The Art and Science of the Importance of Credit Unions

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As financial services organizations seek to build competitive advantage through environmental, social, and corporate governance (ESG), credit unions have put pressure on their members and communities to demonstrate their value through well-known cooperative principles. This is an art and a science. The art lies in the intuition of the participants in the committee and company culture and in the intuition of the participants who develop the strategy, while in the effectiveness of the dissemination of scientific data and how the data shape strategic opportunities.

Art: Board of Trustees and Credit Cooperative Culture

The credit union system is in a market full of competitors: from big banks to neobank to fintech, the concept of metabersion is endless. It is not easy to identify, select and develop financially sustainable strategies among highly, capitalized and extremely fast-paced competitors while constantly changing consumer behavior. This landscape can be very difficult to navigate strategically for management teams and management teams.

The ability to begin to identify winning strategies is fostered through a culture of solidarity that encourages strong strategic thinking and consideration of business strategy in the regular activities of the board and leadership groups. This does not happen naturally. It takes time, effort and attention to promote important Council rules and expectations and to deliberately cultivate a strategic culture.

It can be described as a stabilizing effect between the individual members of a culture council and the dynamics of the council. The group shapes the behavior of the individual, and the individual shapes the group. In a credit union committee, whether consciously or not, individuals begin to adopt the rules of the meeting (written or written) over time. This means that the credit union culture can become more strategic over time. In order to have a deliberate impact on culture, board chairs must be mindful of individual competence, board dynamics, and systematic processes.

1. Individual ability

Each person needs to become a competent strategic thinker in order to promote a strategic culture in their credit union. This means that they have a wide range of knowledge and specialization related to the organization they are governing or managing. People need to understand the internal workings of the business, including strengths, weaknesses, key areas of risk, and external factors that affect the success of credit unions.

2. Table Dynamics

Councils can promote a strategic culture through a common commitment to strategic thinking. This can be formally reflected in the Director’s Terms of Reference, which are ideally reviewed once a year by the full board and are part of the new directors ’onboarding process. Managers and leaders need to be able to share bold / opposing views, so councils need to be very aware of team thinking. Group thinking is usually driven by subtle table behaviors / gestures: crossing your eyes or arms when managers discuss something contrary to the group’s thinking. More obvious actions are also encouraged, such as cutting off someone’s speech or laughing at a raised point. It is essential to provide the same platform for the voices of all directors to speak and to promote different perspectives.

3. Systematic Processes

The incorporation of systematic processes into the table formalizes the commitment to strategic thinking. Systematic processes include board rules, which are reviewed annually and strengthened by board heads; A facilitator for strategic discussions that can encourage your committee to think differently; The agenda of the committee that promotes strategic discussion (including the inclusion of questions for discussion related to the strategy); A template used to present information to the Board for decision-making (i.e., a business case); the educational requirements of the minimum annual directors and the usual assessments of the dynamics / effectiveness of board meetings.

Science: Strategy

The goal of developing, executing, and evaluating your strategy is to remain relevant to your members, employees, communities, and other relevant stakeholders who serve your credit unions. To develop a strategy, managers and executives need to improve their strategic thinking.

The easily digestible framework for strategic thinking is three C’s: Contemplation, Connect, and Committee.

Contemplation: To gather information from various sources. Consider where you get your information from: colleagues, social media, news, podcasts, research institutes, industry experts, management data, etc.

Connect: Take the perspective (s) you have discovered and connect with the credit union, as well as express your thoughts clearly to others around the table. Keep in mind how important it is not only to generate ideas but also to share ideas with your colleagues.

Commitment: When implementing a decision-making strategy on resource allocation.

Data Strategy

Data is a tool that has recently been found in the strategic tool of credit unions. On average, credit unions have between 60 and 100 data sources. The challenge is to take advantage of this data to achieve the strategic goals of the company. A strong data strategy here could be a game changer. The primary function of credit union data strategy is to align and sustain the organization’s strategy. The data strategy supports the data view. Critical elements of a data strategy include data focus, use case, maturity, consumption, and workplace adoption.

Data view: what is your data and why?

Creating a business data view statement is similar to creating a credit union mission statement. Data insights and ideas surround both in their exploration of a future world. Start with the end in mind. View your credit union after connecting data and creating views. Consider how data transforms members ’lives. What is the status of the credit union / member relationship?

Once the approach is defined, the use of data is the next component to be created in the data strategy. A use case is a business problem that a credit union uses to resolve data (related to members or employees).

Data Maturity

Many credit unions believe that once they have established their use case, they have established a data strategy. That is a falsehood. As credit unions are developing data capability, they are also developing a data-mature organization. Data maturity is the extent to which an organization uses data. One of the most excluded areas of data is the maturity of companies. Many organizations believe that data maturity will happen organically. This is not true. Data is an incredibly strong asset and requires attention and attention.

Data Consumption

Data consumption is based on the credit union’s “data culture,” and requires leadership, training, and purchasing at all levels of the business. An effective data culture is based on decision-making processes that take advantage of data from everyone in the organization. Employees use it, understand that data has potential and limitations, and see data and data analysis as a positive experience rather than an obstacle.

Workplace Adoption

Workplace adoption is likely to be the ultimate goal for data transformation. When an organization has the vision, strategy, and resources to achieve its data transformation goals, then transformation transforms new capabilities in a default way and, seamlessly, creates a new culture. Workplace adoption is not an organic development. Successful organizations practice responsibly to foster new capabilities and cultures by following the path of data transformation plans.

A credit union has been able to take over the workplace when data drives greater strategic capabilities. As with any new competency, membership and data association need to be practiced over and over again in a continuous cycle. The partner is the beneficiary of the workplace where the data is used, as it will help the member to better understand and understand their needs and their relationship with the credit union.

It is difficult to master the art and science of the importance of a credit union, but not insurmountable. To thrive and survive in the digital age, credit unions need to focus their efforts on developing a strategic culture around the board and the leadership team. This, together with a strong data strategy, will give credit unions a competitive advantage.

Anne Legg is the founder of THRIVE Strategic Services, a San Diego, California-based company that assists credit unions in transforming data, and author of Big Data / Big Climb, a book on credit unions for data transformation.

Anne Legg Anne Legg

Miranda Flury is president of Hawkeye Strategies Inc., Fort St. John, a British-based consulting firm based in Canada serving co-operative boards and executives. In Saskatoon, Saskatchewan, he is also a public speaker and board member of the Federated Cooperatives Limited of Canada.

Miranda Flury Miranda Flury

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