http://www-rohan.sdsu.edu/~cba/news/story/SDDT-Ely7-14-09.pdf

http://www.cusouth.com/2010/09/collaboration-is-the-new-business-model-for-credit-unions/

http://www.creditunionmagazine.com/articles/is-the-cu-business-model-sustainable

Let me respond to a few of your points:

1. The purpose of the article is not, as you state “to create fear uncertainty and doubt for people using or thinking of using a credit union instead of a bank.” It is to encourage credit union leaders and board members to think strategically about how they can improve and evolve their business model to serve a changing world. The article is in fact not even targeted to or intended for consumers.

2. I do not agree with your assertion that “nearly every single bank is at best incompetent and at worst (most likely) criminal,” and would like to see the evidence upon which you are basing this accusation. All financial services focused on consumers use a similar business model and my comments are as relevant for community banks as they are for credit unions…the world we live in today demands a different way of doing business from all financial services institutions (and most other businesses).

3. The article does in fact identify four general characteristics that are reasons why the traditional business model for all financial institutions needs to evolve, as is noted in my post where I state “The business model that built the industry is seriously broken, and this reality applies to both credit unions and banks.” It should also be noted that I am not alone in making this claim, as the inspiration for this post was a speech by best-selling author Jim Collins.

4. You are certainly correct that there are examples of credit unions out there who have in fact adjusted their business model by embracing technology and finding new ways to meet the needs of their members. But there are also credit unions that have not done this, and they are the ones who need to think more strategically and evaluate their business model moving forward.

5. As a lifelong credit union member (since I was a toddler) and one how has served the industry as a speaker and planning consultant for over a decade, I take offense to the accusation of my being “clearly a shill for some bank or another.” I have only one goal–to help leaders of businesses in the industries that I serve, one of which is the credit union industry, discover and implement strategies that help their businesses thrive. Sometimes doing that means raising uncomfortable issues, asking tough questions, and challenging conventional wisdom–that was the purpose of this post. And I appreciate your taking the time to share the reaction that you had to it.

You are saying that the credit union business model is broken, but do not point out why that is the case in any way.To the contrary you correctly explain they offer higher interest rates and better service to members than banks. The 4 ‘examples’ you give how to improve are generic common sense things, but don’t actually point out any problems. They don’t even apply to modernized credit unions such as Alliant that have fantastic online banking and budgeting tools.

You are clearly a shill for some bank or another.

The notion that the industry lacks a unified vision is spot on. Even more challenging is that many individual credit unions lack a clear vision of what role they want to play in the industry or of what they should do to best serve their members and grow their individual credit unions which is the most pressing short term issue facing the industry.

What the industry and individual credit unions really need is strong leadership…visionary leadership to look at the strengths and experiences of the past, assess the current situation, and define a compelling vision for the future. It sounds a bit idealistic and perhaps overly simplistic, but the short-term survival focus that is dominating many CUs today is getting in the way of creating a future where the collaborative, cooperative capacity of the industry is leveraged to build a future that is better than the past.

Focusing on Gen X or Gen Y seems almost a waste of time to me, if as an industry we cannot embrace the bigger picture. Relevancy is only one proponent of sustainability – continuing to treat the symptoms are not going to cure the problem.

The contrasts you point out between other cooperatives and credit unions are powerful and on point. I especially appreciate your point about being a not-for-profit financial cooperative. If more Boards and leadership teams saw themselves in this way, they would realize that there are many opportunities out there to be pursued in supporting the financial needs of their members…which extend far beyond the banking business model.

Credit unions with elections have much higher membership growth rates and loan to share ratios.

The issue with the credit union business model and almost all of our challenges are symptoms of this issue is that we use reasons for not behaving as cooperatives. While other cooperatives like USAA and REI are thriving, we use our reasons to be claim our business model isn’t working.

It is working for those that use it. And the business model is not a not-for-profit-bank. It is a not-for-profit financial cooperative.

Ask your CEO, when is the last time we sent a ballot to our members? Who is on our nominating committee? Is it the board members that are currently on the board? When is the last time they nominated someone new for the board?