Poland Marries Co-op Bank Model, CU Mission

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There are few greater success stories in credit union development than that of Poland, which, in the short 15 years since the fall of the communist government and development of credit union enabling legislation, has grown to serve 1.5 million people in that country.

Jarek Debowski, manager with SKOK Stefczyka in Poland, shared examples with WOCCU's World Conference here on how his credit union has attracted a whopping 400,000 members (SKOK is the acronym that all credit unions in Poland share; Stefzyka is the individual CU's name, in this case it is named after the founder of credit unions in Poland in the 19th century).

In laying the groundwork for its operating strategy, Debowski said the credit union asked itself "can the key aspects of a cooperative banking model be attained while retaining the essential elements of a credit union system?"

"Taking into account the Polish experience with the banking sector, where almost 50% of all big banks have been privatized with foreign capital, and the fact that 50% of working Poles do not have personal banking accounts due to high prices or lack of trust, the only answer seemed to be to take the best practices of the banks, analyze what people need, and then let's do it our own way."

Out of that research SKOK Stefczyka identified three areas it wanted to examine: the wide range of products offered, the different sales channels being used, and operations and tools. It also identified what he called seven essential elements for credit unions:

* Access to financial services for common people.

* Leveraging the 100 years of experience of credit unions in Poland (credit unions were suspended under the Communist governance).

* Building financial systems for the less affluent and mobilizing domestic savings and putting them to work in local communities, something first referred to by SKOK Stefczyk's namesake, "local money for local needs for local people."

* Diversified range of products at affordable cost.

* Ability to offer above-market deposit rates and below-market loan rates.

* Reliance upon members solely for building market position.

* Building an understanding of the personal and social costs of financial illiteracy in Polish society. "This is important because we have changed the market since the end of Communism just 15 years ago. This is not enough time. People still do not realize the price of the money they borrow from the bank-like institutions."

Similar to those in the U.S., Poland's credit unions launched market research on why people choose banking services, including seeking to know why credit unions in Poland lag the penetration rates of the U.S.

Not surprisingly to any U.S. CU, 50% of Poles said the primary driver in choosing a financial location is location of the branch office. Ranked second was "trust." What Debowski said was "quite significant" was that just 1% of Poles said they were influenced by advertising. "Our first conclusion was to work on a network of branches, and then to work on trust and our image," he explained.

Sixty-three percent of Poles do not use any form of plastic. Up to 85% do not use credit or credit lines or loans of any type. "So we developed simple but affordable personal account with pay cards with wide access to ATM networks with a credit line on the account," explained Debowski.

Why do people not use banks in Poland as much as in other Western European countries? Research found 49% believe that banks are out of the reach of low-income consumers; 42% do not trust banks, and 37% said bank charges are too high. "These three findings drove us to our third conclusions, that financial services in Poland are too expensive for the common people," he said. "With these three findings we decided to redesign our corporate image, opting for that of Franciszek Stefcyzk, the founder of the credit union system in Poland in the 19th century."

The credit union also launched a campaign that seeks to build the image of credit unions as an alternative to a bank.

Seeking to reinforce its own link to local communities, the credit union has introduced a program to pay a percentage of all interest on loans and credit cards to 17 orphanages throughout Poland that are desperately in need of funding.

Finally, it is using some of its revenues to do what many U.S. CUs are doing: engaging in mystery shopping and doing sales training.

As a result of its three-pronged campaign, there are now 230 full-service branches in central locations available to members in Poland; and there are 400 other agencies that offer loans and credit on its behalf. In the area of financial education, it has rolled out a public relations effort, a newspaper that focuses on personal finance, and a "Society for Promotion of Financial Education."

Today SKOK Stefczyka has total assets of more than $400 million. In the fall of 2005 plans call for introducing a personal account with Internet and phone access based on unique software developed by all the credit unions in Poland.

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