Posts Tagged ‘cooperative’

CUs, Social Media, and Governance

December 1, 2010

Based on the conversation exploding on EverythingCU.com over the past two days on Credit Unions and the ROI of Social Media, I created and edited this opinion piece down to 10 minutes to fit it onto YouTube. I talk about branding, marketing, social media, credit unions, ROI, the future of credit unions, their Boards of Directors, and their members, and my mom. I think what we currently think of as Social Media (aka Online Community Engagement) has the potential to transform it all. What do you think?

Transcript:

Hi, I’m Morriss Partee, Chief Experience Officer of EverythingCU, and I’d like to make this quick little video blog on a topic that is near and dear to my heart, and that is credit unions and social media. It’s been an amazing thrill to see the topic of credit union’s use of Social Media and its ROI really blossom on EverythingCU in the past couple of days. I’ve watched with great interest as many opinions have been stated very forcefully from both sides. There are a lot of good arguments, both for and against, credit unions using social media.

Online communication is changing everything

Social media, and if we use the term to mean online community interaction, is, without question, transforming the way that people across the United States, and even across the world, are interacting with each other, and interacting with the world [around them]. So this social media phenomenon and revolution has affected or will affect virtually every department of credit union operations. It’s clear there are marketing implications and operational implications. But I’d like to talk about one are which I think in the long run, has the largest potential to truly improve credit union business and the way members interact with and view their credit union.

A Little Background

One of the big sea-changes in the way that credit unions operate with their members is when credit unions were deregulated from standard fields of membership in 1998. And since that time, credit union after credit union after credit union has gone to community charter, or a charter much broader than their original one.

Hi mom!

As example, my mother is a member of UMassFive College Federal Credit Union. Whenever I’ve had the pleasure of working on marketing campaigns for that credit union, I often think of my mother as the ideal target market. And every now and then, I’ll ask her a question about the credit union. “How do you feel about this? Why do you do business with the credit union? What do you like about it? What don’t you like about it?” And the thing that really strikes me is that because my mother is a retired professor from UMass, she feels like UMass Federal Credit Union is HER credit union. She knows the people who run it, she knows that the people who are members are colleagues of hers, that are affiliated with UMass in one way or another. Of course, she’s very proud of UMass. So anyway, that’s the world in which credit unions have traditionally operated. But for any credit union that is now far more broader than an original employee group, or their employer has changed, merged, been outsourced overseas, their original SEG has shut down, gone out of business, merged, diversified, whatever the story is, those credit unions need a new reason for being. Something that is fundamental, that makes you feel like “this is MY credit union.” Well, what do credit unions talk about in terms of the difference [between themselves and banks]? The difference is in their governance, their form of governance. Credit unions are not-for-profit cooperatives. This is supposed to be MY credit union.

MY credit union? Really?

Well, what does that mean, “MY credit union”? Does that mean I can withdraw a million dollars? Well, no, of course not, it doesn’t mean that. Well, then what does “MY credit union” really mean? How can we replicate, how can we make people, feel, understand what “MY credit union” means? We are the members, right? We are the member-owners. That’s the fundamental thing we’ve got going here.

So what does it really mean to be a member-owner? Well, right now, because of previous technological or operational limitations, membership really has only meant that I vote for a Board of Directors once a year. And I’m only voting for 3 out of 9 or so [board] members each year. And unless I’m really well-tied into the community or connected to the community, I have no idea who these people are. I might get one paragraph and a little, tiny one-inch photograph of what the person looks like, and they all kind of say the same thing about how they’re going to make sure the credit union is operated in the best interest of its members. Great. Well, it doesn’t help me choose, it doesn’t help me understand [who these people are]. I feel relatively powerless, and it doesn’t make me feel much like it’s mine–that I get to vote on… I don’t know who.

Ginny Brady, Revolutionary

That’s why I was so intrigued when Ginny Brady, in Plattsburgh, New York, started blogging with her members. She truly wanted to interact with her members to say “here’s what we are weighing as the board, here are the issues we’re wrestling with, we have to make tough choices, we have to balance different facets of financial soundness, with doing the right thing for our members, with maintaining the institution’s integrity.” For several years, she was regularly blogging, saying “here’s what the board’s doing, here’s what we’re up to, here’s our annual meeting, come out to it, we’d love to talk to you, we’d love to get your input.”

She actually stopped blogging after a couple of years. I think it’s simply because she was way too far ahead of her time, and perhaps people in the Plattsburgh region weren’t really ready for a local credit union to blog, and to understand what that meant, and to know how to find it, and know how to interact, or to want to interact. But I still feel like, as people now come online in different ways, Facebook, Twitter, email , blogging, what have you, I feel that there are new opportunties for credit unions to really make a difference with their governance.

Online input on CU governance!

What if there were online polling? What if you polled the membership regularly and said “how many of you prefer X over Y?” or “how many people feel it’s important that we offer this checking account?” or “we’re planning to build a new branch.” I still feel like there’s plenty of opportunity to really engage members, via online channels, via Facebook, via SurveyMonkey, or any other means, to say “WHAT WOULD YOU LIKE? What is it that would make the credit union better for you? What do you like about us and what we’re doing now? What do you hate about the credit union now?” And we can do these things in real time. You could even have a board meeting where you pose a question to the membership at the beginning of the meeting, and you have a decent number of responses by the end of the meeting. So if members have this voice now, and  they are actually engaged with the board of directors, and not even directly, but just in an anonymous way, that’s going to make people feel like, “yeah, that’s MY credit union. I have input to the credit union. The credit union listens to me for feedback. The credit union is interested in what I have to say. That’s MY credit union. I’m not going to leave MY credit union. I’m not going to go down the street because a rate is a quarter-point higher or lower, because it’s not MY credit union.”

So anyway, that’s just my thoughts, rambling from here in Western Massachusetts on a dark and stormy, rainy December night. I would love to hear your feedback on whether this aspect of inviting membership into governance has significant potential to truly revolutionize how credit unions market with and do business with their members.

What’s your take?

Credit Unions being a Cooperative

July 9, 2010

Recently, the “dot-coop” (or .coop) extension topic was brought up on EverythingCU.com. This question was about whether or not it’s a good idea for credit unions to use this domain extension to signal that they are part of the broader cooperative movement.

This leads to the question: does being a part of the broader cooperative movement still mean anything in today’s credit union world? The reason I like to raise this question is that I had been working with this movement for about eight years before I had ever heard of the Seven Cooperative Principles. I knew that credit unions were member-owned, members had equal voting power, and that they were run as not-for-profit financial institutions. But I didn’t put two and two together to realize that all of these things are principles of the larger Cooperative movement.

So I recently voiced this question in response to the .coop issue, and received a wonderful response from my friend Gene Blishen. Gene is an amazing guy; he walks the talk. He’s the CEO of a successful, small credit union in British Columbia, where he remains true to credit union and cooperative principles while running a productive operation, one which has done some excellent technological innovation based on improving service to the members.

For many credit unions, in the U.S. especially, being a Cooperative has little or no meaning. They are simply trying to be the best financial organization possible, while running under the not-for-profit banner. It’s not that these credit union professionals care any less about their members. They still want to do the best they can for them, and make their lives better. It’s just that they don’t see any significant purpose in the Cooperative movement, or perhaps don’t see how it fits in their workplace. And that’s fine.

Here is Gene’s response on the matter, also posted on his Tinfoiling blog:

I think there is an elephant in the room and it never gets invited to leave.

IF you read the 7 Co-operative principle on which most CUs were founded years ago they were important in the structure and culture of the credit unions. As the financial industry has advanced somehow those principles have been forgotten, neglected or just unknown.

If one makes a decision about anything there are some fundamentals that act when arriving at that decision. Without the knowledge of these principles then the decision gets hijacked by being made outside those principles. If we bring to focus these absolutes that are a given i.e. we need to make money, we need to compete and neglect to discuss and bring forward how we incorporate these values (principles) in our CUs we do an incredible disservice.

Of course we need to make money, I don’t think that is a principle that needed discussion when CUs started. Of course we need to compete, they started because they could compete. But what about democratic owner control? What does that mean in todays CU? Or the education principle? I think we don’t want to discuss those. Why? To be honest because we have failed to bring these to the important level they need to be, we have been too busy making sure we make money and are moving forward in the marketplace.

I look at a CU like a car. You get it into shape. You tune it up. You keep it working well. But is that all? No you then decide where you want to go with it. What destinations are available and when will you get there. You always pay attention to the operation of the vehicle otherwise you won’t get there. Just remember you have seven places to arrive at and the journey can be exciting and very interesting. Remember we do have GPS to get us where we are going these days! :)

Here is a related blog post I wrote on the 6th principle of Cooperatives, which is that Cooperatives cooperate with each other: Zucchinis and Credit Unions: Not strange bedfellows

Zucchinis and credit unions: Not strange bedfellows

November 30, 2009

I love it when credit unions display their awesomeness.

And recently, UMassFive College FCU did just that.

I was driving about Western Massachusetts, when I heard a news story on our local NPR affiliate, WFCR, about UMassFive College FCU and their new CSA loan. Here’s the one-minute radio segment about it: Credit Union loans for farm shares

This statement may raise some or all of the following questions from you:

1.) What does CSA stand for, and what is it?
2.) What is a CSA loan?
3.) Why is it a perfect match that a Credit Union should offer a CSA loan?
4.) Why is this a brilliant business strategy on the part of UMassFive College FCU?
5.) What could UMassFive do to promote their CSA loans even further?
6.) Why do I care?

Q. What does CSA stand for, and what is it?
A. CSA stands for Community Supported Agriculture. Basically it’s a cooperative farm, in a similar way that a credit union is a cooperative financial institution. Customers each purchase a share of the food that is made by the farm. For example, one share might cost $700 for the year. During the spring, summer, and fall, you come to the farm and grab that week’s share of food, the contents and amount of which will vary during the harvest season. Typically, you get a box full of fantastic fresh produce each week. Here’s an example of what Simple Gifts Farm’s produce share consists of. The photo on the right is a typical summer week’s share from Doe Run Farm, a CSA in Tennessee.

What is the advantage of a CSA? Terrifically fresh and local food. Savings over what it would cost if purchased from a grocery store. Half-shares are also often available from a CSA, which get you half the amount of a full share of the farm harvest each week, usually at somewhat more than half the cost of a full share. Often times, membership in a CSA also requires a few hours per month helping to box up the week’s harvest.

Q. What is a CSA loan?
A. A CSA loan is a loan for the cost of one year’s share. While many people might be interested in buying local, and supporting local agriculture for a variety of reasons, many of the people interested in doing it can’t afford a lump sum payment of $600-$700. So in this case, UMassFive College Federal Credit Union is offering their members a NO-INTEREST loan, payable over 6 months, to finance buying a share in the CSA. So instead of $700 in one payment, the consumer would be able to pay $117 a month for six months. For many families, they may lower their total grocery bills while receiving a plentiful amount of fresh fruits and veggies.

Q. 3.) Why is it a perfect match that a Credit Union should offer a CSA loan?
A. The sixth of the Seven Cooperative Principles states that cooperatives should cooperate with each other. Both credit unions and CSAs are cooperatives. Both are (usually) dedicated to local cooperative principles. It’s a perfect fit.

Q.) Why is this a brilliant business strategy on the part of UMassFive College FCU?
A.) Because great businesses differentiate themselves, which creates a brand unique to that business. Credit unions are the only type of financial institution which can partner with CSAs in this way, authentically. (Banks could do it, but they’d be seen as copycats. Realistically, offering these types of loans is not on any bank’s radar screen.) This loan does many things at once: Strengthens the credit union’s brand as a local cooperative, actively doing things to strengthen the community which they serve. It also helps the CSA by making it possible for more people to afford to buy shares in it. It helps the member by spreading the payments for a CSA share out over several months.

There are other benefits of of buying local food, (belonging to a CSA is one way to do it), from which the Credit Union’s brand image is enhanced by association: CSAs help reduce the nation’s overall energy consumption and greenhouse gas emissions by reducing the fuel needed to package and transport food through the wholesaler to supermarket supply chain.

Offering interest-free CSA loans is not going to add significant dollars to the CU’s bottom line, nor is it going to cost them a significant amount. But their reputation is enhanced immeasurably, and management and the board must be taking the position that the PR gained, and thus future business, will more than offset the small amount of the cost of the program. Already, being interviewed by the local NPR affiliate is fantastic marketing, which had no cost.

Q. What could UMassFive do to promote their CSA loans even further?
A. Right now, their CSA loan page has a link to a local food site. I’m not sure if UMassFive is promoting this in their lobbies and teller lines too, but if not, they should. Also, they could provide a more direct link to the CSAs that are in the same area as the majority of their members. And of course, they should get in touch with all of these area CSAs and make them explicitly aware of their interest-free loans. UMassFive could also create a CU/CSA-day event, inviting representatives of the CSA to bring samples to the CU, and make it a festive occasion, bringing both more awareness to the CSAs themselves, and to the fact that UMassFive supports them. Also, UMassFive could publicize the WFCR story about their CSA loans nationally, which if successful, will increase the pride that its members have in it.

Q. Why do I care?
A. Long before I knew what a credit union was, as a child, my mother belonged to a food coop. Now that I’ve made a profession helping credit unions, it’s great to see a credit union that is doing something that makes a lot of sense from a business and community-enhancement standpoint. And by so doing makes the world a better place.

Oh yeah, and my mother is a not only a member of UMassFive College FCU, she’s also a member of CSA Simple Gifts Farm in North Amherst. And on Thursdays in the fall, she often brings my son there to help gather the week’s share.


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