6 big strategic questions for credit union leaders

Here’s a question that I came across recently: Can you do VUCA?

I don’t know about you, but I had never heard that question, nor was I familiar with the acronym. It turns out that it has been used by large companies in planning exercises and actually originated with the U.S. Army. It stands for volatility, uncertainty, complexity and ambiguity. Certainly, it describes the very dynamic environment that credit unions find themselves in these days.

The VUCA concept challenges leaders to ask whether they are ready to manage and govern in an environment with a whole lot of VUCA.

I recently visited Normandy Beach on the northern coast of France where the infamous D-Day invasion took place on June 6, 1944. This was the largest amphibious military operation in history. Thankfully, the Allied forces prevailed in this pivotal battle that ultimately led to the liberation of Western Europe from Nazi control during World War II.

The numbers were simply staggering. The night prior to the invasion, 822 aircraft filled with parachutists headed for drop zones in Normandy. An additional 13,000 aircraft were mobilized to provide air cover and support for the invasion. By morning, 18,000 parachutists were already on the ground. Despite heavy casualties, especially on Omaha Beach, by day’s end, 155,000 Allied troops had stormed the beaches. Within 10 days, the number grew to 500,000 and within three weeks it was 2 million, and the Allied troops were poised to continue their march across Europe to courageously liberate Paris, France and Western Europe.

This was the ultimate example of volatility, uncertainty, complexity and ambiguity. Bombing targets were missed, many mistakes were made and unnecessary deaths and injuries resulted. Over 15,000 French civilians were killed by Allied bombing, largely because our military then lacked the capability of targeting smart bombs like we have today. Ninety percent of the amphibious tanks sank in the Omaha landing, soldiers were unnecessarily seasick due to a well-intentioned large breakfast prior to the attack, and on and on. But despite the mistakes, success was achieved because waiting for better weather or more preparation weren’t viable options.

As I looked out at that vast Normandy Beach, and as I toured the American soldiers’ cemetery where 9,500 U.S. soldiers were laid to rest, it reminded me that managing and leading a business pales in significance when compared to these big battles that truly changed the world. Whether in military exercises or business strategies, failing to act can sometimes be the worst strategy of all. So, preparing for success and trusting our teams, even in the face of volatility, uncertainty, complexity and ambiguity represent the true leadership imperative.

The accounting firm Deloitte recently published its 2018 Banking Outlook and suggested that there are six important challenges for financial institutions to consider as they do their strategic planning. They include:

  1. Customer centricity
  2. Regulatory recalibration
  3. Technology management
  4. Mitigating cyber risk
  5. Fintechs and BigTechs
  6. Reimagining the workforce

After reading this report, I realized that for service providers like CU Solutions Group, we need to create and reinvent our offerings so that they align with these big challenges that credit unions will be facing for many years. CUSG offers an array of technology, marketing and HR performance solutions for credit unions and other clients. We also recently launched our Strategic Advisory Services program designed to complement and support our various products and services.

As credit unions gear up for their strategic plan updates this year, I suggest that the following six questions should be addressed while realizing that the ultimate leadership imperative focuses on knowing what to change and what to preserve.

For instance, credit unions may choose to keep and improve their branch and ATM networks, cooperative principles, commitment to social mission, focus on local geography and fields of membership, commitment to the credit union brand and the focus on member service as   differentiators.

There’s a great quote from the ultimate technologist, the late Steve Jobs, that should ring true with credit union leaders as they grapple with the unprecedented pressure for change in a digital world. He said, “Technology is nothing. What’s important is that you have faith in people, that they’re basically good and smart, and if you give them tools, they’ll do wonderful things with them.”

Due to credit unions’ relatively small size, they will never compete with the mega-banks and their technology budgets. But simple tools like good mobile apps, LifeSteps Wallet and remote deposit capture should be affordable for almost any credit union. Starting with the more practical and affordable technology tools while emphasizing how they can improve service, should be the focus for most credit unions’ limited technology budgets.

Here are the six questions that every credit union should address in their planning exercises:

  1. Do we have a well-defined member experience program? This program should include improvements in leveraging member data, improving talent management strategies and working with partners to tackle “pain points” that are getting in the way of improving member service.
  2. Are we engaged in legislative and regulatory advocacy efforts with our associations? With a new director at the CFPB, a new NCUA Chairman and a Trump administration that favors regulatory relief, there are good opportunities to reduce regulatory burden, even as we work to preserve and improve the federal and state charters. However, every credit union needs to be engaged in identifying the specific issues that need to be addressed by the industry and then get actively involved in all facets of advocacy with national and state associations, including PAC donations, lawmaker meetings and local relationship building.
  3. Are we committed enough to our mobile strategies? CU Solutions Group is committed to helping credit unions improve their mobile service offerings with products like LifeSteps Wallet and other a la carte mobile apps. But an omni-channel strategy that emphasizes mobile still needs to give attention to market-segmentation data, improving member experience in branches, card offerings, lending practices and call centers and using technology to make operations more efficiently.
  4. Cyber risk will be a huge challenge for credit unions in the future and regulators will require more planning and execution here. But starting with the basics, credit unions should patch systems, invest in cyber risk solutions, dedicate staff to IT security and partner where necessary. In 2014, Chase suffered a major attack that affected 76 million households and 7 million small businesses which ultimately cost the bank nearly $1 billion. Cyber risks are growing exponentially and all businesses including credit unions need to see this as a big priority.
  5. Are we looking to partner with Fintech companies and even BigTech companies like PayPal, Apple, Google and Microsoft? More and more banks are seeing companies like Apple, Quicken Loans and PayPal as “frenemies” vs. competitors. These companies are considered “BigTechs” vs. the so-called fintech companies that are disrupting payments, lending and other traditional banking services. It will be more important for companies like CUSG to find ways to partner with great technology leaders like Sprint, Intuit and PayPal to add value for credit unions and their members.
  6. Are we investing enough in leadership development and a new workforce ready for the digital world? Reimagining the workforce is what credit unions of all sizes need to do. This begins with the composition of boards of directors, the CEO and the entire team. Credit unions need to objectively ask themselves if they have the right people for the mission ahead. And if not, they need to invest in training as well as recruitment strategies that help attract, retain and develop the workforce of the future. In a 2017 MIT survey, 56 percent of banking executives are taking on projects that require learning new skills; and 60 percent say they are developing digital talent to position for the future.

    CUSG offers great solutions like Performance Pro, Compease and Strategic Advisory Services to help credit unions deploy the best HR strategies for the future. Newer products like Planning Pro and GovernEase will help credit unions plan and govern more effectively.

The banking model of the future will no longer focus on branches, call centers, online, mobile and mail delivery channels in isolation. The new model will put mobile at the center of a wheel surrounded by branches, online, call centers, mail communication and open APIs. Putting mobile at the center makes it less of an afterthought but rather the primary channel. An omni-channel approach suggests that a personal touch should always be the differentiator for credit unions. And like Steve Jobs said, technology is not the goal, but rather the tools that help meet member needs in the most member-centric way possible.

Just like the incredible D-Day invasion that changed the course of World War II, in our far more limited spheres of influence at credit unions, we need to manage through VUCA with well-thought-out planning strategies that ask and respond to these important questions. For CUSG, we welcome our role of assisting in as many of these dimensions as possible while focusing on our product strengths in areas of technology, marketing and HR performance challenges.

Dave Adams

Dave Adams

Dave Adams is  President / Chief Executive Officer of CU Solutions Group. The  CUSG office is located in Livonia, Michigan. Mr. Adams joined the Michigan Credit Union League in August of ... Web: www.CUSolutionsGroup.com Details

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