More and more often these days, I find myself reflecting on the lyrics of Pink Floyd’s “Us and Them.”
“Down and out, it can’t be helped but there’s a lot of it about; with, without, and who’ll deny that’s what the fighting’s all about; get out of the way, it’s a busy day and I’ve got things on my mind; for want of the price of tea and a slice, the old man died.”
We find ourselves in a painful political cycle hell bent on pitting us against one another. And as if this political maelstrom isn’t challenging enough, I frequently find myself having to explain the pitfalls of “Us and Them” thinking to credit union folks. Personally, it’s frustrating, because I view credit unions as the original source of financial inclusion. After all, it was credit unions that championed providing access to affordable credit to the little guy.
The topic usually surfaces during strategic planning conversations, and it’s usually with credit unions that are growth- (and identity-) challenged, and trying to find a target market where they can compete and win. Many credit unions define “us” as the people with good credit, good incomes – well-established prime consumers. Past strategies to compete with the best services and rates in very competitive markets have not been as successful as hoped. It’s usually at that point in the conversation that I bring up opportunities for serving emerging and underserved markets, like credit-challenged, lower-income, and Hispanic consumers. Then follow the “Us and Them” questions: “Do we really want to serve ‘those people?’ Why would we want to serve ‘them?’”
Stephen Covey said, “seek first to understand, then to be understood”
Covey has it right. It’s amazing how quickly barriers come down when well-intentioned people take a few minutes to first understand. When they do, they realize that not all credit-challenged consumers are deadbeats, and not all low-income people are waiting for a free handout. Many good credit union people are shocked when I share the average incomes or credit scores of the communities they currently serve. Nationally, more than half of all consumer credit scores are considered subprime, and 51 percent of all consumers make less than $30,000 annually. It’s time for a wake-up call: there are now more of “them” than of “us.” Now is the time for more “we.” After all, isn’t that why not-for-profit financial cooperatives were chartered? It’s a time for less judgement, and more innovation to figure out how we can more fully leverage our charters. It’s been my experience that “financial inclusion” nets greater results and is more rewarding than “convenient, friendly service and great rates.”
My understanding of the complex issues surrounding modern-day poverty began in 2004, when my credit union brought in consultant Sandy Maynard to discuss poverty and income class-issues. She helped us break down walls, creating empathy and understanding among the staff. Hearing her words and personal experiences influenced me greatly. It was from that moment on that my credit union career focus shifted to one of greater financial inclusion. Sandy’s training and mentorship helped me understand why income classes make very different financial decisions. Having a better understanding of each group’s life experiences and values helped me identify areas of opportunity to reach out and serve more people. It’s been among the most rewarding work of my career, and it’s helped many of my credit union clients, many of whom are now among the fastest-growing and most profitable credit unions in the country. “We” is better. If your team could use more understanding, I highly recommend Sandy’s poverty workshop and group facilitation. It’s the perfect place to begin your understanding of the serious and complex economic issues currently facing our nation.
Why it matters
Purpose – Real people’s lives improve when we begin to understand, and then we boldly act. When we extend credit to someone who is overlooked and underserved, accompanied by some type of development (training, coaching, education), they make their payments on time, and their credit score improves. When their credit score improves, they can get a better job, get better rates, pay less in insurance premiums, build assets, and buy a home. This is a much stronger brand-value proposition than better rates and fees. Is there a better explanation for our not-for-profit cooperative financial model? Our movement is founded on our acting to teach and lend to people the banks wouldn’t serve. Our model wasn’t built around having the lowest rate in town. I wonder when that mindset changed? Access to credit (and thrift) was our chartering cry. It’s in our roots, and it should still be in our DNA. It’s all about social purpose. “We” is better!
Profitability and growth – The market is flooded with financial service providers who want over-served prime borrowers. That’s why so many credit unions are having a difficult time growing and thriving. So called “prime” consumers can go wherever they want to – and they do. It’s usually to the organization that has the greatest scale to leverage convenience, technology, and rate. Small and medium credit unions lack the scale to consistently and effectively compete in this type of market. To survive, they have to find a space or market where they can compete and win. Marketing 101 will tell you that you want to be number one, or at worst number two in your market. Being number 20 gets you nowhere. Today, there are hundreds of credit unions that have figured out how to profitably serve underserved markets, reaching lower-income, credit-challenged, and immigrant communities. No charity offered here. Remember, “not for profit, not for charity, but for service.” My perspective on service is more about access than being friendly and perky. The cool thing about these credit unions is that they are extremely relevant in their communities; they are thriving. Why? The communities and the people they serve need them.
Preserving our charters – I believe the best path to greater legislative advocacy and victories is through financial inclusion. We’ll win more with “we,” meaning we should more closely align ourselves with the people others don’t want to serve and focus less of drawing a line between “us” and “them.”
If you’re the least bit worried about the long-term growth and/or relevance of your charter – I recommend you take a closer look at any underserved or overlooked communities within your marketplace. If your organization has an “Us” and “Them” mentality – I highly recommend you first “seek to understand” and invite someone like Sandy to visit your team to share some insights and challenge your assumptions in this area. If you are truly committed to becoming more “We” focused, but are unsure how to be more inclusive and maintain profitability – send me an email and I would be happy to share with you best practices and references to assist you in this process.