WASHINGTON–Just what would a “radical reframe” of the credit union community look like?
That question was put to a diverse panel of people from the credit union community, each of whom took a crack at offering their own view on the issue during the UNDERGROUND Conference hosted by Mitchell Stankovic & Associates here. CUToday.info is providing coverage of the unique meeting as part of UNDERGROUND Week. The meeting, held at the Newseum in Washington, sought to create a forum where executives to get together and share ideas that were outside the mainstream. Previous installments in this series can be found here and here.
Mitchell Stankovic said what it meant by “radical reframe” was a willingness to go against the status quo, and recognition that innovation is not just about technology and standard adaptation of business practices. It is also about responding to internal and external environmental considerations that are impacting members and consumers within a credit union’s market area.
Sue Longson, right, during panel discussion at UNDERGROUND Conference.
“One message is to burn it down and start over,” said Randy Karnes, CEO of CU*Answers in Grand Rapids, Mich. “I want to talk to you as designers, as people who feel some compulsion to reframe. I think we fall so quickly into the tactical and into the groove and the doctrine of being a credit union. And that doctrine for a lot of people is a heavy, heavy overcoat. And they wonder if they could ever cast that off and start over to something that brings them back to why we chose not-for-profit financial services as a tactic.”
Patsy Van Ouwerkirk, the former CEO of Travis Credit Union who is now doing consulting work with Mitchell Stankovic, said she believes too many credit unions overlook the importance of political advocacy on the national, regional and local levels.
“It is paramount to the success of the industry and to our individual credit unions,” said Van Ouwerkirk. “In 1975 there were 26,000 credit unions and in 2016 there are under 7,000. Regulation is driving mergers.”
From his perspective, Brad Houle, CEO of CAHP Credit Union, said he believes “Purpose, passion and advocacy keep the industry relevant. Who is doing the advocacy at your credit union? Driving the message to the consumer is part of the local credit union responsibility. Sometimes it takes relationships that can be developed based upon common understanding of specific field of membership. Political advocacy is good at the national and state level, but it also has to be at the local, credit union level.”
Issues With Cannabis Business
One credit union that has certainly been working to deal with a radical reframe is Southern Humboldt Community Credit Union in Northern California. It has been attempting to deal with the ramifications of changes in laws surrounding marijuana sales.
“Cannabis is a banking challenge,” said Shon Wellborn, CEO of Southern Humboldt Community CU. “It’s one that not many financial services executives are willing to talk about. It is still a closed door issue that needs to be opened, because it is becoming a part of the communities we serve. We have credit unions from California, Colorado, Washington and others represented in this room so let’s hypothesize on the issues relating to a marijuana consumer base. Staffing is a significant issue. It’s all cash. It’s filthy. People get sick. The lines are long. An extraordinary amount of very, very expensive equipment is needed to handle cash, and that kind of extraordinary incoming cash can have enormous impact to your credit union. You must manage to the ratios. Your deposits will explode.”
A credit union in a different part of the country is dealing with a completely different type of radical reframing. In Bettendorf, Iowa, the issue has been an accelerated succession plan for Ascentra Credit Union.
“Our former CEO, Paul Lensmeyer developed a succession plan to facilitate a leadership transition as he looked to retirement in three years, shared Dale Owen, CEO of Ascentra Credit Union. “Unfortunately, he passed away unexpectedly and we had to activate the plan. It was a time of sadness for all of us. He was actively involved in the community so we decided to recognize him through scholarships, dedication and actively communicating our vision, our mission and our commitment to core values of a credit union. We have rallied the team around social mission and that has given them purpose during difficult times. You have to take the message to the street. Aggressive marketing of the credit union difference will propel your organization to another level.”
Next Financial Crisis
On the consumer level, Owen sees a radical reframe coming for people carrying student debt, which he believes is “the next financial crisis. We are working with the Iowa League to promote the Financial Educational initiative from Adam Carroll. I encourage all credit unions to watch the BROKE, BUSTED and DISGUSTED video and get involved.”
That video can be found here.
Other key points and personal views made as part of the “Radical Reframe” panel discussion:
- “We have proven we can be bankers. But have we proven that we inspire consumers to ownership endeavors that feed the sense that our businesses tilt the scales toward consumers; that taking on the mission of being an activist consumer-owner enhances our communities, and the culture of our economic market places?”
- “We have built templates and best practice, paint-by-number tactics for surviving as bank-chartered knockoffs. But have we proven we can pick winners from the agendas of our owners? We have elected a voice dominated by the agents who negotiate our existence, not our purpose.”
- “We have negotiated and accepted industry scorecards that bind us to be governed by a set of criteria based not on cooperative business designs, but rather on technical banking designs. Is it even possible to reset our industry scorecards to encourage a second cylinder, a second perspective that would score each organization and network according to its ability to be a well-tuned cooperative?”
Jill Nowacki of the Connecticut Credit Union League during discussion at UNDERGROUND Conference.
- CEOs need to have political advocacy as a key component of their job description. Volunteers need to understand that is part of the governance activities, critical to sustainability of the credit union business model.
- “CUNA, NAFCU, and leagues are watchdogs on the credit union industry and advocate for strategic issues and reform. These associations need your time and your support to garner attention from the legislature.”
- Private lobbyists ensure your individual credit union message is told. CAHP Credit Union, for instance, has engaged the services of Aaron Read and Associates due to the firm’s long-standing relationship with the CHP and their ability to assist our organization with public relations and marketing within the peace officer community.
- The California Board of Equalization wants to create Cannabis Credit Union. The BOE believes it can bring that up under their regulation, even though Dept. of Business Oversight is the department that oversees credit unions. There are nine licenses in the future but nothing slated until 2018. “The cannabis community has a unified message: don’t overregulate us or we will go back underground. They want to be mainstream or not.”
- “There is a boatload of fee income to be had from serving the cannibis industry, but you will NEED every dime of it. You will spend it on the other side.”
- “Banks provide service to the people who will make them money. They serve Millennials. As more community bankers come into the industry we are getting that breadth of knowledge. Their perspective is a strength. It is also an opportunity to educate and differentiate.”
- “What happens when a large CU disaffiliates from CUNA? Is that about the industry or is that about them?
One Millennial audience member noted that in terms of the Millennial perspective, “I don’t think that people know what a credit union is. None of my friends have any idea how it is different from a bank. Use the banker knowledge to question how they do their banking. It’s a fantastic concept, but our generation needs to be educated.”