'But we're different! We're cooperatives run by our members,' is the hue and cry from credit unions. While that's a nice sentiment and theoretically true, it's malarkey. Some members will support credit unions because of their idealism, but credit unions tend to ruin that connection because they're too worried about what ABC FCU's rates are. Rates should be competitive, but competing on price alone is a race to the bottom.

Chris Catliff, CEO at BlueShore Financial in North Vancouver, spoke at the CU Directors and CEOs Leadership Convention in August. He originally had to be convinced to join the rapidly declining credit union, then North Shore Credit Union, and turn it around. Catliff shared, and probably wasn't supposed to, that his credit union was at that time, ranked 57th out of 58 in CAMEL code among its peers.

The credit union was heading downhill fast because it had become irrelevant to its community. North Shore originally served an area that was very blue collar and included a lot of the shipping and dock workers. As the picturesque area shifted toward tourism for its economic driver, the demographic landscape morphed into upper class, white-collar residents.

The credit union hadn't evolved with it.

North Shore rebranded itself as BlueShore Financial, and shifted its brand toward personal banking to cater to the more affluent membership. BlueShore Financial's branches were transformed into financial spas composed of natural yet ecologically friendly materials to reflect the surroundings and the environment, which it found was important to the members. It also added high-end items for sale at its branches to add to the retail atmosphere, donating the income to charity. The credit union woos people in its doors with scotch tastings, which is popular with local residents.

BlueShore Financial looked inside to acknowledge what it was doing wasn't working. It looked outside to its members and community to see how it might once again be relevant.

Catliff's advice — and it's not just his — you can read this over and over again in business theory:

• Don't compete on price. Someone can always come in lower.

• Build a lifestyle brand. Be your members' No. 1 brand, period.

• Look outside the standards for certain services and build true business partners.

This last point can be particularly crucial to building strong relationships that credit unions can leverage.

BlueShore Financial built its own IT with a nonfinancial institutions specialist. The partnership was approached as an alliance and not simply purchasing a product from the provider. The credit union and this business partner went back and forth multiple times about what was needed and what could be created to suit those needs. The credit union ended up with exactly what it wanted in the end, and the business partner developed an entirely new line of business, which makes the business partner eternally grateful and likely to provide the credit union with the best service it can. True partnerships can't be all one way in either direction.

And finally, BlueShore Financial took action to execute on the strategy set forth based on what it learned from the community it serves. BlueShore Financial is theory in action. BlueShore Financial grew from $750 million in assets in 2000 to $2.35 billion in assets today.

As Catliff concluded in his address, "Bigger credit unions aren't necessarily better, but better credit unions get bigger."

Sarah Snell Cooke is publisher/editor-in-chief of CU Times. She can be reached at [email protected].