PHOENIX – Credit unions must show more innovation on products and service or risk becoming a relic of the 20th century rather than a key financial player in the 21st, maintains Chip Filson, president/CEO of Callahan & Associates. Addressing nearly 400 attendees at the annual Member Forum of PSCU Financial Services, the Washington consultant called on CUs to "transform" sometimes lethargic organizations into ones offering a wide number of desirable member services. As examples of innovation, he cited San Antonio Federal CU in Texas with its successful lending venture on manufactured homes, a creative point-of-sale merchant operation run by Services Center CU in Yankton, S.D. and a co-op program readied in the D.C. area using so-called "WiFi" systems or wireless Internet connections. The Callahan CEO maintained stagnancy in member and asset growth afflicts any number of CUs, but the trend can be reversed with pursuit of well thought-out niche programs. In his remarks, Filson criticized CUs who sit on large amounts of capital holding it "for a rainy day" or simply are unsure of how best to use it for expansion. The hoarding of $30 billion in excess capital in the industry "is not a good sign," he said. Citing examples in corporate America of companies like United Airlines, which has altered its customer service mission as a travel advisor, Filson urged CUs to strive toward a new culture of "transformation." As other examples of innovation, he cited a recent Navy FCU advertising campaign and the bid by Wescom CU in California to buy an industrial loan company to help purchase credit card portfolios. The public image of CUs trailing in the shadows of banks or being called "bank-lite" is not healthy, the Callahan CEO argued, adding that the industry "is in no position to duke it out with the banks." Nonetheless, the sharp drop in the number of CUs from 23,876 in 1969, to 8,981 in 2006, coupled with the lack of new CU charters, underscores some of the industry's problems. But he said those CUs which pursue what he called a "young, tough and good looking" attitude can overcome the odds and succeed while also bringing public attention to their economic and service role in the community. Credit unions should be willing to leverage their own strengths and pursue entrepreneurship rather than simply be market followers, he urged. A failure to do that, he warned and the industry could "simply fade into oblivion." [email protected]