Santa & Credit Unions
By now I am sure that you are knee deep in the throes of the Holiday Season. As you know, Santa Claus has been busy making a list of naughty and nice children all year long. His team of elves has been busy making toys and by now is loading his sleigh for his whirlwind trip around the globe on Christmas Eve. I thought it would beneficial, as we get ready for a new year of business, to study Santa’s business model and why it has worked well for so long.
Santa has a list of children everywhere, and he knows whether they have been naughty or nice. The theory here is that nice children receive gifts and naughty children receive coal in their stocking. He not only knows who has been naughty or nice, he also knows what people want. But, how does St. Nick get his list? I would assume that the man in red is one of the earliest adopters of “Big Data”. Whether he does it himself, or he has a team of people working with him, the fact is he knows – as the story goes – about everyone.
So then, the question is, what do you know about your members? Wouldn’t it be nice to know which members will pay back loans and which ones won’t? And, wouldn’t it be nice if you knew what loans members wanted and when? While you may not have all the information that Santa has, it seems that you have a lot of data available. Have you studied that data and are you prepared to deliver over the next year? Technology exists that will allow you to know your members better than you do today.
Santa is always…Santa. It doesn’t matter when or where you see him, he always looks the same, decked out in his red suit, black boots, and red hat. He is a symbol of trust. This is very important, especially if you’re going to be dropping down chimneys in the middle of the night. Sure, there are imposters, but you know when you’ve been in the presence of the real Santa Claus.
Ask yourself this question, is the credit union you work for today, the credit union you heard about when you were younger? Many credit unions have become reliant on fee income rather than interest income for profitability. As a result, we’ve seen a number of credit unions seek out fee income opportunities rather than looking at ways to generate more loan income. This is not the credit union model of our youth that charged few and lessor fees for services, but was willing to provide loans to those who couldn’t get them elsewhere due to unique circumstances.
Has your credit union become so risk-adverse that you are no longer providing loans to folks that can’t access credit elsewhere? Perhaps this is due to poor risk management practices in the past that caused significant losses. Remember, your first name is credit, not services. Also, remember that credit unions’ are a cooperative and you can’t make your members pay the price for poor management practices in the past. As Santa is Santa every day, credit unions must first and foremost be just that to their members – credit unions.
Let’s face it, anyone can give gifts, but no one can give them like Father Christmas! His image remains consistent — he is never heard complaining about his work; he always has a smile and can often be heard laughing with that familiar ho, ho, ho! Consider this, with population growth around the world, security issues, concealed-carry laws and the absence of chimneys, to name just a few growing challenges, the job has become more difficult for Mr. Claus . But, the Jolly Ole Elf has overcome these hurdles by adopting new delivery strategies, increasing the use of online ordering, and partnering with parents to ensure that no child is disappointed on Christmas morning.
Credit unions make loans to members. That’s what we do. But the way we do it has to change. The world has changed. While it’s become more difficult to engage our members in a world where almost everything is done remotely, technology exists that will allow us to deliver the same loans and services we always have, only in a different way. Credit unions must adopt these new technologies that allow us to do business faster and more efficiently than before. Most important, we need to own what we do and strive to deliver the credit union philosophy to our members every day.