An interesting article sent to me by a colleague … see you online! Robert. 

British Columbians love their credit unions with Canada’s two largest — Vanity and Coast Capital Savings — in the province along with about 50 other smaller ones.

The attraction is they are member-owned and community driven. Vancity started in 1946 and became the first financial institution willing to provide mortgages on homes in Vancouver’s working-class east end, east of Cambie Street. Coast Capital’s roots stem from the Depression in the 1930s when banks refused to lend money to those in trouble.

Most members think the best thing about credit unions is that they aren’t banks, which have the reputation in Canada of charging exorbitant fees and reaping high profits that aren’t given back to customers.

But now that the federal government has said it plans to introduce legislation to amend the Bank Act so that credit unions can operate inter-provincially, members may wonder whether their credit union is going to start looking just like a bank.

Mark McLoughlin, chair of the Case for Progress committee, a group started by Canadian credit unions to lobby for the change, said members need not worry.

While credit unions that decide to go national will fall under the Bank Act they won’t turn into banks, McLoughlin promised.

“The big value proposition for this was to enable and ensure that credit unions stayed with the core principles of what made them a credit union to begin with,” he said.

Members shouldn’t see any differences to the service they get at the counter, he said. But what happens behind the counter — the balance sheet of the credit union — is what will change.

Right now credit unions are limited in how much they can grow because they can’t get members, or acquire smaller credit unions, outside the province, McLoughlin said. “So from a business growth perspective there are some challenges.”

And that’s important because banking is a scale business, he said. “You need large volumes to make profit.”

The more members and the more business the credit union has, the lower the costs and the higher the profits.

That means better products and rates the credit unions can pass on to their members, as well as more money to return to members in the form of dividends or spend in the community, he said.

Coast Capital is an example of why bigger is better, chairman of the board Bill Wellburn said.

Coast Capital is the result of the merger of three credit unions, Pacific Coast Savings on Vancouver Island, Richmond Savings and Surrey Metro Savings.

It was a bold move at the time, joining an Island credit union with one from the mainland, Wellburn said. But it meant people moving from Victoria to the Lower Mainland didn’t have to close their Island account and open a new one. It also meant employees could transfer to another branch if they had to move, and that the credit union had a more diversified, and hence less risky, portfolio of deposits and loans.

“And history has proven that [the mergers] have been a success,” Wellburn said.

“Nobody thought we would be able to put a free chequing account in play, but we’ve done that and it’s hugely popular,” he said. “Because when you’re bigger the average cost per transaction goes down and that allows you to offer more services and products to your members.”

Ultimately, though, it will be the members who decide whether their credit union goes national or not. Because those kinds of decisions have to be approved by the members, Wellburn said

I’m just pouring over the CUCC position paper for a federal charter for Credit Unions. While I’m sure it will take some years to develop the legislation and manage the risks and implications of offering federal incorporation, developing your own credit union’s strategy (or not) will likely take the same amount of time. I’d love to hear people’s thoughts on this and have created a topic in the forums for this discussion.

CU Online,

Robert

Many current best practices are highlighted and several online resources are used to demonstrate the look and feel of social media and social networking. The paper also includes tips to help you as an individual figure out how to use these media. As an example: “If you decide to load a Facebook or Twitter app on your smart phone or BlackBerry, make sure you have an affordable data plan first. Just call your mobile supplier.”

Download the PDF here: Social Media and Credit Unions: The Power and the Pitfalls

The contest solicited strategic ideas from the credit union system to increase member value. Jordan’s submission capitalizes on the environmentally friendly, organic and local (green) initiatives by encouraging credit unions to “position themselves as the green alternative to personal finance.”

To find out more about the contest and to read Jordan’s submission, visit www.cucentral.ca/nationalyoung.

www.youtube.com/watch?v=dSSH82DdMH4

(Central 1 Market Smarts newsletter, November 2009)

Merdian Credit Union was created from the 2005 merger of HEPCOE Credit Union and Niagara Credit Union. The newly-formed organization manages approximately $4.6 billion in assets and serves 214,000 retail and business members throughout southern Ontario. With 44 branches and eight commercial business centres, Meridian Credit Union is the largest credit union in Ontario and the fourth largest in Canada. Meridian is dedicated to reinventing neighbourhood banking by extending operating hours, increasing member access to financial coaches, and ensuring decisions are made at the local level.

After the merger, Meridian undertook the usual post merger activities of integrating business systems and banking platforms. Creating or nurturing a sales culture didn’t start until 2006 and is still an ongoing process according to Robert Leaker, Vice President, Emerging Markets and Business Innovations, “We may have started with the best from both worlds but we also wanted to build an organization based on the Meridian way and not on a sales and service program developed in the past, and that takes time and commitment from all levels of the organization”. In fact, Robert emphasized the time an organization needs to commit to the process, “You can’t give up after twelve months or switch providers because results have not been immediate. Our cultural shift took eighteen months and three years later we are still in the process of implementing stage three, our proactive sales model.”

However, discussing stage three is premature unless a review of the development and implementation of the first two stages is complete. Without developing the ground work stage three will not succeed. Robert states, “Unless your members are receiving a level of service that is able to move them from a zone of indifference to a zone of delight your chances of success are greatly diminished”. A credit union must earn the right to ask for the business (see Relationship Hierarchy). One might think that a program that takes three years to implement is unusually long, however, Meridian is committed to developing a culture supported not only by its employees but accepted by its membership.

Defining Service and Establishing Benchmarks

Meridian’s initial discussions and ultimate commitment to develop a pro-active sales culture started with the establishment of a clear definition of service. Questions management had to answer included: what is good customer service, what does it look like and how do you measure if you are successful?
Many credit unions utilize annual surveys to measure a variety of service attributes. Annual surveys are an excellent tool to establish benchmarks and examine specific issues. They are and continue to be a valuable asset in a credit union’s arsenal to measure success and discover if problems exist. When embarking on the new sales program Meridian employed a member wide survey to establish initial customer service benchmarks. They also discovered what service attributes were important to their members.

After the initial research was complete, Meridian developed a system of measurement specifically related to member service metrics and began to track the results on a weekly basis. Without weekly reports the credit union could not determine if a new service program or tactic was effective and quickly address any issues. Weekly reporting would also maintain employee engagement (both frontline and management) in the pursuit of service excellence.

Ultimately the key member service metric Meridian Credit Union chose as a measure of corporate success was the Net Promoter Score or NPS. The NPS methodology in its simplest form is the result of asking one straightforward question: “Are you willing to recommend Meridian Credit Union to your friends and family?”
When the credit union took its first NPS measurement, they discovered the score was +55 out of a possible 100 points (the lowest possible NPS is –100). The score is derived by tallying those who scored 0 to 6 (on a scale of 0 to 10) and subtracting from those who scored a 9 or 10. Best in class NPS for the financial services industry range in the neighborhood of +75 to +80. Meridian is proud to say that some of their branches have already achieved these high ratings.

The NPS may be the metric the credit union uses to rate its service success, but other indicators are also utilized to help tell the story. The credit union tracks overall recent branch satisfaction. This index, made up from a variety of questions, represents satisfaction levels for the last visit or interaction the member had with Meridian and helps management understand if tactics implemented in branch locations are working over time. Overall satisfaction is also measured and represents how satisfied the member is with Meridian as an organization. Likelihood to repurchase from Meridian indicates how likely the member is to make their next financial purchase at the credit union. The credit union weighs and combines the scores for overall satisfaction, likelihood to repurchase and willingness to recommend to achieve an index and rolling score that should indicate how the credit union will do in a year end survey based on the Millward Brown Index.

Millward Brown Index

The Millward Brown Index is made up by weighting the average scores for recent branch satisfaction, overall credit union satisfaction and likelihood to repurchase. The weekly scores give an indication if the branch is trending towards an improved year end score. If the weekly trend is lower the branch has an opportunity to immediately address any issues. If trending wasn’t utilized, the branch would not know service levels were in decline and risk the possibility of alienating members over a twelve month period. A more comprehensive year-end survey is conducted to determine if the score has improved over the past year.

Through the survey process, Meridian identified primary and secondary drivers of service. Primary drivers are the areas that members have identified as most important in providing exceptional service. These drivers can change over time as members expectations change. By excelling at primary drivers the credit union can impact the overall level of service a member receives and help move them from the zone of indifference to the zone of delight. Secondary drivers are important as well and members expect the credit union to be strong in these areas. Meridian explains that being great in these areas alone, however, will not necessarily move a member into the zone of delight. Members happy with service levels for these secondary drivers may remain satisfied but not wowed to the point of willingness to make a referral.

Example of primary drivers are:

• Value added service
• Problem resolution satisfaction
• Knowledgeable staff
• Range of products and services
• Perceived wait time

Examples of secondary drivers are elements of:

• Branch experience
Ex: courteous and polite and convenient hours
• Advisor experience
Ex: Availability of advisor and financial planning experience
• Problem experience
Ex: Problem communication and resolution

Meridian’s weekly survey process enables the credit union to analyze the drivers behind an improvement or slip in their NPS. Meridian surveys two to three members of each branch on a weekly basis and inquires about service interactions that have taken place in the past 72 hours. Once information is gathered, the results are analyzed to help understand how the lack or presence of a particular driver influences the overall results.

After Meridian gathers all the data, the results are reported to branch management who have access to the information through the credit union’s intranet and the Service & Sales Management Dashboard. This reporting leads to stage two of the program.

Reporting, Communicating Results and Coaching

Although Meridian has developed a system that can measure their level of member service success, this effort would be lost if the credit union was not taking steps to act upon the results and implement programs to address service issues. As part of the overall initiative, the credit union implemented phase two of the program. This phase includes management practices that are used to help develop a sales-based culture. These management practices include reporting service results, hosting meetings to understand branch and corporate goals, providing coaching sessions, and developing the Member Concern Program.

Each week the results of branch surveys are displayed on the dashboard which enables branch staff to view the results of the surveys conducted for their location. Branch employees are aware that scores may fluctuate due to small sample sizes, but over time trends will emerge. The year-to-date number is the strongest indicator of how branch teams are progressing. Scores and trending are available for all metrics on a weekly basis and branch management can easily see what attributes of service are improving or trending lower.

Management suggests that branch staff examine both the Net Promoter trending and Member Concern reports together in order to be able to quickly address any situations that may be impacting the member experience. The Member Concern reporting includes verbatim comments that can emphasize or highlight certain situations or cast light on why specific metrics may be trending lower and causing a decline in the branch’s NPS. By analyzing the primary and secondary drivers of service and implementing changes to address areas of weakness, management can see if their initiatives are working by continuously reviewing their weekly reporting. By focusing on weaknesses at weekly huddles, branches help staff hone in on areas that require improvement. Huddle guides are available on the credit union’s intranet to help branch management maintain the awareness and focus necessary to facilitate weekly improvement. Managers are directed to address primary drivers first and then work on secondary drivers of service. Huddles only last 10 to 15 minutes and are designed so any member of staff can facilitate.

Meridian also employs coaching to help drive change. Changing behaviour is not easy as old habits die hard. For sustainable change to take place, good coaching is necessary to continuously reinforce desired behaviours.

I’d like to thank everyone who has been active in this forum and encourage you to spread the word. Creating a network of sharing organizations is what sets us apart from the big banks. Social media is just one tool we can leverage to create a stronger and more dynamic system.

In the interest of sharing and transparency, I’ve attached Meridian’s application for anyone interested in leanring what we’ve been up to.  Application Form Meridian 2009 Central 1 Innovation Awards

Here is the official posting from Central 1: http://infocentre.central1.com/displayjob.php?sp=10&type=SC&jid=0

November 09, 2009

INNOVATION AWARD WINNERS
NAMED FOR 2009

Winners of the 2009 Central 1 Innovation Awards were announced at the Fall Conference on November 6. Awards were presented to winners and runners-up in three categories: (1) an innovative retail, business or insurance product or a new source of income; (2) an innovative method to deliver services to members; and (3) an innovative approach to operations. Two overall awards were presented — Innovation on a Shoestring and Overall Excellence in Innovation.

In the Product Category, Kingston Community Credit Union won for its student account and delivery method named “Like, all Free.” Envision Credit Union was the runner-up for “Step Up”, a cashable, tiered-rate term deposit.

The winning entry in the Service Category came from Teachers Credit Union, which was recognized for its “Money Camp for Kids”. Runner-up was Nelson & District Credit Union, for its “100 Mile Mortgage – Keeping Interest Local.”

Meridian Credit Union was the winner in the Operations Category for its Web 2.0 tools, social media applications and cuinnovate network. Grand Forks District Savings Credit Union was named runner-up for its Unified Enterprise Content Manager program.

The Innovation on a Shoestring Award was won by Kingston Community. The Overall Excellence in Innovation Award went to Meridian.

Now in its eighth year, the awards program celebrates the numerous innovations made by Central 1′s B.C. and Ontario member credit unions. A summary of all of the innovative project work submitted will be distributed to credit unions shortly.

CU online!

Robert

The old Bob was 40-60 years old, lived in the suburbs, had three kids and a double garage, had 7-8 projects on the go at all times, spend more time in a store than anyone else and finally was predictably reached by traditional media.

Today’s new “Bob” or perhaps we should use a name like “Alex” that is commonly used for both male and female alike. “Alex” is male or female and culturally diverse. Shops in a store every two weeks or more, spends 5 times more than the average CT customer, are busy with 7-8 home projects on the go, are self sufficient and finally shop on-line and look to the internet for help.

As I read the article I was instantly faced with the question “are credit unions still catering to their own “Bob” when they should be looking to change to appeal to a new and changing market place?

What do you think?

Sandi Verrecchia

More and more credit unions are experiencing virtual work environments. From dual head office locations to virtual sales teams to home based employees; the rules supporting team engagement, interaction and communication are changing.

For the past 6 six years, CUMIS Insurance’s Strategic Solutions Group has worked in a virtual environment. I would like to share some of the best practices that we use to stay focused and stay connected.

1. Hire the right people

Although simple in theory it is not so simple in practice. Not everyone is equipped to work alone or to work in an environment that has little face to face interaction with a team. It is important to look for people that have the ability to communicate effectively using all forms of contact. It is also important that people are coached to be able to pick up on non-verbal cues and provided with coaching around the use of effective open-ended questions that can be used to address any stress or confusion picked up non-verbally. Coaching on how to give and receive feedback in also key. Communication is critical to the success of a virtual team but it can also be very difficult. Email is the often the # 1 method of communication since it is quick and efficient to use but email is void of emotion so it is critical to coach staff  on proper email etiquette.

2. Provide easy access to the same information

There is nothing worse than being in an off-site location without access to documentation that you need to properly communicate with a client. Ensure that all staff are equipped with the necessary technology and access to information. Also, create a virtual filing system that is easy for everyone to access and store files so that everyone is always up to date.

 3. Communicate, Communicate, Communicate

 In a regular team environment good communication is important but in a virtual environment good is only part of the equation. Communication must be good, frequent, structured and open. Meetings need to have ‘norms’ that outline acceptable behaviour and a forum to bring up issues and/or offer bouquets (positive accolades given to individuals) to keep people motivated. In addition, regularly scheduled face to face meetings are a must so that the team can connect on another level.

 4. Be clear on your goals

 It is easy to loose sight of something when it is not always visible. Virtual teams that consistently revisit the goals of the team and/or mission are      more apt to stay focused and stay the course. Team dysfunction is often attributed to lack of focus or a poorly articulated road map to success.

 These are some of our best practices. I hope you find them helpful.

 Let me know how it is going in your virtual teams.

As an executive of Meridian credit union, I am encouraged to serve on boards that help build my community. The immense satisfaction of feeling a part of the community and helping it grow and flourish is well worth the effort. For me personally, I had to choose a few causes that I was passionate about – living in Hamilton, Ontario there are just too many organizations needing support to try and help all of them. I chose the downtown urban renewal cause –specifically, supporting Hamilton’s emerging artistic community.

Working with artists has been very rewarding for me. It’s like seeing the world from a new perspective. Many of these artists struggle to conform to society’s rules and regulations. They work when inspired, not 9 to 5 which can mean that income also comes sporadically. Some have great credit ratings, some have no credit ratings and some have “colourful” credit ratings. Not surprisingly, banks are very hesitant to lend into this space.

Artists are an extremely important segment in our society – especially in the case of urban renewal. Without art, there is no incentive for people to live and raise families in a downtown environment. Artists make up the bulk of the entertainment and ambiance in an urban setting. In Hamilton, the urban renewal movement is still in its fragile infancy. If the city is to succeed in reclaiming its once vibrant downtown it is crucial that it invests and supports the arts.

How then can a community credit union support lending into such a colourful sector? Meridian has partnered with another not-for-profit called the Cossart Exchange to do just that. The Cossart Exchange provides artistic facilities, business mentorship and professional services to creative based businesses in Hamilton. I met with the Executive Director, Jeremy Freiburger, to see how we could support the Cossart Exchange and the topic of micro-loans came up.

A typical challenge artists face could play out in the following scenario. A regional museum commissions a sculpture for a new wing of its building. An artist is chosen and a price agreed upon. Generally, payment is made upon delivery of the sculpture. The challenge is, some art is capital intensive and working capital (materials etc) required to produce sculpture can be more than the artist’s current savings. They need a bridge loan, but they may not qualify for traditional lending because past income verification is sporadic or they have colourful or no credit history.

The Cossart Exchange has received some grant monies to start its own micro-lending program. Working with the Cossart Exchange, Meridian is looking at ways to extend the reach of this grant money. By leveraging Meridian’s underwriting expertise and existing risk weighted lending methodologies the Cossart Exchange micro-lending fund can be leveraged significantly.

The program works like this. An artist applies for a micro-loan (typically between $500 to $10,000) through the Cossart Exchange. The Cossart Exchange supports the artist and helps them create a business case and presents the opportunity to Meridian. Meridian evaluates the opportunity and artists’ credit worthiness through its existing risk based pricing models. Meridian then approves some or the entire loan. Any short fall in funding is guaranteed by the Cossart Exchange grant money which sits as investment deposit at Meridian. Meridian administers the loan. In this way, Meridian and Cossart share the risk and the total money available for lending is maximized.

While this sort of lending is by no means revolutionary, it does provide an essential service to Hamilton’s artistic community. Many artists don’t know they may qualify for cheaper lending than the faithful old 18% credit card. They may never have heard of a credit union or risk based pricing – they’re just used to the bank saying no!

I’m excited to get this program up and running in its first year of lending in January. I’ll let you know how it goes and where the challenges lie. Until then, CUonline!

Robert

How many times in our Credit Union careers have we heard “what is our value proposition?” Too many to recount. The point is – people are still asking this question today. I just returned from a conference of Credit Union executives and the question was the centre of a great dialogue. I asked the same question last year in preparing and completing a final MBA project. To that end, 74 gracious Credit Union executives from across Canada indulged me and answered a survey questionnaire about this very topic. The intention of the survey was to validate a belief that Credit Union differentiation was being merged away and that leaders really wanted to find an alternative to mergers as a sustainability solution. The results did not disappoint – here are some key highlights:

Competition, efficiency issues and resources, such as capital and talent, were cited as the key challenges driving mergers in the system today. A small percentage of respondents indicated retiring leadership was an issue but it was a distant choice to the top three mentioned. Most leaders indicated that the current pace of mergers will continue or increase and this was primarily due to the current economic cycle, however, increased regulatory burdens and retiring CEO’s would drive future merger activity.

When asked what did differentiate the system, leaders generally thought that connection to community, responsive local policies and service were the primary factors that set Credit Unions apart from the plethora of financial service providers. More than 80% felt these were sustainable and many indicated that the Credit Union business model may need to be revamped to maintain these elements in the future. Interestingly, almost 70% felt that mergers negatively impacted a Credit Union’s connection to community.

To this point in the survey, the trends seemed to indicate that times were tough and the challenges were many. The good news is that Credit Unions are differentiated through their value system of community connection and responsiveness to community. The bad news is that it seems that key differentiator gets diluted in a merger. So – what are the alternatives? Well, that is what the survey tried to determine next.. Let’s assume for a moment that instead of merging, Credit Unions could gain some of the financial advantages of a merger but maintain their own brand and governance. The respondents tackled the issue of system collaboration. Ranking the Credit Union system on a scale of 1 to 10 with 1 representing poor collaboration and 10 indicating great collaboration, most of the replies centered in the 5 to 7 range. Plus almost 60% of responding Credit Unions were engaged in some form of collaborative effort at the time of the survey. This table illustrates the most common functions cited by respondents as an area of collaboration.

Human Resource benefits	Wealth Management
Volume aggregation	Intellectual capital sharing and storing
Car dealer financing	Vendor management
Purchasing groups	Lobbying power
General insurance	Advertising
Information Technology – particularly with banking systems	Product development
Credit Union Central mergers	Credit Union inter-connectivity
Legal or contract development	Community support

A whopping 92% said they believed that alliances and collaboration could play a role in dealing with the challenges currently facing the industry. Supporting comments included:

So where should we concentrate our collaborative efforts?

Technology, administration, research and development and marketing were the top picks. Technology was the winner by a large lead and this is understandable at it is usually one of the highest expense categories on the operating statement.

Great, now that the challenges and solutions have been identified – let’s get started. Oh, wait a minute – over 85% of respondents see barriers to Credit Unions collaborating. Well, that’s ok, we can overcome anything – after all we built one of the strongest co-operative financial networks in the world. Hit us with your best shot – what are these barriers to collaboration? The top two reasons are fear of loss of control and leadership resistance. Many stated that leadership “egos” are the major challenge. Again, a good news, bad news story — people see egos as barriers but take full ownership for who should manage the problem going forward. Survey results indicate that most felt that Credit Union leadership was the best source to start the collaborative process, followed by Centrals and then Directors of the Credit Union. How would we start the process? Tied for first place was the provision of more education for Directors and leaders and illustrating examples of working alliance models. These choices were followed by developing conferences or forums on the subject so Credit Unions could attend and learn more.

In the end the system confirmed my own assumptions:

If you would like more information about the survey please feel free to contact Shelley at smcdade@sunshineccu.net .

Shelley McDade
Chief Operations Officer
Sunshine Coast Credit Union

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