OVERLAND PARK, Kan.-Credit union: know thyself.

That is the message from Tony Ferris, managing partner for Rochdale Group, who said that as the 2014 strategic planning season nears, the CUs that are "truly making progress" in current market conditions are those that are taking a "hard look" at their own capabilities.

That hard question: "What can we change to truly drive value?"

"And by 'value' I mean loan sales," he said. "As interest rates go up it is going to be harder to sell loans, especially on the mortgage front."

Consumers need to be the focus of these efforts, Ferris continued, advising putting processes in place that lead to measurable results, including measuring the touch points and/or channels through which services are delivered.

"Credit unions that can articulate their channels are much more successful than those that have no idea where their sales come from," he said. "Some credit unions know they have branches and sales, but have no idea exactly where they are successful."

The key is to know by product and channel which are delivering best, Ferris explained. Are most loan sales going through a branch? Is there a hub-and-spoke model? Or is the online channel driving lending?


The Two Steps

Meanwhile, Ferris urged taking two steps to improve planning. Step One is an enterprise risk model, which involves measuring every activity and doing so specifically to leverage a return. "This is making decisions 10% better than the CU previously did so."

Step Two is data management, an area where Ferris said too many CUs fall short.

"As an industry we are extremely poor at measuring the data we have," he lamented. "We have a plethora of data, but do not know how to manage it."

He advised CUs to have a "data warehouse" strategy to determine what is going to be measured and how management and the board can use data to make an intellectual decision. "At Rochdale Group we try to change thought processes so credit unions use a risk-centric model that looks out 10 years," he said, adding this needs to include taking into account outside factors such as coming changes to Fannie and Freddie, which may affect mortgages, or where the economy is going.


Business Model Canvas

Another important exercise is creating a business model canvas that Ferris called a "snapshot" of a CU's business model on just a single sheet of paper, which can show both opportunities and the CU's true niche.

"Management has to be realistic and say, 'We cannot do everything.' The business model canvas states clearly what is it we do, who do we do it for, what do the members look like, how do we do it (processes), and who do we do it with (business partners)."

The goal of all of the introspection is for the CU to know how it generates revenue and value. Ferris said it no longer is good enough to say, "We compete on service." Instead, focus must be on what "service" means to members and, "How do we deliver the credit union's value proposition?"

"This can be a shock to some. At times they are resistant to scenario planning, but that is a way to take the emotion out of it-just say what do we do and how do we do it? This forces them to acknowledge the elephant in the room, which is different for every CU. Some have hired the wrong staff. Some have the wrong metrics. Others have the wrong products and services. Get people to acknowledge the importance of information rather than just continuing to do what has always been done."

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