“Culture” is one of those business jargon words making the rounds a lot these days. An organization’s culture is something akin to its moral code. It is created at the top and filters down until it permeates the environment and dictates how people are treated within that environment.
Our President and CEO, Bill Burke, shared his thoughts a month ago about the unfolding phantom account scandal at Wells Fargo. Since then, the scandal has continued to widen and grab more news headlines. You’ve no doubt read or heard by now that Wells Fargo employees, in order to meet sales targets, created roughly 2 million fraudulent accounts for customers and transferred customers’ money without their knowledge or consent. Federal banking regulators said that this practice went on for at least five years. Thousands of Wells Fargo employees have been fired, federal regulators have fined the bank, Congress has held hearings, and the company’s CEO recently stepped down amid the public outrage.
Given these developments, it’s worth revisiting the scandal and how it illustrates the core difference between bank culture and credit union culture. Consumers don’t always know the difference between a bank and a credit union. They probably assume there is some difference, but don’t know – or perhaps even care – what it is.
In short, banks are about profits. Credit unions are about people.
Customers are profit centers at banks. Sales of products and services to customers are designed to deliver dividends to the pockets of shareholders. It’s not difficult to see how the 5,300 Wells Fargo employees who lost their jobs over this scandal got chewed up and spit out by bank culture. When a company exists to generate profit, its culture is organized around maximizing that profit to its small group of owners. Wells Fargo has been hit with $185 million in fines, $100 million of which is a penalty from the Consumer Financial Protection Bureau. Consumers shouldn’t be surprised when, moving forward, those profits are recouped by increased costs to customers.
People are member-owners at credit unions. Each member benefits from increases in sales of products and services in the form of discounted loan rates, reduced fees and a service-focused rather than profit-focused culture. Credit unions exist solely to serve members, making products and services available to the entire membership with the most favorable terms the credit union can afford to offer.
It’s not bad business to make a profit. Money is necessary to keep the doors open and the lights on. But for-profit service providers certainly have a different way of measuring success than not-for-profit service providers.
Mostly, consumers want to have a good experience with people and institutions they trust.
The Wells Fargo debacle violates consumer trust. It opens a wound still not entirely healed after the financial meltdown of the recession, and again exposes the dangers for consumers when profits-above-all define culture.
As the preferred choice for more than 2.8 million consumers in Ohio and more than 100 million across the United States, credit unions like Day Air are built to deliver service, not to carve out profits. These days, with so many stories of profit hungry institutions turning their backs on consumers – or worse, committing fraud for monetary reward – credit union members know they can expect to be treated better than that.
Note: This post was adapted from an article by the Ohio Credit Union League (OCUL).