I got a call recently from a reporter doing a story on free checking. He wanted to know why credit unions were, for the most part, sticking with free checking when so many big banks were dropping it. I told him it was driven by two reasons:
- Credit unions are looking to maintain a point of differentiation from the big banks, especially when it comes to fees.
- The board of directors at many CUs won’t let the CU charge for checking. I’ve had a number of conversations with CU CEOs and CMOs who have expressed interest in finding ways to add fees to their checking accounts (yeah, I know: shock! horror!), but have run into roadblocks by BODs who won’t approve the fees.
I didn’t give this much more thought until I read Mark Arnold’s blog post titled Staying Relevant: One Credit Union CEO’s Insight. In an interview with Angie Owens, CEO of American Airlines Federal Credit Union, Mark asked “Why do credit unions struggle with being relevant today?” Her response included:
“One challenge in particular many credit unions face with relevancy is in working with boards that are happy with the status quo. While we always respect and value their volunteerism, expertise and time, boards must be willing to move forward and plot a brave new course into the future for their credit union.”
Honing in on the board as a major factor causing CUs to struggle with relevancy speaks volumes. It’s hard enough for CU execs to stay on top of changing consumers needs and preferences, changing technology developments, and an increasingly onerous regulatory and compliance environment. But having a board that stifles change is a burden no exec wants to deal with.
But there is one aspect of Ms. Owen’s comment that needs more discussion — specifically, the point regarding boards being willing to “plot a brave new course into the future.”
Whose responsibility is it to envision that brave new future and develop a realistic, coherent, and tangible plan for making it a reality? I’m not sure we can blame the board for not having that vision.
On the other hand, these seemingly endless cries for increased board participation by Gen Yers — who, according to those making the claims, represent the future of CUs — have little credence to them.
The board is not some focus group comprised of a representative sample of CU or community members. It’s a group that provides advice, direction, and guidance regarding the operation of a business entity. I don’t care how many Facebook posts, fans, or friends some 25-year old has made in the past five years. Knowing how to use social media, and being a member of a particular generation, does not qualify someone for being on the board of directors of a financial institution.
There are a lot of folks who believe that the credit unions who thrive in the future will be those that innovate the most. I’m not so sure. It might just be those that best manage their board of directors.