March 26, 2026
by Scott Butterfield
Something is stirring in the credit union movement. You can feel it at conferences, read it in the trades, and hear it in the hallways of league events. There is a growing tension, sometimes raw, sometimes polite, between small and large credit unions. And if we are not careful, that tension will do more damage to our movement than any regulatory burden or competitive threat ever could.
Let me be clear about where I stand: I have spent the better part of 40 years in the credit union movement, 25 working inside smaller credit unions, five as a board member of a small credit union, the past 15 years working exclusively with smaller institutions, and in just the past 12 months have been in the shops of more than 40 smaller credit unions to facilitate their strategic planning meeting. I believe deeply in the mission these institutions carry. I also believe that some of the narratives currently circulating within our movement, on both sides, are factually wrong, strategically counterproductive, and frankly unworthy of a cooperative philosophy built on mutual respect.
This article is my honest attempt to name what I see, challenge what I think is misguided, and point toward what I believe can actually move us forward together.
The Reality: Not All Small Credit Unions Face the Same Challenges
When we talk about small credit unions, roughly those under $250 million in assets (my definition), we are not talking about a monolithic group. Based on the YCUP team’s work across the country, we see three distinct cohorts, and treating them as a single category is one of the first mistakes in this conversation.
The first cohort, perhaps the top 15 to 20 percent of small credit unions, is genuinely thriving. They are well-capitalized, profitable, and growing members, loans, and balances organically. They have found their niche. They adapt. They invest in their people and their technology. These credit unions are not waiting to be rescued; they are becoming the medium-sized credit unions of tomorrow. For all those who predict that small credit unions will disappear within a decade, I would ask them to spend some time with this cohort. They would reconsider.
The second cohort is strategically stagnant. They are well-capitalized, but they have not grown net members for a long time. Loan-to-share ratios are lower. Technology has lagged, though the pandemic accelerated meaningful catch-up for many. These credit unions need more than regulatory relief; they need a compelling reason to grow again, a new niche they can own, and the courage to make hard decisions about their lending, their services, and their leadership direction. This is the group where consultants, leagues, and system partners can have the most meaningful impact, if the credit union’s leadership is willing to engage.
The third cohort, and this is the difficult truth, consists of credit unions stuck in legacy thinking, legacy systems, and, in some cases, legacy leadership that is not positioned to adapt in today’s hyper-competitive market. Regulatory relief may keep these institutions alive a bit longer, but it will not change the fundamental challenge: leadership. Free compliance consulting helps you check the exam boxes. It will not help you grow. Any serious conversation about helping small credit unions must put leadership development at the center, not at the margins.
What the Emerging Groups Get Right — and What Concerns Me
Over the past several years, a number of new organizations have emerged outside the established credit union system with a shared purpose: championing small credit unions. They include CEO-to-CEO peer networks focused on vendor leverage and shared learning, nonprofit advocacy organizations pushing for targeted regulatory relief, and newer trade groups forming to represent smaller institutions. I follow their work with genuine interest.
I want to be fair. These groups are led by passionate, well-intentioned people who see real problems and are trying to solve them. They lead thriving, successful organizations themselves. The frustration driving their formation is legitimate. Vendor pricing abuses are real. I have seen contracts and service arrangements in this space that I find genuinely horrific, and small credit unions often lack the scale and leverage to push back. The regulatory burden on small institutions is real. And the feeling, right or wrong, that the largest voices in our movement sometimes drown out smaller ones, that feeling is real too.
But here is my concern: we’re not offering a consistent voice to policymakers, potentially diluting the message across all our efforts, and we’re not properly building on the strong advocacy work of our trades.
Our national association, America’s Credit Unions, and our state leagues are not perfect, no human institution is, but they have achieved meaningful wins for small credit unions. GoWest Association recently committed $200,000 to launch a Small Credit Union Accelerator Program, built in partnership with small credit union leaders and focused on coaching, leadership development, strategic differentiation, and regulatory engagement. The League of Credit Unions and Affiliates has a dedicated Office of Small Credit Unions with assigned consultants and in-person visits. America’s Credit Union’s Small Credit Union Committee has produced practical resources that have been used by thousands of institutions over the past decade. These are not token gestures. They are substantial investments.
When we start working in silos, we divide our advocacy energy. We risk sending conflicting messages to regulators and legislators who prefer a single, coherent voice from the credit union movement. And we risk alienating the large credit unions and system partners who, in many cases, are quietly providing exactly the kind of support small credit unions say they need.
The Myths We Need to Stop Repeating
On the small-credit-union side, I hear this too often: large credit unions want to merge us out of existence. This is largely false. The aggressive merger activity I observe is more often initiated by mid-sized credit unions, those in the $100 to $500 million range, than by the billion-dollar institutions being held up as villains. And in my experience, the majority of small credit union mergers that do occur are board-driven, sometimes as a response to years of strategic stagnation rather than any external pressure. That does not mean there are no bad actors, or that the condescending “FedEx-a-merger-packet” approach I have personally witnessed is acceptable; it is not. But painting all large credit unions with that brush is both inaccurate and counterproductive.
I also hear that leagues and our national association only care about large credit unions. I understand where this frustration originates, with more large credit union leaders at governance tables and greater resources devoted to complex large-institution issues. But today, three capable small-credit-union leaders sit on the ACU board. The challenge is not that the system has abandoned small credit unions; in many cases, the challenge is that, given real capacity constraints, small credit unions have not consistently shown up to engage with the resources and governance opportunities available to them. I have seen league staff work their hearts out to build content and events for small credit unions, and in return, have seen only a handful of registrations. That is a shared problem we all need to own.
I also hear that large credit unions are basically banks. Some of their decisions, stadium naming rights, and bank acquisitions may look bank-like, and I understand why that troubles people invested in the cooperative mission. I share some of that concern. But many of these same institutions are high-performing CDFIs that lend where others won’t, that support smaller credit unions in ways that never make the news, that are providing exactly the kind of people-first cooperative finance this movement was built to deliver. We cannot afford to paint with too wide a brush.
On the large-credit-union side, I hear that small credit unions lack the scale to survive. I have heard this said publicly, from stages, by thought leaders who should know better. It is condescending and not true. Survival is not primarily a function of size; it is a function of relevance. As long as a credit union sustainably serves what its target market genuinely needs, it has the opportunity to grow. Where small credit unions struggle is when they try to be all things to all people, competing in crowded markets where they cannot win on price or digital capability. The answer is not to get bigger for the sake of getting bigger; it is to get more niche-focused.
I also hear, and this one genuinely frustrates me, that innovation is dead at small credit unions. Wrong. The thriving small credit unions I work with are constantly adapting, piloting new products, rethinking their field of membership, building community partnerships, and finding creative ways to serve members that larger institutions often can’t match because of their scale and complexity. Small credit union innovations may not always make the conference stage or the trade press, but they are real, they are happening, and they deserve recognition.
What I Actually See Out in the Field
My team makes 50+ annual visits to credit unions across the country, institutions of all sizes, in all kinds of markets. What I see does not match the dominant narrative of large credit unions preying on small ones.
I see large credit unions purchasing core systems for small credit unions nearby in transition. I see management support quietly offered during leadership gaps. I see collaborations, referral arrangements, and shared expertise that are building genuine cooperative relationships across asset sizes. These stories are not making it into the national trade news, but they are happening. The small-versus-large framing damages our ability to see and celebrate this work, and it makes more of it less likely.
I also see something important within the small credit union community itself: a lack of board engagement that is doing more harm than any regulatory requirement. I do not hear credit union leaders telling me there are no training opportunities for their boards. I hear them telling me their boards won’t show up. The problem is not resource scarcity; it is a lack of commitment. And that is a leadership challenge that no advocacy group, no league program, and no regulatory reform can solve from the outside.
A Path Forward Worth Taking
I am not asking anyone to be naive. The challenges small credit unions face are real, and the urgency is real. The roughly three to five percent annual consolidation rate in this segment is not a statistic to be dismissed. But I am asking all of us to be honest about what will actually help.
What will help is next-level leadership development, especially for boards. What will help is if more large credit unions openly share technology, insights, and operational expertise with smaller credit union cohorts, and more small credit unions accept that help without pride getting in the way. What will help is better vendor accountability, which our system partners are better positioned to pursue at scale than any new emerging group can. What will help is small credit union leaders showing up to league events, to system governance, to the advocacy opportunities that already exist, rather than building parallel structures and hoping for better results.
What will help is a movement that is deeply communicative, collaborative, and empathetic, and that all organizations – old and new – that are working to advance various aspects of the credit union movement acknowledge that we need ALL of us right now to be successful.
Most of all, what will help is a movement that tells the truth about its own diversity, honors the institutions doing exceptional work at every asset level, and refuses to let legitimate frustrations calcify into a permanent, counterproductive war between small and large.
We are one movement. Alphonse Desjardins and Edward Filene did not build this for any particular asset size. They built it for people — for the member who needs a fair loan, the community that needs a financial partner, the household that needs someone to sit across the table and say: you belong here.
That mission does not have a size requirement. Let’s start acting like it.
