Leadership lessons from the Lone Star State
September 13, 2018 8:30 AM
CU in San Antonio
The Cornerstone Credit Union League – which represents credit unions in Texas, Arkansas and Oklahoma – returned to San Antonio recently for its annual leadership conference. Over the course of four days, hundreds of credit union professionals heard from experts on everything from advocacy and fintech to diversity and the future of the media. Here are some highlights from the conference.
It's about more than just AI
Artificial intelligence is only half of the equation for financial services – and it may be the less important half.
That was the message from Sundeep Kapur, founder of Digital Credence, who offered a keynote address on AI and the future of financial services.
“Chess grandmasters can’t beat computers anymore – the only way to beat a computer is to play a computer against a computer,” asserted Kapur. “They have looked at every possible strategy, every possible move [and] have the ability to spit that out quickly. Let’s apply that back to our industry – let’s empower our people to be able to give the correct answer quickly to the people we serve so we can be able to take those next steps.”
Consumers, he reminded the crowd, want an incentive to do business with you. But you don’t have to give them points or a tangible reward, he said – just remind them they’re getting a good deal. He urged credit unions to remind members about their relationship with the institution and the credit union’s value proposition. “That’s what keeps you top of mind.”
On top of everything else, he added, “ultimately they’re looking for safety and security, because it’s your job to protect people so you can serve them effectively.”
For as much as financial institutions are moving toward increased usage of digital channels, Kapur reminded, empathetic employees are also essential to success.
Credit unions want their electronic channels to be smart,” said Kapur, but “if we don't invest in the employees having more and better answers, [members] will ignore the employee and go straight to the website and other channels.”
That was the message from Sundeep Kapur, founder of Digital Credence, who offered a keynote address on AI and the future of financial services.
“Chess grandmasters can’t beat computers anymore – the only way to beat a computer is to play a computer against a computer,” asserted Kapur. “They have looked at every possible strategy, every possible move [and] have the ability to spit that out quickly. Let’s apply that back to our industry – let’s empower our people to be able to give the correct answer quickly to the people we serve so we can be able to take those next steps.”
Consumers, he reminded the crowd, want an incentive to do business with you. But you don’t have to give them points or a tangible reward, he said – just remind them they’re getting a good deal. He urged credit unions to remind members about their relationship with the institution and the credit union’s value proposition. “That’s what keeps you top of mind.”
On top of everything else, he added, “ultimately they’re looking for safety and security, because it’s your job to protect people so you can serve them effectively.”
For as much as financial institutions are moving toward increased usage of digital channels, Kapur reminded, empathetic employees are also essential to success.
Credit unions want their electronic channels to be smart,” said Kapur, but “if we don't invest in the employees having more and better answers, [members] will ignore the employee and go straight to the website and other channels.”
Advocacy update
Ryan Donovan, chief advocacy officer at the Credit Union National Association, said the lame-duck session in Congress following the upcoming elections is likely to be on things like government funding, a possible jobs bill – which gives credit unions opportunities for additional reg relief – and confirmations, which could include CFPB director nominee Kathy Kraninger and NCUA board member nominee Rodney Hood.
As for the elections themselves, Donovan offered a few different scenarios for how voting could play out and what the impact of changing power in the House and Senate might look like for credit unions. While the possibility of increased investigation and oversight into President Trump is likely if the Democrats take the House but the Republicans hold the Senate, he said credit unions could see an increased focus on HMDA, CRA, diversity and inclusion efforts at financial institutions, and more, adding that it’s possible Sen. Mike Crapo and Rep. Maxine Waters could work together on further reg relief.
As Credit Union Journal has reported,Donovan also briefly discussed NCUA’s risk-based capital proposal and NCUA board member Rick Metsger’s comments earlier in the conference that CUs have had more time to prepare for RBC than nearly any other rule in the movement’s history.
The public has been getting increasingly involved in political and advocacy campaigns in recent years, said Donovan, and he urged credit unions to make the most of that. “If we’re not asking [members] to be involved, we’re letting them down.
As for the elections themselves, Donovan offered a few different scenarios for how voting could play out and what the impact of changing power in the House and Senate might look like for credit unions. While the possibility of increased investigation and oversight into President Trump is likely if the Democrats take the House but the Republicans hold the Senate, he said credit unions could see an increased focus on HMDA, CRA, diversity and inclusion efforts at financial institutions, and more, adding that it’s possible Sen. Mike Crapo and Rep. Maxine Waters could work together on further reg relief.
As Credit Union Journal has reported,
The public has been getting increasingly involved in political and advocacy campaigns in recent years, said Donovan, and he urged credit unions to make the most of that. “If we’re not asking [members] to be involved, we’re letting them down.
Partnerships and payments strategies
Amazon, Netflix and Uber have already set the standard for how consumers expect personalized, frictionless experiences, but credit unions have a long way to go to catch up.
“You can’t imagine a world 10 years from now if you’re 20 steps behind where you need to be today.”
That’s according to Jennifer Addabbo, founding partner of CU Engage, an advisor for strategic vendor decisions at credit unions.
While the movement continues to worry about increased competition from fintechs, one option Addabbo suggested is finding ways to work with those companies to do testing in a sandbox environment.
“These fintechs are clamoring to work with financial institutions because they know that you have relationships with your members and your members trust you,” she said. "So if you have the trust and the relationship and they have the technology, there could be a nice marriage there.”
Credit unions may also not be doing enough to ensure their card is top of wallet for frequent online transactions. Addabbo advised looking at transaction data and checking for frequently used sites and apps like Amazon and Uber.
“If you don’t see an Amazon transaction in that member’s monthly transaction history, you are not their primary card,” she warned. But while CUs can’t afford high profile spokespeople the way Capital One uses Samuel L. Jackson to advertise, they can still promote themselves and motivate members to use their card for online transactions. One option she suggested is offering a small statement credit if a member makes five Amazon transactions in a 30-day period.
Credit unions can learn a lot about their members’ behaviors simply by digging through bill pay and ACH data, she reminded – and it’s easier than many CUs might thing.
“You don’t need a data scientist to look at this stuff – you need a kid that’s comfortable with Excel,” she quipped quickly adding that CUs will also need someone who can help them form a strategy about how to make use of that data.
“You can’t imagine a world 10 years from now if you’re 20 steps behind where you need to be today.”
That’s according to Jennifer Addabbo, founding partner of CU Engage, an advisor for strategic vendor decisions at credit unions.
While the movement continues to worry about increased competition from fintechs, one option Addabbo suggested is finding ways to work with those companies to do testing in a sandbox environment.
“These fintechs are clamoring to work with financial institutions because they know that you have relationships with your members and your members trust you,” she said. "So if you have the trust and the relationship and they have the technology, there could be a nice marriage there.”
Credit unions may also not be doing enough to ensure their card is top of wallet for frequent online transactions. Addabbo advised looking at transaction data and checking for frequently used sites and apps like Amazon and Uber.
“If you don’t see an Amazon transaction in that member’s monthly transaction history, you are not their primary card,” she warned. But while CUs can’t afford high profile spokespeople the way Capital One uses Samuel L. Jackson to advertise, they can still promote themselves and motivate members to use their card for online transactions. One option she suggested is offering a small statement credit if a member makes five Amazon transactions in a 30-day period.
Credit unions can learn a lot about their members’ behaviors simply by digging through bill pay and ACH data, she reminded – and it’s easier than many CUs might thing.
“You don’t need a data scientist to look at this stuff – you need a kid that’s comfortable with Excel,” she quipped quickly adding that CUs will also need someone who can help them form a strategy about how to make use of that data.
Wanted: Brand ambassadors
Regardless of who they serve, credit unions rise and fall by their culture, cautioned Stephanie Sievers, a credit union CEO and founder of Think Pink Strategies.
People want to work for organizations that make them feel like their work has value and meaning, said Sievers, but credit unions often have a problem with how they communicate and sell themselves.
“It doesn’t matter what your business plan or your mission statement says – if your company culture doesn’t reinforce that, you’re going to have a hard time creating employees as brand ambassadors. And if you don’t have brand ambassadors, you’re going to have a hard time going out there and getting new members,” she said.
One common problem, she added, is hiring for skill instead of hiring candidates who are aligned with the organization’s vision.
“If you hire people to do that job, they’ll work for the salary, but if you hire people who believe what you believe, then you’ve got yourself some brand ambassadors,” she said.
But CUs too often make the mistake of making their branding too confusing for the communities they’re serving. If a company-branded polo shirt isn’t the exact same color every time, she said as an example, consumers won’t remember it as well as they would if it’s consistent.
“If your colors are blue, wear blue even if you’re sick of it!” she said, adding “It’s not about you – it’s all about the brand, and we’re trying to communicate to the members who we are.”
She offered the “Got milk?” and “Just do it” campaigns as examples – both are decades old, but they haven’t changed a bit, in part because consumers recognize them and the people behind those campaigns have maintained the same messaging, logo, font and more for decades.
Familiarity breeds trust, she explained, so changing taglines, messaging and more can be confusing to members and potential members.
People want to work for organizations that make them feel like their work has value and meaning, said Sievers, but credit unions often have a problem with how they communicate and sell themselves.
“It doesn’t matter what your business plan or your mission statement says – if your company culture doesn’t reinforce that, you’re going to have a hard time creating employees as brand ambassadors. And if you don’t have brand ambassadors, you’re going to have a hard time going out there and getting new members,” she said.
One common problem, she added, is hiring for skill instead of hiring candidates who are aligned with the organization’s vision.
“If you hire people to do that job, they’ll work for the salary, but if you hire people who believe what you believe, then you’ve got yourself some brand ambassadors,” she said.
But CUs too often make the mistake of making their branding too confusing for the communities they’re serving. If a company-branded polo shirt isn’t the exact same color every time, she said as an example, consumers won’t remember it as well as they would if it’s consistent.
“If your colors are blue, wear blue even if you’re sick of it!” she said, adding “It’s not about you – it’s all about the brand, and we’re trying to communicate to the members who we are.”
She offered the “Got milk?” and “Just do it” campaigns as examples – both are decades old, but they haven’t changed a bit, in part because consumers recognize them and the people behind those campaigns have maintained the same messaging, logo, font and more for decades.
Familiarity breeds trust, she explained, so changing taglines, messaging and more can be confusing to members and potential members.
Succession strategies
No matter how lofty or modest your credit union’s strategic objectives are, the whole plan can be undone by succession – either badly planned or unexpected.
That was the message from Maria Kell, senior consultant at Business Compensation Consulting, who reminded that effective succession planning protects the credit union’s culture and the continuity of the management team.
When creating a succession plan, advised Kell, credit union leaders must not just look at the CEO, but at those under the CEO who may be hoping to make it to management someday, either at their current credit union or elsewhere. One consequence of succession, she said, is that it sometimes creates an unintended domino effect when one person leaves because they didn’t get a position they wanted or found a better option elsewhere.
Among the considerations that must be taken into account in a good succession plan, she advised:
*Age – Not just those at the top of the organization but those beneath them and how big the age gap among them is.
*Length of tenure
*At-risk factor – Just because an employee is a certain age or has been at the credit union a long time doesn’t mean they might not be considering moving on.
*Family demographics – Empty nesters, she said, may have more ability to pick up and leave unexpectedly as opposed to someone still raising children.
*The market the CU operates in
*Overall health of the institution
And, warned Kell, the institution could be harmed by finding a successor with the same background and mindset as the current leader.
“Looking for a ‘Mini Me’ of your current CEO may not be your best strategy,” she warned.
That was the message from Maria Kell, senior consultant at Business Compensation Consulting, who reminded that effective succession planning protects the credit union’s culture and the continuity of the management team.
When creating a succession plan, advised Kell, credit union leaders must not just look at the CEO, but at those under the CEO who may be hoping to make it to management someday, either at their current credit union or elsewhere. One consequence of succession, she said, is that it sometimes creates an unintended domino effect when one person leaves because they didn’t get a position they wanted or found a better option elsewhere.
Among the considerations that must be taken into account in a good succession plan, she advised:
*Age – Not just those at the top of the organization but those beneath them and how big the age gap among them is.
*Length of tenure
*At-risk factor – Just because an employee is a certain age or has been at the credit union a long time doesn’t mean they might not be considering moving on.
*Family demographics – Empty nesters, she said, may have more ability to pick up and leave unexpectedly as opposed to someone still raising children.
*The market the CU operates in
*Overall health of the institution
And, warned Kell, the institution could be harmed by finding a successor with the same background and mindset as the current leader.
“Looking for a ‘Mini Me’ of your current CEO may not be your best strategy,” she warned.
