Do Thought Leaders Create Doubt About Credit Unionsā€™ Future?
An Underground Collision Debate
Yes, by Randy Karnes, CEO, CU*Answers, followed by
No, by Sarah Snell Cooke, Principal, Cooke Consulting Solutions
Randy: An all too common conversation or email these days: “Randy, I have officially entered the frantic zone! I am overwhelmed by the sense that the future is so complex, moving further and further ahead of where we are today, and just too big for us to face. Every meeting with a consultant, every review by a regulator, every time my staff or board members tell me what they learned at their last industry event, and every time I look up and down the road, I feel defeated and ready to drive my credit union directly into the waiting arms of a merger partner. And somehow it feels like that was the design. The industry is herding me, and the thought leadership themes all seem to be the same melody.”
No doubt today’s overall marketplace environment can be overwhelming and push both consumers and business leaders into the “frantic zone.” Social and business connections are so fine tuned to reach us all, and the content so diversified and attention grabbing that it seems the whole point is to make us panic about everything. On one level you can just write it off as “life in the modern world.” Hype is the game, and we all must find our way through it without losing our balance and connection to the work needed. We push through the hype to face the changing
realities and find success for our communities. But that is easier to type than to accomplish sometimes.
It’s life today… we all know… so what?
What if our credit union industry’s thought leaders all stopped and took responsibility for the impact of our work: We are the drivers of the sense of frantic resign of so many credit union leaders and owners. Is that our goal?
"Instigating frantic fear of the future is a marketing ploy, not a theme for leadership."
Problem One: Identify our thought leaders and our goals. Impossible – everyone believes they (including me) are a thought leader, so to get everyone in a room and brainstorm on our goals and impact is tough. But what if we could urge credit unions to stay in the game? “Instigating frantic fear of the future is a marketing ploy, not a theme for leadership. We get it.”
Problem Two: Frantic fear of future regulation and compliance themes. When will regulators wake up and avoid creating regulatory or compliance fear that lines the pockets of vendors and discourages the heck out of stressed or crisis junkies in our industry? Feels as though more money has been spent on the fear of CECL than all the money to ever be saved by the execution of CECL. Where is the leadership to calm the credit union stakeholders that regulatory fear years ahead of regulatory realities is irrational and industry defeating?
Problem Three: Frantic fear of technology differentials. Almost a psychosis where CEOs are dead certain that every tech trend rumor is the competitive requirement for every CU that hopes to have a future. A complete disregard for the hype cycles during the build out of solutions, and the difference between the calls for capital to build solutions and the calls for customers and distributors to implement solutions. We are encouraged to jump in too early by the hype cycle that teases us with the hopes we will own tech and corner an advantage to avoid being left out. A tease we fall for over and over so we can lead the pack. We are encouraged to implement solutions as distributors and customers with the same sentiment – hype the CU industry to be first movers for status and tease the second and third movers to overextend and wish to be closer to the leaders of the pack. The strain or anxiety of not conforming pushes another frantic round of “I will never reach the stars without merging for scale.” What stars, tech stars? I thought we were worried about the agenda of our members and their aspirations?
Why buy into tech at the edge? Why waste current dollars for education on tech 5-10 years away for tactical solutions realized? Why convince yourselves that on-the-edge tech investments guarantee CUs a seat at the table when there are very few seats at the table for credit unions once the tech firms become mainstream and are harvesting on the capital of realistic investors – round 6-12 players. Tech has a “frantic lure” for consumers and business leaders alike – our thought leaders should see the responsibility to help all of us rethink our affinity for falling for the disappointment over and over. Wait patiently. Wait for the guy who knocks on your door with a solution that has a yield, a solution that has implementation support, and a solution that will have a good run to accumulate the returns you need with your members.
Problem Four: Frantic fear from the dubious best practice declarations of peers and vendors yet executed in your organization. From your best peers: “If I have invested in this practice, you should too! If our CU does this every CU should as well! It is the tribe thing to do. Trust us, we have done so much research about your situation, that we know this will be winner for everyone.” And generally, the vendors of best practices are even worse (for profit vendors and our regulatory vendor endorsers) and they have more dubious reasons to influence teams than your best friends. But year after year credit union leaders become more and more frantic about the list of things they must implement to keep up with the pack.
Why write this now… hasn’t it been the same deal for 20 years or more?
Because the world is more anxious right now and credit union leaders are more likely to capitulate to the nature of the times and just give it up. Because the group think of the industry is “scale is a safe.” Because so many of us as commenters seem unaware that we are adding to the frantic nature of our industry’s operators.
As thought leaders, we may have lost some sense of our responsibility to downplay the fear as the most important theme of this era for credit unions. To encourage the self-confidence of credit union consumer-owners as the capital that we all count on for safety and soundness. And to most importantly separate our day jobs from the bigger themes we throw out to the cosmos for credit unions to ponder.
I am on my way to the Money2020 conference after just returning from the World Council event in the Bahamas. Big events with self-branded thought leaders who do a great job of adding to all of these frantic fears, selling just how far many operators are from the future of the industry.
In fairness I should not judge their motivations too harshly. But on some days, it seems that like a Halloween haunted house, our best thought leaders are simply selling tickets to scare the hell out of everyday credit union managers. And I fear far too many times over my career I have let myself down as a thought leader too – we all deserve better from those who should lift us up.
Sarah: The cacophony of ‘you need to do this, or you’ll fail’ is growing;
there’s no doubt about that. At the same time, credit union leaders do have to develop and execute on strategies that will move them forward, ranging everywhere from digital transformation to collaborative partnerships that can help fill some gaps. That’s why companies like CU*Answers, Mitchell Stankovic and mine exist!
That said, there’s a level of personal responsibility every leader of an organization must take to determine what’s right for its consumers, be they credit unions or members. The essence of a strong leader must be to think critically about all the noise in the credit union community, in their local communities and within their own organizations and distill it down to priorities that best suit all the stakeholders’ needs. The amount and volume of what ‘needs’ to be done according to others, is irrelevant if it’s irrelevant to the individual organization.
Truth is, we all need to be able to respond in our 24/7 world. It’s expected. Educated thought leadership is necessary in various areas of the credit union business. Some emerge as thought leaders for a certain audience versus another. It is life today to be always connected – both incoming and outgoing communication – and it is everyone’s responsibility to adopt and adapt to keeping an eye on the horizon, whatever that is to you and your organization, and to keep our feet firmly planted on the ground so we do not sway from what needs to be done to execute on the strategies based on different thought leaders’ input. And, for the most part, we have the choice to turn off what we don’t want to hear. (For the most part because compliance issues like CECL must be adhered to, whether credit unions like it or not.)
"The essence of a strong leader must be to think critically about all the noise in the credit union community, in their local communities and within their own organizations and distill it down to priorities that best suit all the stakeholders’ needs."
And there are consequences to turning off what we don’t want to hear. Compliance – obviously. Not ready for digital transformation? 99.9% prediction of failure. Not collaborating to create something larger than individual credit unions can – troubling at best. Credit unions are not thinking big enough. It’s like the doctor telling you to exercise every day, when s/he is hoping you’ll at least do 3 days a week. Sometimes we all need a jumpstart before we can make the necessary, step-by-step, steady progress credit unions must do. Last week, I was at Open Lending’s Executive Lending Roundtable, and the keynoter, Paralympic skier Josh Sundquist, shared his life’s motto: 1MT1MT, which stands for one more thing, one more time. Adaptation is just putting together several single steps at a time until you reach the horizon you’re keeping an eye on.
Many credit unions are behind on a lot of things that will be critical to the future of success, including data warehousing, management and analysis. They need to get moving on CECL compliance before the new deadline because it’s obviously taking longer than even FASB expected to get it right. Credit unions really should adapt fintech’s fail forward fast development techniques across their entire businesses, which includes making decisions faster. We’re so obsessed with perfect it gets in the way of pretty darn good. Credit unions are, by nature, risk averse, but we need to get outside our comfort zone. Experiment. Test. And then implement and scale. Base hits every day.
Perfection is impossible and a waste of time (with some caveats for security and accuracy). We should make our member-owners more a part of the process. Use them for ideas and beta testing whether for tech or any new product or service. That’s how fintechs are growing in importance to consumers because they feel ownership. They have a real say in what happens with the products, while some credit unions merely pay lip service to democratic control by member-owners. If credit unions want members to feel ownership again, we have to involve them and that means giving them a peek behind the curtain of imperfection, using credit union executives’ expertise as thought leaders to bring information directly to the members and gather their input to help cut through the hype. Balancing all the input deemed worthy, prioritizing and executing is what good leaders do.