30 July 2008

The Smaller the Better? (Maybe size does matter)

At the age of twelve I was a towering 5’7”. As one of the first boys in my class to have my growth spurt, I was able to experience what no one in my family could. I was tall. I was in the back row of my basketball team photo. I was bigger and stronger and hairier and had a deeper voice than most of my classmates. It was good to be big.

Seventeen years later, I’m still 5’7”. With the passing of every year I was able to see my contemporaries grow taller and taller, while I became (seemingly) smaller and smaller. I went from being one of the tallest people I knew my age, to being one of the shortest. Tough? You betcha! I’ve heard every short joke ever created, and have been the unwilling recipient of countless comments on my height, or in this case, lack thereof. It’s been tough to be small.

Or has it?

Yesterday I flew from Charlotte to Houston to speak at the Texas Credit Union League’s Mid-Asset Summit. My seat was in the exit row. While nearly everyone else on the plane over the age of 7 looked cramped, uncomfortable, and displeased with their seating arrangement, I was nearly able to stretch my legs straight ahead of me. Sure, I felt cramped shoulder to shoulder (such is life on airplanes), but in terms of legroom I thought the plane was quite spacious.

And today I talked to amazingly passionate credit union CEOs from mid-sized credit unions in Texas. After conversations with these executives, I have never felt better about being a part of this industry. We discussed why it has never been a better time to be small, the mainstream media’s general distaste for all things big and profitable, and the subsequent public distrust of large firms. Small, not-for-profit financial institutions have what most large financial institutions do not: the genuine ability to craft solutions to their field of membership’s unique needs, a transparent and trustworthy “we are here to help our members, not to profit off of them” public persona, and the ability to honestly prove innocence from the recent meltdowns in the financial services sector.

Do small credit unions have a lot of work to do? Sure, some do. Mostly, though, I think it’s a great time to be a small or mid-sized credit union. It’s just a matter of communicating our unique stories, serving our members in powerful, personalized ways, and continuing to be what we have been: transparent, honest, and a cost-saving solution to regular Americans’ financial service needs.

Don't ask me to reach the top shelf in a cupboard. Don't make me the center on your basketball team. But please don't expect me to be ashamed of my credit union's size.


Ron Shevlin said...

Personally, I don't think smaller CUs have any better ability to "craft solutions to their field of membership’s unique needs", "help their members", or "prove innocence from recent meltdowns" than larger CUs.

It's not like the larger CUs are THAT large, except for a handful.

For me, there are two major reasons why smaller is better -- at the moment:

1) In general, smaller organizations can respond to change faster than larger ones can.

2) The bigger firms got bigger for the wrong reasons. And there's not enough space here to elaborate on that one.

But in the context of the financial services industry, even what you consider to be "large" CUs are still relatively smaller firms.

Matt, the Credit Union Warrior said...

@Ron I can always count on you for a great comment!

I agree that most "large" credit unions don't seem that big when you compare them to other financial institutions (banks). I also agree that there are many large credit unions (NC SECU, the 2nd largest credit union in the world, comes to mind immediately) have been able to behave as a small credit unions in terms of maintaining a member-centric, local feel.

That said, I think you and I would also agree that some large credit unions have lost their religion. The implementation of the "grow or go away" mentality has become in many ways a "growth at any cost" model. Some are behaving in ways that are not discernible from the big, "evil" banks from which they once claimed to be different.

The news of the day has allowed the public to learn a few things about credit unions. First, credit unions did not get knee-deep into sub-prime mortgage lending like banks. Second, the National Credit Union Share Insurance Fund (NCUSIF) has never experienced a loss. Third, credit unions deposits are insured at levels at least equivalent to those in banks.

Marry this information to the anti-corporate, anti-establishment, anti-profiteering, and anti-big sentiment of most Americans right now, and you have an environment rife with opportunity for credit unions in general, and small credit unions in particular. Small and medium sized credit unions, if managed in accordance to the founding principles of the movement, have a perfect opportunity right now to attract hordes of new members.

Breathe said...

you came to Texas and didn't come to visit? Okay, true, I'm in austin, but still.

Hey, I came across this and wanted to send it to you but didn't have your email. what do you think:

Gene Blishen said...

Great post. There is a philosophy of being small that is not understandable by those whose philosophy is being big. They just don't see it and never will. There are a lot of reasons why smaller is sometimes better just as there are reasons for why larger maybe better. The key is that our marketplace is a mixture of both and will continue on that path.
I am a proponent of smaller. I think we need to get beyond size and start paying attention to quality. Some think that dimension (quality) is possible with quantity. That continues to be the question I grapple with.

Matt, the Credit Union Warrior said...

@breathe What was that old Alan Jackson song about Dallas? "Oh how I wish that Dallas was in Tennessee." I wish Austin was in Houston...would have been neat to meet you!

@Gene I've always cautioned myself from pigeon-holing a financial institution on size alone. Like I said, NC State Employees' Credit Union runs an incredibly member-centric operation in spite of their enormous size. I think you and I both know, however, that being small has its distinct advantages...never more so than today.