WASHINGTON—The nation’s non-financial cooperatives, which hold about $300-billion in assets, are pledging to work with credit unions in a new initiative aimed at cross promoting membership, sharing space, and bringing their deposit and loan business to CUs.
The new effort is coming in conjunction with a new report that seeks to quantify the business case for credit unions and other cooperatives to “engage in mutually beneficial partnerships with each other.”
The report was jointly produced by CUNA, the National CU Foundation, the National Cooperative Business Association, and the Filene Research Institute.
About 35% of credit unions have community FOMs, making them readily able to accept cooperatives as members, i.e., as borrowers and/or depositors, the report suggests. Many credit unions without community FOMs may also be able to accept cooperatives as members through membership in select groups, the report adds.
“Credit unions are not financial institutions that happen to be cooperatives. They are cooperatives that happen to be financial institutions,” said Mark Cummins, president & CEO of the Minnesota Credit Union Network and Chairman of CUNA’s Cooperative Alliances Committee. “This report shows that credit unions and other cooperatives are natural business partners and would greatly benefit from working together.”
Saying it recognized “the tremendous potential” for economic benefits that credit unions could reap from developing more business relationships with other types of cooperatives, the CUNA Cooperative Alliances Committee said it was seeking to demonstrate this potential with data, which is why it partnered with the National Credit Union Foundation, the National Cooperative Business Association and the Filene Research Institute.
Funded by a grant from the Foundation, Filene conducted the study and announced the results of the project at a recent meeting in Washington. Credit union and cooperative leaders met about how they can follow up on and use the results of this research, including:
- Cross-promoting membership.
- Sharing physical space, such as locating credit union branches or ATMs at or next to non-financial cooperatives.
- Cross-marketing efforts such as co-branding credit cards.
- Shifting cooperatives’ current and future deposits and borrowing from commercial banks to credit unions.
“This is about quantifying the business opportunity between credit unions and co-ops,” said Mike Beall, president and CEO of NCBA CLUSA, and the former president of the Maryland/DC and Missouri leagues. “It’s a no-brainer for credit unions to ask for co-ops deposits and loans, and a no-brainer for co-ops to make the switch to credit unions from banks. NCBA CLUSA is committed to making this happen.”
Mark Meyer, CEO of the Filene Research Institute said cooperatives and credit unions coming together presents an “incredible opportunity.”
“On deposits alone, credit unions could help co-ops earn hundreds of millions of additional dollars every year," said Meyer. "But credit unions have to tell that story better, and this report is a great step in that direction."
In 2014, non-financial cooperatives in the U.S. had about $300 billion in assets, according to the report. These cooperatives range across a broad variety of sectors, including utilities ($149 billion) and farm-related ones ($83 billion). Non-financial cooperatives would benefit from broadening their potential sources of credit and financial services. As cooperatives themselves, credit unions are a natural destination, instead of commercial banks, for non-financial cooperatives’ deposits.
The report can be downloaded at this link.