Small Credit Unions, The Silent Majority

In many ways, today’s small credit unions resemble the “little guy” the credit union movement fights so hard to recognize and serve. As of September, 71.9 percent of our 5,966 credit unions are considered “small,” with assets of less than $100 million. Last year, I personally visited more than 35 small credit union boards and management teams for strategic planning sessions, credit unions located across the country in both urban and rural environments, and representative of all types of membership charters. My travels put me in a unique position to listen to and observe needs, wants – and, increasingly, frustrations.

Frustration is high (and growing)

Smaller credit unions are frustrated over a host of issues. The regulatory burden remains a huge frustration, of course, but I often find it’s more than that. Two other big frustrations include:

Competition. This comes naturally from market forces. Everyone agrees, especially the little guys, that it’s harder to compete in today’s financial landscape. Small credit union leaders know that to be relevant long-term, they must be able to grow and generate sustainable income. In most cases, I find the apex competitor smaller credit unions face are the large credit unions located in their market. In some markets, there are three or four very large credit unions competing with an open field of membership, and – like it or not – this hurts the smaller (and even mid-sized) credit unions in that market.

Please understand, I don’t want to do anything to limit any of our credit unions, regardless of size – they all matter. But, I think we must at least look at, understand, and talk about the big elephant in the room. One best practice I see from time to time is a large credit union stepping up to help the smaller credit unions in the area. There are no strings attached; the larger credit union isn’t interested in merging the smaller credit union. It just wants to help, and sees it as another way to support the community at a different level. It’s a smart idea: a little bit of assistance can help smaller credit unions carve out their own unique niches, and smaller credit unions can sometimes help consumers the larger credit union can’t (or doesn’t want to).

Feeling left out. I’ve also found there’s latent frustration over the perception that many credit union trades and many vendors don’t care about small credit unions anymore. Small credit union leaders see all the attention the large credit unions get and believe it’s due to commensurate contributions of dues and fee income. The feeling is compounded by the volume of credit-union related content targeted to and/or about large credit unions.

I’ve written about this before, and believe me when I say that innovation at small credit unions is not dead. There are scores of small credit unions innovating, and many are among the movement’s fastest growing and most profitable. I encourage our trade associations and vendors to consider the amount of attention paid to smaller credit union issues. Like any good relationship, the more you invest, the more you get back. Make small credit union leadership feel respected and important, and their level of loyalty and participation will increase.

Next month, many of us will gather in Washington D.C. to Hike the Hill and advocate for credit unions. We have very enthusiastic and professional advocates in Washington, but they need our support. I agree with Jim Nussle and others that the current political climate presents a huge opportunity for credit-union regulatory relief. None of us, small or large, can afford to miss this opportunity, and we all must get engaged if we want to be successful.

Small credit unions are a very big part of our advocacy picture. Because small credit union leadership is “closer” to their membership, the member stories they share with legislators may be more authentic, more clearly articulate the credit union’s role in serving the middle class, and their collective voice more closely represents our majority. I believe that in today’s political climate, the more authentic we can be, the better our chances to effect change.

Small credit union accountability

It’s not only the trades and vendors that need to challenge the status quo. We need to see more small credit union leaders sitting on state- and national-level boards and committees to make sure their unique voices are heard. This is easier said than done; it’s a big investment in time for small credit union leaders who are up to their eyeballs in operations and compliance duties. Regardless, they need to make the investment if they want their voices heard. To influence change, you need to be at the table.

Small credit union leaders also need to support those programs and services that are currently available to them. Several leagues have already recognized the need to create forums for smaller credit unions – not just to “network,” but to provide strategic educational sessions unique to the challenges faced by small to mid-sized credit unions. Nothing is more frustrating for our trade associations than creating valuable, small-credit-union-focused events and not having enough people participate to justify the effort. I am privileged to work with credit union leagues and other trade associations that provide excellent education opportunities for smaller credit unions. I can tell you that many of the credit unions engaged in these small credit union programs are thriving and among the most successful credit unions in the country. Smaller credit unions can and do succeed, but they must get involved.

Gut check

We need to ask ourselves how much small credit unions matter to the credit union movement. Personally, I believe they are the heart and soul of our space. I’m not discrediting all the good work done by larger credit unions, and I know I will be criticized for saying it, but it is what I believe. Our “movement” becomes an “industry” without a healthy population of smaller credit unions.

If we believe small credit unions are vitally important to our space, I hope we can do more to collectively make serving and supporting them a higher priority. Our movement is stronger when we are all on the same page. It hurts our collective when portions feel unimportant or irrelevant. I believe there is opportunity to increase engagement through better inclusion and support.