That elusive credit union difference. What does it mean? How can credit unions communicate it in a compelling manner? Do consumers care? Over the next few days I am going to share my thoughts on these questions. This first post comes from an exchange I had with my Australian pen pal.
Last year I met John Yardley, who is the general manger of personal banking at mecu in Australia. From time to time, John sends me information about the wonderful things mecu is up to down under. For instance, he talks a lot about mecu’s pioneering work in the area of sustainability.
Last week John sent me something which, to the best of my knowledge, is a credit union (natural person) first: mecu was given a short- and long-term credit rating by Standard & Poor’s. I asked John if mecu intended to use this rating to prepare for some sort of alternative capital offering. This is his edited reply:
“Not a capital raising exercise (at this stage at least) – we already have significant capital adequacy, strong profitability and are well placed to fuel any future growth. Getting a rating will assist us to retain our retail deposits and to continue to grow our deposit base at a time when there is ‘a flight to quality’. Part of the growth equation is about our strong ties to the not for profit sector, who have billions in dollars of funds invested at any point in time (they rarely spend their capital) but who cannot, in many cases, invest with non-rated FI’s. It’s also about retaining our market/industry position as an innovative and sustainable CU and I think there will be benefits we haven’t even thought about yet.”
You will scarcely hear other financial institutions talking about their S&P rating as a vehicle to attract retail deposits. mecu went through this time consuming (and presumably pricey) exercise to meet the needs of one of their core member segments AND for as yet undiscovered reasons. Curious to hear your thoughts on what we can learn from this pioneering move by a credit union to differentiate itself.
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