By Mary Auestad Arnold
With margins tight, growth slow and competition mounting, credit unions are surely at a crossroads. Maybe the most critical intersection since the '70s when deregulation plunged S&Ls and credit unions into direct competition with banks. I wasn't yet in the movement to witness it, but it's obvious that a great many CUs were up to the challenge. As a group, credit unions have experienced enormous success during this period, while the savings and loan industry has virtually vanished.
What move will you make at the current crossroads, the one that now includes the possibility of hostile takeovers?
The way former NCUA Chair Dennis Dollar sees it, credit unions must embrace the idea that the market has changed and that competition is here to stay. "Frankly, escaping it is not an option," he said during a recent CUES Webinar. Rather than wish for the good old days, "we've got to make these the 'good new days,'" he said.
The only protection in the marketplace, he added, is credit unions' own performance. When he was with NCUA, Dollar said he would get letters saying, "We want our regulator to protect us from competition." His bottom-line response? "The only one who can protect you is you."
A self-described free-market thinker, Dollar believes greater consumer choice is a good thing as long as CUs have the ability to compete. He made it his mission while at NCUA to make it easier for credit unions to compete. He also approved some field of membership overlaps, which yielded some complaints: We won't survive! Concerned, Dollar began tracking the outcomes. Three or four years later, "every one of them was stronger," he said. "They rose to a new level in performance.
"Your challenge is to see the competitive marketplace as an opportunity instead of something to fear," Dollar said.
The question is how are you going to do that? Dollar's suggestions involved greater cooperation among credit unions. "We have to cooperate even as we compete," he said. "Working together we can compete with them all!"
For example, he urged CUs to join shared branching networks. Worried that another CU will steal your members? "Get over it!" he said, noting that this risk should be immaterial compared to the benefits of greater access for members. He also advocated greater use of CUSOs and advised large credit unions to mentor smaller ones--and for the smaller ones to accept it rather than fearing the help is merely an entree to merger.
How is your CU embracing competition?
Dollar's Webinar is available for playback. He will also speak at CUES Annual Convention, June 17-20 at the Atlantis in the Bahamas and close CUES' CEO Network, Nov. 4-7 In Key Biscayne.
