The Entrepreneurial Credit Union?
This article was originally published on CUinsight.
I live in two worlds.
On one hand, I am an entrepreneur who left my last real job 23 years ago to start a design and marketing agency. I traded the safe 9 to 5 long ago and have employed a small team ever since. Entrepreneurship is risky. An entrepreneur trades the safety of a (semi-) guaranteed pension and (semi-) guaranteed income for an opportunity to control his or her own destiny and to do something without the typical constraints of a job.
On the other hand, the company that I founded, Currency Marketing, now exclusively serves the credit union industry. I’ve found that what credit unions stand for aligns with my personal and professional beliefs.
This combination is ironic, because credit unions are about as far away from entrepreneurship as you can get.
But, if we go way back to 1900, a very entrepreneurial Alphonse Dejardins and his wife Dorimène Roy Desjardins, founded the first caisse populaire in Lévis, Quebec. It was the first credit union-like institution in North America. Over the course of the next 14 years, Alphonese personally founded an additional 148 caisses throughout Quebec and Ontario. This is a mighty entrepreneurial achievement by any measure!
South of the border, businessman and social entrepreneur, Edward Filene, championed workers’ rights and pioneered the credit union movement in the United States. He was instrumental in establishing enabling legislation in Massachusetts in 1908 and he also donated a million dollars of his own money to CUNA’s predecessor organization, the Credit Union National Extension Bureau. Again, this seems like some pretty risky activity and heavy duty entrepreneurship in action.
So what happened? Unfortunately, the credit union industry has become highly regulated and extremely risk-averse. Over the course of the last century, it has had most of its entrepreneurial spirit sucked out of it. No doubt there are pockets of entrepreneurship—Filene’s i3 program and the CUSO ecosystem come to mind—but for the most part, boards and executives spend their day-to-day activities on protecting what is versus working on what could or should be.
I suppose this is the arc of many established industries. As Harvard professor Clay Christiansen famously outlined in the Innovator’s Dilemma, "Outstanding companies can do everything right and still lose their market leadership—or worse, disappear altogether."
In the case of credit unions, it’s the disruptive technology that’s proving to be the industry’s Achilles’ heel. Even though credit unions are cooperative enterprises that work together, they haven’t worked together to create the technology they need to reinvent and thrive. Instead, credit unions rely heavily on large technology vendors that are facing the same innovator’s dilemma.
How is it that companies like Dwolla, Geezeo, Mint, Movenbank, Simple, Square and dozens of other nimble, lean fin-tech startups can build something fresh and innovative? The recipe seems simple. Take a driven founder with an idea, attract a few million dollars in venture capital, add a dozen or so talented developers and designers, employ lean-startup methodology, get to market quickly and iterate constantly. Can’t the credit union industry, with its collective tens of thousands of employees and more than a trillion dollars in assets under management, do the same thing?
What do you think? Are there opportunities and the desire for credit unions to recapture that entrepreneurial spirit that has slowly slipped away?