By Christopher Stevenson
When I interviewed with CUES almost four years ago, I spent a lot of time researching credit unions to prepare. It seemed that in whatever I read about CUs, the term "non-profit cooperative" emerged again and again. When I started my job, staff described credit unions to me as cooperatives and the movement as a "cooperative movement." It wasn't up for question; credit unions were cooperatives. Now, over the course of the past three weeks, I've had a number of conversations with credit union staff, directors, and suppliers about the cooperative nature of CUs, and the cooperative hardline seems to be softening a bit.
Throughout my conversations, credit union insiders said things like:
- Credit unions are businesses that were built on cooperative principles.
- People don't know what a credit union is, let alone the cooperative principles and field of membership.
- Credit unions say they provide better rates as cooperatives; some do and some don't. What's the credit union difference if they don't?
- There is only a co-op advantage if there is an actual strikingly obvious advantage to the consumer. Is there?
I believe that the cooperative business model provides distinct advantages over for-profit models, competitively and for the members. I also believe that many credit unions do a poor job of communicating the cooperative advantage. The benefit of cooperatives is not, as my friend Tim says, "just a cuddly feeling," but the tangible, hard-hitting benefits aren't communicated to the members, or for that matter, employees or directors, very well.
The most important benefit of the credit union cooperative model is that credit unions are owned and controlled by their members. Unfortunately, most members believe their roles at the credit union are insignificant. This can be especially true with larger institutions. However, would their attitude change if they truly undersood that they alone reap the benefits or suffer the losses related to the credit union's performance? Not only that,their participation directly affects the other members of the credit union. Members are interdependent.
Does your credit union adequately explain how the organization is designed to work? I'd guess not. I've belonged to three different CUs and worked at one. Not one of them gave me the rundown on the cooperative model. Had they done it, It would have changed the way I approach banking.
There is a saying among cooperatives that a cooperative without an education program will last a generation and a half. While credit unions do a great deal to provide financial literacy programs to their members (which ultimately benefits the credit union membership), they do little to educate new and younger members about the cooperative or its history. In a recent class of credit union board members, the instructor asked how many in the room knew the origin of the credit union they served. Less than ten percent of the class knew why their credit unions were created. At the same time, credit union staff and board members lament that no one shows up for annual meetings or volunteers, and few new candidates run for the board. Consider it for a moment. If the average member doesn't understand how the structure of the credit union is different from a bank or how their actions directly affect their own bottom line, why would they serve?
Member education becomes even more important as the credit union grows. In large, complex organizations, the member can feel far removed from the action. How can one person's voice be heard among 100,000 other voices? However, members who understand the credit union's distinguishing features and mission, how they are represented by the board of directors, the CU's background and history, the different programs offered, and the competitive environment in which the CU competes are more likely to continue their patronage, provide constructive feedback, and serve as effective salespeople for the credit union. (See Shari Storm's recent post on the effectiveness of word-of-mouth marketing.) Think about it, if you really understand the purpose of the organization and can get behind it, you're much more likely to support it, even in tough times. In short, money invested in educating members about cooperatives is money well spent.
So if communicating the cooperative advantage is so important, how do you actually do it? I'd start with the employees. Do your staff members, tellers included, know they work for a cooperative and what that means to the members? When I worked for a CU in college, I had no idea--it wasn't discussed--but I was on the front line meeting with members. Don't think that staff training on cooperatives can be completed in 15 minutes at the end of a staff meeting, either. The goal is to communicate the value of the cooperative so well that staff members can communicate it to anyone who comes in the door. That means that whoever is doing the training needs to have more than just a cursory understanding of the benefits of cooperatives as well.
Make it standard practice to include verbal and written explanation of the credit union model to all new and potential members who step foot in the CU. Encourage volunteerism from the outset, explaining that a member's active participation improves the quality of the cooperative and can have a positive impact on one's personal bottom line. Discuss the importance and relevance of participating in board elections in providing direction to the credit union. Really, if a member knows what they're in for when they join a credit union, one of two things will happen: They will either bolt for the door or they will embrace the concept and be the long-term, engaged members every CU longs to have. If you think checking accounts are sticky, imagine what volunteerism and community will do for your CU.
Credit unions are not just financial service providers. They operate on a different business model that not only provides a competitive advantage if it's done right, but that also can help engage members in the organization and provide them a sense of community. Now, I may be all pollyanna-ish on this, but I firmly believe that one of CU's greatest assets is the cooperative business model. Why put it under a bushel basket? Talk it up.
