Rediscovering our Cooperative Roots: Reinventing Revenue Growth, Member and Loan Attraction

Scott Butterfield, CUDE

“We must remember what we started out to do and then find ways to do it

with the modern techniques available.”

Louise M. Herring

Using Louise’ Advice

1. Remember what credit union’s started out to do

2. Identify what’s changed3. Discuss some modern techniques to

reinvent revenue, member and loan growth.

WHAT CREDIT UNION’S STARTED OUT TO DO

Our Origins

Socially Responsible Focus• Affordable access to credit• Promote thrift

Has This Focus Been Successful?

Early Movement Growth

• Total number of credit union’s grew during the great depression.• 1,100 in 1929 to 1,700 in 1932

• Total number of credit unions continued to grow after the war• 17,256 in 1956 to 23,761 in 1969 (peak)

Our Focus on Affordable Access to CreditResonated Strongly with Consumer Need.

WHAT’S CHANGED

What’s Changed?

Economy• Period of long-term growth has ended• Consumer’s are in rough shape

• Deeply in dept• Lost significant wealth during recession• Prospects of long-term high unemployment• Impaired credit scores

What’s Changed? The Housing Market

http://www.calculatedriskblog.com/2012/05/quarterly-housing-starts-by-intent.html

Mortgage Loans are 48% of our total loans

What’s Changed? Automotive Market

What’s Changed? Household Debt

What’s Changed?

Regulatory and Legislative• Escalating regulatory burden• Consumer Financial Protection Bureau

• 23,000 pages of legislation • Introduces 387 rules from 20 separate federal agencies• 75 changes to existing regulations and over 20 new

regulations stemming from Dodd Frank.

What’s Changed?

Complexity• Credit union operations are more complex

• Especially for the 70% of credit unions that are less than 30 million

• Rising system and HR costs• Specialized HR training and skill sets required

What’s Changed?

Competition• Banks• Lower traditional loan demand• Shrinking pool of well qualified borrowers• More community chartered credit unions

• Overlapping geographic trade areas• Look, sound and act alike• Similar product, rate and service offering• Weak consumer understanding of credit union

differentiation.

MODERN TECHNIQUES AVAILABLE

Modern Techniques

Our People• Get the right people on the "bus”• Ensure proper training and skill sets for today’s

new reality• Make the hard decisions

What are some of the new skill sets that might be needed more today?

“There are going to be times when you can’t wait for somebody. Now, you’re either on the bus or off the bus”. Ken Kesey from Good to Great

Modern Techniques

Systems and Resources• Correctly aligned with current member need for

access (including credit) and service• Have consumer needs changed in the past 5

years?• Leverage cooperative roots

• Joint CUSO’s – lending, collections, operations, compliance, training

• Facility sharing

Modern Techniques

Membership Growth Strategies• Identifying and Leveraging the CU Difference

• Purpose – People over profits• Products and services that meet consumers

current financial needs• Reputation and trust• Social responsibility• Local community presence and local funding• Stability – well-capitalized, lower risk• Affordability

Modern Techniques

Membership Growth Strategies• Community Focused Opportunity

• Programs targeted to low and moderate income• Financial education• Access to credit and savings accounts• Asset building tools such as matched savings

accounts

Best Practices #1

Best Practice – Lower East Side Peoples FCU• $32.0 million assets• NY, NY• 3 Branches• Financial education• Payday alternative loans• Risked based lending• Check cashing• Remittances• Shared secured Credit cards• IDA accounts

Best Practices #1

Modern Techniques

Loan Growth Strategies• Effective Lending Cultures• Underserved, Opportunity Markets –

Microenterprise Business Loans

Best Practices #2

Alternatives Federal Credit Union• 77.5 Million Assets• 1 Branch, Ithaca, NY• Microenterprise Business Services• Chartered expressly for Small Business Needs

• Education• Lending• Products/Services

Best Practices #2

Why It Matters

• Our current model is struggling• Growing and competing in the new environment

will be difficult• Historical precedence that CU’s have survived

and thrived during periods of economic challenges

• Consumers need credit unions more than ever before

• A renewed focus on “what we started out to do” will resonate with consumers today leading to Revenue, Membership and Loan Growth

Thank You!

Scott Butterfield, CUDE, CUCE, CCUEYour Credit Union Partner253-507-2443Scott@yourcreditunionpartner.comwww.yourcreditunionpartner.com