Coxon, along with other credit union executives from a variety of credit union sizes believe that technology has leveled the playing field and that the consumer should base decisions on individual and personal goals.
“It’s a very personal decision that should be based on the kinds of products and services the individual requires,” Coxon said. “Although one person may need an extensive line of products, services and specific technology, another consumer may simply be seeking only the basics.”
Although numerous consumers may just be seeking a fee free checking account or a simple auto loan, some of the smaller credit unions (under $50 million) are merging with larger credit unions in order to expand offerings.
With the growing number of recent mergers, bankers have voiced concerns that the credit union industry is trending toward developing a slew of powerhouse credit union entities.
Kathleen Murphy, CEO of the Maryland Bankers Association recently voiced her apprehension about the growing number of mergers saying that if credit unions continue to grow and expand they should just convert to become a bank. “The more they expand and act like [Federal Deposit Insurance Corp.]-insured banks, they should convert to banks,” Murphy said.
However, credit union executives like Coxon say that there’s room for everyone at the table and that smaller (and larger) credit unions play an important role in the marketplace.
“There will always will be niches for smaller credit unions to serve specific markets so I don’t think they’ll become extinct,” he says. “When it comes to merging there are numerous business advantages for economies of scale. Everyone can benefit by combining smaller ones with some of the larger credit unions.”
Coxon contends that although the smaller credit union will remain an important player he believes that there may be fewer in the marketplace. “However, that's a financial services trend, not with just credit unions. Instead its not just finding ways to serve the market, but instead how can you leverage the technology the in the most efficient manner.”
Technology Has Leveled the Playing Field
“Clearly technology has given us the ability to make the industry a band of equals no matter the credit union’s asset size,” Coxon says.
He explains that even the smallest credit union can offer extremely stealthy technology however, larger credit unions have an advantage of being able to adopt technology quicker.
“We can be on the leading edge of technology, whereas smaller ones may wait until solutions become more apparent as they require proof of the concept,” Coxon says.
Georgia United Credit Union ($930 million, Duluth, GA) offers numerous forms of technology, which may surprise some members. “As the first credit union in Georgia to offer mobile check capture, I think our technology offerings would be a surprise to many,” says Kim T. Wall, Director, Public Relations & Community Development. “And, many of our own members seem surprised to learn about the variety of mortgage loan programs and competitive loan rates available through our credit union.”
President and CEO, Robert Fisher from Grow Financial Federal Credit Union ($1.6 billion, Tampa, FL) believes that technology has opened the door for credit unions to offer just about any electronic service, however credit unions should determine which service is the best match for its membership. “In general, technology has allowed everyone to offer pretty much the same thing. The critical thing is to figure out who you are, and then stick to it.”
“As far as we are concerned, size has nothing to do with it,” Fisher adds. “Well-run small credit unions can compete with larger credit unions on many fronts. Technology has equalized the differences in many ways.”
Technology has also allowed for credit unions to make adjustments in how they communicate and work with members as well. For example, Rivermark Community Credit Union ($550 million, Beaverton, OR) plans to close a branch this summer due to the increase of online and mobile banking users. According to Rivermark Marketing Lead David Noble, the credit union is the first in the state to offer products like mobile deposit, which has allowed members to make check deposits using their iPhone or Android device. In a press release he states that, “In just two months over 5,000 members had downloaded the free DeposZip Mobile app.”
Rivermark’s President/CEO Scott Burgess said, "It's no longer necessary for members to come to us when we are always available online to them, when they need us."
Small Credit Union Mergers Should Not Make Banks Nervous
For many small credit unions, merging with a larger credit union only allows for the smaller players to remain viable in a constantly evolving market.
“I think we compete on both levels,” Wall explains. “We are constantly trying to differentiate ourselves from the ‘big box banks’ regardless of credit union size. At the same time, we also seem to compete more than we collaborate with like-sized credit unions than we used to. Years ago, the main competitor was any bank, but now, more and more credit unions are growing and moving into the backyards of smaller credit unions. Another trend is the growing number of smaller credit unions opting to affiliate or merge with larger credit unions because of the increasing burden of regulations, compliance, and the cost reductions available through shared expenses (improving economies of scale.)”
For Dixiecon Federal Credit Union ($226 million, Richmond VA), merging with Hopewell Chemical Federal Credit Union ($28 million, Richmond VA) meant that the credit union could not only survive but also thrive.
Dixiecon’s President/CEO Jerry Plumley said that the credit union was struggling to offer the same types of products and services as other financial institutions, in addition to fielding mounting regulatory demands. “This is a just a little credit union,” he said. “I’m getting to the point where I’m going to retire, and I couldn’t get anybody to replace me.”
The merger with Hopewell Chemical will allow Dixiecon to provide a wider variety of loans, ATM services and debit cards, which will directly benefit the credit union’s current and future membership base. “We couldn’t afford to handle all those kind of loans,” Plumley said. Merger plans were finalized April 1.
In an Access First newsletter article, new President/CEO Gary Klein explains how the merger will benefit the membership. “This merger will provide you with a wide array of innovative loan, mortgage, deposit, and investment solutions. In addition, this merger will allow you access to five full-service branches, including three in the Bay County area.”
According to a recent press release, more than 70% of Access First members voted in favor of the merger.