Four Conference in Four Days

I just got back from a great trip. I attended four very different conferences in four days all in my timezone!

1) IT governance course in Vancouver

I took my first formal course as a new credit union board director. It was an IT governance introductory course offered by CU Source held in Vancouver on the first day of the Credit Union Central of Canada 2012 Canadian Conference for Credit Union Leaders (yes, that is the longest conference title ever). As information technology is now the second largest expenditure at most credit unions – human resources is typically the largest – it's becoming more and more important for board members to have a deeper understanding of what's going on with the technology in place at their credit union.

Take aways: The course was a good overview, if not a little basic. The focus was more about risk mitigation versus using technology to serve members better. I suppose this will always be the case in such a heavily regulated industry, but I couldn't help feeling that the typical, cautious wait-and-see approach contradicts the notion that credit unions are smaller and, therefore, more nimble. Because most credit unions now out source so much of their IT systems, they can't be nimble – they are at the mercy and time lines of large, expensive and slow-moving vendors that have hundreds of financial institutions to service. In Canada, we're starting to see the big banks really take the lead on implementing technology tools like mobile banking and personal financial management. On a positive note, I think a smarter, more connected board is a really good thing and I appreciated the overview.

2) Filene i3 in San Francisco

I was in invited by the Filene Research Institute to be guest at the i3 group presentations. What's i3? "Ideas, innovation and implementation. Filene i3 is a work group of innovative, insightful and energetic credit union professionals who have not yet reached the CEO level, but are in a position with substantial responsibility. This creative group reflects diversity in experiences, credit union positions, geography and credit union membership. i3ers strive to be transformational leaders in building the future of credit unions and to create new ideas, innovate and implement for the benefit of the credit union industry."

Eight i3 teams, made up of three to five credit union employees, presented their finished projects to an audience of approximately 75 people.

Take-aways: It was encouraging to see the Filene i3 model in action. The credit union industry is old and largely stuck in its ways, but here is a group of people working hard to disrupt and reinvent the credit union movement from the inside out. There were two expert panels made up of accomplished entrepreneurs, scholars and academics that provided feedback to four groups each. Each expert added insightful advice couched with fairly gentle criticism. The ideas were solid, but not necessarily ground-breaking or fully baked. This is to be expected – i3ers are volunteering time outside of their jobs and day-to-day lives.

3) FinovateSpring in San Francisco

I attended the first day of FinovateSpring. Imagine 63 companies all given seven minutes each to demo their working solution to a crowd of more than 1,200 connected critics. No PowerPoint. No faking it. Here are the words that come to mind. Huge. Intense. Fast-paced. Overwhelming. Impressive. Too much. Future. Innovation. Awesome demos and products. So-so demos and products. Zuckerberg-like, T-shirt-wearing geeks rocking their demos. A few ex-bankers trying to be cool, but instead come off slightly awkward on stage.

Take-aways: Going in, I was nervous for credit unions. I was thinking that I was going to witness enormous disruption aimed at toppling incumbents. This wasn't the case. Instead, what I saw was highly polished companies with amazing software looking for partners, investors, clients and distribution channels. These start-ups are well funded with millions sunk in development and now they are looking for a return. Most were pitching the financial institutions in the crowd to implement their white-label solutions. Here are the best of show winners as determined by audience vote (in alphabetic order):

• BehavioSec for its new security layer based on user typing/swiping patterns
• BillGuard for its card charge dispute platform, BillGuard FI
• Dwolla for its FISync service to enable banks to originate real-time payments
• iQuantifi for its new financial planning and advice tools
• MoneyDesktop for its PFM platform and integrated "deals"
• Personal Capital for its iPhone app and interbank funds transfer
• SoMoLend for its P2P lending platform

It was good to see a large contingent of credit union people there, thanks, in large part, to Filene. 

One sobering note: I was struck by the contrast between the i3 pitches and the Finovate pitches. Finovate is the big leagues. The solutions presented were fully baked and ready for market. You could tell that millions upon millions of dollars had been spent before anyone stepped on stage. The demos showed that the best technology minds in the fintech space are feverishly working at solving big problems. These firms are not regulated and are not stuck in their ways.

This is not a new wake-up call for credit unions – it's the same song I've been singing for years. But what was new for me was how in my face this reality was at Finovate. These solutions are real and they're spectactular! My hope is that credit unions get onboard and partner with the best solutions to offer their members more compelling reasons to stick around. I think Filene is well positioned to facilitate this connection between Silicon Valley and the credit union industry.

4) NCGA Marketing Matters in Portland

For my last stop on my whirlwind Westcoast tour, I was the keynote speaker at the National Cooperative Grocers Association Marketing Matters conference in Portland, Oregon. I did two talks:

1. The Young & Free Story
2. Integrated Social Media Marketing

Take-aways: I learned that there are a lot of parallels between credit unions and cooperative grocers. Shared challenges include awareness and understanding, selling member shares, economies of scale and confusion with competitors – community banks for credit unions and Whole Foods and Trader Joe's for cooperative grocery stores. And wouldn't you know it, cooperative grocers are also finding it difficult to attract Gen Y! I attended the reception on day one and it was like being in a credit union parallel universe with such similar conversations!

The highlight was someone telling me, "I can't believe you made me cry about overdraft fees." Ha!

In this International Year of Cooperatives, there seems to be a heightened realization that credit unions are cooperatives and that there is potential for cooperatives of different stripes to work together. This is a good thing.

I ended my second talk with some fun. Check it out (and pardon my shaky iPhone camera work).

Tim

Story Time: From Credit Union Member To Credit Union Director

Photo by purplebeats

I've been in business for 21 years. My last "real job" was actually in high school. Needless to say, I've been very fortunate to work for myself and build a business that I am proud of. 

Over the years, I've been very focussed on shaping and reshaping my business. In fact, I can count five subtle changes in direction along the way. Fresh out of art school, I started out as an independent graphic designer creating brand identity packages for small local companies within a 75-mile radius. That was version 1.0. Versions 2.0 through 4.0 were a series of additions and subtractions that led to marketing for credit unions. Version 5.0 is the marketing firm you see now – Currency Marketing is dedicated to helping credit unions attract and retain new young adult members and we serve credit union clients all over North America. It's been an exhilarating and rewarding journey.

Somewhere between version 4.0 and 5.0, I hit my first rough patch. For the first 18 years in business, I had never had to worry about expenses exceeding revenue or meeting payroll, but all of sudden late 2008 hit and the bottom fell out of our new target market: U.S. credit unions focussed on the next generation of members. You see, with uncertainty surrounding the impending NCUA assessments, very few credit unions were in a position to commit to a major initiative like Young & Free. We had tremendous interest but I knew I would have to wait out most of 2009 before the new direction would really take off.

To be proactive, I met with my business services account manager at my local credit union branch. I presented my evolving business plan, my forecasts and signed contracts for current and future programs. The intention of this meeting was to be open and honest about what was coming up and to assure my rep that the next year may not look great, but the long-term future was looking very positive.

I received a letter shortly after this meeting letting me know that my line of credit was being pulled and I had 60 days to pay it off. I was stunned.

At the time, I felt like I had a great full-service relationship with my credit union. I had all of my business there including my personal accounts, my investments and my mortgage as well as my business relationship with a generous line of credit that I was barely using at the time but knew I would need to rely on for the coming year.

I had moved all of my business from a national bank to this credit union seven years earlier and I had always been treated like a valued member. I had become an avid supporter and believer in the credit union philosophy of people helping people. I had focussed my business to only work with credit unions. I thought by being honest and presenting a compelling business case that I would be able to work with my credit union to weather the coming year. I spoke with my account manager on the phone to discuss options but the decision was final. I had plenty of equity in my house that I was willing to use as collateral, but nope "head office" said that was that.

The irony was not lost on me. I had moved from the national bank to a local credit union because I wanted to shop local and establish a mutually beneficial relationship. When I received that cold, emotionless letter, the credit union advantages that I had grown to trust evaporated.

After catching my breath, I decided to turn to a man that I have always had the deepest respect for: Gene Blishen, the general manager of Mount Lehman Credit Union. I wasn't looking for a hand out, just advice on my options.

Not only did Gene listen to my story, he and his team believed in my vision and took the time to put together a fantastic financing plan to see me through. Within a month, I moved everything to Mount Lehman and never looked back. The branch is a 40-minute drive away, but that doesn't matter. This little, one-branch credit union (1/50th the size of my previous credit union) has better technology than almost any credit union in Canada and, with the shared ATM network, I have easy access to cash when I need it. The Mount Lehman staff are tremendous and have gone out of their way to help my family and my business. My momentary lapse in the belief that credit unions were different was immediately rejuvenated. 

Thankfully, 2010 and 2011 have gone exactly as planned and we are now in a great place with 10 active Young & Free regions that include 91 participating credit unions. All we needed was a little help from a great credit union to see us through the transition to our new business model.

After being a proud member of Mount Lehman Credit Union for a little over two years I inquired about serving on the board of directors. The timing was right since there was a vacancy that the board was looking to fill. I cobbled together a resume (thank you LinkedIn), met with the board, went through a criminal records check and I am now proud to say that I am a director of Mount Lehman Credit Union.

My interests in serving in this volunteer position are threefold: This credit union helped me when I needed help, so I want to return the favor; as a consultant to the credit union industry, I feel like I will learn a tremendous amount about the inner workings of a credit union through this role; and, most importantly, I want my credit union to survive and thrive.

When credit unions stop looking at the human side of a relationship and just rely on numbers, they stop being credit unions and simply become little banks ruled entirely by unwavering policies. In hindsight, I am grateful that my previous credit union gave me the boot – I've learned a lot about myself and my belief in the credit union movement through this process.

Tim

Thing 4 of 30: Strengthen the board of directors

September is 30 things I would implement or consider implementing at my credit union if I was a credit union leader.

Thing 4: strengthen the board of directors

Here's what I would do to reinvigorate the democratic process at my fictitious credit union:

1. Institute maximum term lengths. In most countries, a leader can only serve for maximum of eight years. Go beyond that and the idea well runs dry. I believe the same goes for credit unions. It's may be noble to serve for 30 or 40 years, but unless your directors are bringing new and insightful ideas to the table decade after decade, it likely isn't serving your credit union's best interest to have life-long board terms. I was a volunteer with my local chamber of commerce for six years. I started as a director, was elected to the executive, served as president for two years, was the past president for one and then they booted me to the street. And it was time!
2. Require broad age representation. Only 6% of credit union board members are younger than 40! In my fictitious credit union, the board would be made up of members in their 30s, 40s, 50s, 60s and 70s. The credit union rules would stipulate the number of seats in each decade! There should be more than grey hair at the table. Nothing against grey hair—in fact, my mom has a lovely head of it. And she's smarter than me in many ways, but at the ripe old age of 40, I think I know a thing or two that she and her fellow Boomers might have missed. It is no coincidence that the median age of a credit union member is 10 years older than the median age of the population—simply look at the demographics of the board to see the correlation. Check out Filene's MAP to Success project for ideas on how to get younger people involved.
3. Pay the directors. It is common in Canada to pay the credit union's board of directors whereas in the US, board members are unpaid volunteers. At my ficticious credit union, the board members will be paid. To thrive over the next 100 years, credit unions need to reinvent themselves. To do this, credit unions will need to attract board members with a high level of varied expertise. Not only will modest compensation attract board members from all age groups, it will also hold all board members accountable to bring value and dedicate the time to properly steer the ship. Ginny Brady, a board member and blogger from New York's UFirst Credit Union examined this topic in detail on the CUES Skybox.
4. Use social media to elect the board and to connect the board to the members. Vancity produced podcasts for all of its board nominees. United Communities created YouTube videos to introduce members to board nominees. Fantastic ideas. I would go a step further and broadcast the annual general meeting live online with Ustream. I'd also set up a Get Satisfaction forum to solicit ideas and feedback from the membership throughout the year. And, I would follow in the foot steps of Ginny and launch a blog for the board and require all members of the board to contribute.

I warned you that some of my 30 things might be controversial!

Tim

Is your mission stuck?

I visited a branch of my credit union recently. They have a nice picture of their board members with the credit union's mission statement underneath. It says 'Offering members exceptional and innovative financial services.' 

Now, I personally know of one innovative thing they offer right off the bat. When my turn came, I went through my transaction waiting for a lull to ask my question. When it happened I asked, as I pointed to the picture on the wall, 'What innovative services do you offer?'

The teller looked at it and then replied 'Oh I don't know. They just made that up.' We had a good laugh and I went my merry way.

It's not a big deal. I got done what I came to do, had a friendly encounter, and a laugh at the end. If someone had been standing outside and asked me to rate my experience on an extremely satisfied to extremely dissatisfied scale, I would say it was close to the former. (Check back in a few days to see why I think member satisfaction is the enemy of a great credit union brand.)

But... let's think "what if."

What if she had responded immediately with "I can tell you three things that are innovative about our credit union." After all, I asked the question, so why not let loose and really own the statement?

Tip to all credit unions:

• Make sure your staff can explain anything you've posted or displayed in the branch in the blink of an eye.

• If staff have a tough time putting it into words, change the words. Odds are your members' eyes are glazing over at the "corporate-speak" anyway.

Do you have a simple yet inspiring mission statement?

Nala

Shout out: United Communities' One Member One Vote

I stumbled upon Ontario's United Communities Credit Union One Member One Vote microsite for its upcoming AGM.

The site is built on a real simple premise: it showcases potential director bios alongside simple YouTube videos. It is a neat way for members to get to know potential directors prior to the big vote. Each video has been viewed about 50 times, probably higher readership than the required Notice of AGM documents that were sent by mail!

This is a simple and effective use of available social media tools. Nicely done United Communities.

Tim