Credit Unions — 1970s Good Attitude, 21st Century Technology
I call myself the weather man whenever anyone questions my position on a tech issue. Meaning, when conditions change, I change my position. So in this case, I confess to having been a commercial bank bigot for about 42 years. Now I believe the credit unions are taking over what the banks managed to screw up. How do I know this? Like the weatherman, I checked the instruments, took some measurements, followed the patterns, checked the behavior of recent "tsunamis, hurricanes and tornadoes," and then I called the situation. Credit unions are the new banks.
These are the reasons I changed:
1. Public Perceptions. The Congress should have been coached to use the terms Investment Bankers or Wall Street Companies whenever they went on the attack. Instead they used "bankers" which the general public assumed meant all bankers, including Main Street bankers. The Lehmans, Bears, Merrills, and Goldmans ruined it for all banks.
2. Four Giant Banks. "Too Big" doesn't guarantee competence. So while four banks were forgetting the rules of trust, credit risk, security, carefully-calculated growth and constant oversight, all banks took a hit for their indiscretions and failures even though the giants avoided the "chain and padlock." And they're not out of the woods yet. Every month there's a new "hurricane" brewing somewhere.
3. Smaller Banks Wanted a Piece of the Greed Game. At least 968 small banks (139 failed plus 829 at risk) tried to replicate the big boys, but weren't slick enough to pull it off and didn't have the backing of the regulators to protect the American image as the World Economic Power. So they failed or are on Sheila's euphemistic "Problem Bank List." Does that mean 7,118 banks don't have a problem?
4. Big Credit Unions. There are only five credit unions in the U.S. (3% of what is considered large financial institutions) that qualify to be called big, over $8 billion in assets. Their size doesn't guarantee anything. Their customers do. Navy Federal Credit Union, North Carolina State Employees Credit Union, Pentagon Federal Credit Union, Boeing Employees Credit Union and SchoolsFirst Federal Credit Union. Call it forced camaraderie, common bond, or we're in this together, but is there any doubt these financial institutions know their customers? Would a credit union encourage its members to borrow beyond their means? Do credit unions cater to Wall Street? Do credit union managers get gazillion dollar bonuses? The members decide and therefore, unlike commercial banks, there's built-in protection. "Whattaya mean you're gonna build a new home office? Pitch a tent in the company parking lot and use the savings to pay us a higher rate on our savings."
5. Failures. So far this year, the score is: 139 banks, 16 credit unions. The base for each group is about the same. These two numbers speak volumes and they all address customer safety and profit. Credit union members got both.
6. Credit Union Technology is on a Par with Commercial Banks — Now don't get carried away. I can't say it's any better. Four primary core vendors (FIS, Fiserv, Jack Henry and Harland Financial Solutions) also serve 61% of the credit union population. If credit unions were technology-weak in the past, it was because their authority was limited by law. When Congress expanded their scope, credit unions stepped up to the plate and went shopping for readily available technology from the best providers.
The title of this blog says something about 1970s Good Attitude. That wasn't an accident. Fifteen months ago I became a member of a credit union by default. When I bought my third Jeep from the same guy at my summer spot, he offered me four choices for financing. I chose the big bank because I was still a bigot then. With a credit score like mine, it takes seconds online to get approval, but the big bank was going through an identity crisis at the time. The bank didn't know if its name was Wells Fargo or Wachovia. When in the doubt, banks freeze. So Chris chose a credit union and in seconds the deal was sealed. Recently, I called this unknown credit union to find out if they really exist. I told the lady I wanted to do something special with my monthly payment and after she told me, "Don't worry I'll take care of everything for you," I wanted to say, "Ma, is that you?" That's what I meant about 1970s Good Attitude.
A personal note: If you miss your Mama, visit a credit union. They'll comfort you, treat you like family, and fix your technology. But you may have trouble saying goodbye.
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