The cost of doing good
In an ideal world, credit unions would be able to perfectly balance their drive to help people with the demands of running a successful business. However, this is not always fiscally possible, as there are a lot of asks of a credit union’s operating budget. Does a credit union lower their loan rates, or do they spend that revenue investing in the new technology that will allow them to better serve their members in the long run? Do they drop their fees, or do they buff up their cybersecurity to counter the constant and evolving threats to their members’ information and funds? Do they open a new branch in an underserved area, or do they hire another compliance officer to make sure they are meeting all the necessary reporting requirements.
Striking the right balance is difficult for any credit union, but it is especially true for the ~3,500 small credit unions out there who bear the brunt of regulatory cost ratios. Add in constant banker attacks against credit union’s tax exemption, the current trend of treating any fee as excessive, and repeated attempts to lump credit unions into laws and regulations meant to stop bad actors like payday lenders, and we risk forcing credit unions to cut important member services or to stop taking risks in order to protect their balance sheets. We risk stopping credit unions from acting like credit unions.
In National Credit Union Foundation’s Credit Union Development Educator (CUDE) program, we spent a significant amount of time on the topic of empathy and its place in the business world. Without empathy, it’s too easy to turn away the underserved as too risky and focus on whatever will keep the credit union safest. On the other side, too much empathy can lead a credit union to make unwise decisions that jeopardize the credit union’s balance sheet and invite a prolonged visit from NCUA.
The fact is that although the empathetic nature of credit unions is at the core of everything they do, credit unions at the end of the day, like any company, must be in the black to remain solvent. And as much as it would be nice to give away everything for free, that’s just not possible.
Credit unions know what is best for their members and their communities, and DCUC remains committed to protecting our members’ ability to make the right decisions for their people, especially servicemembers and their families. We do this by continuing to educate about unintended consequences and remind law makers and regulators alike who credit unions are and what they stand for. From Estes Park in 1934, where our modern credit union movement formed, to today, credit unions are here to serve and provide an alternate way to offer financial services: one not focused on profit, but people.
