Pandemic, polarization, purpose, and profit

Someday, hopefully soon, the pandemic will be a historical event that most consumers have bounced back from physically and financially. However, for many consumers the bounce-back time will take significantly longer or not happen at all. The financial aftermath of the pandemic will further accelerate the income and quality of life polarization already underway.

Today, during the midst of the pandemic, credit unions are demonstrating their value and commitment to serving consumers (and small businesses) faced with extreme financial challenges. These actions speak louder than words in conveying the credit union purpose. I believe these purposeful actions, for people in need, will result in longer-term credit union loyalty and sustainability (profit).

However, I fear that once the pandemic is behind us, many will return to old routines and forget about the people who don’t bounce back as quickly.

Polarization of income, equity, and inclusion

Income polarization describes a process in which income concentrates into two separate groups: one rich and another poor.  This means there are fewer people in the middle-income group and more in the high-income and low-income groups. This is a serious problem in many of the communities credit unions serve. For decades, the middle class has been shrinking.

“Household incomes have grown only modestly in this century, and household wealth has not returned to its pre-2009 recession level. Economic inequality, whether measured through the gaps in income or wealth between richer and poorer households, continues to widen” (Pew 2020). The outcome of the 2020 recession could be far worse.

There are many factors at play here, but regardless of the issue, the fact remains that there are more people (and more likely to follow) struggling financially.  These individuals are more likely to remain on the fringe, excluded from affordable financial services. They need a credit union.

Purpose alignment

Everything we do, as people or as an organization, reflects our purpose.  One of the ways we can determine how closely we’re demonstrating our purpose is to listen to what other people appreciate about us. Judging by the massive media exposure and over-the-top member testimonials credit unions are receiving at the moment, I would say we are in the “people helping people” business and are at our collective best when we’re inclusive, helping our members solve financial challenges. I don’t recall a single news-related article in the past that praises the credit union space for having the best financial technology, or most robust menu of financial services. Over and over again, credit unions stand out when they demonstrate they are the consumer’s best financial advocate – especially for the “little guy” who is probably lower-middle-class, to low-income.

There’s no need to return to “normal” after the pandemic is over.  There will remain a large and growing group of people who will continue to face financial challenges who we can serve AND continue to gain extraordinary brand recognition, loyalty, growth, and profitability.


No doubt, working through the current economic recession is going to take its short-term toll on credit union earnings and capital. It will be painful. However, keep in mind the longer-term positive impacts that will result from credit unions stepping up and helping members through these tough times:

  • Improved brand image – once again, people are seeing credit unions in the correct, purpose-aligned, light. Credit unions are reminding consumers, businesses, and communities that they are the best financial option for many. Credit unions put people above profits. Credit unions are “Financial First Responders!”
  • Increased member loyalty – People forget common product and service commodities, but they are quick to remember people and organizations that stuck their necks out and helped them through a financial challenge.
  • Purpose-driven actions and meaningful member financial outcomes are resulting in better legislative and regulatory recognition. These efforts are already resulting in big wins for credit unions.

Collectively, improved brand impact, increased member loyalty, and an improved regulatory playing field will result in long-term membership growth and profitability.

Why it matters

A look at changing market segmentations reveals an increasing number of people will need quality financial advice and flexible products designed and specifically aligned to help lower-income and credit-challenged consumers. Time and time again, credit unions demonstrate their best collective market niche is helping underserved consumers (and businesses). The credit union space is small. Credit unions can’t be all things to all groups. The closer credit unions can align their purpose of “people helping people” to need, the greater the opportunity for growth and long-term viability.