The Business of Sharing

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If his life were a movie script, Dan Balagna would say sayonara to his credit union career by riding into the sunset on his Yamaha Venture Royale, the wind slapping against his leather vest, the arms of his wife, Joy, snug around his waist.

Far from the executive image that the 59-year old executive has portrayed for the last 40 years is a hardcore motorcycle enthusiast just itching to trade his suit and tie for a pair of cut off jeans.

"That's the real Dan," he said from his office in Southfield, Mich., from which he will officially step down as president and CEO of Service Centers Corp. and president of Corporate Subsidiaries for CO-OP Network-a.k.a. the father of shared branching.

Balagna, 59, began his career with the Michigan CU League in 1963, and helped pioneer the concept of shared branching with Service Centers Corp. in 1975. As head of SCC since 1981 Balagna helped build the national shared branching network and to create the first national electronic switch for credit unions.

To be honest, he said, his retirement date of Jan. 1, 2004 is still much too far into the future to ponder.

Besides, his to-do list is full of projects that need to be completed and ideas that need to be developed before he turns things over to Ken Sucher, formerly senior VP. Sucher has been named EVP of Operations and IT, filling a position created when SCC and the CO-OP Network combined last year.

"A lot of my focus right now is on long-term, strategic opportunities," he said. "We just celebrated our first year with our new colleagues in Ontario, Calif. (CO-OP Network) and I couldn't be more pleased."

But, he added, there is still work to be done to combine the two operations and shuffle departments between Ontario, Calif., the CO-OP's home base, and Southfield, Mich., where SCC-now the Eastern Corporate office-will continue to operate the shared branching functions.

In addition, Balagna said, his staff is working on a program that will allow the CU service center employees who serve members of 300 CUs, so far, to cross-sell customized products and services by quickly reviewing a member's financial profile as he or she conducts business. He said the shared branching offices pulled in 18,000 new product leads last year and expects that training, technological advances and employee incentives will triple that number in 2003

Beta-Testing Lending System

SCC is already beta-testing a lending origination system within four of its shared branching locations. It matches loan applications to the scoring systems of the applicants' individual credit unions via computer. "We even envision some of our branches becoming lending centers," Balagna said.

Also on the burner is a plan for its service centers to offer check cashing to both members and non-members. With so many shady payday lenders "gouging" people with exorbitant interest rates, Balagna said, there is tremendous opportunity for the industry to take charge. Expect a "How To" manual from SSC on the topic later this fall, he said.

Balagna started his credit union career as a junior auditor with the Michigan Credit Union League in 1964. He was 19 years old, married to his high school sweetheart, Jean, and attending college courses at night.

"I started at a great time in the credit union community," he said. "There were new products and so much sharing to help others be successful."

Balagna said he was fortunate to "grow up" with the industry's early pioneers.

The Beginnings Of Shared Branching

In the early 1970s, when CU leaders started talking about the shared branching concept to allow many credit unions to serve members in one location at a fraction of the cost to provide the facility and services individually. Balagna was responsible for developing accounting procedures and training the first manager of a shared branch.

Later, as the Michigan league's controller and director of finance, he served as treasurer of SCC's board of directors. He became the company's first president in 1981.

"By 1981, we had four shared branches, but no technology," he said. "There was no switch that allowed us to connect all the credit unions together. Just the telephone."

The organization required five separate data processing systems to serve members of the network's first five credit union participants.

Fortunately, Balagna said, by the time he was on board, the company was "already in the throes of developing" a switch to link everything together. With no vendors willing to take on the challenge, he said, SSC teamed with Dearborn Federal Credit Union to create the first application.

As expected with new technology, things didn't always go smoothly.

Balagna recalled one time when a computer glitch called the "ping pong effect" turned a member's single withdrawal into an entire day's worth of withdrawals. The system had to be shut down and reprogrammed to stop the transaction from repeatedly bouncing from shared branching computer to the woman's CU account.

Balagna said he also recalled a time when SCC's leaders wondered why more credit unions didn't "jump on the bandwagon," especially considering predictions that brick and mortar would soon go the way of dinosaurs.

"Now, we are seeing a major increase in brick and mortar across the country," he said. "Consumers still pick a financial institution based on where it's located."

Still, SCC can't complain. Its shared branching network, called Credit Union Family Service Centers, has its own ATM network-SC24-along with 1,026 shared branch locations in 38 states serving more than 300 member CUs. Some 30,000 members use shared branches every day. Last year, it merged with the CO-OP Network EFT Services. SCC also supports other shared branch networks for CU groups around the country and provides a gateway to CU Service Centers, the international shared branching network.

The CO-OP network was established in 1981 with only 20 Automated Teller Machines. Today, it has 17,117 no- surcharge ATMs across the country.

"I have watched SCC grow from an idea and vision of several innovative credit union leaders to an organization recognized nationally for creating a highly efficient credit union delivery system," he said. "Our efforts sparked a new industry within the credit union community across the country."

Besides Balagna's work with SCC, he has been active in his community and the industry. He was on the faculty of Michigan's Wayne County Community College and presently serves as board chairman of the National Association of Credit Union Service Organizations. He received the Michigan Credit Union League's Distinguished Service Award and was inducted into the Michigan Credit Union Hall of Fame in 1995.

Sharing The Credit

While peers continue to credit him for his contributions to shared branching, Balagna responds, "Nobody's an island. You can't succeed in business without the right people around you."

SCC is now a subsidiary of The CO-OP Network with headquarters in Ontario, Calif., and Southfield, Mich. The California office will continue to handle the bulk of EFT functions, while Southfield will continue to be the home of shared branching operations. Combined, the new organization now has 1,000 employees.

Tucked inside SCC's Southfield facility is a 20 foot by 30 foot cold room of neatly (and surprisingly compact) stacked computer drives that handle 10-million transactions a month. Computer technicians sit in front of connecting computer screens in an adjoining room, separated by a large glass pane.

Balagna said SCC moved into the 22,000-square-foot building off of Nine Mile Road four-and-a-half years ago after outgrowing its previous home. Already, it has outgrown this location, he said, explaining that HR and facilities functions have been moved to nearby buildings.

During his four decades serving the industry, Balagna said he has seen a lot of changes, and, equally as important, some of the same-namely the focus on member service.

"That was embedded in me so strongly in the early years," he said. "I would hope some of that influence has rubbed off (on my successors)."

Balagna said there is a lot about the industry that he will miss, but plans to stay in touch. But not as a consultant, he said. Just to reminisce.

While Balagna said he plans to be around for a year after retirement and will provide assistance, if needed, he also says he'll be busy cruising down the highway with Jean on his motorcycle and attending classic car events to show off his restored 1957 Classic Thunderbird.

He said he plans to sell his home in Highland, Mich. and move to Naples, Fla., where a retirement nest has already been established.

To be honest, he said, it's been in the planning stages for several years already. "My wife and I want to retire while we're still young enough and healthy enough to enjoy it," he said. "We're still pretty adventurous."

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