The following perspectives could have value and be a positive influence on the future of the credit union movement:
1. Branding. I have obviously not been in the planning sessions, listened to the marketing consultants, or heard the management team and the board debate as various credit unions decided to change their names.
But, as an outside observer, it seems to me that about half of those name changes were well-thought-out and effective. The other half left me scratching my head and wondering, “What were they thinking.”
I understand that brands and names evolve. Consumer acceptance shifts. Sponsors disappear or become less relevant. And credit unions sometimes change their target market, which leaves their historical brand outdated.
But on the other side of the equation, I am often reminded of a marketing axiom I learned many years ago: “Your brand is your lifeboat. Never abandon your lifeboat.”
An entity’s brand identification is a combination of marketing messages and consumers’ experiences with that entity’s products or services. Brand identification is built over years or even decades.
A brand becomes a consumer “comfort zone.” If the messages and experiences have been predominantly positive, brand can exert a powerful influence on a consumer’s decision to deal with a specific vendor or institution in the future.
Just as a lifeboat is needed and much-appreciated in a storm at sea, so too is a known and well-positioned brand.
Some of the best brand changes credit unions have made have been those that preserve a historical name, look, or feel while stretching that brand to reach new or more broadly defined markets.
But in doing so, management and boards of directors might want to keep the lifeboat analogy in the back of their minds.
2. Regulators. Most of us are trying to find a balance among multiple and often conflicting issues, objectives, principles, or priorities. That’s a natural consequence of limited resources—time, money, focus, and energy.
But, it is in finding that balance that we serve multiple good purposes, perhaps few to an ultimate best outcome. But accomplishing “more” too may be the really important result.
Regulators typically do not have that balance (other than the pressures of the regulated, for less!). A quote from an American Banker article makes the point: “Anyone in the prevention business—from doctors to airline security screeners to bank examiners—will tell you they face an exponentially bigger downside from being too lax than being too stringent. Abundance of caution will always win the day here.”
The Federal Reserve, however, does have a dual mandate: to manage the money supply (control inflation) and to have policies that will stimulate “full” employment.
There is much debate about the appropriateness of those competing objectives, but it would be fair to say that when they can both be achieved at the same time, the economy and society are well-served.
As far as I have been able to determine, our credit union federal regulator’s objectives or mission is to “prevent” and “avoid” risk based on wording such as “enforce legislation and regulation,” “assure safety and soundness,” and “protect the Share Insurance Fund.”
What I would suggest is that some of the words often in NCUA Board members’ speeches also get adopted as policy or mission (or even in legislation) for the agency, giving credit union regulator guidance “to stimulate credit union activities (loans and other financial services) for consumers and businesses to increase incomes, employment, ownership, and economic growth of, and in, America’s communities.”
Note: I have actually used for this text a variation of an NCUA description of its Community Development Revolving Loan Fund.
NEXT: CEO compensation
3. CEO Compensation. “But I know it when I see it.”
There may be a credit union CEO compensation variation of the famous Supreme Court Justice Potter Stewart quote from 1964 about pornography, but a few rules for boards of directors, CEOs, and credit union compensation consultants might help us avoid that kind of comparison:
4. Business lending. Some in our industry, including some regulators, have a deep fear of credit union business lending. Indeed, we’ve had a number of headlines over the years about failures specifically linked to business lending.
Statistically, I think credit unions’ loss numbers are as good as or better than community banks’ numbers, but I do understand the objections and the concerns (lending does have risks).
Our job is to do the underwriting, pricing, and monitoring in a manner that mitigates those risks (or pays for them).
Credit union business lending is extremely important for a couple reasons:
In addition to the above benefits, business lending represents multiple lenders (credit unions and banks) in a community looking for good loans that will help finance business growth.
And, the U.S. needs good jobs and employment, and federal, state, and local governments need the tax receipts from successful businesses and their employees. That’s the principle on which to base the case for expansion of credit union member business lending.
And as a tangential benefit—as credit unions become more active business lenders—banks will become more competitive and business-friendly lenders as well.
5. Leadership. Be present, engaged, and passionate.
Years ago, participating senior executives in a group working with a consultant were each asked to pick from a list of descriptions of their leadership style. It was interesting, but not surprising, that no one in the group described himself or herself as “warm and fuzzy.”
In a way, that was disappointing because they had potentially eliminated the father figure, someone who is a good friend, someone with empathy, or perhaps leaders who sincerely care about the lives and welfare of those who work in their organizations.
I would not in any way de-emphasize core leadership requirements—technical competency, financial acumen, judgment, self-confidence, and communication skills. But I’d also want to see personality traits that would include warm and fuzzy, love, and enthusiasm.
Those soft and very positive motivating skills are particularly desirable, especially in a member-owned, not-for-profit entity. Our mission is to help people improve their lives, to have cars to get to work, to have homes and to improve them to meet their tastes and needs, to save and send their children to college, and to save and invest for retirement.
With that kind of mission, we should have a genuine passion for what we do, we can be caring and kind with co-workers, and we can have love for the member/owners we serve.
6. Do your absolute best! As a UCLA student in the 1960s, one of my heroes then—and since—has been UCLA’s legendary basketball coach John Wooden.
At the top of Wooden’s Pyramid of Success is “competitive greatness,” which he defined as “Perform at your best when your best is required. Your best is required each day.”
JOHN TIPPETS is president/CEO of North Island Credit Union in San Diego.