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Small Credit Union Committe: Key Challenges

In 2009, the Small Credit Union Committee met to review and update previously identified key challenges faced by credit unions today. The focus of the committee is to solicit ideas from state league staff and concentrate on the issues threatening small credit unions.

According to the 2009 Small Credit Union Committee, there has been a shift in the level of importance of certain issues. During the first meeting in 1999, issues focused on product offerings and volunteer and staff skills. Today, the major issues deal with compliance of regulations, lack of succession planning, and overwhelming back-office redundancy. Corporate stabilization has become a major concern.

There is also a problem with attracting and retaining well-qualified volunteers. With pressures to broaden offered services, there has been a lack in marketing to attract new members.

In an industry where online banking has become the norm, the poor credit union web presence has caused many small credit unions to suffer tremendously. Without a competitive salary or benefits package, attracting and retaining qualified employees has become a major problem. There has also been a lack of high-quality strategic planning.

The Committee has determined four overriding challenges in existence today.

1. Regulatory Burden. Three or fewer full-time employees operate over one-quarter of United States credit unions and over one thousand credit unions have one or fewer full-time employees.

2. Back-Office Redundancies. Survival rests on spending more time interacting with members and less time dealing with back-office tasks such as payroll, data processing, and accounting system management.

3. Succession Planning. Finding qualified directors who will accept the risk of oversight responsibility is becoming difficult.

4. Corporate Credit Union Issues. Small credit unions are concerned about permanent depletion of corporate capital. Without it, they would not be able to bear the burden of costs that are normally associated with corporate stabilization efforts and would be driven out of business.

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Credit Union Philosophy

Historically, credit unions began in 1844 in Rochdale, England. A group of weavers established the Rochdale Society of Equitable Pioneers. Their society consisted of members to whom they sold shares to raise necessary capital in order to buy goods at lower prices than retail. They then sold those discounted goods to members. This was, essentially, the first credit union.

From there, the credit union movement spread to Germany, Canada, and the United States. In 1935, the treasurer of a credit union stated that credit unions were for service, “not for profit, not for charity.” That philosophy has been retained into the modern era of banking convenience.

Credit unions exist to serve members and look out for their interests. They provide a level of service unsurpassed in the financial world. The Cooperative Alliances Committee (CUNA) has established seven principles that reflect the philosophies and commitments of credit unions.

1. Voluntary Membership: Services are available to individuals without social, racial, political, gender or religious discrimination.

2. Democratic Member Control: Cooperatives are democratic, owned and controlled by members.

3. Members’ Economic Participation: The owners are the members. As such, they contribute to and democratically control the cooperative.

4. Autonomy and Independence: Credit unions are autonomous and independently controlled by members.

5. Education, Training and Information: Credit unions provide training and education for staff, members, and elected representatives.

6. Cooperation Among Cooperatives: Credit unions serve members by effectively working together on local, state, regional, national, and international levels.

7. Concern for Community: Credit unions focus on sustained development of communities by adopting policies that further the community.

These seven principles are grounded in cooperation and shared values. All credit unions abide by these principles and exist to serve their members and consider the well-being and furthered development of their communities. This sense of brotherhood has remained the main appeal of credit unions everywhere.

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Dealing with Credit Union Security Concerns

Logo for Credit Union 1 - Alaska
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Using a credit union can appeal to many when it comes to meeting their financial needs. Credit unions and other financial institutions produce major concern with security for some people. Well, credit unions understand this concern and strive to maintain financial security.

Credit union securities include personal security and securing finances that people entrust with the institution. While security has been a concern from the start of credit unions and financial instructions the onset of online banking and financial applications intensifies the concern. Patrons want to know if they use the convenience of online services then their money and any personal information will be secure. They want their private information to stay private and they want their money to stay in their account.

Many precautions have been made to create credit union security, even online. These are:
1. Private Access Codes
Patrons are given private access codes allowing them to get into their account. They will have a special number and password that they enter allowing them to work in their account. This is a convenience for patrons as they have access to their accounts 24/7. An added benefit is patrons can also check their accounts to make sure their security has not been breached. If they see an issue they can contact the credit union immediately.

2. Secure Server
Many credit unions and financial services are providing servers that have a strong firewall designed to keep private information private. For instance, when a patron uses their private access codes for their account no one else can get to them or the account. Technology allows the information to be encrypted to prevent theft. Even if a credit union sends information online to a patron this information is also safe.

3. Protected Browser
Often credit unions will require patrons use a secure browser. This will double the security effort and credit unions provide patrons with the details they need to do this.

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