The Reputation of Credit Unions: Going Back to Basics Amid the 2020 Economic Downturn

In the midst of high unemployment, an expected continuation of job losses and consumers who are struggling to make it month to month, there is a strong need to return to basics in the credit union industry and revive the overall mission of why credit unions exist.

We are facing a grim economic outlook as a result of the pandemic-induced shutdown and its far-reaching impact over the next 18 to 24 months, and no one knows when or if things will improve. The future may look quite different than the pre-pandemic “norm” did, which may cause credit unions to embrace and leverage the difference they make in this world.

Are we just in an economic downturn or recession, or could this lead to a depression? Experts have many opinions, but one thing we know is that our members and communities are hurting. Credit unions are poised to provide support, build deeper relationships and be the providers of choice as the economic landscape unfolds and things begin to improve.

If a potential member were to ask any of your credit union employees, “What makes a credit union different from a bank?”. would you be proud of the answer provided? Would the right answer be given? If not, this is the right time to use your closed branch hours to focus on educating and training employees.

By focusing on thoroughly onboarding new employees to understand the “credit union difference,” credit unions can uniquely position themselves to take advantage of opportunities to build trust-driven relationships with their members and potential members in a post-COVID-19 world.

In the current “shutdown recession” and its economic similarities to the Great Depression, consumers’ returning desire to maximize every one of their dollars will inevitably attract new members to credit unions. Giving consumers a solid understanding of the value of what credit unions offer, why we’re different, and how we’re positioned to help members save and make money, will help build deeper relationships and support the holding of meaningful conversations that help improve the financial lives of every member.

Does a Credit Union Culture Matter?

The credit union industry has a strong beginning, is a powerful movement in our nation, and stands for noble values that have purpose. Yet, few credit unions are actually teaching the concepts of the credit union movement and have focused on other valuable skills needed in today’s complex environment.  As the demand for digital solutions prevails in the face of this pandemic, many credit unions have and are hiring high quality talent from outside the industry in an effort to successfully compete in the world of frictionless member entry channels and ongoing remote service options.

Much-needed talent is pouring in to transform outdated processes and delivery systems, helping to modernize and digitize systems. Yet, many of these new hires are not properly onboarded, not educated about the world of credit unions, and don’t fully understand what a credit union is, how they are different or what they stand for.

Are we losing our edge by not onboarding new hires correctly and setting clear expectations up front? Through my travels, I’ve learned no two credit union cultures are alike. Even if a new hire has previously worked in a credit union, ensuring they understand the new cultural norms and behavioral expectations is critical to their success. What works in one culture does not necessarily work in another. Proactively helping employees to properly acclimate supports the transitional success of each employee, removes confusion and eases the anxiety that comes from starting a new job. Creating specialized and focused onboarding that helps everyone adapt better, and protects each organization’s culture and the credit union industry overall.

While temptation will pressure some to squeeze more into an already condensed new hire orientation training, avoid falling into that trap! Recognize that drinking from a fire hose does no one any good.  Strategically pacing this education out over the first three to six months of a new hire’s journey, and then annually thereafter, allows for maximum retention of information. Focus on quality of the education over quantity.

Contact other credit unions that have done the hard work of creating quality onboarding and evaluate what can work in your credit union. Unlike banks, credit unions cooperate with their peers and help support ongoing development throughout the movement. CUNA Mutual and your state credit union league are great resources that have their own modules and/or partnerships with vendors that can educate on the value of a credit union.

The Origin of CUs in the U.S. & Similarities to Today’s Economic Downturn

The birth of credit unions in the U.S. truly started in the aftermath of the Great Depression. While there were just a few credit unions in existence prior, the need for a different banking option created opportunity at just the right time. As stated on Ducksters’ education website, in the late 1920s, consumers lost all their savings when 11,000 banks failed, and as the economy improved over a difficult economic decade, they were reluctant to trust banks with their hard-earned money. Unemployment went from 3% in 1929 to 25% in 1933. Sound familiar?

The credit union movement took off in the 1930s as groups of people got together from different industries and pooled their savings together (teachers, steel workers, military, etc.). Rather than handing over savings to another institution that could fail, people decided to lend it out to their peers and/or neighbors and charge less for it. The sense of ownership and safety to help one another was a much better option. This sparked a cooperative movement of “people helping people” where today, there are approximately 6,000 credit unions helping members to be financially secure.

As we hire from outside the industry, new skill levels improve a credit union’s ability to compete, but if we do not take time to educate and guide these talented professionals in the ways of a credit union, the cooperative culture may be lost. This is being seen today in some credit unions that are merging with banks, and combining two cultures without proper onboarding and education on how the core values of a credit union are vastly different from a bank’s. We also see bankers moving into the credit union space at executive levels where onboarding is key. Without a focus on helping new hires understand the culture of your credit union, a good culture can be lost all together.

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Michelle Peterson is a 20-year credit union industry veteran and the former Chief Retail Officer and SVP of Member Experience for Travis Credit Union based in Vacaville, Calif.