Planning for 2021 and Beyond

stepping stones labeled with 2021 and subsequent years crossing a misty river
By Onker Basu , Steve Williams

7 minutes

10 priorities for your board as it sets a vision for this new decade

Looking to a new year, leaders may be tempted to call for a global do-over on the start of the next decade as they aim to coalesce behind the strategic initiatives most likely to steer their credit unions to success in the 2020s.

Short of a time machine, a helpful first step in setting that course might be to revisit the roles of directors and executives in developing and implementing strategy. In times of crisis, the lines between the complementary, but distinct, responsibilities of the board and management team can become blurred. 

A widely used approach to governance is to have the CEO lead the management team in identifying strategic priorities, seeking board input and guidance, and then executing those plans. The primary strategic role of directors is oversight, with regular discussions about progress and trends that point to course corrections or new opportunities.

Crises can knock those roles off-kilter. During the COVID-19 pandemic, reports to the board on the CU’s operational response might have opened the door for directors to weigh in on issues normally beyond their purview. A reset might be in order as CUs move into a new stage where leaders must align their organizations with the realities of a new world. 

In the pre-pandemic era, financial services had been doing well, with many banks and CUs posting high earnings. Leaders saw a clear path to sustainable opportunities to bolster their mission, increase revenue and build member relationships. The events of the past nine months have pushed these 10 issues to the forefront of strategic discussions: 

1. Diversity, Equity and Inclusion 

Social unrest, the uneven impact of the pandemic on people’s health and finances, and political polarization have propelled DEI into the realm of strategic imperative. CUs have long supported DEI in member services and community outreach, in the workplace and in the boardroom. The widespread outcry for social justice has added urgency to DEI actions. 

This work takes many forms, from a recognition of the diversity of each CU’s members and employees, to internal training on what DEI means, to resource groups providing a voice and sense of belonging for people who bring diversity of experience and perspectives. Importantly, boards and executives are working to develop intentional programs aimed at the long-term achievement of diversity at all levels.

2. Serving Small Businesses

Meeting the lending, deposit and cash management needs of small businesses presents an opportunity to connect with an underserved market that aligns perfectly with the credit union mission. Widening a CU’s business services opens the door to expanding relationships with small-business owners, including the potential to become their personal bankers. The success of many CUs with the Paycheck Protection Program brings fresh momentum for CUs in the small business arena.

3. Making More Mortgages

As CUs make headway in building their reputation as mortgage lenders, the next challenge is scaling operations to handle increased volume as efficiently as possible. How can they manage the secondary market to sell more loans? How can they build a servicing portfolio? How can they manage the financial volatility of this crucial product line amid economic uncertainty? Additionally, CUs will need to ingrain a digital-first approach.

4. New Era for Payments

Of all the facets of financial services, the pandemic has likely had the greatest permanent impact on how people pay—at the checkout counter, online and in transferring funds to other people. As more members develop a preference for contactless and digital payments, CUs need to hone an intentional strategy that encompasses cards and digital management tools, including payment apps like Zelle. In the new world, it will be a battle to win the top spot in members’ digital wallets.

5. Broader Fields of Membership 

Across the movement, for financial cooperatives of all sizes, field of membership requirements can be an impediment to sustainable growth. Expanding select employee groups, moving to a community charter or taking advantage of options under the latest interpretation of the National Credit Union Administration’s field of membership rule may be part of the discussion for directors and executives.

6. Financial Performance 

The pandemic, rate environment, economic downturn and continuing social and demographic shifts have significantly strained earnings in the banking and credit union industries. CU boards and executives must balance strategies to improve earnings with the necessary investments in technology, marketing and talent that will be needed in the next era of financial services. 

7. Competition for Talent

Remote work went from future possibility to instant reality as part of the pandemic response for many CUs. Some aspects of technology infrastructure, security, productivity and oversight must still be addressed, but the ability to work from home has become a potential advantage in enhancing recruitment and retention. However, CUs must rethink how they will maintain cultural connections among associates who work remotely.  

8. Delivery Channel Preferences 

Even the most technology-averse members got a forced introduction to digital delivery during the COVID-19 crisis. As branches reopen, management teams and boards will be sifting through lobby traffic data and contact center volumes as they consider infrastructure investments. The sudden shift to remote channels may have unearthed some new member service priorities, such as seamless, quick online account-opening solutions and self-service mobile apps. 

The pandemic certainly didn’t start the debate about the future of branches, but it has upped the ante for a serious and thorough investigation of members’ evolving, long-term preferences. How many will return to teller windows to make loan payments and deposits with cash back? How many will arrive seeking guidance on their most important financial decisions? And how should those trends influence the brick-and-mortar network? 

Branch technology will be a key component of those explorations. CUs that invested in interactive teller machines should have a great deal of data on how those devices supported efficient, accessible member service—and employee and member health and safety—throughout the pandemic and how they will guide infrastructure decisions moving forward.

Directors will benefit from a data-rich view of what members want and need from their CUs—and how and where they prefer to access those services. Compelling and eye-opening business intelligence can be used to guide strategic conversations and decisions. Such information can include regular updates on current channel usage, relevant member survey findings, and analysis of financial services industry gains and losses related to the mobile-first advances of big banks and fintechs.

9. Real-Time Strategic Planning 

CU leaders are recognizing that what was once an annual event, typically an off-site retreat, needs to happen more regularly. Threats and opportunities with the potential to transform the financial services landscape are accelerating, and so must the ways executive teams and directors respond. 

Strategic planning increasingly happens in quarterly “sprints.” Boards are setting aside time in their regular meetings for strategic discussions. Executives and directors can also more quickly hold remote planning sessions on a specific strategic topic, such as a new line of business. 

It’s important to recognize where there may be resistance to these changes and to surface and address directors’ underlying concerns. To some extent, that discomfort may be related to the sudden shift to remote board meetings. 

At some point, most boards will return to in-person meetings. But even then, the option for occasional remote sessions can offer an efficient way to keep strategic conversations going. 

10. Embracing the New Normal 

As much as people may yearn for pre-pandemic days, we haven’t run across a leadership team that is striving to get back to “business as usual.” Instead, there is universal recognition that CUs need to make the most of this new normal. Directors, managers and staff have implemented their business continuity plans with a modification here and an upgrade there. Now they are looking to the future through the interconnected challenges and potential advances we’ve laid out here. They understand there’s no going back and are looking forward to the rest of the 2020s and beyond.  cues icon

Onker Basu is a senior director and Steve Williams is president and a partner with CUES Supplier member and strategic partner Cornerstone Advisors, Scottsdale, Arizona. Both are active in the firm’s strategic planning practice.

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