Oh no, I’m not telling you what that may be. I have no idea. The purpose of this post was to solicit input from all of you in the know!
Select an industry at random. For better or worse, we are seeing a rapid consolidation of smaller firms into super-sized conglomerates. Whether they are tech titans such as Google, Apple, and Amazon, or general producers with the household names of S.C. Johnson and General Mills, an absorption of the “little guy” is occurring on a continuing basis. With it, we are seeing a separation of pricing (large companies can scale to bring down costs in ways small firms cannot), resources (talent and patents are bought upon seeing their value and operated under the large brand umbrella), and quality (some, but not all, cut corners to reach the largest audience at the expense of enthusiasts and purists).
One of the best dinners I’ve ever made consisted of nearly 100% local and small company produced ingredients. I won’t lie; they were expensive, but in combination they produced a party of the palette. You could say they cost what real food actually costs. Could I have assembled the meal by walking through a mass-produced supermarket aisle? Sure, for a lot less, too. But the tomatoes might not have been as ripe, the bread not as flavorful and free of preservatives.
We tend to associate small with quality, consistency, and a true human element. Not often with cheaper or better equipped. Yet, you feel a connection with the product or service, and that’s why you return each weekend to the farmer’s market.
What have I found in working with a wide range of credit unions ($2 billion plus down to below $50 million)? Is bigger better? Do the small institutions provide a greater sense of connection to the community and their members?
My perspective (and I encourage you to constructively disagree!) is as such: The size of a credit union is unimportant so long as they can provide sufficient services and service quality for their members, while operating within their regulatory bounds.
Last week, the NCUA released a list of credit unions which missed their first quarter Call Report filing deadline. After negotiating with those providing extenuating circumstances, NCUA cited 62 credit unions. The typical penalty was a hundred-something dollar fine, however, one credit union was compelled to pay $20,000.
Most interesting about this list was the size of credit unions involved. Not a single credit union cited had assets above $250 million, and more than half were below $10 million. Is it possible the small institutions just had too many fires to fight that this didn’t get finished in time?
No matter the industry, small remains that way for one of two reasons: 1) A too-rigid hold on to that start-up mentality (which lets them adjust to market swings, customer desires, and a changing regulatory climate with ease, but also keeps them from stepping outside their business). 2) They think small, looking at the larger competitors and exclaiming, “We would do those things, but we’re too small and need to do this and that, so we can’t, but if we had the time, we would.” To their credit, the reduction of costs as presented above does make it hard for them to compete head-to-head.
I’m interested in what you think. Are we seeing the end of small credit unions? Do the new technologies members expect put the “little guys” at a disadvantage? Can you have a small-town feel in a big institution? Discuss it in the comments below.