System or movement?

Is the credit union industry a system or a movement? I think it depends on what side of the US-Canadian border you are on. I often contemplate this question, since I split my time between what I would call the Canadian credit union system and the U.S. credit union movement.

Here's a definition of "credit union" from Wikipedia.

A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at reasonable rates and providing other financial services to its members. Many credit unions exist to further community development or sustainable international development on a local level.

Worldwide, credit union systems vary significantly in terms of total system assets and average institution asset size, ranging from volunteer operations with a handful of members to institutions with several billion dollars in assets and hundreds of thousands of members. Credit unions are typically smaller than banks; for example, the average U.S. credit union has $93 million in assets, while the average U.S. bank has $1.53 billion, as of 2007.

The World Council of Credit Unions (WOCCU) defines credit unions as "not-for-profit cooperative institutions." In practice however, legal arrangements vary by jurisdiction. For example in Canada credit unions are regulated as for-profit institutions, and view their mandate as earning a reasonable profit to enhance services to members and ensure stable growth.

This difference in viewpoints reflects credit unions' unusual organizational structure, which attempts to solve the principal-agent problem by ensuring that the owners and the users of the institution are the same people. In any case, credit unions generally cannot accept donations and must be able to prosper in a competitive market economy.

It's hinted at in the article, but I can assure you from first-hand experience, that the vibe on either side of the border could not be more different.

The Canadian credit union system

I would argue that in Canada, the leaders of the credit union system view the industry as a utility. Much like plumbing or roads, the pipes are there to move money and to share resources and technology for the purposes of competing against the large national banks. There doesn't seen to be much politics or lobbying involved. Credit unions pay taxes and are not subject to the intense regulatory oversight that credit unions in the US face. For the most part, there are no fields of membership in Canada. Anybody can join any credit union in their province. Canadian credit unions cooperate on a business level, not an emotional level. It's very systematic.

The US credit union movement

In contrast, the credit unions in the U.S. are far more warm, fuzzy and political. For instance, there is simply nothing in Canada on the provincial or national level like the CUNA Government Affairs Conference—an annual gathering of the U.S. credit union movement where thousands of credit union leaders gather to visit Capitol Hill in a cooperative effort to propel the U.S. credit union movement forward.

Of course, U.S. credit unions are linked together for payments and technology, but the relationship between U.S. credit unions seems to be more linked by a common fight against banks, laws, regulations and political forces. There are so many banks in the U.S., whereas in Canada, there are less than a dozen. Because of this adversity and diversity within the marketplace, the credit union industry in the U.S. feels more like a movement—constantly fighting the good fight.

Another major difference that further emphasizes the system-movement difference is the size of credit unions. In Canada, there are only a handful of credit unions with less than $25 million in assets, whereas in the US, more than 50% of credit unions have less than $25 million in assets. In Canada, credit unions have more than 20% of the mortgage business, while in the U.S., credit unions have less than 2% of the mortgage business.

Does it matter?

As a generalization, I think that U.S. credit unions and credit union people are more in touch with the core cooperative principles and that Canadian credit unions and credit union people are perhaps a little more like bankers. And by that, I mean that, in most cases, decisions are made more by the book and less by the individual case.

I'd hazard a guess that the credit union members on either side of the border are interchangeable. Although, a Canadian is likely more able to tell you the difference between a bank and a credit union simply due to the fact that there are no community banks in Canada. This makes the difference more obvious when comparing trillion-dollar national banks to local credit unions.

Is one side of the credit union border better than the other? There are so many factors—from differences in the size of the two nations and the two economies and the very different competition that credit unions face in Canada and the U.S.—that the answer isn't black and white.

From a pure business standpoint, Canadian credit unions perform better. From the members' standpoint, I'd say that the answer is unclear.

What do you think? I'd love to hear from credit union people on both sides of the border. Is it just semantics—this system versus movement argument—or is it deeper than that?

Tim

Does your credit union branch staff have talent?

In celebration of International Credit Union Day, we hereby proclaim the start of a ridiculously awesome online talent contest just for credit union employees!

Last winter, we had so much fun with the Lookin' Like a Fool with Your Money in a Bank Music Video Contest, we figured that it's once again time to hold another online video contest! And in the tradition of really long contest names, we present to you: the Why Gen Y Live Ultimate Break Room Bling Out Credit Union Online Talent Show.

The grand prize is a flat panel TV and a Nintendo Wii for your branch break room!

Here's a video that explains everything.

And here's a dedicated page with all of the dates and details. Also, check out the recording of today's Why Gen Y Live show.

Spread the word—we think this will be lots of fun for credit union staffers.

DeAndre

There actually IS meat on bacon!

Most of you have probably seen that Cheryl and I have thrown our collective hat in the ring to be the CU Water Cooler Symposium WildCard Speaker.

When you work in marketing and advertising, surrounded by fun co-workers and fun clients, on an incredibly fun and innovative product (Young & Free) it's hard not to let that spill over into contest entry for a wildcard speaker’s spot (as evidenced by our most recent campaign video).

But we want to clarify something—our presentation isn't going to focus on funny videos and bacon, it's going to delve into research we are doing with Gen Y'ers in regards to their use of social media platforms.

We are asking a cross section of young people across North America about:
• Which platforms they use
• What they actually use them for
• What they would never use them for
• And how they perceive businesses interjecting in those spaces

(just to name a few)

We will be compiling these results and sharing 3 practical ways that Credit Unions can take this information and implement a social media strategy in these spaces that will be relevant and get results.

So here’s what you need to know: yes, half of us are young and both of us are silly, but we're going to deliver a fun presentation that will leave the audience with some insight into how Gen Y is actually using social media and share information on how credit unions can get involved and get bottom line results.

We’re really excited to have a conversation about this, and if you are too, you can vote for us here:

http://www.cuwatercoolersymposium.com/vote/

Voting closes Friday at 2pm PT.

All the best,

Nala (and Cheryl)

United Federal stands up, takes matters into its own hands and says "We're different and you can trust us"

Michigan's United Federal Credit Union isn't sitting back and waiting for the new members to find them, they are taking a stand and have launched their own PR campaign. This is from United Federal's interactive press release.

"While Congress continues to pour billions into a bailout stimulus plan for the banking sector as a solution for economic recovery, alternative financial institutions like United Federal Credit Union (UFCU) are standing up and speaking out about being another resolution to the financial crisis, and an institution that Americans can trust."

United Federal is not beating around the bush! Nicely done. More credit unions should step up and get their good name out this way.

Tim

CU Branding 101: What's the difference and does it matter?

There were many highlights at the FORUM Solution/Trabian Partnership Symposium, but the best part to me was the unveiling of the CU Skeptic. We now all know that the CU Skeptic is Mark McSpadden from The Garland Group and the host of Banktastic TV's the CU Scoop.

Mark did a great job of presenting his case. One of the screens that he employed to prove his point was simply titled "The Difference Between Credit Unions and Banks" which was followed immediately by a blank screen. In Mark's sub-30 Gen Y opinion, there is absolutely nothing different between the two. We can all go on and on about the member ownership, the not-for-profit structure and the community centered focus, but to the Skeptic and in his estimation, to the general public these things either don't matter or are completely invisible.

Mark's blogging as the Skeptic grew out of being tired of the credit union cheerleaders (including yours truly) blogging about how great and different credit unions are.

Does the difference between credit unions and banks even matter?

The problem with this age old comparison is that the differences are subtle and the differences are often different!

Ultimately, each credit union needs to be relevant and desirable to its own members. This point was brought home by William Azaroff presenting his story about Vancity (400,000 members and $14B in assets) and Gene Blishen presenting his story about Mount Lehman Credit Union (2,000 members and $40M in assets).

Other than both being credit unions, these two institutions have absolutely nothing in common. This is a good thing, because both serve a very different group of people and both of these credit unions are very successful.

So why the fixation on a national brand campaign?

A recurring theme at these events and online is the need for a nationwide brand awareness campaign in the US to illustrate the difference between credit unions and banks. In theory, this is a good idea, but the main problem is that large groups of credit unions can never agree on a compelling universal difference.

Since hearing the Skeptic's talk, I have had this mock meeting conversation rattling around in my head.

The scene: the Motel Owners Association National Convention

300 motel stakeholders have congregated to discuss the need for a national branding campaign.

"We need to get the word out that motels are better than hotels. Those hotel guys are eating our lunch."

"Yeah, hotels are all about making the big profits. Motels are an affordable alternative. So first of all, let's decide on what makes us different."

"Doors on the outside?"

"No, we have halls at our motel."

"How about anything under two floors?"

"Nope, we have three floors."

"Kitchenettes?"

"No. Some hotels have kitchenettes. We can't use that."

"What if we go after the business practices of the hoteliers?"

"Not our style. Besides, we'll have the tourism regulators kill our campaign."

Two hours later after serious brainstorming and debate, two final message emerge that all 300 conference delegates can agree on:

"Motels... Our towels are slightly scratchier."

"Motels... It is 68% fewer steps on average from car to pillow."

But perhaps now there is a compelling difference that needs to be told

With the big banks in the US in an endless downward spiral, now would be the time to promote a unifying difference between credit unions and banks. A message of trust would resonate more today than ever before.

Will it happen? Not likely. There are too many cooks and there is fear of casting any doubt towards the stability of the big banks.

Bottom line:

Defining and promoting your credit union's brand is your problem. Do everything you can to stand out against the competitors in your marketplace. Lean on some of the global credit union differences if that makes sense in your situation or define your own difference and stick to it over time.

The CU Skeptic provided all of the Symposium attendees with a splash of cold water. Thanks Mark!

Tim

Are your credit union's marketing efforts worthy of comment?

The blog-o-sphere has been buzzing about Microsoft's new Windows Vista ad campaign that debuted last Thursday. I'm not going to add another blog post analyzing whether the first ad is good or bad or whether Windows Vista has any chance of shaking off over a year's worth of awful press and reviews. I'll leave that to the advertising and tech blogs to fight it out.

One thing is for sure though, people are talking about this ad. On and offline. I was at dinner last night at my hotel and I overheard a group of regular folks laughing their heads off, "And Jerry and Bill come out of the mall eating churros. Ha ha ha! It was hilarious."

Relevance to credit unions? I know you don't have $300 million to spend on your next campaign, but this example begs these questions. Are your credit union's marketing efforts:

1. Memorable?
2. Different?
3. Remarkable?

And by remarkable, I mean worthy of comment and discussion—good or bad. Now in the case of Microsoft's latest effort, most of the commentary seems to be negative.

Most credit unions play the middle ground of features and benefits advertising producing results that are not remarkable. No one is interesting in duking it out over a bullet-point list of benefits!

Tim

P.S. OK, I will give you my opinion. I'm going to give Microsoft the benefit of the doubt. I like the first Vista spot. It has layed the ground work for an interesting story to be told. Going head to head with the stellar Apple Mac vs. PC ads is a near impossible challenge. Vista has been publicly lambasted for more than a year. Microsoft and its agency have chosen to take a very different approach. And for that, I applaud them.

I can't wait to see the rest of the campaign play out. Bill Gates makes a great straight man, but the bigger issue for Microsoft is the negative public perception about Windows Vista. I think Vista sucks and I haven't even used it before! No 90-second spot is going to fix that.

Challenge your members

In a recent Ipsos News Alert, it was reported that "fully eight in ten Canadians (86%) enjoy being exposed to people and ideas that challenge the way they look at the world."

When Larissa put out her great "difference" video on behalf of Young & Free Alberta, I sent it to several family and friends. I wanted to share the kind of work my company does. Here is the response from one of them:

"This is so informative!!  I never really knew the difference before.
I am convinced that I should join our local Credit Union."

So many credit unions that Currency works with have growth opportunities with their existing membership, let alone new members. Banking is such a commodity these days, that providing great service is merely table stakes. What does your credit union do that is different? How can you challenge members to rethink their banking relationship and deepen their credit union relationship?

Nala

Want to start another revolution? The difference between banks and credit unions – part 2

The last time I posted a video by Larissa Walkiw, the Common Wealth Credit Union Young & Free Spokesperson, it travelled around the world like wildfire.

Well, Larissa just posted part 2 today. Here is the original post.

The more people that see these videos, the better. Part 2 is more specific to the Alberta marketplace, but the credit union differences of local decision making and free ATM access are universal.

Again, this is 100% Larissa's work. We are very proud of her. Feel free to post it on your website or blog and please include the following credits.

Video courtesy of Common Wealth Credit Union's Young & Free Initiative. This is the original work of the 2008 Young & Free Spokesperson Larissa Walkiw. Copyright 2008. Visit www.youngfreealberta.com for more information.

My online conscience, Ron Shevlin, left this comment on a previous blog post.

"I don't think that the number of other blogs and sites that link to the video are measures of success."

Good point. I'll leave Larissa's RSS feed subcribers to generate local success. I'll enlist mine to help the credit union movement. I have heard from numerous people that sharing part 1 caused people to become credit union members! And afterall, that is our purpose!

Tim

The best education piece on the credit union difference that I have ever seen

Larissa is knocking it out of the park on a daily basis on Common Wealth Credit Union's Young & Free Alberta blog.

+ Add this feed to your reader. She will make your day.

+ Share this link http://www.youtube.com/watch?v=cawzTSVTP2M

Everyone involved in the credit union movement should watch this video.

I have been marketing and believing in credit unions for more than 15 years. Honestly, I have never seen the credit union difference so powerfully illustrated.

Other than setting the stage and providing a forum for conversation, we have nothing to do with the direction or the content of the blog. Everything you see here is Larissa. She has an inquisitive mind, a wry sense of humour and mad skills beyond her 19 years.

She is doing Common Wealth Credit Union, the credit union movement and her generation proud.

Bravo!

Tim