If credit unions want to do a great job in four areas of big opportunity—and others—they’ll need input from leaders with a variety of life experiences.
The communities many credit unions serve today have evolved over decades. Whether employers of select employee groups CUs served in the past have closed or the communities that surround them have changed demographically, most credit unions are working to serve a different group of people—from age, race, socioeconomic and other perspectives—than they did in the past.
Consider that by 2044, the U.S. will have a minority majority population and that, for many areas, the only thing propping up population growth is immigration. Think about how millennials are carrying more debt than any other generation, will have a tougher time getting credit and have different priorities compared to previous generations. If credit unions want to attract new members (and loans) going forward, they need to better understand the perspectives of these unique groups—and others.
If you find yourself working to serve a changed membership, your credit union has two choices: ignore the changes and continue to target the members you know best (probably people like you) or get serious about serving new groups by adding new perspectives to your strategic conversations, to better help your organization understand the best way to reach and serve them.
Your Credit Union Partner works with a large, diverse group of 170 client credit unions. The most successful have more diverse leadership, boards and teams. These credit unions excel at organic membership and loan growth and have higher earnings, community (brand) recognition and internal engagement. I believe it’s the diverse leadership at the top in these organizations that sets the tone and ensures the right conversations are taking place to create the best solutions.
What Diversity in Thinking Can Get You, Strategically
Here are four fresh ideas that could be developed at credit unions led by people with a diversity of perspectives:
1. Small-business services. Prosperity Now reports that in Ohio the rate of business ownership is 1.4 times higher for men. Most large credit unions have business lending programs, but there are very few emerging business development opportunities for female entrepreneurs. Perhaps we would see more relevant solutions for female business owners (and new growth opportunities) if more of our large credit unions had female CEOs or if their boards had more female entrepreneurs.
2. Serving people of lesser means. In January 2019, CNBC reported that 78% of U.S. workers live paycheck to paycheck. For any of us that have participated in credit union “reality fairs,” we know there are many challenges facing working class and lower-income consumers. Frequently, I see a lack of understanding of this perspective by board members that think, “It’s just common sense not to spend all you make.” I’ve even heard boards say they think lending is a bad thing! That probably explains why they have a 30% loan-to-share ratio. If your credit union serves, or wants to serve peole of lesser mean, I recommend that you have members on your board that come from these backgrounds. Even if they are older, they are more likely to relate to many of the unique challenges faced by this group today. Having this perspective among your leaders shapes conversations towards product and service flexibility.
3. Serving the Hispanic community. The Pew Research Center reported that the Hispanic population in the U.S. has reached nearly 58 million and has been the main driver of U.S. demographic growth. This means many of the communities we serve have a large or growing Hispanic population. Your Credit Union Partner team member Alejandra Seluja says you must earn your Hispanic community’s “trust” before you can successfully serve the market. However, we frequently see credit unions that are “ready to go” to market with one or two branch employees who are bilingual. While we all must start somewhere, that alone won’t cut it. Not for meaningful growth. We work with a lot of credit unions successfully serving the Hispanic market. Without exception, these CUs’ success was centered on having Hispanic board members and/or C-suite leaders. Having this diversity of perspective allows the organization to consider unique cultural perspectives. For example, it’s difficult to gain trust if the credit union doesn’t accept alterative ID. The family unit is very important to the Hispanic culture. Imagine trying to sell a new account to a Hispanic family when they learn you will open an account for the son who is a U.S. citizen, but not for the mother who is not a U.S. citizen. We can talk about trust all we want, but if the trust isn’t perceived by the target market, we have failed.
4. Serving the next generation. Scholarship America recently reported that students who graduate with debt often miss out on the benefits that come with a degree. Students with outstanding loan payments were 36 percent less likely to purchase a house, and other research indicates that those with student loan debt also are less likely to take out car loans. Wow. Homes and cars, that’s our bread and butter. Many from my generation didn’t have to enter our professional and borrowing years with massive student loans that blow our debt-to-income ratios out of the water. It will be interesting to see how credit unions respond to this huge problem. We won’t survive without the next generation of borrowers. I would want a young person who is experiencing this or has gone through it on my board or management team to offer insight. Someone will effectively lend to this group; I hope its credit unions that figure out how to do it well. We also need this generation on our boards (and management teams) to remind everybody that Popmoney doesn’t even come close to Venmo.
Why It Matters
We operate in a very competitive world. In dynamic times, we need more perspectives in our strategic conversations. Our boards and management teams are led by wonderful people, but (and I mean this respectfully) a majority have limited perspectives bounded by their age, gender, race and socio-economic experiences. If we want to grow deeper with our diverse communities, we must seek fresh perspectives and to understand.
Scott Butterfield, CUDE, is principal of Your Credit Union Partner, PLLC.