Credit Union System Must Look Back to Look Ahead

Start a new year with a new administration and a new Congress. Add legislators and regulators pushing forth aggressive agendas. Mix with an unstable unprecedented economy, falling investment returns and strained budgets. It is the perfect recipe for “recession depression.”There is no doubt that the entire credit union system is negatively affected by the volatility of our current operating environment. Whether the fast approaching winds of change are considered good or bad, change can’t be stopped. How each stakeholder in our three-tiered system responds determines our collective fate. Actions of each affect all. In these circumstances, our cooperative nature should be our greatest strength.Unfortunately, if actions are taken independently, in self-interest and without respect for system unity and the greater good, it ensures severe vulnerability within a fiercely competitive financial marketplace.Statistics fill the headlines. Aggregate numbers reflect the strength of the system. The credit union community is filled with great talent and intellectual capital. Credit unions have the trust of their members. The components of a strong and vibrant industry exist. And, it has never been more important for us to pool these collective resources. That requires credit unions, leagues and CUNA to work cooperatively and collaboratively. Yes. That means exploring new business models. Yes. That means applying greater fiscal discipline to operations. Yes. That means focusing on program priorities that fuel growth and generate income. And, yes, that means driving redundancies out of the system through expanding partnerships and pursuing consolidation opportunities. These statements apply equally to credit unions, leagues and national entities. The question is: Will we have the grit to engage in the difficult dialogue, to support the necessary changes, to make the tough decisions and to execute plans that positively contribute to our necessary evolution?History reflects that at our peak in 1969, 23,866 credit unions existed; and, today there are only 8,176 credit unions. Consolidation continues. And the dues investment base has declined. But credit unions continue today to shape, value and financially support their leagues and the three-tiered system. Each league’s value proposition is directly determined by their member credit unions through their voice and their vote. As a membership responsibility, the credit unions shape their league’s principles, priorities and products.Leagues today are not the leagues of yesteryear. The role of the leagues in forming credit unions, initiating share draft programs and creating corporate credit unions is a valuable history lesson on the significant contribution of leagues in the development of the credit union financial and support system. As we celebrate the 100th anniversary of credit unions in the United States, we should be respectful and proud of our past but mindful that our present and future success has even greater demands and will test our pioneer spirit.Leagues must rely on their ability to be creative, collaborative and responsive as we face the surmounting challenges in 2009 and beyond. Leagues will realize the necessary operational costs and benefits and efficiencies by clearly reassessing their plans, products and programs. Which programs or products are added, deleted or modified will be decisively determined by their members’ support. Observations maintain that leagues are carefully scrutinizing their product and program menus to meet the expectations of their member credit unions. Due to a consolidated marketplace, gone are many of the solely proprietary products and programs of the past that can now be structured on a regional, shared-cost collaborative basis among leagues and other system partners. Examples include check processing, card programs, auditing and marketing services, and compliance support. Additions to league menus are products and programs that generate a direct benefit to the member credit unions in the form of additional income or membership growth. Examples include the outreach programs that attract and engage youth, the underserved and ethnic populations; initiatives that promote credit union differentiation in the marketplace; shared-branching programs that result in member retention and additional member convenience; and direct credit union member discount programs that add value to membership.The overwhelming majority of credit unions would concur that the leagues’ primary role today is to advocate for credit unions and their members in state general assemblies, in the halls of Congress and with state and federal regulatory agencies to ensure credit union interests are represented and protected. Today, the leagues’ role includes being facilitators to provoke thought, inspire leadership and gather consensus on critical issues. Today, the leagues’ role encompasses acting as coordinator for the common voice, harnessing the grassroots power to move forward a time sensitive and crucial agenda. And, today, leagues serve a critical role as the catalyst in creating and supporting the necessary cooperative entities and programs including Credit Union House on Capitol Hill, Project Zip Code, the Credit Union Legislative Action Council, Unrelated Business Income Tax action response , the National Action and Response Program, the Filene Institute and the REAL Deal outreach initiatives. In the wake of major disasters, leagues have created state foundations to be the local life raft for credit unions and their members providing supplies, manpower and funds to rebuild communities-demonstrating our philosophic and philanthropic spirit.In summary, the role of leagues has transcended from paternal to partner. Leagues sit at the table with credit unions to form credit union service organizations and limited liability corporations and manage a host of businesses. Leagues partner with other leagues to form jointly owned entities to offer products more efficiently and in larger scale. Leagues partner with CUNA to identify and offer national distribution of products and services.As we celebrate our history and face the challenges ahead, may we all recognize the contributions of our predecessors and appreciate the system we built together. And may we embrace change, knowing that each component of our system is interrelated and interdependent and be confident that we will always act in the best interest of the members we serve.