We traveled from Killarney to Vancouver and found that discussion and debate swirled around similar topics. 

Small credit unions find it harder to compete today. They face higher compliance costs, requirements for specialized expertise which they are not large enough to hire and requirements for heavy investment in information technology systems in order to provide the products that members are looking for. Employee-based small credit unions tend to do better than community-based credit unions because they have a specific demand niche and are able to control both their cash flow and their risk through payroll deduction. Mid-size credit unions also struggle with the compliance costs, required technical expertise and the investments required for technology. (Mike describes the same challenges among US credit unions.)

Large credit unions are able to hire the expertise they need and invest in the technology they need to provide the services and products that member demand. Both membership growth and return on capital is highest among large credit unions. Membership growth is higher among community credit unions and return on capital is higher among employee-group credit unions.

Some talk of economies of scale. If the return on capital or assets is smaller for small credit unions, how large does a credit union have to be to be sustainable? How fast can it accumulate retained earnings to support growth?  What is the curve for economies of scale for credit unions that need to meet both the demands of members and the prudential and reporting requirements of regulators?   

Many talk of mergers happening again in increasing numbers in the U.S. and in Canada. Mergers were the talk of Killarney. Sure, merger has its place. But the challenge and the hope in both Killarney and Vancouver was about collaboration. In Killarney, people explored the possibilities of collaboration among credit unions to achieve the purpose of better services for members. In Vancouver, people shared examples of credit unions’ business collaborations. The bottom line to getting underway, many pointed out, was developing trust among the participating credit unions. 

 

 

 

 

In Mexico, the Caja Popular Mexicana (CPM) was formed in 1995 with the merger of 62 credit unions, 24 state federations and a national confederation into one credit union.

We worked with CPM during the early years after the merger to help standardize the operation.  At the time, CPM operated 31 regional offices and 365 branch offices in 24 of the 32 Mexican states.  Most still operated with different policies, products and information systems.  Ramon and the young management team -- Cirilo, Rene and David -- worked hard to establish the single brand, establish  consistent financial planning and financial monitoring.  The early years were focused simply on everyone breaking even, then on building capital reserves.  Later years addressed reinvesting in better systems and services. 

 The Texas Credit Union League and California and Nevada Credit Union Leagues partnered with CPM to help them put in place an updated information system.  The staff established aggressive marketing programs, new products and stronger internal controls.  Tools today are increasingly complex and sophisticated at CPM.

When we started 10 years ago, CPM served 472,562 members and managed total assets of US$402 million.  Today, CPM serves 2 million members and manages US$1.9 billion in total assets.

We went back to CPM’s two-day annual general meeting where 300 delegates asked questions, raised issues and voted their minds.  The traditional democratic ethos of CPM remained unchanged throughout all this growth and sophistication. But now they vote with remote electronic controllers which tallied the votes on the screen.

And through it all, Cirilo, David and Rene watched and smiled.

 

 

 

 

As part of the youth leadership exchange program, in Des Moines, Iowa, Murray and his family hosted Victor from Guatemala. Murray wrote:

It went great! I meant to follow up with you but hadn't yet. Victor was a really nice and interesting guy. We're almost exactly the same age and he has three kids, so we bonded over that. His English wasn't much better than my Spanish, but we managed. :)  Ironically, his sister's family is in Coralville, Iowa, so they joined us for a welcome dinner after the airport and he spent Easter weekend with them.

I can't remember if I told you that my family did an exchange in Guatemala when I was six years old, so my mom sent the photo album and itinerary of our trip. I remember some of the trip. Victor, Amy and I went through the album together and had a good time seeing all the places we went that he knows well. The boys really enjoyed having Victor stay with us as well, so we had a very nice experience.

It made me more eager to get my family down to Panama so they can experience life like Victor's and like I've experienced on my trips! So if you ever plan to take your kids down in the next year or two, let me know and I may beg to piggy back on a trip if that wouldn't be too big of an inconvenience. I'd love to get them to Latin America (beyond just a beach resort ... not that there's anything wrong with that!) so they can experience other cultures. Of course, Victor is lobbying for us to visit him in Guatemala now as well. :)

 

 

From Coahayana, Mexico Catherine Ford wrote:

As we drove down the road lined with endless rows of banana plants, lemon trees and pineapple plants, I kept hearing the name Letty. "Who is Letty?" I finally blurted out. No sooner had I asked than we arrived at a dusty wayside road where more than a dozen farmers were waiting to meet us led by Dora Leticia, or Letty. Her cowboy hat and quick smile immediately put me at ease as we heard about the work she does collecting and transporting bananas from farm to market buyer.

During the meeting, many of the farmers voiced their concerns about working with Señora Letty. How can we be sure that the price will be fair? How will we be paid? The tension in the discussion eased considerably when the farmers learned that Caja Providencia -- the local credit union -- would be involved. How? The credit union can finance agriculture and determine when the banana market to be the  "ripest" for improvement. The credit union sees this market as potential for new growth and is working with Letty to connect the linkages from farm to table.  

 

After meeting with the farmers, we visited a farm and heard more of Letty's story. She spent her early adult years in Southern California picking in the fields. Working legally, she said she would breeze through the border checkpoints with her 90-day worker visa. Now a grandmother of many, she includes much of her family in the business. She oversees 10,000 tons of bananas annually. From farm to market to school lunch, this business is not easy, does not stop on the weekend, nor is it protected from politics. Yet with the credit union backing her and the farmers she works with trusting her, I know when I visit later this year I will hear how lives have improved because of the credit union.

 

In New York, Leon, Manchester, Washington D.C. and Winnipeg we debated the 2012 United Nations International Year of Cooperatives.  Would it be as notable as the International Year of Microfinance, or as unnoticed as the International Year of the Potato?  In 2011, when the Year of Cooperatives was launched, we saw much coverage in the cooperative sector press, but not so much in the popular media. 

In 2011, we still suffered from the impact of the global financial recession. In the U.S. we saw the Occupy Wall Street movement as consumers reacted with distrust and anger about the impact of Wall Street banks and government policy. We saw Bank Transfer Day, when consumers, angered by high fees, moved their accounts from the large banks to credit unions.

Why do we care about international Year of Cooperatives? During a time of consumer unrest and searching, i t offers an opportunity for credit unions to shine. It is an opportunity to review the credit union appeal to today’s consumer and to refresh the credit union brand.  We say credit unions are different.  What is the credit union difference?     

I grew up with Don.  He is married with two kids. He owns his own home. Don is a working person. He does not have a lot of money. He is a bright guy who considers how he uses his money, and he cares about what is best for his family.

Does Don care about cooperatives? He does not really think much about them, but he has a notion that they are generally good. Does he care about U.N. International Year of Cooperatives?  He had not heard about it. Does he care about credit unions?  He does not think much about them.

Don does not let me get away with anything. If I want to champion credit unions and why they are different, he is going to challenge me every step along the way.

What is that credit union difference? Is it that they are cooperatives? Is it their democratic nature?

No.  Cooperative ownership and governance is a structural form. Cooperative democracy is not an explicit determining factor when Don decides where he chooses his financial services.  What Don values the most is the quality of the service, the convenience and the cost. Don does not care how we provide competitive pricing and service; he just expects it … or he will find it elsewhere

Yes, it does not matter what country you look at. What people comment most to me on is that what stands out about credit unions is the passion that they have for serving their members. This is very different than a commercial stockholder-owned institution. The institutional mission is not driven by maximization of shareholder value or return on shares. The internal mission is driven by member service. That internal passion and drive for member service comes from the cooperative structure and values. The one-member, one-vote cooperative principle and the notion that every member is as important as another is what drives the internal service culture of credit unions.

It is not the cooperative structure and the democracy which Don sees.  It is the service driven by that passion that Don likes.

Don is going to try us out. But he is going to test us.

His first order conditions tell us what is necessary to get his business. He is going to compare rates and fees; he is going to see if he saves money. He is going to see if he can use the services and vehicles that he wants. He wants mortgages and debit cards, a large ATM network, internet banking and online automatic bill pay. He wants to access his accounts with mobile cell phone banking. We will attract his business with the pricing and the services that he wants.  Once he is signed up and plugged in, it will be a hassle for him to change to another institution. This is the stickiness that keeps him for the short run.

But this is not the credit union difference. There are banks, microfinance organizations and finance companies that can offer these conditions. If we want his loyalty and we want to keep him over the long run, we have to meet his second order conditions. This is the credit union difference.

We have to help him improve his and his family’s life. Credit unions in Kenya manage their liquidity to provide members with the loans to put their children through school and access better life opportunities.  We have to provide service when others do not.  

In Ecuador and Poland, during the financial crisis and the recession, credit unions continued to serve their communities and lend money when other financial institutions would not. We have to stay with him when he goes through hard times.  Credit unions in Ireland continued to find ways to help their members through the recession when household members lost their employment. 

And the real hallmark of a credit union, of a cooperative, is to provide members with the best alternatives for them versus the most profitable alternative for the credit union. This is what members notice and what members remember. Credit unions in Guatemala and Mexico invest at their own cost to teach their members how to farm to meet global GAP standards to earn a better living and provide better nutrition and education for their children. This is what we mean when we say we put people ahead of profit. This is the Loyalty that keeps him for the long run. This is the difference from the simple commoditization of financial services.

But this works only if we can maintain the necessary conditions. Remember that stickiness is only sticky in the short run. If we learned anything from Bank Transfer Day, it was that consumers will move to where they can get a better price and the better services that they want. If we meet the second order conditions but do not maintain the necessary first order conditions, we lose Don and others like him.

Why do we care about the International Year of Cooperatives?  The year provides an opportunity to examine our appeal to consumers today and to promote the credit union difference. Can we refresh the credit union brand?  Can we communicate the benefits of that “difference” in meaningful ways that respond to what today’s consumers are looking for?

 

 

 

 

 

 

The vision of the Global Women’s Leadership Network is to provide women with the opportunity and resources to make a measureable difference …  in the lives of each other, in the lives of credit union members and in their communities. 

 

Joe suggested that we wear pink ties as part of our support and participation in the Global Women's Leadership Network.  "Tie your pink on," he said.  And we did.

The walled city of York, England, was first established in 71 A.D. by the Romans. There, we visited Mike and Nick of North Yorkshire Credit Union. The credit union was started in 2006 and serves the county of North Yorkshire, the largest county of England.

North Yorkshire sits in the northern neck of England across from the North sea coast almost to the Irish Sea. It is made up of moors and dales; much of the land is national parks. The population is sparsely settled.

North Yorkshire Credit Union started with the mandate to pool savings and provide a more affordable source of credit for the county citizens. Staff still remember when then-Prime Minister Gordon Brown met with the credit union  to announce fund support from the Department of Work and Pensions to extend financial services to rural areas.

The Scarborough part of North Yorkshire is an economically depressed area. Many villages have collapsed as the fishing industry declined, then disappeared. Small farms lay idle as young men and women leave for the cities. As villages cope with shrinkage, the credit union works closely with the housing associations to provide financial services to their members.

The credit union's challenge, Mike tells us, is how to deliver services across such an expansive area when the population is not large enough to support a branch office or kiosk. “It is about partnerships and alliances,” Mike explains. Nick beams with enthusiasm as he lays out a map of the county. He waves his hand at 92 points of service across the expanse. Most villages have schools. Many have libraries and if they do not, the county has a mobile library bus that visits on a regular basis.

The credit union has trained volunteers in the libraries and the schools to serve as extension agents and provide people with services. The libraries and the schools provide the meeting places, but they do not allow third party software on their systems. So the credit union developed a web-based software platform called Webteller. Agents are trained to use Webteller to receive members’ deposits and loan payments. Loan applications are still paper-based; agents help members fill out the application and send it in to the office. Moving the loan application process onto the Webteller will be next. Agents can take in money, but not disburse cash so the credit union is providing members with cards which they can use for accessing cash.

Schools are asking the credit union to conduct financial literacy training for the students. “We need to do this”, Nick and Mike nod, “but we have to figure out how to make it sustainable first”.

 

They are the street fruit vendors, the agricultural laborers, the street sweepers, the bus hawkers, the construction workers.  They are the working poor.  Many have limited education and many are illiterate, but rarely are they innumerate.  They are up early and at their work when most leave for work.  They are still at work as dusk falls and most go home. 

It is rare that they walk into a credit union branch office during the work day. So the credit unions expand their service delivery, reaching out to them via mobile technology.  They stop in neighborhood shops to buy their family needs at the end of the day.  The credit unions put plastic cards in their hands and the credit unions put POS machines in local stores.  They can swipe a card to deposit money into their account and save after a good day.  They can swipe their card to pull from their account to buy what they need after a bad day.

Access expands in concentric circles.  Today, the POS expands the services out a little further than the branch office.  It is not about the technology; it is about the convenience.  Note they all have cell phones, sitting on the ledge between the fruit, on the dash of the bus or in their coverall pockets.  Tomorrow it is the cell phone which will expand access.

 

We met in college. He came from a far-away country, and we called him Ellie. After college I went south to a land that spoke another language, and he went home to Kenya, which he had missed for four years.

I heard a few words here and a few words there from friends who were closer to him. Many years later, our paths crossed again. He had worked in public health and education. He had tackled community development in his own country and throughout Africa. He had worked with coffee cooperatives in Kenya, and he had done governance training for NGOs, cooperatives and SACCOs. We compared notes on places where we had worked in the past decades and found that we had worked in communities a scant 20 miles apart. Now he had been honored to serve his country as ambassador in my home country, and we call him Ambassador Odembo.