You might have noticed that Credit Unions are celebrating the accomplishment of surpassing 100 million members in the USA. While I agree this is a major accomplishment, it made me wonder why haven’t the other 200 million in the USA joined a Credit Union when there is a lot of value to becoming a member. Is it that they just don’t know the difference or similarities between a Credit Union and a Bank? Also, maybe there are some misconceptions about banking at a CU. This seemed like the perfect 1st blog.
First, I would like to give you my background. I spent 6 years at the Big Bank and 8 years as Chief Credit Officer and CEO at two community banks before taking over as CEO of Sterling in January 2013. I think my background makes it easier for me to compare the two.
Products and Services: I think you will find that almost all retail products & services offered by a bank can be found at a CU. At Sterling, one of the directives from the Board when I started here, was to make sure Sterling is offering a full slate of offerings to enhance the value of our memberships. Since I started, the CU has implemented Rewards on Debit Cards (not at most banks), ID Theft protection, Merchant Processing Services, Smart Phone Ap, and will shortly have longer-term mortgages (>15 years) and money purchase mortgages. Plus we have revived our Tru Stage insurance offerings for auto, home, and life (check it out, I saved a lot of $$).
Technology: Most people figure that CUs can’t compete with banks in this area. This may have been true in the past, but CUs are becoming just as proficient or leading in this area. This was another directive by the Board to make improvements to enhance the value for our members. As mentioned above, we now have a Smart Phone Ap, but we have major changes coming December 1st. These changes will offer a much more advanced online and mobile bank offering that is in line with all other institutions in the area.
ATMs: For many years, the Big Bank has promoted how they were more convenient with all of their ATMs. Here at Sterling we are a part of an ATM network that offers almost 5000 ATMs in 42 states for our members. These ATMs can be accessed at no charge and even will allow deposits to be made if the machine has the capability.
Membership: A lot of consumers think they aren’t eligible for membership. Yes, some CUs are chartered just to serve certain employer groups but many have moved to community charters like Sterling. Click here to see if you can become a member at Sterling.
Rates & Fees: Google will show you than on average CUs are way ahead of Banks here. Why is that? Of course, the bank will tell you it’s the CU tax break (good idea for a blog in the future on why that is not true); however, it all comes down to the biggest difference between a CU and a Bank; it’s the Business Model! As a person, who has managed at a stock-owned bank, a mutual thrift savings bank (no stockholders), and a member owned credit union, I feel this is where I am qualified to speak on this difference.
The directives from your Board meets what makes the business model successful. At the stock owned banks that I worked at, it was what can we do to maximize shareholders’ wealth, which if a person has invested their money into your business; they do deserve a return, but is this return at YOUR expense?
When I was at the mutual thrift, the ownership was similar to a CU. There was no outside pressure on the Board and Management to appease stockholders, which made the management of it more rewarding to me. However, I was approached on several occasions with plans to convert to a stock bank. Can you guess the number 1 reason that I was given to convert? It was so myself and others could obtain stock and maximize our wealth. If they ever sold the benefit to the depositor or borrower, it was way down the priority list.
So what is so great about Sterling’s business model? The Board, my management team, and I are given one main directive that is mentioned a few times above: Enhance the Value of our Memberships! There is no stockholder to appease. If you are a member here, you have an equal say as any other member not just a few select stockholders. This business model doesn’t allow us to give away services, but these services are much cheaper here. For example, NSF is $25 versus most banks in town at $33 or higher. No loan processing fees on direct loans versus banks that are typically around $150. Rewards on debit cards transactions with no minimum balance fee versus no rewards and minimum balance fees. And it goes on and on.
If you are a member, I would like to thank you. I would also ask that you have my staff compare what you are paying at other places (credit cards, loans, deposits, etc). If we can save you money, we would love to do it. If we can’t, my staff is not trained to have you move it no matter if it is a benefit to you. If you are not a member, I hope this has convinced you to Join the Movement! at Sterling.
Aaron K Wood, CEO