Shana. Richardson, Wednesday, December 30
Credit unions are relatively small players in the financial services marketplace, but through their collaborative, not-for-profit roots, we can do a world of good for consumers, the communities we serve and the credit union movement as a whole.
I recently viewed a Cooke Consulting Solutions Facebook event with credit union DC leaders Geoff Bacino and John McKechnie, and we have some challenges ahead that will require all of our cooperative strength to overcome. First, under a Democratic administration with the election of Joe Biden as president, the Consumer Financial Protection Bureau is expected to take up a much more activist role. I don’t want to make this political, but often well-intended policies can cause headaches for credit unions that are already fulfilling their mission of serving their member-owners in the way they want to be served.
We could even collaborate with the bankers on this issue…EXCEPT, they’re going to be trying to step on our throats at every chance they get according to the Washington experts. From field of membership expansions to credit unions buying banks to, of course, the perennial issue of credit unions’ tax-exempt status, it sounds like they’ll be all over us. This is an unfortunate distraction given that our common enemy should be the big banks that are taking market share from all types of community financial institutions.
During this month's NCUA board meeting, the agency already “unreversed” a regulation regarding an FOM expansion rule that the bankers challenged in the courts – and lost. The NCUA re-adopted a provision that allows credit unions to apply to serve combined statistical areas, or parts of them, as well-defined, local communities if the population has less than 2.5 million. Given the banks are abandoning these areas because of the cost to serve them, it makes little sense for them to oppose it, but such is the plight of credit union politics. (And when you’re ready to add these groups, let Ser Tech know – we can help you reach them with credit data-based, targeted marketing for the best ROI on your marketing spend!)
During the video, the question was asked whether FOM is even relevant anymore, given the advent of mobile banking and other technologies that help expand credit unions’ reach. I say, yes they are! Building deep relationships within your niche markets is an excellent business strategy to grow credit unions that is also cost effective.
An excellent way to build relationships in a niche market is to reach out to the underserved markets, such as the rural ones the NCUA just opened up for credit unions. Given bank stockholders’ demand for returns, it doesn’t make sense for them to serve these areas, but credit unions’ shareholders – the members – only demand service. And that’s what you can give them!
In serving these areas, consider Community Development Financial Institution’s certification and NCUA’s low-income designations if applicable. These two programs offer some regulatory relief and access to grant funds from the Treasury Department that make serving these areas much more feasible. And it helps credit unions demonstrate their commitment to our philosophical roots, which also supports our tax exemption.
Upping credit unions’ tech game can also help reach members in underserved areas more efficiently and effectively. I’m very involved with the World Council of Credit Unions, and we could definitely borrow some of the organizational concepts we’ve witnessed in Brazil. Again, collaboration is the answer! Cooperating on back-office work, from operations to compliance to IT, can save big dollars and provide a boost to credit unions’ ROA, allowing them to reinvest more into – you guessed it – serving our members, proving our tax-exempt purpose in DC and do battle with the big banks and others, like Amazon and Walmart, that are invading the financial services marketplace.