The purpose of credit unions

What does a credit union do? It does everything a bank does.

How does it do it? Just like a bank does, but under the ownership of the people who bank there.

Why does it do it? To keep profits from being siphoned off into the pockets of distant shareholders.

These basic ideas were included in a video produced by Central 1 Credit Union called “Some Choices Matter“. But in their video they also pitch the idea that profits stay in the community. This seems like a good idea—and one of the core values of credit unions—but it turns out that “profits staying in the community” is unhelpful in persuading bank customers to join a credit union. This was demonstrated in the results of the National Credit Union Awareness & Perception Study, released recently by the Canadian Credit Union Association at their 2017 National Conference.

Participants at the conference—all credit union professionals and board members—were asked how they would describe a credit union to someone who knew nothing about credit unions. Listen to their responses. Credit union people have been so well-trained to the idea that “we are not a bank” that they fail to explain themselves clearly by refusing to compare themselves to a bank. The most practical explanation begins: “We’re just like a bank except that…” People know what a bank is.

I edited the Central 1 video, removing most of the talk about communities. I also took out mentions of the word “co-operative” because there’s no good answer to the question of why a new member of a credit union is expected to be “co-operative” in some way. I also took out the annoying mumbo jumbo that marketing people write. I cut 1.5 minutes from their 3.5 minute pitch.

This is the purpose of credit unions in the 21st century. (Smaller credit unions might have other social purposes, too.)

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