Slowdown in Membership Growth Makes No Sense

I was never very good at math. Maybe that’s why the various credit union membership numbers being bandied about lately don’t make sense to me. Depending on whose figures you believe, the total number of members in the 9,000 plus U.S. credit unions still around is somewhere between 84 and 85 million, give or take a few hundred thousand. Most everyone involved with credit unions takes that number as gospel. I don’t. For one thing, it counts people like me who belong to more than one credit union (and there are lots of us), as a separate member for each of our credit unions. What is also interesting about that lofty number, which is constantly bragged about a lot in speeches and articles, is that a few years back CUNA dedicated a senior staffer to lead the charge to reach a goal of 100 million by the new millennium. Didn’t quite make it! Also worthy of note is the fact that the population of this country is rising faster than the percentage of citizens who belong to credit unions. What’s wrong with this picture? Credit unions have never been better positioned for growth in their history. Despite a dramatic drop in the number of credit unions, assets are increasing at breakneck speed. But not membership. Why not? The credit union spin doctors try and explain away the slow down in membership growth, especially in the last 12 month reporting period, with such lame rationale as “credit unions are purging inactive and low balance members from their roster.” That just doesn’t fly. Credit unions have always done that. If this dump members activity has been accelerated, why? (Maybe that’s another column?) Shouldn’t credit unions be putting at least as much effort into getting inactive members active as they do with all-out marketing campaigns to bring in new members? The trend today is for credit unions to seek more turf, especially those pieces of geography brim full of potential members. State and federal regulators have been more than generous in granting a flood of field of membership requests, even some that stretch the definition of “well defined community” to the breaking point. Just ask the banking industry lobbyists! Shouldn’t all these FOM expansions logically be expected to bring in a ton of new members at a record pace? Add to the equation Access Across America, an NCUA initiative authored and pushed by NCUA Chairman Dennis Dollar. It is a politically correct program designed to bring credit union services to millions of low-income neighborhoods. It has done just that. Far faster than probably even Dollar ever imagined possible. Since the program was launched, untold millions and millions of “potential” members have had a growing number of credit unions actively seeking to bring them into the fold. There’s more. A record number of credit unions have converted to whatever charter would make it easier for them to add to their membership rolls. State to federal. Federal to state. Whatever to community. Even once plain vanilla, single sponsor credit unions have gone the community charter route. A community charter of course, opens the doors to every living and breathing soul in the community. And then there are credit union mergers to consider. Among other things, the surviving credit union following a merger usually has positioned itself for a significant membership growth spurt. It has the resources to bring in lots of new members that for whatever reason the two previously separate credit unions were not able to do as effectively. Despite all these opportunities for individual credit unions to increase membership, overall credit union industry membership numbers only increased slightly last year. The total rose less than a million, the lowest membership growth in the last 10 years. The obvious conclusion from all of this is that credit unions are not doing a very good job of converting potential members into members even though they have never had a greater opportunity to do so. Maybe there is another reason? Perhaps credit unions are losing more members than ever before to other financial institutions such as banks, especially community banks? As far as I know, departing members are not tracked. Only net gains are reported. Thus if a credit union that normally brings in 10,000 new members every year still does so, but is now losing 5,000 current members, the net gain is only 5,000 members. Maybe the difference between when membership was growing by leaps and bounds is not that fewer members are being recruited but that more are departing for greener pastures. Heresy you say? Not really. Despite the prevailing credit union attitude that all banks are bad and only seeking a fat profit to share with management staff and stockholders, there are many outstanding community banks, some of which can out credit union a credit union. And despite all the bashing of payday and predatory lenders, just maybe this is where the potential and former credit union members have been forced to get their financial needs handled. There has to be a reason why these entities have had meteoric growth in the last several years while credit union membership growth has dropped down to low gear. Maybe the percentage of credit union loan turn downs has gotten too high and the CU delinquency rate become too low? And just maybe, credit unions seeking a blacker bottom line have become too eager to send less active and thus less profitable members packing? Whatever the reason, the slowdown in credit union membership growth doesn’t make any sense and needs to be addressed in an objective and unbiased way. If there is a problem, it should be fixed ASAP. With all the growth tools now readily available to credit unions, that still elusive 100 million members should have been achieved long before now. Any suggestions? Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected].