Trust: The Foundation of Credit Unions
Trust is the foundational difference between CUs and banks, and is something we must continue to work on daily.
Acting in the best interest of our members is the duty of credit unions. It’s what we’ve done throughout our history. When consumers’ trust in banks dropped steeply during the financial crisis, they turned to their local credit unions.
The 2008 financial crisis wasn’t the first time we’ve helped members through a hard time, and it certainly won’t be the last.
Just look at our industry’s response to the recent government shutdown. For more than a month, thousands of federal government employees didn’t know when they’d be paid next. Across the country, credit unions stepped up and mitigated their stress by offering various forms of relief.
Among the assistance offered: 0% interest loans, increased credit card limits, payment deferrals and extensions, and loans to replace federal government paychecks. These are just a few of the ways we supported our members, but the impact was widespread and acknowledged by the national media and key lawmakers, including House Financial Services Committee Chairwoman Maxine Waters (D-Calif.).
Where were the big banks during the shutdown? They were slow to respond, mainly noting that they would “work” with affected customers, until media attention forced their hand.
It was these same banks that engaged in risky lending practices that shaped the housing bubble. It was the banks that tightened lending and increased fees as they tried to rebuild their profits. While banks try to prove they’ve seen the light and urge lawmakers and regulators to loosen the restrictions that were put in place to protect consumers, the ongoing news of fines and larger-than-ever profits make that hard to believe.
Enlightened consumers have become increasingly wary of these unethical banking practices.
Credit unions, on the other hand, were there to help American families pick up the pieces when the housing bubble burst and get their finances back on track. Our institutions offer safe, affordable financial products that are meant to improve our members’ lives, not enrich stakeholders. It’s our commitment to our members and reinvestment in our communities that has created a solid foundation of trust.
This is why credit unions continue to see growth. We’re there for our communities that need it most.
There are a number of challenges currently facing credit unions – from crushing regulatory burdens and compliance costs to fintechs offering competing products – but we have never been stronger. Between 2017 and 2018, we saw more than a 4% increase in annual membership and our assets grew 5.4%. Our loan growth and lending performance has surpassed banks’.
We now provide financial services to more than 116 million Americans, and despite consolidation within our industry, we are gaining new members every month. This doesn’t mean we can slow down now. In fact, it means the opposite.
NAFCU’s upcoming annual conference (June 18 to 21 in New Orleans, La.) provides a space for credit union leaders – veterans and rookies alike – to come together and refresh their perspective. This year’s conference is all about big trends and big takeaways that will take our institutions to the next level.
As we work to identify trends within our member base to offer more and better financial products and services, NAFCU continues its advocacy as the industry’s Washington watchdog to give us the regulatory environment needed to do so. We’ve seen the tide turn toward regulatory relief for smaller financial institutions like credit unions. That’s why burdensome rules are being reviewed to ensure that they benefit consumers without stifling growth and innovation.
Lawmakers and regulators recognize the credit union difference: Trust. It is the foundational difference between us and banks. It is something we must continue to work on daily. We must never lose sight of why our cooperatives were founded. And I, for one, believe we never will. Because doing what is right and earning trust, simply, is in our DNA.
Jeanne Kucey is Chair of the NAFCU Board of Directors and President/CEO for Jetstream FCU. She can be reached at 305-821-7060, Ext. 3080 or jkucey@jetstreamfcu.org.