Mindset Shifts That Have Helped Credit Unions Thrive

John Myers of c. myers will be leading two Asset/Liability Management (ALM) trainings in Oregon and Washington in March, including one in Tigard, Ore., March 12-13, and another in Spokane, Wash., March 15-16.

Over the past four years, credit union earnings—if not outright survival—have been threatened from many directions. The National Credit Union Share Insurance Fund (NCUSIF) assessments will continue for years to come. Loan demand and yields are down for many, putting pressure on margins—in part because share rates can’t be lowered much more. Fee income is threatened not only from legislation and regulation, but now from new competitors, such as PayPal and Google Wallet, offering new, innovative products.

There is less and less room for error in the financial services industry; the consequences of not asking the right questions have become more severe. The issue is not just credit risk, but building a business model designed for the future.

Asset/Liability Management is much more than numbers. This course, customized for the Northwest Credit Union Association (NWCUA), is designed to help financial and non-financial people alike understand how they can apply real ALM strategically.

At the ALM training, credit union professionals can take advantage of the chance to discuss and test balance sheet ideas using case studies in an individualized “learning laboratory.” Participants will also discuss key processes of strategic ALM concepts, explore contemporary issues and use proven and innovative methods used by hundreds of credit unions to manage risks and make decisions about business opportunities. The full agenda is available online along with registration information for both the Oregon and Washington trainings.

For the past 20 years, c. myers has worked with hundreds of credit unions of varying sizes. According to c. myers, the information below highlights just a few of the mindset shifts that have helped many credit unions thrive during turbulent times.

Strive for clarity.

  • Why are we in business? (Purpose)
  • Who is the strategic focus of our business/marketing plan? (Target Market)
  • What do we do/offer that our target market will find valuable and motivate them to do business with us? (Value Proposition)
  • How will we uniquely deliver on our strategy and value proposition better than our competitors? (Competitive Advantage)

Embrace making “no” decisions. Successful credit unions prefer to strategically say “no” to one-off opportunities or initiatives rather than jeopardize future success.

In his recent book, “Great by Choice,” Jim Collins said of great leaders, “They didn’t let external pressures, or even social norms, knock them off course. In an uncertain and unforgiving environment, following the madness of crowds is a good way to get killed.”

Produce and evaluate data with the objective of enhancing information equity. It’s not enough to have simple facts or data. A credit union must dig deeper to truly understand how its business operates, including dissecting member behavior. Successful credit unions are able to deliberately analyze the right data and turn that data into reliable decision information.

Strive to solve for mass customization. Imagine serving target markets with an “Amazon-ish” business model, where credit union offerings are customized to fit member needs and desires. The first step is not technology. It is to get board, management and staff to embrace this concept. The best technology without the right people driving its use can be a huge waste of time, energy and money.

Make it easy. There’s a reason fast-food restaurants have proliferated over the past 30 years—people want things to be easy, fast and right. In this case, “people” includes both members and staff. Keeping processes, product offerings and promotions as simple as possible is a win for all. This, of course, is easier said than done, because it often requires many “no” or “stop-doing” decisions, which can be uncomfortable.

Focus on attracting and retaining the right talent. The focus is on talent at all levelsboard, management and staff. No matter how many “right” things your credit union might contemplate doing, if you have the wrong people doing them, you might as well not do them at all. Successful credit unions take seriously their approach to hiring problem solvers who will be diligent about thinking strategically for the organization. These credit unions actually embrace the right type of turnover. They realize that if they keep people who are not a good fit, they run a very high risk of losing the right talent. Another key factor is that the board focuses on strategic issues and does not get bogged down with tactical issues.

Continuously link strategy with desired financial performance. Strategic direction and strategic initiatives will impact earnings and net worth. Quantifying the short, and more importantly, the long-term impact to earnings and net worth of individual, and combinations, of decisions has been a critical component of successful credit unions. These historically low interest rates make doing this even more important.

Additionally, defining your own measures of success is necessary, but it can often result in being contrary to conventional wisdom. This can be a very good thing. Imagine what the economy might be like if there was less of a desire to “keep up with the Joneses” in business as well as for individuals.

As mentioned above, these are just a few of the mindset changes c. myers has observed. Consider investing time with key players in your organization to understand the mindset changes your organization has made and possibly additional mindset changes that may need to take place in this ever-changing world.

 

Questions? Contact Training Programs Coordinator Yuri Jung: 206.340.4817, yjung@nwcua.org.

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