A while back, I worked on a consulting project for a Pepsi bottler who was building new plants in Argentina and Brazil. What I learned on that project should be of interest to credit unions.
I bring this up because of a blog post by Tim McAlpine, who wrote:
In the past, there was an unwritten understanding within the credit union movement that credit unions were all in this together and the banks were the enemy. The new reality, especially in multiple credit union markets, is a full-on, no-holds-barred fighting to the death.”
Tim’s remarks, along with some of the comments to his post — and Trey’s comment that he might be working in the “most uncooperative cooperative industry in existence” — suggest that CUs are struggling to find the cooperate/compete boundary.
Here’s where my consulting project experience comes in: On my trips to South America, I was surprised to find that representatives from Coke and Pepsi would meeting to discuss the market and the opportunity it held. This wasn’t some kind of nefarious, illegal collusion.
At the time, the regions of South America that I was visiting were greenfield territory for the soft drink providers. As a result, two of the fiercest competitors on the planet — Coke and Pepsi — were collaborating to help develop the market. They knew that if they didn’t first get people to like their products — and make it a staple of their diet — then they would just be pummeling the crap out of each other for a market that wasn’t even worth fighting for.
So here’s the lesson for credit unions:
Cooperate to build awareness of — and demand for — credit unions as a category. Then compete tooth and nail for the consumers who want to be CU members.
What Bellco is doing should hardly merit criticism or controversy. In fact, I could argue that what it’s doing is good for CUs. A merger or acquisition is often a trigger for customer defections. As a result, Bellco could be helping to ensure that New Horizon’s members don’t defect outside the CU membership ranks.
With expanding fields of membership, overlap is inevitable. Nobody has a protected market. If a CU isn’t marketing to other CUs’ members, then it’s not competing effectively. After all, it’s a lot easier to poach from the choir, then to convert the heathen.