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AUGUST 22, 2014

Credit unions are touting the number as what it truly is – a major accomplishment.


Originally Appearing in the Credit Union Times 


There’s been a lot of press about CUNA’s recent announcement that their numbers indicate America’s credit unions have now exceeded the long anticipated 100 million member threshold.  Credit unions are touting the number as what it truly is – a major accomplishment.


Banks are trying to say diminish the number as just another benefit we derive from our tax exempt status as if an eighty year old federal taxation policy is the only positive credit unions have in their arsenal and the sole differentiator between for-profit, stockholder owned banks and not-for-profit, member-owned credit unions.

Here’s the reality about clearing the 100 million mark.  Of course, without question, this is a watershed moment for credit unions.  And credit unions should celebrate clearing the 100 million member mark.  It is a truly huge reflection of public knowledge about and belief in credit unions.

But within that reality lies a challenge.  It is also an opportunity for credit union self-evaluation.

Reaching such a milestone gives credit union leaders, both the volunteer directors and the professional staff, a few minutes to pat themselves on the back and then to follow the victory party with a real opportunity to move forward strategically, analyze the reasons for the industry’s success over the past decades and renew the commitment it will require to build even further upon that success.

Better penetrating 100 million members with additional services will require an ever increasing commitment to member service with innovative products and service offerings being constantly offered in enhanced modes, more channels and expanded venues.  And how do we replace some of those 100 million members as they age out of their credit union years with the next generation of credit union members.

A milestone achievement is a great opportunity for such an internal analysis.

While we must all recognize that there are some duplicates in the 100 million which obviously counts twice a large number of members like me who have found value in membership in multiple credit union, this achievement should not be minimized by our competitors.

How wrong they would be if they take solace in the fact that there are some duplicates in the numbers and credit unions may actually not be over 100 million yet.  No pun intended, but they are missing the mark on this story.

Credit unions are growing significantly in consumer choice during a challenging marketplace with more and more local, regional, national and international competitors.  Why?  Because their members are more satisfied than those of their competitors as is reflected in every consumer survey published over the past ten years.  Those satisfied members are the source of the other new members coming to the credit union.  It is successful member service meeting member needs and generating more members from the success.

In fact, even duplicate credit union members themselves are a sign of satisfied members seeing value in being credit union affiliated – maybe with more than one if they are eligible by field of membership to do so.

Just as credit unions ought to use this achievement to self-evaluate and find ways to strategically build on their success, competing financial institutions should also look inward as to how and why their local credit unions are beating them in the marketplace.

It is more than the tax exemption, guys.  Credit unions are growing because of their fundamental member-ownership structure and the service mentality that extends from that.

Let’s look briefly at the banker argument to minimize the 100 million achievement.

Even if an unlikely high of twenty percent of the 100 million are duplicate members (probably the number is closer to seven percent), that is an incredible vote of confidence in a very competitive marketplace for credit unions by 80 million individual Americans choosing to do business at the local not-for-profit financial cooperative option available to them.

And, if the critics are right (and I do not believe they are, but I will concede the point for the sake of argument) and half of those individual members do not recognize the structural difference between their credit union and the local bank, that is still an incredible cadre of 40 million individual Americans who use a credit union as their consumer choice and understand the fundamental reason why they do so.  As an industry, I’d take a potential 40 million referral pool to work from any day.

That 40 million individual Americans who would know what their credit union fundamentally is and why they believe in it, even using the bankers’ unlikely worst case scenario numbers, is also a source of considerable political capital our competitors would underestimate at their own peril.

The fact that competitors are challenging the 100 million number within itself is a compelling reason for the credit union industry’s recognition of the 100 million member milestone.

And if the self-analysis that comes following our clearing such a threshold results in credit unions doing credit union even better, it is reason other competing financial institutions to go beyond their miss-the-mark challenges to the numbers and take notice of what they represent as well.

Dennis Dollar is Principal Partner of Dollar Associates LLC, a full-service credit union consulting firm headquartered in Birmingham, AL.  Mr. Dollar is former Chairman of the National Credit Union Administration from 2001-2004, serving during both the Bill Clinton and George W. Bush administrations on the NCUA Board from 1997-2004