Time for the ultimate examination

This is my 100th article to be published by CUInsight. By far, it has been the most difficult to write. It was difficult given all the uncertainty of the moment. The credit union movement hasn’t faced a bigger challenge. I’m confident we will collectively get through it and be stronger for it, but things will be different in a lot of ways.

I have spent a lot of time during the past month talking with credit union leaders. Conversations have been focused on crisis management, potential outcomes, stakeholder needs, access to resources, and, of course, concern over their next regulatory examination.

NCUA deserves high marks thus far in its response to the pandemic: regulatory flexibility, grants for LID credit unions, and expressing that it will limit the burden imposed on credit unions so they can focus on providing uninterrupted service to their members.

However, despite the tools and reassurances offered, many credit unions are of the mindset that “we’ll believe it when we see it.” There is a lot of concern that as credit unions are encouraged to act in the best interest of their members and staff, there will be little flexibility or understanding from their examiners when the time comes.

As always, credit unions need to act in the best interest of their stakeholders. Their actions will in part influence the results of their next exam. This is a test for examiners as well. We’ll be watching how they respond to the challenges credit unions faced during the pandemic. I was disappointed to learn last week that examiners reached out to two small credit unions, both I would consider national best practices, to schedule an exam this month (April). For the life of me, I don’t understand why their exams couldn’t wait at least until the shelter in place order is lifted. I don’t think the examiners involved considered the impact an exam would have on a seven- or eight-person credit union team learning to work remotely and trying to meet high member needs.

Other exams of greater importance

Credit union leaders are in the midst of far greater exams. Their current actions are being closely examined by staff, members, and the communities they serve. I believe that the results they get from these exams will far outlast any short-term regulatory exam – and they may be far less forgiving.

Staff – How we respond to staff safety, security, and well-being today, during times of unprecedented crisis, will influence the credit union’s internal culture for years to come. Our words and our deeds are being observed. If profit is placed before people, they will know and those who remain after the crisis will remember. They won’t remember excuses; they will remember what you did. I suspect future applicants will want to know how a prospective employer treated staff during the great shutdown. Employees who feel valued during this mess will work harder and be more committed to the organization and the team. 

Members – The consumers we serve are scared, and many are unprepared for this. Experian just released its Look Ahead 2020: Consumer Insights report. The results are from a national survey conducted between March 27 and April 3, 2020. One of the key insights was that 24 percent of survey respondents have already filed or plan to file for unemployment during the next 30 days (the number has likely increased during the last two weeks). How we respond to member needs at this time will determine our loyalty metrics for years to come. While people are slow to remember who gave them the best auto rate, they will be quick to remember who helped them during a time of crisis. There has never been a better time to earn member loyalty. The lengths credit unions leaders are going today to support members in crisis are remarkable. Regardless of size, credit unions are stepping up with examples that include loan deferments, interest-free emergency loans, fee waivers, and more. I’ve never been prouder to belong to the credit union movement. 

Community – Now is the time to leverage the credit union’s brand in our local communities. We do this in many ways. First, we support “community” when we financially help individual consumers within the community. Second, we support community when we find ways to collaborate with community partners to meet emerging and unmet needs. This could range from gathering relief supplies to interest-free loans to first responders to fundraising to a community webcast to discuss financial concerns, resources, and solutions. The potential list is long. This will not be easy and may be the biggest drain on credit union resources. But those who do it now when times are tough will increase brand recognition, win over new members, and create lasting community partners. Those who don’t won’t be remembered.

Why it matters

We will collectively make it through this pandemic, but things will dramatically change. I don’t have a crystal ball and can’t predict with any accuracy. I’d bet that technology will improve and change the way we deliver service to members. Unless you believe that the current downturn will have a big economic bounce-back (I don’t), the future is likely to be more competitive for loans and member engagement. Opportunities will likely depend on more than a “click.” I think they’ll depend on how well credit union leaders performed on their current exams. Moving forward is going to require more than adequate capital. It’s going to include a loyal team that’s willing to learn new things and work harder. It’s going to require members who believe in the brand, and I’d want to have broad community brand recognition and support.

This crisis will define a generation. Now is a time for each of us to give it our all. It will likely be the greatest effort many of us have ever given professionally. But it’s needed now and it’s up to us to show the world what we’re made of and make a meaningful difference.