better, more cost-efficient services from their current provider. The credit unions also liked corporates vying for their business and they liked having options. However, everything comes with a cost. Competition costs money. Advertising isn’t cheap, and neither is additional staffing. And of course, with competition comes the possibility of consolidation, as some corporates become dominant in their markets and others disappear. But that’s nothing more than the cost of doing business. Natural-person credit unions are learning that lesson everyday as more and more community charters are granted. It’s no longer business as usual in credit union land. But for every time I hear someone talk about “corporate competition”, the next words I usually hear have to do with cooperation, or the lack thereof. “Corporates should be cooperating to help credit unions, not competing against each other,” they say. And I agree, 100%. Currently, corporates continue to cooperate on many issues that affect credit union products and services, legislation and regulation. Corporates are members of U.S. Central and the Association of Corporate Credit Unions – both of which offer us the opportunity to cooperate on many issues that affect our members. Additionally, we cooperate all the time through agreements to distribute each other’s products or services. For example, Mid-Atlantic offers an excellent bill-pay product that is remarketed by other corporates. Northwest Corporate offers a Business Services package that is also offered through FirstCorp, and EasCorp has an advisory service that is used by several corporates, including Corporate One. Cooperation is alive and well in the corporate network. Finally, no one can predict with certainty the future of the corporate network. I do expect there will be more consolidation, but I have no idea of who or when. What I can predict with confidence is that competition is here to stay. And while some leaders of corporate and natural-person credit unions will find that difficult to accept at first, it will be the best thing for credit unions in the long run. Why? Because choice is good for credit unions, it’s good for credit union members, and it’s good for business. Competition isn’t about winning or losing. It’s not about defending territories or aggressing upon another corporate’s traditional market. It’s about working harder to provide better value to our members. I’ve run a corporate, and I’ve run two natural-person credit unions, and I can tell you this, the landscape for credit unions is changing. But one thing that shouldn’t change is our continued focus on our members. We must keep this focus if we wish to survive.