Skip to main content

What’s really killing small credit unions?

by Becky Reed, BankSocial

There has been much attention given to the rapid disappearance of the small, local credit union. About a hundred reasons have been cited for this disturbing trend—from lack of succession planning to the cost of compliance. While any of those hundred reasons could be part of the problem—there is one I believe is central to a small credit union’s inability to survive: The Core

Let’s look at the advantages of being a small, local credit union:

  • Ability to provide very specific products that meet the needs of the local community
  • Small hyper-focused team that can make decisions quickly
  • Short implementation cycle due to less red-tape and structural roadblocks

A small credit union can leverage these advantages by:

  • Testing out innovative ideas
  • Changing course or pivoting rapidly
  • Implementing changes quickly

With all the advantages of being small, why do so many smaller credit unions struggle to capitalize on these key differentiators? It all comes down to technology and a small credit union’s inability to leverage modern tools due to an anything-but modern core. Most cores were created before the turn of the century with some of the more popular ones being closer to the mid-1900s. The technology landscape looked completely different in 1980 than it did forty years later in 2020. But many smaller credit unions, especially those under $75 million in assets, are still operating with a core from 1980 (or before!). So, why haven’t they switched Again, many reasons for this include long term contracts or lack of resources, but the main reason is that most of the cores out there just don’t cater to the small credit union market. So, this market has fewer choices. The result of this is that the smaller credit unions just cannot adopt newer technologies to enhance both the member and the employee experience because their core just can’t handle it! This is a travesty.

So, how do we fix this?

  • Educate small credit unions on their options
  • Use our collaborative superpower to leverage collective bargaining so that a group of credit unions can convert to a more popular core together
  • Help small credit unions tap into their key differentiator—being small and nimble

Small credit unions are the lifeblood of our industry. The credit union philosophy of people-helping-people is lived out daily in their deep connection to their community. There is help available and a whole lot of people dedicated to the survival of this key market. To learn more about how you can get involved or get help, reach out – let’s talk!

Becky Reed

Becky Reed

Becky Reed is a credit union industry veteran and thought leader with more than two decades of experience in credit unions and CUSOs. Renowned for her unique perspective as a ... Web: https://www.banksocial.io       



Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

The Skills Board Chairs Need Now: Leading Through Complexity, Not Control

NCOFCU Podcast   Grant Sheehan CCUE | CCUP | CEO-NCOFCU The role of the board chair has quietly—but fundamentally—changed. A decade ago, success was defined by experience, authority, and strategic judgment. Today, those traits are still relevant—but no longer sufficient. The modern board chair operates in a world shaped by competing stakeholder demands, technological disruption, geopolitical uncertainty, and increasing scrutiny. What emerges is a role that is less about control—and more about navigating complexity. Below are the core capabilities that now define effective board leadership. 1. From Authority to Orchestration The most important shift is conceptual. Board chairs are no longer expected to be the smartest voice in the room. Instead, they are expected to make the room smarter . This requires the ability to: Synthesize large volumes of information Reconcile conflicting perspectives Facilitate high-quality dialogue Traditional strengths like executive experience matter les...
Post a Comment
Read Complete Article HERE>»

On Stablecoins, NCUA Has Opportunity to Strike Right Balance and Get it Right

By Grant Sheehan As digital payments continue to evolve, the National Credit Union Administration’s (NCUA) efforts to establish a regulatory framework for stablecoins mark an important step forward. For credit unions, especially those serving mission-driven communities like firefighters and first responders, access to emerging financial technologies is not just an opportunity but a necessity to remain competitive and relevant. The  National Council of Firefighter Credit Unions  (NCOFCU) appreciates the  thoughtful input  provided by both America’s Credit Unions and the Defense Credit Union Council (DCUC) on the NCUA’s proposed stablecoin framework. We find strong merit in the recommendations of both organizations and believe their combined perspectives offer a constructive roadmap for getting this right. Important First Phase, But… At its core, the proposal represents an important first phase in implementing the stablecoin provisions of the GENIUS Act. Establishing a...
Post a Comment
Read Complete Article HERE>»

It All Starts in the Boardroom

It all starts in the boardroom—but the consequences are felt far beyond it. When Governance Breaks Down, Members Pay the Price Credit unions are built on a simple but powerful idea: they are owned by their members. Unlike traditional banks, where shareholders drive decisions, credit unions are meant to operate democratically—guided by a volunteer board elected by the very people they serve. But that model only works when participation exists. A governance breakdown happens when the people elected to oversee an institution stop truly representing the people who own it. In credit unions, this breakdown doesn’t usually come from scandal or sudden failure. It happens quietly, over time—through disengagement. The Root of the Problem: Low Engagement Most credit union members don’t vote. Board election turnout is typically in the low single digits. In some cases, it’s barely measurable. That means a very small percentage of the membership is effectively deciding who governs an institution th...
Post a Comment
Read Complete Article HERE>»

Sunday Reading - Why the IRS is necessary

  'Taxman'   Why the IRS is necessary The Internal Revenue Service, or IRS, is a division of the US Treasury Department created in 1862   that enforces the Internal Revenue Code —Title 26 of the US Code, a compilation of federal statutes—and, effectively, oversees tax collection. In 2024, the IRS's roughly 75,000 employees collected roughly $5T in tax revenue.   Given its role in diverting household income streams, it also has a bad reputation. Half of Americans had an "unfavorable view" of the IRS as of 2024 ( see data ). In a ranking of 16 well-known federal agencies by popularity that year, t...
Post a Comment
Read Complete Article HERE>»

It's Financial Literacy Month

April is Financial Literacy Month—a time dedicated to empowering individuals and families with the knowledge and tools needed to make informed financial decisions. Whether you're budgeting, saving, managing debt, or planning for the future, improving your financial literacy can have a lasting impact on your well-being. We invite you to explore our Consumer Education website, where you'll find helpful resources, tips, and guidance to support your financial journey. If you find it valuable, please share it with your family and friends—because financial knowledge is even more powerful when it’s shared. https://www.ncofcu.org/financial-literacy  ================================================= Remember, you're not alone with  NCOFCU.org Join/Upgrade Check out some of NCOFCU's additional features: Annual Conference First Responder Credit Union Academy Financial Literacy Podcasts YouTube Mini's Advocacy  
Post a Comment
Read Complete Article HERE>»

Growing Use of Stablecoins Could Reshape How FIs Manage Liquidity, Allocate Assets, NY Fed Report Suggests

NEW YORK — The growing use of stablecoins tied to the U.S. dollar could reshape how banks manage liquidity and allocate assets, potentially leading institutions that support the digital tokens to hold more reserves and make fewer loans, according to a new study from the  Federal Reserve Bank of New York . The paper, titled “ Stablecoin Disintermediation ,” was authored by economists Michael Junho Lee and Donny Tou and examines how stablecoin activity affects the balance sheets and liquidity management of banks that partner with stablecoin issuers. The researchers found that while stablecoins rely on traditional banks to function, the relationships can alter the liquidity demands placed on those institutions. Banks serving stablecoin issuers tend to hold larger reserve balances and reduce the share of assets devoted to lending, shifting toward a more reserve-heavy banking model. Focus of Study The study focused on developments following the March 2023 collapse of...
Post a Comment
Read Complete Article HERE>»

Join NCOFCU partner Vining Sparks this Thursday for their economic outlook webinar

If you are a portfolio manager, CFO, or CEO/president be sure to join NCOFCU partner Vining Sparks this Thursday, July 16, at 11 a.m. ET for its third quarter economic outlook webinar. Vining Sparks' Chief Economist Craig Dismuke will evaluate economic developments and fixed income sector performance to identify risks and opportunities within the U.S. market. To attend this free webinar register today! You will receive instructions to access the webinar after your registration is confirmed. If you do not receive a registration confirmation email, please contact Vining Sparks via email . This educational event is offered to institutional investors only. Vining Sparks is a member of FINRA/SIPC.
Post a Comment
Read Complete Article HERE>»

Why is NCUA Overlooking the Biggest Fee of All?

By Frank J. Diekmann NCUA has made a priority out of the F word in 2024—fees--announcing a special focus on NSF and OD fees this year.  And yet the agency seems to have little interest in the biggest and most egregious fee of all—the “merger” fee that comes when net worth isn’t returned to the people whose money it is in the first place, and it instead goes to insiders—often in amounts a multitude larger than any bounced check fee. It's sadly ironic that NCUA seems bothered by fees members opt into, but not by a merger fee they don’t seem able to opt out of. The merger fee is a hidden-in-plain-sight cost to members that is so brazen and increasingly occurring it has entered that dangerous territory of almost being taken for granted, wi...
Post a Comment
Read Complete Article HERE>»

Rick Metsger reminded credit unions the National Credit Union Share Insurance Fund may be required to increase loss reserves as the values of taxi medallions decline.

A LEXANDRIA, Va. (Dec. 8, 2017)  – National Credit Union Administration Board Member Rick Metsger today reminded credit unions the National Credit Union Share Insurance Fund may be required to increase loss reserves as the values of taxi medallions decline. “Prices for New York taxi medallions at two recent public auctions have been considerably lower,” Metsger said. “That, combined with a continued increase in already high delinquency rates on medallion loans, suggests the Share Insurance Fund’s reserves may have to increase in the very near future.” Metsger spoke today to the Oregon Department of Financial Services CEO roundtable in Salem, Oregon. His remarks covered various issues related to credit union regulation and the Share Insurance Fund.  Metsger said the NCUA issued a Letter to Credit Unions in 2010,   warning of concentration risk , and the agency issued a more specific letter on   taxi medallion lending in 2014​ . “We have known, and warned ...
Post a Comment
Read Complete Article HERE>»

NCUA Board Doubles Small Credit Union Threshold to $100 Million

  Updated Definition of “Small” Means Relief for Hundreds More Credit Unions More than three-quarters of all federally insured credit unions will be classified as small entities under the final rule (Part 791) and interpretive ruling and policy statement (IRPS 15-1) approved by the NCUA Board. The Board’s action raises the asset ceiling for a “small” credit union from $50 million to $100 million under the Regulatory Flexibility Act. The change makes an additional 733 federally insured credit unions eligible for special consideration of regulatory relief in future rulemakings and assistance from NCUA’s Office of Small Credit Union Initiatives, including training and consulting. In all, 4,690 federally insured credit unions will be classified as small. “The asset ceiling for small credit unions is now 10 times higher than when I became Chairman in 2009 and 100 times higher than when I first joined the Board in 2002,” NCUA Board Chairman Debbie Matz said. “When I returned to the...
Post a Comment
Read Complete Article HERE>»