A principle of both internal and landscape architectural design is that “form follows function.” The concept was developed by Louis Sullivan, who used the phrase when he designed the Wainwright building in Chicago. It was utilitarian in design reflecting the office work that would take place within.
Examples of this premise can be found in numerous areas of biological evolution:
- Coral reefs, which protect other species from ocean waves and currents
- Bears, which have sharp, curved claws to help them catch fish
- Walruses, which have blubber to keep them warm
- Giraffes, which have long necks to reach leaves on tall trees
More to the point, credit union organizations are subject to this same evolutionary principle. The member owned, self-funded, locally focused, democratically elected leadership reflected the founding purpose of a financial cooperative. That is to combine individuals’ resources to assist those left behind or preyed upon by existing consumer options.
This special economic focus on those on life’s financial margins was supported politically with a blanket exemption from federal taxation. Credit unions were seen as an example of doing good for communities and groups rather than rewarding institutional profit and private ownership.
Today with abundant financial choices for almost all levels of society, the original purpose seems somewhat muted. The middle class of employed workers is doing well. Those with home ownership and savings in ever rising markets, even better. Serving those left behind is hard. These groups today are often the focus of special governmental or nonprofit programs
What happens to credit union design when the original function, or calling, is changed by market forces?
As in many other areas of life, the form changes as the focus of an organization evolves to serve all-comers not just those left behind by America’s promise of opportunity. The previous cooperative design elements are replaced by institutional priorities of growth, increased marketplace visibility and reach. These ambitions are driven by CEO’s and boards who inherited a legacy of financial resources held in common, but who chose to pivot away from traditional community and member investments.
This evolution places profits before people, thus turning upside down the cooperative priority. Growth comes from acquisitions using the collective capital pursuing other financial organizations. Internal value creation for the member-owners is seen as boring. Geographic diversity, new revenue sources and investing in fintech startups are the key to future success.
In short, these new designs make some credit unions indistinguishable from their for-profit privately owned competitors. Members are no more than customers, each a potential revenue or profit center.
This evolution is neither inevitable nor the ultimate outcome. But it does garner the headlines and lots of external brokers, consultants, advisors who introduce credit unions, as their next meal ticket, to the wonders of market capitalism. Credit union boards, executives and even external advisors who have limited grasp of their organizations’ legacies are easily seduced by the thrills of this market-place capture.
Self-awareness and self-restraint are hard characteristics to nurture when one is in a position of power and privilege. However, I believe the leaders of credit unions in the year ahead will be those whose vision may seem modest compared to more dramatic short term activities.
For values that sustain are not the result of temporary market success, but rather the hard-earned relationships nurtured over years. These values shape the functions to which leaders give priority. For those in positions of credit union leadership, cooperative design is still true to the original purpose.