NWCUA’s Troy Stang Kicks Off Series on CEO Perspectives

Editor’s Note: With 2013 in the rear-view mirror, Anthem asked Northwest credit union presidents and CEOs to reflect on the year that was, consider what lies ahead and talk about the challenges — and the opportunities — that await credit unions in 2014. Look for “The CEO Perspective,” an occasional series of interviews from the corner office, in upcoming Anthems.

When Troy Stang stopped into his favorite Portland barbershop last week to get his hair cut, the conversation with his stylist quickly turned to credit unions when she noticed his Northwest Credit Union Association shirt.

The young woman told Stang that she was a member of Rivermark Community Credit Union, but she said she did most of her banking elsewhere — and she really wasn’t sure why. So in casual conversation, Stang talked about the structure of credit unions and what that means for members. He talked about the value credit unions bring to their members, and the impact they have on their communities.

And by the time Stang left with hair trimmed, he also took with him a promise that his stylist would visit her Rivermark branch soon and make it her primary financial institution.

Structure. Value. Impact. They’re more than just words to Stang, who will seize every opportunity to share his passion for the credit union movement and explain why market share matters to the credit unions he represents.

Stang joined the Credit Union Association of Oregon as its president and CEO in 2008. After guiding the organization through its January 2011 merger with the Washington Credit Union League, he served as president of the merged Association and assumed the role of president and CEO in October 2012. Stang currently serves on a number of national boards and advisory panels, including the Credit Union National Association board, Western CUNA Management School board of trustees and the American Association of Credit Union Leagues’ Regulatory Advisory Committee. He also helped deliver the work of AACUL’s System Evolution and Consumer Awareness task forces.

To kick off “The CEO Perspective,” Anthem asked Stang to gaze into his crystal ball and talk about what he sees in credit unions’ future.

Q: As 2013 drew to a close, major data breaches at Target, Neiman Marcus, Michaels and other retailers had a major impact on credit unions and their members. All together, there were almost 2,000 data breaches across the U.S. in 2013. These breaches affect retailers’ reputations, to be sure, but they also have a huge impact on financial institutions’ bottom lines. What kinds of fixes – technological and/or legislative – would you like to see in 2014?

A:Credit unions hold their members’ account data in the highest regard, and when retailer data breaches occur, I’m impressed with how quickly credit unions work to protect members in a uniquely personal way. Sometimes, of course, that involves blocking affected cards and reissuing new ones – security measures that come at a significant cost to the financial institution and ultimately to the member. It is ironic, I think, that none of these costs are born by, or recoverable from, the retailers who were responsible for their systems being breached.

There are several steps we need to collectively pursue. We must:

  • Gather as much accurate data as possible about the impact on credit unions and credit union members;
  • Assess the data and determine what costs/losses might be recoverable through legal action, and whether it makes sense for the industry to pursue a class-action lawsuit;
  • Use the data to make sure that the public understands who ultimately bears the cost of data breaches, and how current law allows retailers to avoid financial responsibility; and
  • Work with lawmakers and regulators to better protect consumers and make sure that those responsible for not adequately protecting consumer data are held financially liable.

Q: Speaking of legislative action: Tax reform — and the need to protect credit unions’ tax status — will continue to loom large in 2014. How do you see the battle shaping up in the coming year, and what role will the Association play in that fight?

A:Congress and state legislatures may have created credit unions and our structure, but it is our obligation as stewards of the cooperative charter to ensure that the fundamental basics of that charter remain for generations to come, and that the charter powers remain relevant by evolving with the changing needs of consumers. The Association will continue its advocacy efforts in Washington, D.C., Olympia and Salem, and we have added a grassroots advocacy manager to our team in an effort to more effectively engage credit union leaders from across the Northwest in the process.

We’ve all seen the “too big to fail” headlines, and we also know that the public is best served by having a choice in the financial services industry — for-profit or not-for-profit; state or federal charter; local, regional or national institutions. However, it is the NWCUA’s priority — our Job No. 1, if you will — to make sure that consumers understand why the structure, value and impact of credit unions make them the best financial choice.

When consumers understand why and how credit unions are different from banks, they understand and support the need for our tax exemption. Education and public awareness are crucial, because the more knowledgeable members are, the more engaged they become and the more likely they are to spread the word to their friends, family and neighbors. That’s a very powerful piece of the advocacy puzzle.

Q: Without a doubt, 2013 may have been one of the most challenging years ever for dealing with new compliance requirements. Mortgage-rule changes, in particular, could have an immediate impact on the real estate market and credit unions’ role in it. What worries you most about these changes/challenges, and about the so-called “regulatory burden” in general? How is the Association responding?

A:This is the “new normal,” I’m afraid. When it comes to operating a financial institution, we will see more regulation in the future, not less. But it’s important that lawmakers and regulators understand the impact they are having not only on individual credit unions, but also on their members. They need to understand that the regulatory environment is stifling innovation, and preventing the marketplace from evolving fast enough to maintain its relevancy to the consumer. And they need to understand that while their regulations have impacted credit unions, which by and large have been the “good guys” in the financial services industry, they haven’t figured out a way to get their arms around the non-traditional players – like those in the payments space, for example – who continue to eat away at consumers’ trust.

This is the year when the NWCUA and its members need to stand up and say, “Enough is enough.” This is the year when lawmakers and regulators need to be encouraged to “dial it down” on some of their most recent actions. As an Association, we will gather the data and present the facts, and we will make sure that policymakers truly understand that the “regulatory burden” falls not just on financial institutions, but also on consumers.

Q: What other legislative and regulatory issues are likely to rear their heads in 2014?

A:There will always be those in the market who don’t want any competition, and we can expect the banking lobby to continue to make eliminating credit unions a priority. The truth is, they ought to focus on collectively fighting the regulatory burden, so that we can all ensure that the needs of communities and consumers are met.

Q: Asset growth, loan growth, ROAA, membership – the trends were all positive for Northwest credit unions in 2013. From an economic standpoint, do you expect to see positive trends continue in 2014? What areas worry you most?

A: Northwest culture aligns well with credit union values and cooperative principles. I believe that more and more consumers will turn to credit unions to serve their financial needs, and that more and more credit unions will encourage their members to engage in a deeper way with their cooperative. But collectively, the credit union movement here in the Northwest has more work to do, because not all Northwest consumers understand what the unique structure of credit unions can mean to them and to their household in terms of real, tangible value, or what it can mean to their communities. And I’m worried that the distraction created by unnecessary legislation and regulation will hinder innovation and ultimately make it harder for credit unions to remain relevant to consumers and their marketplace needs.

Q: Credit unions continued in 2013 to have a major impact on the communities they serve, from fundraising to financial literacy and more. Talk a little bit about why that’s important to you, and about the role of the Northwest Credit Union Foundation in facilitating community-impact programs.

A: I believe that “giving back” is best accomplished by local institutions. It’s the idea of “neighbor helping neighbor” that resonates with people, and our Northwest credit unions continue to be so deeply woven into the fabric of the communities they serve. This year, the Foundation has partnered with Profits 4 Purpose to develop an easy way for credit unions to share information about their projects and programs, and it’s already impressive to see the collective impact that the not-for-profit charter has in communities across the Northwest. The data has also helped the Foundation identify three strategic areas – asset building, economic empowerment and cooperative development – where it can leverage internal and external resources to help credit unions have the largest collective impact. I’m excited about that focus, and about the opportunities it presents.

Q: You’ve talked about the importance of leveraging the power of aggregation to create value and promote innovation. Some would argue that the long-term survival of small credit unions depends on that. How will the Association emphasize the importance of scale in 2014?

A: Innovation is expensive for financial institutions, but so is running the everyday back-office operations that keep the doors open. In fact, those costs are higher than ever before. Through Strategic Link and its partners, credit unions can compete against the largest national and regional banking brands, while still focusing on the personal service that credit union members have come to appreciate. I believe it’s crucial that we leverage the kind of collaboration that is embedded in credit unions’ cooperative roots.

Q: You often use the phrase “I see a world…” to talk about credit unions’ future. Describe the world you’d like to see.

A: I see a world where credit unions in the Northwest are delivering the most valuable and innovative financial products and services available, where the majority of Northwest consumers are credit union members, and where those members understand and enjoy the benefits of belonging to these financial cooperatives.

Up Next: Rivermark Community Credit Union President/CEO Scott Burgess

 

Questions? Contact Gary Stein: 503.350.2216, gstein@nwcua.org.

Posted in NWCUA.