The art and science of the importance of credit union

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As financial services organizations strive to build a competitive advantage through environmental, social and corporate governance (ESG), credit unions are putting additional pressure to prove their worth to their members and communities through well-known principles of cooperation. It is both an art and a science. Art lies both in the way the culture of the board and the enterprises is promoted and in the intuition of the participants who develop the strategy, while the science is in the efficiency of data implementation and how data shapes strategic choices.

Art: culture on board and credit union

The system of credit unions is a market full of competitors – from large banks through non-banks to fintech companies to the concept of the metauniverse, the list is endless. Identifying, selecting and developing financially viable profitable strategies among huge, well-capitalized and incredibly agile competitors, while consumer behavior is constantly changing, is not easy. This landscape can feel very difficult for the board and management teams to navigate strategically.

The ability to begin to identify winning strategies is promoted through a supportive culture that encourages sound strategic thinking and thoughtful consideration of business strategy in the regular activities of the board and leadership teams. This does not happen naturally. It takes time, effort and focus to promote important norms and expectations on board and consciously cultivate a strategic culture.

Culture can be described as a stabilizing influence between individual board members and board dynamics. The group shapes individual behavior, and the individual shapes the group. On the credit union board, consciously or not, people begin to accept the rules (written or unwritten) on board over time. This means that the culture of the credit union may change to become more strategic over time. In order to deliberately influence the culture, the chairmen of the board must pay attention to the following: Individual competence, board dynamics and system processes.

1. Individual competence

Everyone needs to become a competent strategic thinker in order to improve the strategic culture of their credit union. This means that they have a huge body of knowledge and experience related to the organization they manage or manage. Individuals need to understand the internal workings of the business, including strengths and weaknesses, key risk areas and external factors that affect the success of the credit union.

2. Dynamics on board

Boards can promote strategic culture through their shared commitment to strategic thinking. This can be officially reported through the Director’s Terms of Reference, which is ideally reviewed once a year with the whole board and is part of the process of introducing new directors. Directors and leaders must be able to share bold / conflicting views, and thus boards must be very aware of group thinking. Group thinking is usually encouraged by subtle behaviors / gestures at the board table – rolling your eyes or crossing your arms when principals discuss something that contradicts the group’s way of thinking. It is also encouraged by more obvious actions, such as cutting off someone from speaking or laughing at a raised point. It is crucial that the voices of all directors have the same platform for expression and that different points of view are encouraged.

3. System processes

The incorporation of systematic processes on the table on board formalizes the commitment to strategic thinking. System processes include board rules, which are reviewed annually and strengthened by the board chair; a strategic facilitator who can make your board think differently; an agenda on the board that promotes strategic discussion (including the inclusion of strategy-related issues); a template used to present information to the decision-making board (ie a business case); minimum annual requirements for the education of directors and routine assessments of the dynamics / efficiency of board meetings.

Science: Strategy

The goal of developing, implementing, and evaluating a strategy is to stay relevant to your members, employees, communities, and other key stakeholders that your credit union serves. To develop a strategy, directors and CEOs need to refine strategic thinking.

An easily digestible framework for strategic thinking are the three C’s: Contemplate, Connect and Commitment.

contemplate: To gather information from a wide variety of sources. Think about where you get your information – colleagues, social media, news outlets, podcasts, research institutes, industry experts, data provided by management, etc.

Connectivity: To take the insights you have revealed and connect them with the credit union, as well as to be able to clearly articulate your thoughts with others around the board. Think about how important it is for you not only to generate ideas, but also to be able to explain them to your colleagues.

Relationship: To decide on the allocation of resources when it comes time to define a strategy.

Data strategy

One newly discovered tool in the strategic set of credit union instruments is data. On average, credit unions have between 60 and 100 data sources. The challenge is to use this data to achieve the strategic goals of the company. This is where a solid data strategy can change the game. The main function of the credit union’s data strategy is to align and support the organization’s strategy. The data strategy supports the data vision. Critical elements of a data strategy are data vision, use case, maturity, consumption and acceptance in the workplace.

Data Vision: What is your data and why?

Creating a corporate data vision statement is similar to creating a credit union mission statement. The vision and the idea of ​​data revolve around exploring a future world. Start with the thought of the end. Imagine a credit union once the data is connected and insights are generated. Think about how data transforms members’ lives. What is the state of the credit union / member relationship?

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

Data maturity

Many credit unions accept that once they have established their use case, they have a data strategy in place. This is a delusion. As credit unions create data capability, they also develop a mature information organization. Data maturity is the degree to which an organization uses the data it produces. One of the most neglected areas in the data is the maturity of the enterprise. Many organizations believe that the maturity of the data will occur organically. This is not true. Data is an incredibly strong asset and requires focus and attention.

Data consumption

Data consumption depends on the credit union’s ‘data culture’ and requires leadership, training and participation from all levels of business. An effective data culture is one in which everyone in the organization uses data in their decision-making processes. Employees use it, understand that data has potential and limitations, and see data and data analysis as a positive experience, not an obstacle.

Adoption at work

Job acceptance is probably the ultimate destination for data transformation. When an organization has the vision, strategy and resources to achieve its data transformation goals, then by default the transformation creates new opportunities and, ideally, a new culture. Workplace adoption is not an organic development. Successful organizations practice hard to drive new capabilities and culture, continuing the trajectory of the data transformation plan.

A credit union has achieved acceptance in the workplace when data promotes greater strategic opportunities. As with any new ability, linking article and data must be practiced repeatedly in a continuous cycle. The member is a beneficiary in a workplace where data is used, as the data will help the member to better anticipate and understand his needs and his relationship with his credit union.

Mastering the art and science of the appropriateness of credit union is difficult, 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 leadership team. This, combined with a powerful data strategy, will give credit unions a competitive advantage.

Ann Leg is the founder of THRIVE Strategic Services, a San Diego-based California company that helps credit unions transform data, and the author of Big Data / Big Climb, a book on credit unions for data transformation.

Anne Leg Anne Leg

Miranda Fleury is president of Hawkeye Strategies Inc., based in Fort St. John, British Columbia, Canada, a consulting firm serving cooperative councils and leaders. She is also a public spokesperson for management and strategy and a board director of Federated Cooperatives Limited in Saskatoon, Saskatchewan, Canada.

Miranda Fleury Miranda Fleury

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