PARADISE ISLAND, Bahamas–More than 2,000 people representing credit unions from more than 60 countries around the world helped the World Council of Credit Unions kick off its World Credit Union Conference here. Below is an overview of some of the extensive reporting done by CUToday.info from the meeting.
World CU Conference: Why Donald Trump Won, And What Lies Ahead
PARADISE ISLAND, Bahamas–How did Donald Trump emerge to win the presidency of the United States, and why are other Trump-like candidates being elected in other countries around the world?
One person who has been an advisor to presidents and who predicted the rise of populist candidates shared her views on those questions during a Q&A as part of the World Credit Union Conference here.
Dr. Pippa Malmgren, an economic trends forecaster who was an advisor to President George W. Bush and several British prime ministers, authored the 2015 book “Signals: The Breakdown of the Social Contract and the Rise of Geopolitics,” in which she had predicted the political winds were shifting.
“People think populism is local, but in fact its global,” said Malmgren. “The real question is what is causing it and I think the underlying cause is the (government) debt problem. It’s like a wrecking ball that breaks down the social fabric; it breaks the promises that hold everyone together. It leads people to ask, ‘Why are you in charge?’
“Second, Trump is a fascinating phenomenon in that he is so polarizing and divisive. There are a lot of his policy stances that a lot of people could support, but the way he talks is the problem. It’s fascinating in the sense, how do we explain the economy is doing very, very well? It’s because of him or in spite of him, depending on your view. My view is the economy was doing very, very well before him. It’s not the result of his policies. But the markets like his lower taxes, his cutting of red tape.”
Where Do We Go From Here?
When Malmgren was asked where the U.S. and the world “goes from here,” she responded, “I can envision we may stay in this populist environment for longer than we thought. It’s partly because the Democrats don’t have a candidate, but more importantly, they don’t have a story. If they can answer that question, then we could have a new situation.
“The presidential race is almost always won by someone you’ve never heard of,” continued Malmgren, who lives in Great Britain. “Three years before they became president, nobody ever heard of Bill Clinton or Obama. What is clear is the American public want someone who doesn’t come from politics. I think they will persist with this desire to have an outsider. One third of last congressional election were people who never worked in politics before, and that may be universal.”
World CU Conference Coverage: WOCCU, Visa Partner to Enhance Mobile Capacity of Kenya’s CUs
PARADISE ISLAND, Bahamas—The World Council of Credit Unions and Visa have announced a partnership to bring enhanced mobile capability to credit unions in Kenya.
Kenyan credit unions, known as SACCOs for savings and credit cooperatives, need to offer solutions to members who now face issues when using mobile payments, the World Council of Credit Unions stated during its World CU Conference here.
“The end-result of this effort will be a reduction of cost to members, including duality of costs,” said WOCCU Board Member George Ototo, referring to how members now face high costs for mobile payment using the M-Pesa network and others.
“This project will also lead to increased efficiency for our credit unions and we will be able to reach more consumers and bring more members into our credit unions,” said Ototo, who is CEO of the Kenya Union of Savings and Credit Co-operatives.
Solve a Lot of Needs
Visa’s Doug Leighton told CUToday.info the project will drive better engagement with SACCOs and their members.
“This will solve a lot of Kenyan credit union members’ needs related to moving money back and forth,” he said. “The manifestation of this will likely be a mobile app, that is what we are hoping for—one that is layered onto existing Visa technology but then is modified and has features that are specific to solving members’ needs.”
One of the goals, too, stated Otto, is to have the new solution work as a point of sale device for mobile phones, which would eliminate members’ reliance on local merchants.
Listened, and Then…
Tom Mazurek, Visa senior director of seller solutions, shared how Visa recently worked with a group of representatives from SACCOs in Kenya to first listen to their needs and then take a deep dive into collectively coming up with possible solutions.
“We leveraged Visa’s Innovation Center in Dubai,” said Mazurek. “We spent two full days engaged with developers, designers and SACCO representatives to discuss possible solutions.”
Mazurek said the group made good progress, addressing key concerns SACCO representatives shared. They said the solution:
- Must generate revenue
- Offer P2P payments
- Have a strong tutorial, especially for those who face literacy issues
- Have an affordable price
- Offer credit functions
“It’s still very early for this effort,” said Leighton. “We just had our ideation session at the end of June. The next phase is to work the business case elements and then get into more of the technical development.”
World CU Conference Coverage: WOCCU Announces Board Changes
PARADISE ISLAND, Bahamas–—The World Council of Credit Unions has named two new board members. The changes were announced during WOCCU’s World CU Conference here.
The Board appointed Allison Chaytor-Loveys of the Canadian Credit Union Associationand Charles Murphy of the Irish League of Credit Unionsas new directors. Chaytor-Loveys takes the seat formerly held by Kevin Sitka and will serve a two-year term, while Murphy will finish out the final year of Brian McCrory's term.
Chaytor-Loveys is also a CCUA Board Director and serves as CEO of Newfoundland and Labrador Credit Union (NLCU). During her 15-year tenure as CEO of NCLU, the organization has won provincial, regional and national awards for creating a model work environment, providing exceptional member service, producing innovative marketing campaigns and making important contributions to communities, World Council reported.
Murphy is in his seventh year on the Irish League of Credit Unions’ Board of Directors—serving as President from April 2017-19. He also serves as a board director for Slane Credit Union and ECCU Assurance DAC—the ILCU’s own life assurance company.
In addition, board members Carla Cicero (CUNA) and Diana Dykstra (CUNA) were reappointed for two-year terms, while Jaime Chavez (FECOLFIN-Colombia), Younsik Kim (NACUFOK-Korea) and Rafal Matusiak (NACSCU-Poland) were all reelected to two-year terms on the 14-member body.
Need to ‘Step Out’
"Being a director for the World Council of Credit Unions requires that one step out. It requires commitment to step out from one's framework, from one's comfort zone and to providing service to our global credit union system," said World Council President and CEO Brian Branch.
The World Council Board’s committee officers for 2019-20 are:
- Steve Stapp, Chair/Human Resources Committee Chair/Executive Committee Chair – USA
- Rafal Matusiak, Vice Chair/Secretary – Poland
- Diana Dykstra, Treasurer/Chair of Audit & Risk Management Committee – USA
- Martha Durdin, Chair of Governance & Elections Committee - Canada
World CU Conference Coverage: 4 Global Perspectives On How Credit Unions Are About More Than Credit
PARADISE ISLAND, Bahamas–Four people representing credit unions on four continents shared their perspectives on how credit unions can step up to support sustainability. Three of the four people sharing their stories with the World Council of CUs’ World CU Conference here spoke specifically to credit unions’ roles following disasters.
Here’s a look at what each person had to say:
Special Emphasis on 2 Groups
Manafred Dasenbrock, chairman of the Board, Brazil’s SECREDIT movement, said the SICREDI credit unions have placed a special emphasis on reaching out to women and young professionals in Brazil as key elements to credit unions’ sustainability in his country.
Dasenbrock said supporting financial literacy has been critical to building loyalty in members, especially among its youngest members and community members. The good work done has led to support from other industries, he said.
“We also have an international cooperation day, and on this day we specifically attracted young professionals and women to come in and talk about these things,” said Dasenbrock.
Credit unions in Brazil have also worked to drive greater attendance and involvement in annual general meetings. In one case, he said a credit union in a city of 15,000 people drew nearly every member to its AGM.
“Here, again, when the delegates bring forward the votes of the communities you can see the presence of everyone there—young people, families—so everyone can see how important this is,” said Dasenbrock.
Not Operating in Isolation
Credit unions are part of a larger movement of cooperatives that have a heritage in common, according to Leni San Roque, CEO of the Asian Confederation of Credit Unions.
“We are a movement of people helping people and a movement committed to promote social justice and to help the poor and disadvantaged,” she said. “We are a vital part of the whole and not just isolated units with no relationship or bearing to the world.”
Credit unions and their management and volunteers need to reach beyond just financial services, San Roque said. “We cannot just fold our arms and look at what is happening with our members who are victims of disasters.”
As examples of disasters that have struck the region represented by the Asian Confederation, San Roque pointed to the 2005 tsunami that struck Indonesia, Thailand, Sri Lank and India, as well as a 2013 typhoon in the Philippines and a 2015 earthquake in Nepal. She said credit unions have stepped forward after each calamity to provide assistance.
The Asian CU Rehabilitation Fund built 20 houses for members in India, and rebuilt 10 credit unions in Indonesia, for example, and provided a revolving fund to support members. “The purpose of the fund is to help rehabilitate credit unions and to help people to rise up again,” she said.
The Asian Confederation has partnered with WOCCU and The Irish CU League to help rebuild 173 credit union s in Nepal following the earthquake.
“Helping others in need is not only a responsibility of life, it is what gives meaning to life,” said San Roque.
‘You Are Privileged’
Much like San Roque, George Ombado, CEO of the African Confederation of Cooperative Savings and Credit Associations, which represents credit unions in 28 countries, challenged CU leaders to think beyond just their role in finance when it comes to their communities, and further called on attendees to realize just how “privileged” they are.
“When we talk about sustainable development, it means we must try to balance the needs of the economy and society with our living environment,” said Ombado. “What is the objective of the credit union? That is a question we must as ourselves. Is it to make profit? I think no. It is to meet the needs of the people. We cannot avoid the pain, but we can help to make it less painful.”
Many of the problems the world faces can be resolved in part through the 7 Cooperative Principles, according to Ombado, but not if they are not put into practice.
“Cooperation among cooperatives–we don’t seem to do so well in this particular area,” he said.
When cooperatives do cooperative, Ombado said it is imperative to also put inclusion into practice, but he stressed the word to him means more than one thing.
“For me, my own definition, sustainable development must be inclusive,” he said, citing gender disparity, generational balance, and rural communities as areas where inclusion must be considered.
Could Be Dire News
He noted, for instance, Africa is the youngest continent in the world, with half its population, some 750 million people, below age 19. Not successfully reaching those younger people will mean dire news for credit unions, he said.
In many of the countries the African Confederation represents, he said credit unions have been active on issues that include addressing poverty, food insecurity, health and sanitation issues, and more. That includes the planting of trees to deal with mud and landslides.
“We don’t have to wait until our members are in desperation mode. We should develop mechanism of intervention,” said Ombado. “This room is full of some of the most privileged people in the world. You may not think you are privileged, but if you think about the billions of people in this world, you are among the most privileged. And you need to thank God for that. As credit unions, perhaps it’s high time we bring our influence and credibility to other areas. The role of sustainable development lies on me, lies on you, and not necessarily on the institutions you work for.”
Doing the Right Thing Good For Business
Few credit unions in the United States understand what it takes to help a community once again become sustainable than Redwood Credit Union in Northern California. It has had to deal with several enormous wildfires that have destroyed thousands of homes, its communities, and affected its own employees. The $4.5-billion Redwood serves approximately 335,000 members, and its CEO, Brett Martinez, told the World CU Conference being a part of the community is about far more than just making loans when times are good.
“Doing the right thing is good for business, and doing the wrong thing is bad for business,” said Martinez. “I think as credit unions we do the right thing every day. I don’t think doing the right thing one time is good for business; doing the right thing all the time is good for business. It’s easy to be there for people when there is a birth of a child or a new house, but not as easy when there is a divorce or a death of a family.”
Unfortunately, noted Martinez, fires in California have become a “regular thing.” After the devasting fires of 2015, Redwood CU stepped up and created a Community Fund that helped distribute several million dollars to victims. But that turned out to be just a test run. In 2017, the North Bay Fires became the largest in California’s history, covering four counties and destroying more than 7,000 homes, including 5,600 that burned in one nigh within 2.5 miles of its headquarters. Twenty-three employees also lost their homes.
The Complicated Part
“The most complicated part has been identifying the victims. Trying to get the money to people as quickly as possible is really important,” said Martinez. “In the U.S. a lot of times, in disasters the regulator will declare an emergency and allow financial institutions to close. The reality is we had thousands of members who ran out their doors with what they had. What they need isn’t for their financial institution to be closed. We aware our employees were impacted personally, but we were there for our members. We were fighting the battle, including getting cash from armored services that didn’t want to come into the fire zones.”
As CUToday.info has reported, over a four-month period Redwood CU offered to cover all the administrative costs of a relief fund; costs that eventually topped $1 million. Over four months it collected $32 million from 41,000 donors from all 50 states and 23 countries.
“Raising the funds isn’t the complicated part; it’s doing what you said you were going to do.” Said Martinez. “We hired nonprofits in communities to take applications from victims. Doing the right thing is good for business; it’s crazy. People come to work for our credit union, join our credit union, because of that. We hear that all the time. I told the board this will either take our brand to the next level, or we will destroy our brand.”
‘Everyone Has an Opinion’
That isn’t to say everyone is appreciative of the credit union’s good intentions and dedication to its community, Martinez acknowledged.
“When you raise $32 million, everyone has an opinion,” he said. “There is a lot of drama. We have had people come in and investigate our funds. We have opened up the books.”
The devastation in the community has also led Redwood CU to reluctantly enter a new line of business.
“We didn’t do construction loans, and we didn’t want to do them. But when you’re helping your community rebuild, you don’t always get to do what you want to do,” he said. “We had to hire that sophistication, and it’s hard, as everyone is hiring that sophistication. We continue to help our community rebuild long-term.”
World CU Conference: A ‘Red Warning Light’ You Should Be Watching
PARADISE ISLAND, Bahamas—A “red warning light” should be flashing over the top of credit union buildings if they can’t solve the growing and changing financial challenges of their members, insists one person.
Adam Lee, incubator director at the Filene Research Institute, said credit unions need to find ways to help improve members’ financial lives, as so goes members’ financial health so goes the future of the credit unions that serve them.
Addressing WOCCU’s World CU Conference, Lee pointed to major technological, sociological and economic trends affecting consumers’ balance sheets, suggesting ways CUs can help, including changing their banking model.
“Credit unions need to pay attention to these trends that are occurring today and create products and services to address them,” he said.
Lee said the first trend credit unions must recognize is the “precarious future of work.” He described how more than 30% of U.S. workers today don’t have a steady paycheck from one employer, choosing either to freelance, start their own business, or piece together a number of jobs.
“This, in part, is the gig economy,” he noted.
Reason for Concern
What credit unions should be concerned with from the trend is that fields of membership, for CUs that are not community based, are at risk.
“People are moving away from that single-source employer,” Lee said. “The Gig Economy now represents $3.7 trillion in revenue annually.”
With income volatility also comes concerns over members’ ability to pay their loans on time, and to also save money, Lee added.
To help members who don’t have steady paychecks, Lee said more CUs should offer small-dollar payday alternative loans to prevent members from taking higher rate and often predatory payday loans.
“Only 10% of credit unions offer a payday alternative loan,” said Lee. “So there is a great opportunity here. CUs should also consider offering unemployment insurance and healthcare insurance products through third-party providers.”
Another trend impacting credit unions and their members are disparate needs from two growing demographic segments. Lee pointed to the increasing number of older Americans and the needs of Millennials.
He noted that Filene research shows many younger adults have far more debt than their Boomer counterparts had when they were young. He also said many Boomers today find themselves without the resources to retire.
Lee recommended credit unions develop budgeting and “income smoothing” products for young adults and small-dollar lending products, prescription drug assistance and even debt consolidation for older Americans.
Need to Evolve
In addition to adding products and services to address these trends, Lee said credit unions will need to evolve their current banking models to one or more of four new types: concierge banking, relationship banking, automated banking, and ambient banking.
With concierge banking the credit union places the financial well-being of their member at the forefront of every transaction, Lee explained.
“So it’s not about the transaction, it’s about how does each transaction help members meet their broader financial goals—always uncovering the true hidden need,” he said.
Relationship banking, as with concierge banking, is very “high touch,” explained Lee.
“The credit union focuses on relationships, values and authenticity,” he said. “The credit union’s mission becomes an explicit part of the members’ decision-making process. Trust is built through credibility and capability.”
Two Models to Consider
Lee said the following two business models meet the needs of younger consumers.
“Automated banking is low touch but personalized,” said Lee. “It leverages artificial intelligence to automate processes and reduce costs. Member facing technology is also used to save members time. Member data is the fuel for automation—from routine tasks and natural language processing to advanced risk assessment and decision-making.”
Ambient banking is low touch and “hands-off,” explained Lee.
“The member experience becomes channel agnostic—the credit union becomes part of the background,” Lee said.
As an example of how ambient banking works he cited the case of an FI assisting the consumer, but behind the scenes.
“I drive to the donut shop and when I arrive my car’s voice response system, which is linked to my credit union account, tells me I don’t have enough money in my account to pay for the donuts,” Lee said. “But it does tell me I have room on my credit card, so the credit union has helped me out, stayed in the background, and all ends well. The credit union has blended into the everyday environment.”
Challenge to Double Attendance
PARADISE ISLAND, Bahamas—Citing the “great work” credit unions do around the world, Stephen Stapp encouraged attendees at WOCCU’s World CU Conference to accelerate their efforts and reach more people.
“It’s been a humbling experience,” said the WOCCU chairman. “I know the great work that we do and the urgency in which we need to carry it out. In this capacity, I feel I am an ambassador of the credit union system and a servant to the people throughout the world.”
Stapp said he recognizes the power CUs have to change the world.
“But we need to accelerate our work,” said the president/CEO of Unitus Community Credit Union in Portland, Ore. “We can’t be satisfied with where we are today—so much change is taking place. Nike is from Portland, and I like the Nike statement ‘Just Do It.’ Now is our time to just do it, be champions for the people we serve and fight for a cause. We have 2,000 attending this meeting this year and my challenge to you is to make that number 4,000 next year and 8,000 the following year.”
He also encouraged more young leaders to play a strong role in credit unions throughout the world.
“WYCUP (World Council Young Credit Union Professionals) this year brought 100 young leaders to the meeting. I say next year let’s have 200 and 400 the next year. We need more strong young people in our movement,” Stapp said. “I challenge everyone to invite more people to the party, because there are a lot more people in this world we need to serve and we can lead this social change.
World CU Conference Coverage: How 1 Tiny, Struggling CU Turned Itself Around
PARADISE ISLAND, Bahamas—A tiny $7-million CU on the brink of conservatorship in 2010 has grown to $37 million in assets today with 2.67% annual ROA and 27% annual loan growth.
Terri Robinson, CEO of Ironworkers USA FCU, said the credit union was able to not only pull itself out of its nosedive—caused by the Great Recession and many members losing their jobs—but also become a strong credit union that recently was approved by NCUA for a nationwide charter.
Robinson said the only way the credit union was able to transform itself was through collaborating with several other small, local credit unions.
“We had to look at collaboration, I knew that when I took over in 2010,” Robinson told WOCCU’s World Credit Union Conference here. “It was a dire situation. NCUA had made us a CAMEL 4, had us under a net worth restoration plan as well as a Letter of Understanding and Agreement. The world had come crashing down around us. Our members were losing their jobs—35% were without work in 2010. They stopped paying their loans. We had to write off $240,000 in bad loans, which was a ton for a credit union of our small size then.”
Can’t Cut, Cut, Cut
Robinson recalled NCUA was directing the credit union to “cut, cut, cut,” including looking for ways to reduce staff and branches.
“But cutting much further was very difficult,” Robinson explained. “Through attrition we had already cut down to five people running three branches. We knew, too, that we needed to survive, and that just cutting was not going to help us grow. So, our board and I made the decision to survive.”
That decision involved finding resources beyond its own.
“I said we have to collaborate with other credit unions in the area that are doing well. And they had to be local, as I could not afford to travel,” she said.
Robinson said a group of several small CU leaders agreed to partner to help each other. She emphasized that the meetings—which took place at lunch, over drinks, anytime and anywhere the group needed to meet—were “safe places.”
“These meeting were very open. We shared our weaknesses and strengths, problems and successes, and we did so knowing that no one was trying to take advantage of another credit union, looking to bring about a merger,” she said.
Adding Shared Branching
One of the first steps taken by Ironworkers USA FCU was to move to shared branching. “That gave us greater reach and our members more convenience,” she said.
The group of fellow CUs also shared an internal auditor.
“That was a big relief to us, because compliance is such a big concern,” Robinson said. “That got a big regulatory burden off our back, because otherwise we could not have afforded to pay for an auditor just for our credit union.”
Marketing Materials Shared
Ironworkers USA FCU then partnered with a small, local marketing firm that produced a great deal of materials that could be shared by all the credit unions with minimal repurposing, Robinson explained.
“We did not have to recreate the wheel, just change the massage slightly. We even could share a great deal of the artwork,” she said.
According to Robinson, net income got a big boost when the credit union partnered with another small shop to use their mortgage origination expert.
“That really helped us a great deal, and it generated instant income for us,” Robinson said.
But Ironworkers USA FCU also knew it needed capital to truly turn things around.
“So we got a secondary capital loan from a local credit union,” Robinson said. “That additional $250,000 on our books, which was a non-insured investment by the lender, gave us the capital that allowed us to invest in the credit union and grow. It also got us immediately out of the net worth restoration plan.”
The group of credit unions continues to collaborate on staff and board training, hiring one consultant to do the work for all.
Robinson said Ironworkers USA FCU’s Call Report numbers clearly reflect what collaboration can do for small credit unions. The CU made $501,066 in 2015, $496,349 in 2016, $504,252 in 2017, and $613,078 last year. The CU grew assets by nearly $3 million in 2017, almost $6 million in 2018, and through Q1 2019 had increased assets by more than $4 million.
“And all that is from what once was a little itty bitty credit union,” she said.
3 Different Regulatory Perspectives
PARADISE ISLAND, Bahamas–Three very different perspectives and scenarios related to the regulation were shared here by people from three different parts of the world. The remarks and insights were shared during WOCCU’s World Credit Union Conference here during a session titled “Next Generation Regulation.” Below is a look at what credit unions were told:
A Long Way From Days Regulator Was Part of Ministry of Sport
Think NCUA sometimes doesn’t understand your credit union? Credit unions in Grenada may be one up on you, as regulation of credit union on the island used to fall under the Ministry of Sport. Much is changing, according to one person who spoke to the World CU Conference here.
During a panel discussion on Next Generation Regulation, Dennis Felix, executive director of Grenada Administration for the Regulation of Financial Institutions, said significant advances have been made across the Caribbean to strengthen regulation. But it wasn’t that long ago that wasn’t the case, he said.
“All general legislation was outdated from the 1950s. Some used the motto used to be, ‘Follow along and you can’t go wrong.’”
Felix said regulators and credit unions—many using the World Council’s PEARLS system––have both improved their games, both in Grenada and across the Caribbean. While CUs in the Caribbean have been slow to respond to any of the Basel standards, he said that is also changing. Regulators have also put into place guidelines for the application of proportionality, including whether the institution has cross-border operations, the complexity of its assets and liabilities, and the asset size of the institution.
Felix said measures under consideration include monitoring of credit unions’ performance by international agencies, such as IMF, and the development of a risk-based supervisory framework for credit unions. He said the establishment of new prudential regulators, establishment of financial crisis resolution plans (with assistance from World Bank) are also spreading across the Caribbean.
In the U.K., Most CUs Never See An Examiner
There are 440 credit unions representing a total of $5 billion in assets in the United Kingdom and Northern Ireland supervised by the Bank of England—which regulates CUs–and just nine people at the BoE responsible for oversight. The result is the majority of credit unions–approximately 360–never see a regulator or examiner in their offices, said Chris Donald, senior manager of Credit Unions with Bank of England.
Many of the 440 are very small and it “can be difficult” to supervise those institutions. “We do see six to eight small credit unions fail each year,” said Donald.
Donald said the regulator does not supervise credit unions below approximately $20 million in assets.
“If there are problems, we react. I believe we are proportionate and flexible, and able to do that because we do tolerate failure with some of our smaller credit unions perhaps in ways other regulators do not,” said Donald.
Donald said the Bank of England has two statutory objectives: safety and soundness and facilitating competition.
What CUs Contribute
“Credit unions offer diversity to any financial system. Many in U.K. serve members of society who might not have access to banking,” he told the World CU Conference audience. “We want safety and soundness as regulators, and I assume that’s what credit unions want, as well. It means being financially sustainable and being run by qualified management teams and boards. I think financial soundness can coexist with the ethos of credit unions. The volunteer ethos does not conflict with having a professional mindset. What we need to do as regulators is make sure we have a framework that does not stifle innovation or get in the way of growth.”
In the U.K., he said the risks to the credit union sector are similar to those in other countries and include:
- Credit risk
- Vulnerability of small CUs to an idiosyncratic event
- Profitability in the current external environment
- Governance standards
- Relevance (technology being one part of that)
“There is a low level of participation among young people in the U.K. in credit unions. Without attracting young people, there could be hard times ahead,” he said.
In the U.S., Lack of Proportionality
While credit unions and banks share the same regulator in many countries, Ryan Donovan, chief advocacy officer with CUNA, explained how the U.S. system works, with credit unions paying fees to cover the operation of the National Credit Union Administration. Donovan related how some in the U.S. have expressed fears NCUA will be merged into the banking regulator, the FDIC, but said he believes “as long as credit unions continue to pay for their regulator, they will have a separate regulatory scheme.”
As the subject of the breakout session was proportionality of regulation, Donovan offered an update saying rules applied to credit unions have been anything but proportional. He noted U.S. banks control $18 trillion in assets, which is 13 times larger than U.S. credit unions.
“Each of the four largest banks in the U.S. is larger than the entire U.S. credit union system,” he said. “And if you take the top 10 banks, the 10 largest credit unions combined represent 3% of their assets, and are roughly the same in assets as the 10th-largest bank in the United States. And yet the NCUA imposes some of the same regulatory requirements on these institutions, including a relatively new stress-testing requirement.”
Other Points Made
Other points made by Donovan:
- When it comes to risk profile, over the past 30 years the bank fund has been insolvent twice, while the National Credit Union Share Insurance Fund has remained consistently well-funded over that time.
- Donovan said over past 10 years there have been two and a half times the number of bank failures as CU failures, costing the bank fund 50x what failures has cost the CU fund.
- Over last decade U.S. banks paid $260 billion in fines, vs. $26 million for one CU settlement.
- Donovan said the estimate is it costs credit unions about $6.1 billion to comply with regulations every year. “Increased costs is the chief driver of credit union and bank consolidation. In years when the CFPB was most active, from 2012-2017, we saw the highest rate of credit union consolidation in 20 years. Some would say correlation is not causation, but the evidence is unmistakable–nearly all the credit unions that have merged are under $250 million in assets.”
- “The Basel standards are the gold standards of banking regulation, yet so often I think they’ve missed the complete message the Basel Committee has delivered from the beginning, that regulation needs to be commensurate with the risk profile of the institution,” he said.
World CU Conference Coverage: Project Storm Break Surpasses Goal
PARADISE ISLAND, Bahamas–The Worldwide Foundation for Credit Unions has now surpassed its $100,000 goal for its Project Storm Break disaster relief fund following an event here.
After announcing earlier in the day during the World Council’s World CU Conference here that it was $60,000 toward its $100,000 goal, a Champions event fundraiser pushed the total amount raised to $107,000 after more than a dozen credit unions stepped up with support.
The goal of the fund is to provide disaster relief fund that affected credit unions can access in the immediate aftermath of a natural disaster.
“The forward-prepared fund will allow World Council to respond immediately when a natural disaster happens,” WOCCU said. “That response will include financial support, supplies and technical expertise to help credit unions in the impacted areas get back on their feet and help the communities they serve.”
‘Another Great Tool’
During the evening event at the conference, Worldwide Foundation Executive Director Mike Reuter and Manager of Dominica Cooperative Societies League Phoenix Belfield shared stories about the positive impact Champions made by donating to disaster relief efforts in Dominica, after Hurricane Irma ravaged the Caribbean-island nation in 2017.
“I cannot overstate how generous the Champions we honored tonight have been in demonstrating a commitment to ensuring that every member of the global credit union movement seeking prosperity can achieve it,” said Reuter. “We see Project Storm Break as another great tool our Champions can utilize to ensure members can still access credit union services during times of crises caused by hurricanes, earthquakes, floods and other natural disasters.”
World CU Conference Coverage: Here’s Where Membership is Growing Fastest
PARADISE ISLAND, Bahamas–Where is credit union membership growing fastest? During the World Council’s World CU Conference here, the World Council recognized credit union associations from North, South and Central America with awards for posting the greatest membership growth.
2019 Membership Growth Awards went to the following countries—based on data derived from World Council Annual Statistical Reports, WOCCU said:
- Brazil: SICREDI grew at a rate of 37%, adding 2.6 million members for a total membership of 9.6 million.
- Guatemala: FENACOAC membership increased 8.6%, adding 142,702 members for a total membership of 1.8 million.
- United States: CUNA membership grew at a rate of 4%, adding 4.3 million members for a total membership of 113 million.
The World Council Board of Directors also recognized three new members added over the last year:
- Croatian Association of Credit Unions (Direct Member)
- All-Ukrainian Association of Credit Unions (Affiliate Member)
- Finacus Solutions - India (Associate Member)
'Here to Stay'
In opening remarks, WOCCU Chairman Steve Stapp, CEO of Unitus Community Credit Union in Portland, Ore., spoke of credit unions—or saccos, mutual savings banks, building societies, cooperativeas or whatever they may be called–said, “We are here to stay and we are creating an impact, and yet we have so much work to do.”
Noting the 61 counties in attendance all hail from different parts of the world and political systems, Stapp said, “Nowhere in the world right now is there such a diverse group of individuals gathered with the same purpose: people helping right now.
Distinguished Service Awards
The World Council presented its Distinguished Service Award, its highest honor, to one individual and one organization.
Winning the individual award was Sylvester Kadzola of Malawi, who served on the WOCCU board from 2001-2016 and who has been an influential leader in his country and Africa. Kadzola was injured in a terrible car accident in 2018 and was unable to attend and the award was accepted on his behalf.
Winning the organizational award was the Brazilian Organization of Cooperatives, which was nominated by Sicredi. The organization has helped Brazil’s credit unions grow marketshare from less than 1% in 2005 to more than 8% in 2017.
The Prime Minister’s Address
The prime minister of the Commonwealth of the Bahamas, Dr. Hubert A. Minnis, in welcoming credit unions to his country, cited the mission of the regional host of the meeting: the Caribbean Confederation of Credit Unions.
“The Confederation seeks to strengthen, unite and promote sustainable growth and development for cooperatives in the Caribbean for socio-economic development,” said Minnis.
The prime minister noted that as of December 2018, there were 289 CUs in the Caribbean serving 2.6 million members.
“Given this potential, especially among smaller countries, credit unions can play an outsize role in economic development, especially in less developed areas,” Minnis said. “Many areas are underbanked. We encourage this sector to expand their services, especially in those islands where the commercial banks have exited the markets.”
World CU Conference Coverage: GWLN Celebrates 10thYear With Milestone, Surprise $500K Donation
PARADISE ISLAND, Bahamas–The Global Women’s Leadership Network (GWLN) marked its 10thanniversary here by also announcing it had not only surpassed a milestone, it received a surprise donation of $500,000.
Sue Mitchell, who was among the co-creators of the GWLN and who continues to serve as its volunteer chair, said she had set a goal of having 100 sister society chapters in place by year-end, and after sitting at 90, it has now met the goal.
“Ten years ago when we mentioned the World Council’s vision to create a global network for women, heads turned–there was non-belief that we needed to focus on diversity within credit unions,” said Mitchell in remarks delivered during a reception held in conjunction with the World Credit Union Conference in the Bahamas. “Tonight we know how important this initiative is in helping people rise up from poverty and have a voice in society. We celebrate (WOCCU CEO’s) Brian Branch’s foresight and I am honored to have shared his vision.”
Mitchell said the Global Women’s Leadership Network has raised global awareness with local impact by opening people's eyes to the credit union difference “one person, one step, one man, one woman, one Sister Society at a time.”
One Person’s Accomplishments
Mitchell singled out Leni San Roque, CEO of the Association of Asia Confederation of Credit Unions, for her work in traveling to remote areas and who in less than three years’ time has organized 25 sister societies in Asia, including the most recent one in India. More than 1,500 woman in Asia are now involved.
There are currently 35 GWLN sister societies in the United States, and Mitchell said with the exception of Antarctica, there are now sister societies active on every continent.
Mitchell reminded that while the reception was a celebration, on a more serious note the work could not continue without donations and support in order to become a “sustainable, premier program.”
“Our legacy leaders believed in creating initiative that built scale and strategically positioned cooperatives for the future,” said Mitchell.
At the conclusion of Mitchell’s remarks she and everyone else present were surprised by an announcement from Todd Clark and Samantha Paxson of CO-OP Financial Services that it would donate $500,000 over 10 years to GWLN.
“Fifty percent of our workforce is women. Sixty-three percent of our management team, is women. And it's something we think is important,” said Paxson. “We were the founding sponsor of Global Women 10 years ago and we think it's important on the 10-year anniversary to continue that.”
Mitchell also honored the winners of the organization’s highest honor, the Athena Award, who were on hand, and also presented the award this year to Elevations Credit Union and its former chair, Nancy Herbert,. Elevations Credit Union donated the creation of a mobile app for the GWLN.
“This will allow us to reach places around the world that had trouble registering to become members,” said Mitchell. “This will help us build scale and change our digital footprint! We will now be able to show the world GWLN impact.”
Scholarship Winners on Hand
Recipients of the 2019 GWLN Scholarship were also on hand for the 10-year anniversary celebration. Each year, GWLN said it seeks to award scholarships to female leaders within credit unions so they may acquire new skills, tools and resources to make an impact and further their professional development.
The 2019 scholarship winners are:
- Rene Gayle, Assistant General Manager, First Heritage Co-Operative Credit Union Ltd. (Jamaica)
- Habiba Kent, Board Member, Windsor Employees SACCO (Uganda)
- Barbra Mchenga, Youth Advisor, Malawi Police Service SACCO (Malawi)
- Rose Vanessa Nyambi, Microinsurance Manager, Malawi Union of Savings and Credit Cooperatives (MUSCCO) (Malawi)
- Bettyrose Okiri, Project Manager, African Confederation of Co-operative Savings and Credit Associations (ACCOSCA) (Kenya)
- Jovitta Sakwiya, HR, Administration and Marketing Executive, Malawi Union of Savings and Credit Cooperatives (MUSCCO) (Malawi)
Since 2009, GWLN has awarded 51 scholarships to women from 23 countries.
Scholarships are made possible through funding from annual membership donations and sponsorships, including the generous support of CUNA Mutual Group, CU Direct, PSCU and the Susan Adams Scholarship Fund supported by One AZ Credit Union.
World CU Conference: Lessons for 21stCentury CUs From Fourth Century BCE
PARADISE ISLAND, Bahamas–Credit union looking to compete in the 21stcentury were offered lessons from at least the fourth century BCE.
World Council of Credit Unions’ CEO Brian Branch shared the writings of Lao Tzu, the ancient Chinese philosopher and writer who is the reputed author of the Tao Te Ching and founder of Taoism, in his opening remarks to the World CU Conference here to frame the challenges to and responses from credit unions.
Lao Tzu 1: Without Leaving Home, One May Be Acquainted With the World
“People want their children to have more prosperous lives then they do,” said Branch. “This is the work credit unions do in 117 countries around the world. We share with each other a common DNA of being member-owned and controlled. What makes us different in our marketplaces is the common DNA we share. Economic empowerment is what generates loyalty.”
Lao Tzu 2: All Difficult Things Have Their Origin in That Which is Easy and Great Things in That Which is Small
“As we find refugees entering new communities we find refugees often turning to their credit unions to provide greater economic stability going forward,” said Branch. He later added a top-of-mind challenge to credit unions around the world today is regulatory burden. “If the cost of regulatory accumulation–$4 trillion–were a country, it would have the fourth largest GDP in the world,” he said
Lao Tzu 3: Respond Intelligently Even to Unintelligent Treatment
In 2014, noted Branch, the World Council heard from many of its member countries that their top challenge was membership growth, and that CUs specifically needed people between 18 and 35 years of age. In response, WOCCU created Challenge 2025 with a goal of adding 50 million new members. Credit unions internationally currently have approximately 260-million members.
“The challenge for 2025 is the digitization of the global credit union system,” said Branch.
Lao Tzu 4: The Key to Growth is the Introduction of Higher Dimensions of Consciousness into Our Awareness.
“We look at what is going to drive that growth, and that’s what we work on,” said Branch. “One hundred years ago, wewere the disruptors. We found ways to serve the underserved or just the not served at all, the people banks didn’t want or thought to risky. Today we are in the Information Age and what drives technological disruption is increasing access to the Internet. At end of 2018, 4.2 billion people had access to the Internet. People have gotten used to accessing services and making payments using mobile phones. We call it reducing friction for the consumer; consumers call it making life easier.”
Branch said the advantage of being a cooperative movement is allowing small institutions to share in the high costs of technology.
“Today’s challenge is more about data analytics. What are members doing? What are their demands? How do we use that information as feedback and to drive new product development, innovation and new channels?” asked Branch. “More importantly, it provides us with an opportunity to create more trusted relationships with our members. We use data analytics to find what is in the best interests of our members and to provide them better alternatives. That’s what builds trust.”
Lao Tzu 5: New Beginnings are Often Disguised as Painful Endings
“We have new opportunities as a cooperative system to give members the best options for their economic well-being,” said Branch.
Lao Tzu 6: There is Nothing Softer Than Water, and Yet There is Nothing better.
“We are flexible and we bend around obstacles,” said Branch. “We overcome the greatest disruptions. We wear through some of the greatest obstacles. It’s 2019, and the state of our movement and the future looks great.”
World CU Conference Coverage: What Ordering a Pizza Has to Do With Future of Lending
PARADISE ISLAND, Bahamas—Today people are carrying away their home-delivered pizzas without tipping the driver. The reason: the pie is being delivered by a driverless car–and credit unions should be paying attention for reasons that go far beyond ordering a pizza.
In two cities Dominos is partnering with Ford to test autonomous pizza delivery vehicles that have touchscreen on the widow.
“You walk to the curb, tap on the touchscreen, the window lowers and you take your pizza,” said Tony Boutelle, president and CEO of CU Direct.
In remarks to WOCCU’s World Credit Union Conference, Boutelle used that example to make one of many points about how the automobile industry is changing. He addressed the rise of autonomous vehicles, faster growth of electric cars, car sharing services, car subscription services and more.
“It’s not an if but a when disruption will really occur within the automotive industry, and it will be very interesting to see how all this happens,” said Boutelle.
Boutelle said that predictions of autonomous cars hitting the road in large numbers as consumers dump their cars–and the loans that financed them–may not happen as quickly as some people are predicting. He compared how the U.S. might transition from traditional auto sales/auto ownership to real adoption and acceptance of driverless cars to how the airline industry finally took hold, over a period of 30 years.
‘This Change is Coming’
“Make no mistake, this change is coming,” said Boutelle, pointing out that in 2015 autonomous vehicle investments were $6 billion, a figure jumped to $60 billion last year.
Boutelle described the progression of autonomous vehicles from “level two” cars that are on the road today that have limited self-driving capabilities to “level 5,” where the car has no steering wheel and no brakes for a safety driver to operate.
“That is where everyone is trying to get to. The next big step that will move autonomous vehicles forward is legislation that will allow for greater testing,” he said.
An Electric Future
Boutelle also addressed the growing marketshare of electric cars due to prices coming down as the cost for electric car batteries falls dramatically and more charging stations (61,000 in the U.S.) are in place. Boutelle’s observations on electric vehicles were echoed by a keynote speaker at the World CU Conference, as CUToday.info reports elsewhere.
“Electric car sales in the U.S. are now growing at about 30% a year,” he said, noting that China leads the way in EV sales with a goal of 20% of total cars sales being electric by 2025.
“China estimates 70% of its cars will be electric by 2040,” he said. “The U.S. is behind China, but we will catch up soon. And this will have a big impact on car dealerships, as 40% of their income comes from service, and electric cars are more reliable because they have a lot fewer parts.”
Boutelle addressed the growth of car subscription services and even car sharing—where consumers share their own vehicles with others and make money.
Rent Thy Neighbor’s (Car)
“Rent your neighbor’s car,” said Boutelle. “The Turo app that provides this service has more than a million users now among tens of thousands of cars, according to the company.”
The challenge to credit unions is to find ways to be part of this change, he said.
“From a lending perspective, I try not to be concerned too much,” said Boutelle. “The change will happen over the next 10 to 15 years. I would say for now to focus on traditional auto financing. There are 276 million cars on road now and about 33% of credit unions’ loan portfolios is auto lending, and we depend on that today, and we can continue down this path.”
But it’s important now to begin building relationships with new players, insisted Boutelle.
“Look at electric carmakers, try to get more of those loans,” he said. “And look at other types of transportation that uses electric, like scooters and bikes. Consider relationships with autonomous vehicle fleet companies, creating business lending opportunities here. Be aware, too, of multi-owner contracts, where four to five people will own one car. That is not big today, but we think it could be some day.”
World CU Conference Coverage: Young Career Execs Get Career Direction
PARADISE ISLAND, Bahamas–Young credit union professionals here were given some strategies for making the most of a meeting they were attending, as well as their own careers.
During a Forum, the World Council Young CU Professionals (WYCUP) were given an action plan by making the most of the World Credit Union Conference and their own careers. by Brandi Stankovic, an executive coach and motivational speaker who serves as chief strategy officer for Michigan-based CU Solutions Group.
Stankovic asked members to identify a challenge that is limiting their leadership abilities and solicit suggestions on how to improve in that area from their WYCYUP colleagues. She said it was something they should be able to use going forward.
"It’s not only for you, but also for the individuals giving the ideas. So often, when something is a challenge for us, we shut down the idea of looking for solutions. But we can't do that and still grow into the leaders we want to be," Stankovic told the Forum.
WYCUP members were also given some philosophical direction during a workshop led by Chad Helminak, director of development education and cooperative culture at the National Credit Union Foundation. Helminak encouraged attendees to align their values with the values of the credit union movement—and explore ways to leverage those values to drive new ideas and deeper levels of engagement among their colleagues and members.
Eli Zgonjanin, CEO of FULM Savings House of Macedonia, spoke on the importance of WYCUP alumni giving back to movement to guide the next generation of young professionals.
World CU Conference Coverage: 3 Women Share Perspectives on Leadership With GWLN
PARADISE ISLAND, Bahamas–Members of the Global Women’s Leadership Network heard from three women who gave different perspectives on leadership and teamwork during a workshop held in conjunction with the World Credit Union Conference here.
Erin Wolf, managing partner at SuiteTrack, gave a presentation entitled “Teamwork: Giving and Receiving Feedback,” while two executives from CO-OP Financial Services also addressed the group. CO-OP Chief People Officer Cheryl Middleton-Jones discussed the skills necessary for successful networking, while Chief Experience Officer Samantha Paxson talked about shifting leadership norms by embracing traits once seen as detrimental to leadership.
"When I was young and starting out in business I was told to keep my head down and take direction,” said Paxson. “But what I found was, when I was authentically myself and I sought to understand the people that work around me, or beside me—the product team, the sales team—the more I thought about creative ways to help solve their problems, the more I personally moved up and the more challenges I was able to solve for my company..”
Paxson also urged executives in the audience to move away from an exclusive approach to leadership, to one that's more humanistic and inclusive.
Diversity & Inclusion Network
Members of the GWLN also joined with members of the World Young CU Professionals (WYCUP) Organization to participatein a Diversity & Inclusion Networking Luncheon that featured Seattle Credit Union Executive Vice President and Chief Operating Officer Tonita Webb as keynote speaker.
Webb took a deep dive into diversity and inclusion programs, saying they're easy for credit unions to talk about and plan for—but often very difficult to implement.
"If you have a diversity and inclusion program, and you’re not addressing implicit bias and microaggressions, you’re going to have people leave," said Webb.
Webb encouraged credit union employees to push for programs that ensure women and minorities can feel safe to talk about those issues, because full diversity, inclusion and equity is only possible once that happens.