Love is in the air, and as Cupid pulls another arrow out of his quiver and readies his shot, many credit unions are hoping he’ll kindle a spark between members—both new and old—and their local credit union. But here’s the thing: everyone knows credit unions love their members, and members love their credit union. There’s no arrow needed here.

However, there are some out there who have become disillusioned with the credit union mission. They’re tempted by the fancy technology, asset size, and income of the big banks down the road. The credit union’s mission just isn’t as enticing. So, who is Cupid’s target this year? Who needs to fall back in love with credit unions and their cooperative design? Contrary to popular belief, it’s not the members, it’s the credit unions.

Too focused on the competition

In her recent article, industry veteran Denise Wymore examines the slow transformation of credit unions from a not-for-profit, member-driven alternative to banks into income-focused, fee-heavy financial institutions.

Wymore writes, “When credit unions were born, they were something radical: financial cooperatives built on seven cooperative principles. Principle #3: Member Economic Participation made us different. Our capital wasn’t owned by investors or shareholders; it was owned by the members. That structure meant any ‘profit’ we returned through lower interest rates on loans, higher dividends on savings, and no fees or significantly lower fees. We didn’t have to ‘beat’ the banks—we were the alternative to banks. And it wasn’t unfair competition; it was our cooperative design.”

Nowadays, credit unions are racing to keep up with FinTechs, Neobanks, and the big banks by mimicking their strategies. We have what were once local credit unions now with assets of tens of billions, with executives raking in tens of millions in compensation, offering membership to anyone willing to pay for it. AI, growth, and profit dominate conversations. Healthy credit unions merge for the sake of scale, handing out large bonuses to executives as they do so.

So focused on beating the competition, credit unions have put themselves at risk of becoming the competition, all in the name of winning the financial institution war. But the truth is, credit unions shouldn’t be running their race to begin with; we should be in a different league altogether, and proud of it. As a financial partner, credit unions should strive to stand out, not fall in line with the rest, and get lost in a sea of sameness.

Fees and transparency 

But the focus on competition runs both ways, as Wymore points out. As credit unions slowly morph into the competition, the banks are working to slowly morph into credit unions, as they begin attempting to achieve the transparency, fee forgiveness, and social responsibility that younger generations prioritize.

Regarding fees, Wymore notes that “Pressure mounted on both banks and credit unions to eliminate NSF and overdraft fees altogether. Ironically, many big banks led the charge—removing those fees entirely. That’s the part that stings. The very system designed to protect members from predatory pricing somehow began mirroring it. And as the tide shifts back toward transparency and fairness, the institutions that once were the problem are now racing ahead of us to fix it.”

As of 2023, credit unions collect three times the amount of fee income to assets than banks. Our industry knows the amount we make in overdraft and NSF fees isn’t a good look either, as credit unions were outspoken in their opposition to reporting said income on annual call reports, and our leading advocacy organization, America’s Credit Unions, campaigned to have the requirement revoked, citing reputational damage if it remained public. Ultimately, the NCUA allowed individual credit union fee income to remain unpublished.

So, not only are credit unions taking in more fee income than the big banks, but they are also actively trying to conceal the source of that income from their members. But credit unions aren’t banks. Credit union members are the credit unions’ owners, and that should mean increased transparency between the credit union and its members, not less. Right?

Be a credit union, not a bank

It’s time to stop trying to turn the industry into something it’s not and fall back in love with what credit unions already are. Credit unions are not banks. The goals and motivations that drive the credit union every day should not be income and growth, but the mission on the wall and the principles on which we were founded. Let’s stop striving to be the competition and instead focus on leaning in to what makes us different.

So, as we celebrate the season of love, let’s remember what about our industry we love most: our community involvement, our cooperative foundation, and our commitment to people over profit.