In the Q&A that follows, Grzegorz Bierecki, president and CEO of Poland's National Association of Cooperative Savings & Credit Unions (NACSCU), offers his thoughts on how Poland's CUs have matured so quickly, how the unique SKOK Stefczyka model works, and Poland's CUs own battles with the country's banks.
CUJ: In a short 20 years, Poland's credit unions have grown into a sophisticated, full-service financial providers faster than credit unions in any other country? How has this come to be?
Bierecki: Credit unions had their rebirth after 45 years since the end of the Second World War (credit unions existed in Poland prior to World War II). In communist Poland cooperative movements were highly suspicious and the country's authorities did not support the development of free social thought. When Polish "Solidarnosc" (Solidarity) overthrew communist doctrine, we were able to create independent financial institutions in Poland, which were an alternative to the nation's monopoly. By taking advantage of Polish traditions such as SKOK Stefczyka (a credit union that existed prior to World War II), Polish capital and better offerings than banks have to offer, credit unions developed dynamically and became a school for reviving democracy after the years of captivity.
CUJ: Many Americans, especially, have little understanding of Poland prior to 1990 under communist rule. Describe life as you recall it under communist rule, and where did the average person conduct their financial business?
Bierecki: For people living abroad it is hard to imagine what living in a captive nation really meant. Fighting as part of the underground for a free Poland, we knew that only breaking the chains of communism would set free people who were living here under the yoke of a totalitarian nation and let them have a chance to live in a free homeland. Especially after the Second World War, Poland was in tragic situation -seemingly there was peace, but real Poles had no say in their own country. The fate of Poland was dependent on decisions made in communist cabinets in Moscow. When we regained freedom after 1989 I could finally realize my plan of Polish SKOK Stefczyka rebirth. Visitation to credit unions in the U.S., made possible by Betty Kernagham, was very helpful, as was the cooperation of American credit unions.
CUJ: Your father and yourself were both active in opposing communist rule. Please tell us about the role both of you played, and why?
Bierecki: If you agree to destroy the truth about your nation and homeland, you resign from fighting for life with dignity. My father and I had never accepted living under Soviet occupation. When I was creating independent, underground publishing houses, I knew that it would help people to find the truth, which was forbidden in illicit books. When I was bringing underground "Solidarnosc" to life, I knew that sooner or later our nation would gain the soul of the Polish patriot. Now we know that I wasn't mistaken. The work that would come later in the Nation Commission of "Solidarnosc" was the fruit of hard, underground work to overthrow communism in Poland.
CUJ: How did you come to know Lech Walesa? And please share with us the early days of working in the government.
Bierecki: When we were working underground there wasn't time for finding sources, which inspired individual people to act. Myths were created along with different ideological vanguards. Nobody had read the resumes of those who would later become legends. At that time the most important thing was to overthrow communism. When I was working in the National Commission of "Solidarnosc", just after Poland gained independence, Lech Walesa, along with the late Polish president, Prof. Lech Kaczynski, were my superiors. Walesa was chairman of "Solidarnosc," Lech Kaczynski was his deputy. It was important that Walesa gave me the green light to move ahead with creating Polish Credit Unions; Lech Kaczynski provided substantial support.
CUJ: How did you come to be selected to play a role in the development of credit unions in Poland? What knowledge did you have, if any, of the history of credit unions in Poland and the state of credit unions around the world?
Bierecki: Credit unions were known in Poland before the second world war, when there were some 3,500 credit unions associated with Polish people at that time. When I was with the "Solidarnosc" delegation that visited the USA, I had an opportunity to look more closely at how they worked in the 1990s. Because of that we were able to rebuild credit unions in post-communist Poland, giving my countrymen the possibility to use friendly, financial institutions with Polish capital.
Today many countries, especially from East-Central Europe are learning from our experiences. I'm proud that we can help our friends from those countries, which were also under communist occupation.
CUJ: A credit union can be a challenge to found and operate in countries with developed CU movements, such as the U.S. What were the biggest challenges in attempting to launch credit unions in Poland?
Bierecki: Convincing the Polish people that something that does belongs to the country can serve them even better. The mentality that had its roots in the communist system did not change overnight. With hard, organic work we had to prove that it's possible and it would be good for Polish society. Today, thanks to Polish credit unions, many people can afford a better life.
CUJ: Were there CU-enabling legislation/laws in place, or did you need to get legislation passed?
Bierecki: Credit unions in the beginning didn't have an easy life in Polish legislation. First, we had to strongly solicit to be included in an Act on labor unions. Then we had to work very hard on a freestanding credit union act. Our work was successful in 1995. Thanks to this Act credit unions have been able to grow very dynamically.
CUJ: What lessons did you learn in those early days of getting credit unions started?
Bierecki: Nothing is a given. You have to fight for everything and work hard, so that the fruits can be collected from the tree called "serving another human being." The fight to overthrow communism has taught me a very important way of life.
It is true, however, that while nothing is a given, it's also true that dreams come true. In the 1980s there weren't many Poles who believed in regaining freedom. Today it's hard to imagine that this freedom could be taken away from us. I have learned what real solidarity is, solidarity in people who have the same goal in working for credit unions. I have learned how great power emanates from mutual cooperation, how important people's motivation is, and how it is different than in commercial institutions. And finally, I have learned the necessity of keeping a rigorous and clear vision of destiny, which leads to realizing individual tasks.
CUJ: Is it true you also needed to create a self-insurance fund for deposits? Does that remain in place? Why no government-backed insurance scheme if that is true?
Bierecki: Banks were blocking credit union access to the public deposit guarantee system, knowing that it would decrease trust in credit unions. Thanks to European Union regulations, we have been able to create a private deposit guarantee system called the "CU Mutual Insurance Society." This system has been working for 14 years and no one has lost a dime. It was completely created using the funds of credit unions themselves.
In addition, with gained deposits, it's higher than Bank Guarantee Fund. In 2009 the government decided to guarantee a possibility of support for our system in case the gathered funds weren't enough. Thanks to a separate guarantee system, credit unions aren't afraid of any eventual risk of paying for banks' bankruptcy.
CUJ: The SKOK Stefczyka model is particularly interesting. How did you come to arrive at this business model? How long did it take to develop? How has it changed? What do you hope to do next? Why have some credit unions chosen not to participate?
Bierecki: The model of SKOK Stefczyka group is the answer to the problem of how to assure access to the newest technologies and organizational solutions for credit unions that are too small to buy those tools. Until now, the only solution for smaller credit unions was to join the bigger CU. Now, working in group and having backup from an outsource center launched by SKOK Stefczyka group and based on resources of the biggest SKOK Stefczyka, smaller credit unions have been able to considerably increase their incomes (in one case by 236% in the first year) and gained needed dynamics to grow bigger. This model lets us use the economies of scale without the loss of local connections.
SKOK Stefczyka Group has been working for three years and it represents about 60% of the Polish system. It's also growing bigger with the addition of other credit unions, and I think that in the next two years almost every single credit union will be working under the new model. Many people need more time to understand this simple rule-that what is good for members-better, richer services-is valuable for credit unions and their leaders.
CUJ: What is your relationship with banks in the country? Tell us more about some advertising you did related to some of the bank troubles?
Bierecki: It is similar to any other country in the world. Credit unions are an alternative to banks, and that's the way we should see them. Banks, afraid of competition, are conducting more or less open warefare. Our advertising is focused on one thing: that we differ. "We are not banks"-that's our leading keyword, underlining that we are different than banks. It was successful-we showed who we are, and at whom we are directing our credit unions services. So we say (on billboards) "Don't blame us-we are not banks."
CUJ: What are your next goals for Poland's credit unions?
Bierecki: Credit unions are available everywhere in Poland. We are the biggest network offering bank services for individuals. In the next year we will be starting services for people in other membership organizations, such as cooperatives, associations, churches, and labor unions. It's a big sector in Poland, forsaken by banks but very close to the working philosophy of credit unions. We want to double the number of our members in the next five years. The current crisis in commercial financial institutions showed many people that credit unions are the best choice for them.
CUJ: What lessons does the Polish experience in developing credit unions offer to other countries looking to build their own credit unions?
Bierecki: The universal recipe for building a good credit union system doesn't exist. You can't forget about the cultural, historical and economical differences. The Polish recipe is to build an institution which, from the beginning offers complex services on a market basis, so members can find in their CUs everything they need. Credit unions need to be democratic organizations, independent of government's whims and changing governments. They need to be financed by funds of their members and focused on serving them. In their activity they must show the principle of solidarity, by developing economies of scale and marketing tools. They must show self-discipline in acting, moderation in investment, and cultivation of the CU philosophy within the executive cadre and employees. Above all, the most important thing is there is a mutual vision of a development goal accepted by crucial system players.
CUJ: What do you hope the people of the world's credit union community will take from the meeting in Gdansk, and what do you hope to show them?
Bierecki: We will be able to share our experiences and discover some practical solutions developed by our friends from other credit unions. Mutual work and finding wise solutions always brings tremendous benefits. Whoever walks with the wise becomes wise. After this conference, we will surely become wiser. GdaÃ…â€sk is a place of "Solidarnosc" and freedom. I hope that participants of this conference will see for themselves how fundamental these values are for the success of credit unions.