With the World Council of Credit Unions having announced an ambitious goal of one-billion credit union members—there are currently just over 400 million–three people offered their thoughts on what it’s going to take to hit that lofty target, sharing their views it’s going to require partnerships, fixing “aggravations” with regulators, and will need to begin with CU employees’ own membership status.

The discussion came during Mitchell Stankovic’s Underground Thriller event in Las Vegas. It featured Brian Kaas, president of TruStage Ventures; Lecia Roundtree, chief people officer with Stanford FCU, Jim Morrell, president and CEO, Peninsula Credit Union, and Lisa Arthur, Global CMO with Sensedia.

Arthur’s comments, which focused on her own experience in recently joining a credit union, are reported separately.

‘Is it Something Else?’

“What will it take for credit unions globally to reach a billion members?” asked Kaas. “Is it the mission of credit unions we've been talking about? Is it the vision of the leaders not only in this room but across the country and across the globe? Is it technology? Or is it something else? Is there some other secret sauce that really is going to be critical to enabling us to achieve that very lofty and very ambitious goal?”
Kaas said his view is the answer is found in all three.

“I think the common theme we've heard here is, hey, this mission should be resonating with almost everybody,” he shared. “But we're having a hard time reaching younger people, reaching people my age with sharing that mission. What can we do differently to get the word out there? Are there lessons to be learned from credit unions in other parts of the world?”
The challenge with the vision, according to Kaas, is that there is so much going on in everyone’s lives that there is too much to think about.

What Needs to be Done

“What do we need to do over the next three years, five years, the next decade to really adapt as an industry to not only sustain where we are but to achieve that goal in 10 years?” he asked. “I think we really need to reimagine what collaboration and cooperation means and we need actionable collaboration. I think we really need to reinvent ourselves as an industry or we potentially will be going in decline. We have an aging membership. As we all know, we're having a hard time really attracting younger generations.”

No Surprise

Not surprisingly, Kaas said there is more competition than ever before and a big reason is technology. But that same technology presents an opportunity for reaching the WOCCU target, he believes.

“I think that's going to be the biggest catalyst for us as an industry to achieve that billion-member growth,” Kaas stated. “I think it also presents perhaps the biggest obstacle to us in achieving one-billion members, and that is staying relevant . We have a single bank, JP Morgan Chase, that has a technology budget that's almost double the size of the entire credit union industry combined There also over 10,000 fintech companies now operating in the United States, so you know that's a whole new entrant of competition that didn't really exist 10 or 15 years ago.”
The good news, he said, is that many of those fintechs will provide the tools, the technology for credit unions to reinvent themselves.

A Billion-Dollar CU is ‘Small?’

“We talk about small credit unions that are having a real challenge here. I think if you look ahead five or 10 years, what's considered a small credit union is probably going to be $500 million or a billion dollars,” he forecast. “Again, what do we need to do differently to ensure small credit unions can really survive and adapt in a world where financial services is being driven more and more by technology? We need to collaborate, meaning we need to find a way to reach agreement on things.

Empowering Leaders

“I think we need to empower individuals to really lead this. We need to identify technology partners that we can partner with on a collaborative combined basis that will provide that critical technology,” he continued. “As we look ahead there will be more and more underbanked and unbanked consumers in the United States and globally. Credit unions are the best suited of anybody to really serve the needs of those individuals. Technology now provides the tools for us not only to reach those individuals and to serve them, but to do so in a responsible way.”
Using technology, Kaas said, will not only help credit unions grow, it will create a whole new source of financial security and financial independence for those individuals and allow them to get micro-loans that can enable them to build credit.

Credit Unions & AI

“Artificial intelligence is another key driver of building more efficiency into the system,” Kaas said. “There are some fintech companies out there that I know are very interested in partnering with smaller credit unions…so that on an aggregated basis (they) can get some of the benefits and scale of a large bank. It's going to require cooperation.”

A ’Completely Different Approach’: Beginning With CU Employees

Offering a “completely different approach” to the question of how credit unions get to one-billion members, Stanford FCU’s Roundtree said that as someone who focuses on people all the time, she believes the issue should be addressed “from the inside out.”

“When we talk about the fact that we need to build membership, I've got a question for you: How many of your employees at your credit unions are members?” she asked.

Roundtree said she conducted a small survey of an HR networking group to which she belongs that found the answer to the question above was anywhere between 40% and 80%.

“So, then I kind of thought, ‘OK, that's really great because you kind of need that for payroll deduction, but let's be real. How many are really active members?’” she continued. “The number was way less than that. So, when I think about building membership, when we talk about member service and all of that stuff, I can't help but think that if your own employees are not active members, how are they helping you to build membership?”

The Issue of Turnover

Roundtree noted the greatest turnover in credit unions is with employees who have been employed for less than two years.

“Why is that? Because the people we are trying to attract as our future members are in that age group. Some of the people I've talked have said, ‘Well, you know, they're member-facing positions and they just turn over.’ But why? It wasn't always like that. And then you start thinking and it's how are we treating them?

“We all talk about AI,” Roundtree noted. “People say AI is definitely going to change different positions. It means there is a shift in the skill set that our employees have. We say, ‘OK, you're going to have to be more innovative and you're going to have to be problem-solvers.’ We have all these great questions during interviews and then we hire people and we say, “Oh, we don't really want your new ideas. We want you to just do what we've always been doing.

Two Years of ‘Crap & Out the Door’

That scenario, Roundtree told the Underground meeting, has led many new hires to conclude, “Well, this is kind of boring and not what I expected,” and “after two years of that crap they're out the door.”

Roundtree noted that in her home state of California, many younger people are leaving the state because they can't afford to buy houses, meaning they're probably still in their parents’ house and they don't need to have another job before they quit.

“And with 4% unemployment, they'll get the job when they're ready to get one. So, we lose the talent and we’re not finding out from the member’s perspective (about why many younger people don’t join the CU),” Roundtree stated.

‘Greatest Group of Advertisements’

She then added, “When you think about all of our credit unions, all of the employees, they are the greatest group of advertisements, if you will. If we just use them to solve the problem I think that we'll be head and shoulders above where we want to be.”

Aggravations, Irritations & Cooperation

Jim Morrell shared with the meeting his perspective on the one-billion member goal, saying his view is influenced not just by his work as a CEO and in U.S. credit unions, but also by his new membership on the board of the World Council of Credit Unions and by the work he has done with Africa’s credit unions for more than a decade.

He reminded his audience of a “luxury” many in the U.S. and other G20 countries take for granted and often don’t think about, and that is that there are deposit guarantee schemes in place. Outside the G20, just 20% of countries have deposit insurance.

The Regulatory Challenge

“But I also to pivot and transition a little bit here to the U.S. How often and how many times do our regulators actually understand who it is that we're serving?” he asked. “We seeing more and more regulators or the heads of regulatory agencies issuing ideas by tweet or LinkedIn posts about why a credit unions need to have the Community Reinvestment Act or how one credit union that went rogue with redlining and that now blankets the entire industry that we're all guilty of that. That's not accurate, that's not true.

“So, how is it that we as a credit union industry are unifying our voice to help those regulators understand the people that we're serving?” he continued to ask. “How can we maybe make some proactive changes to the Federal Credit Union Act?”

Getting ‘Irritated’

Morell said he is “irritated” and it gets him “fired up” when he finds credit union CEOs posting on a listservs that their credit union is eliminating “second chance checking” because “we've just determined it's not making us any money.”

“It’s irritating to me when I see merger posts that talk about, yes, the efficiencies and yes, to the benefits of the members, but leave out the fact that that could be for the benefit of more members joining financial cooperatives because they're not thinking about the growth of our entire financial cooperative industry. They're thinking about what's in it for me.”

The Big Opportunities

Morrell said he sees big opportunities for credit union growth, including among the 28% of the Gen Z population that's part of the LGBTQ-plus community, and with the Hispanic community.

“In 10 years the majority of high school graduates will be minority white,” he stated. “What is it we're doing to prepare ourselves, because it's not like a light switch where all of a sudden non-Hispanics can understand what this Hispanic community might have felt like or how they're dealing with, interacting or engaging in our financial services network. It takes time for us to introduce DEI concepts in our organizations, in our decision-making process.”

The Center of the Onion

“I think we only get there when we get to the center of the onion, when we get to the member,” Morrell continued. “I think it should motivate us to figure out how to get out of our own way, how to listen to one another, how to collaborate with each other, how to effectively advocate for change both here in the United States and in different regions around the world. I think that's how we'll get to a billion members.”

Before Getting to One-Billion Members, Addressing Platforms that ‘Suck’

If credit unions really want to grow to one-billion members worldwide, one of the things they’re going to need to do is address online platforms that “suck,” according to one person who shared her own difficult experience in recently opening a CU account.

Speaking to the Underground Thriller event hosted by Mitchell Stankovic in Las Vegas, Lisa Arthur, global CMO with Sensedia, was a participant on a panel that discussed a goal announced by World Council of Credit Unions’ (WOCCU) President and CEO Elissa McCarter LaBorde, who wants to grow total CU membership to more than one-billion people from the current approximate total of 411 million. McCarter-Laborde wants at least 50% of the membership growth to be women.

But there are some very basic challenges to hitting that number, according to Arthur. (Comments by the three other panelists are reported separately.)

“Our quest for a billion members will require you to more than double your membership today,” Arthur said. “I want you to think about what that would mean for your organization. The first question is, what is it going to take for you to double yourmembership?”

First Bad Handshake

One thing it’s going to require is a better experience than the one Arthur reported having as part of her efforts to join a credit union in just the last month.

“I live in Seattle and it's a local credit union. I thought I was going to have to go to the branch, which I didn't have to do, I was able to (join) digitally, which is awesome, as I do all my banking digitally,” Arthur related. “The experience sucked. I still have no money in that account. The first thing that happened when I started opening the account was I got a screen from some company--I still don't know who it is--on privacy, which tells me screen scraping is going on. That's my first handshake with this credit union.

A Second Bad Handshake

“The second handshake was that I could not transfer money from my big four (bank) account,” Arthur continued. “I was ready. I still have nothing in that account. It took five days to get the welcome member (message). Nobody's engaged. Now, I have a debit card and an account with nothing in it. Are the 18-year-olds, the 30-year-olds, going to accept that? I'm 63 and I don't accept it. So, it really starts with the member journey and experience right for us to double membership.”
Arthur, who has been working internationally with credit unions and who praised Brazil’s Sicredi movement for its tech proficiency, said her work in CUs has her determined to get her new account funded.

“I'm a believer in this movement, too, but we have to do better,” she told the meeting. “We have to kill sacred cows and honestly the time is now.”

Strategy for Open Banking

Arthur urged every credit union to have a strategy in place for open banking, but said she frequently interacts with CU leaders who are “scared” of open banking and open finance.

“That fear is actually misplaced,” Arthur said. “Open is being interpreted as a heavy compliance burden, it's being interpreted as punishment. But it's about member empowerment of data and it's about a strategy to fix the innovation friction that you have.”

Embracing What ‘Really Matters’

She again credited Brazil’s credit unions for moving early to embrace open banking, including addressing any compliance challenges, with the country’s CUs concluding that what really matters is the member experience. She reiterated it’s an issue—along with financial education—critical to attracting younger members.

“Having that breadth, that vision, is important,” Arthur said. “I give you this case study because it's possible in a cooperative environment; it's even more possible than at the traditional bank.”

Getting the experience right, she added, allows members to tell the CU story.

Get Unshackled

Finally, when it comes to that other issue getting so much attention, Arthur added, “Technology is not a panacea. It is a flywheel and you can't have a flywheel if you're shackled to old shit.”