0:00

Well , registration is now

0:02

open for the Swaboda

0:04

Credit Union Conference on the 24th of

0:06

November in Manchester . Now

0:09

it really sounds interesting in this conference because it's

0:11

starting to get to grips with this real

0:14

digital future question

0:17

what do credit unions need

0:19

to ensure that they can win in this

0:21

changed world that we're living in

0:23

? They call the conference disturbance and transformation

0:26

and the future of your members

0:28

and your credit union , and

0:30

I think it will stretch credit union thinking about

0:32

the extent required and

0:35

change in a digital era and

0:38

the business and operational transformation

0:41

that we thought we'd gone through apparently

0:43

still needs to be undertaken . The

0:45

Swaboda team want to make sure

0:47

we understand that this is not an IT

0:50

event . Yes , it's a discussion

0:52

about how we change our

0:54

business and operations to

0:56

cope with the onslaught

0:58

that a digital future requires

1:00

. Now , the last decade , many

1:03

of us have lived through the credit

1:05

union adaption to online banking

1:08

, smartphone apps and many of us

1:10

use open banking for loan

1:12

underwriting . Some are even starting

1:14

to take advantage of the API based

1:16

technology . You know APIs

1:18

are the application program interfaces

1:21

, if you like . It's

1:24

the thing that sets the rules and protocols

1:26

to allow different software programs to

1:28

talk to each other and share data

1:30

and functionality . The

1:32

best example I can give you is when

1:35

the weather app on your phone is probably

1:37

using API to get the current weather

1:39

data from another service to give to

1:41

you while you're asking for it . But anyway

1:44

, this is just the beginning of a digital

1:46

, accelerated form of

1:48

AI . Members will expect

1:50

financial and other services to be

1:52

in real time , in fact all the time everywhere

1:55

seamless , personalized , predictive

1:57

. The rapidity and

1:59

depth of change will be profound . I

2:01

thought we'd done with all this , but apparently we

2:03

were only at the beginning . Anyway , this conference

2:06

good because it's pulled together several people

2:08

to help us understand the

2:10

next onslaught of disturbance

2:13

and transformation in a digital

2:15

era . We've got Dr Leader Glyptis

2:17

, professor Karen Elliott , sean

2:19

Milley , paul Rooney and

2:21

George Hofheimer from the USA . Now

2:24

, george founded the Hofheimer strategy

2:26

advisors back in 2020 to advise

2:28

credit unions . Previously , george

2:31

was the head of research and development

2:33

at USA based Filene

2:35

Research Institute . He was there 15

2:37

years and before that he was the

2:39

chief learning officer at QS , you

2:42

know , the Credit Union Industries Education

2:44

Association . He was

2:47

there for eight years and George began his career

2:49

in international business , including

2:51

members of the first group of

2:53

Peace Corps volunteers to

2:56

the former Soviet Republic of

2:58

Uzbekistan . George is in

3:00

demand as an advisor and researcher , and

3:02

devising creative ways to match the

3:04

needs of business and society has been a

3:07

constant theme of his career . I

3:09

managed to get old of George ahead of this conference

3:11

, especially as he's just recently brought

3:13

out a book called Banking on the Human

3:15

Scale and I asked

3:17

him , george , in a world dominated

3:19

by scale and technology , smaller

3:22

community-based financial institutions

3:24

like credit unions have

3:26

the chance to serve more people and

3:28

serve them better by making banking

3:30

more human . That's one

3:32

of our sort of USPs

3:35

, it's what sets us apart . But your

3:37

book presents the way forward that continues

3:39

with the human scale idea

3:42

. But how do credit unions maintain

3:44

a human touch in this digital

3:46

era ?

3:46

Yeah , as it relates to technology

3:48

and credit unions , we

3:51

find ourselves in a bit of a pickle , regardless

3:53

of whether you're on this side of the Atlantic or the other

3:55

, and that , regardless of which credit union you're

3:57

talking about the largest one in the world , which is Navy

3:59

Federal , to the smallest one in

4:02

the world , which you know could be several hundred

4:04

pounds or several hundred dollars

4:07

of and collective individuals is that

4:09

technology's march is not going to stop

4:11

. And how

4:13

do we figure out how

4:16

technology fits into our model

4:19

? And what I've observed , mostly

4:21

with larger institutions in the US and

4:23

Canada , is that we tend to

4:25

overindex on technology's

4:28

impact on our business model and

4:30

what we try to do is emulate the largest

4:32

institutions , which realistically

4:34

have budgets that are I

4:37

don't know how many multiples of what our budget

4:39

are in terms of technology . We

4:42

try and meet them at that same level

4:45

. Realistically , it's not

4:47

going to happen . I believe a figure

4:50

that I just saw for JP Morgan Chase , which

4:52

is the biggest national bank here in the United States

4:54

and probably one of the largest in the

4:56

world they spend $12

4:58

billion on technology every

5:00

year . I

5:03

share that bit of data with perhaps

5:05

a $2 billion institution here

5:08

in the States and they become

5:10

a little meek around this . The

5:12

key is to be very strategic with our investments

5:14

. The thesis that I'm trying to put

5:16

forward with the book that I just wrote

5:18

and some of the work that I do with credit

5:21

unions is to figure out what can

5:23

we realistically do with technology to

5:25

make it emulate what credit unions are quite

5:27

good at , which is the face-to-face , person-to-person

5:30

type of service . The

5:32

way that we've been talking about it here

5:34

with credit unions is

5:36

what are the table stakes

5:39

, if you want to use a poker analogy , just

5:41

to be able to sit at the table to say

5:43

we are a modern institution is

5:45

usually being able to see what

5:48

your balances are , being able to transfer

5:50

money either to people or organizations

5:52

and to gain an understanding

5:55

of what are my credit offers and to be able

5:57

to close a loan . I

5:59

know that there's a lot of technology involved with that

6:01

, but where we tend to get

6:03

off track is by listening

6:06

to vendors that have really interesting

6:08

and great ideas , but realistically

6:10

it's not going to have a huge

6:13

impact on the members of

6:15

the credit union . So what I like to do

6:17

is say let's try and figure out how technology

6:19

can emulate the good old days of

6:21

being able to serve people on a face-to-face

6:24

basis and just being able

6:26

to satisfy consumers around

6:28

. Hey , I want to be able to open up an account

6:30

online without having come into a branch

6:32

. That , to me , is a table stakes technology

6:35

. It's not cheap to do , but I think

6:37

it's something that we should all aspire to . That's

6:40

not to ignore all of the great technological

6:42

advancements that we're starting to

6:44

see , and I always

6:46

urge caution around those types of

6:48

investments on a large basis for

6:50

smaller institutions like Red Union . We just simply

6:52

don't have the balance sheets to invest in all of

6:54

those technologies . So it's an active

6:56

prioritization .

6:58

George , is another aspect of this change

7:00

the way in which we recruit

7:03

and hire people . Do you think

7:05

there are changes in attitude towards

7:07

what we can expect from

7:10

future leaders in credit ?

7:11

unions . Yeah , you know it's really interesting

7:14

. I think the default for most

7:16

hiring managers or boards of directors

7:18

when they're looking for leaders or any positions within

7:21

credit unions was does this person have

7:23

a financial services background ? Do

7:25

they have an operations background and do they have a lending

7:27

background ? So I mostly

7:29

work with CEOs and that

7:32

used to be the default when there was a vacancy of

7:34

a CEO , nine times seven out of 10

7:36

, that person would be from one of those

7:38

three areas finance , operations

7:41

or lending . What we're starting to see is that's

7:43

changing and it's a little bit

7:45

different today , where

7:47

more technology professionals are becoming

7:49

CEOs . Interestingly , more marketing

7:52

and communications professionals

7:54

are becoming CEOs . If we can kind

7:56

of extrapolate out from there , just from the CEO

7:58

level , how

8:01

do you bring the right talent into the organization ? The

8:03

first thing that's so important is to be

8:05

able to have a very clear purpose and understand who

8:08

you are as an organization and how people

8:10

fit into that . There's a kind of

8:12

cliche in hiring . It's

8:15

like hire for talent , train for skills

8:17

, and I've seen that manifest

8:19

itself pretty well within organizations

8:22

that have a very strong understanding of the purpose

8:24

of what they're trying to achieve within their organization

8:26

. So bringing someone in from

8:29

a sales perspective , for example , that

8:31

may not have financial services background but

8:34

has the same ethos and understanding

8:36

of where the organization is going , can be a really potent

8:38

combination . That's just one vivid

8:40

example , but you can think of it from a variety of

8:42

technical areas , George . What ?

8:44

about measuring success

8:47

. Credit Union that

8:49

achieves all of its social goals

8:51

but returns a loss on the balance sheet

8:53

might develop some sort of ethical

8:55

fatigue . Board members

8:58

may lose social skills

9:00

hard . Is

9:02

that double bottom line success achievable

9:05

where the credit union fulfills

9:07

its social goals and at the

9:09

same time delivers a healthy

9:11

profit ?

9:12

But I think sometimes we do get it a little bit backwards

9:15

in that we focus too much

9:17

on the social outcomes rather

9:20

than the business outcomes . And I am

9:22

not a hardcore capitalist by any

9:24

means , but I do prescribe

9:27

to the notion no margin

9:29

, no mission . So

9:32

if you don't have the resources and the capital to

9:34

invest in

9:36

social initiatives or any types

9:38

of initiatives , you're just not going to be a going concern

9:40

. So one of the things that I'm

9:43

trying to get through to

9:45

my clients and work with them on is an

9:48

allocation of your budgeted net income

9:50

at the end of the year to allocate

9:52

for quote unquote , do good initiatives

9:54

, and

9:56

that context looks different for

9:59

every organization , but

10:01

I think that that's the right way to think about . The

10:03

ordering is that we have to take care of our business first

10:05

. We have to ensure , especially

10:08

in a regulated entity like

10:10

a credit union or organizations

10:13

that are in the banking world , we need

10:15

to have the proper capital and

10:17

safety and soundness in place in order to

10:19

do the fun stuff . In fact , I'm here in the

10:21

state of Virginia and I'm working

10:23

with a credit union right now named

10:25

Chartway Credit Union , which used to serve the big

10:28

naval base here , and last night

10:30

they had their big foundations , gala

10:32

, where they help support

10:35

children that are going through really difficult medical

10:37

times . Now they and

10:39

they support this foundation really strongly

10:41

from a financial perspective . But they wouldn't be able to do

10:44

that if they didn't have a very , very strong

10:46

operations and

10:48

a profitable , profitable model . So

10:51

that comes after we've figured

10:53

out quote unquote figured out the

10:57

margin side of the equation .

10:58

George , finally , I need to ask you

11:00

about strategy

11:02

days , and many people

11:05

will have the temptation , coming back

11:07

from their planning days , to take

11:09

the papers and the ideas and

11:11

stick them in the top drawer of the

11:13

desk and turn immediately

11:15

to the 150 urgent emails

11:18

, the staff issues and the entry

11:20

from hell . George , first

11:23

of all , do you recognize that this happens and

11:25

also have you any tips for us

11:27

returning from our planning days as

11:30

to what we can do ?

11:31

Yeah , that is very recognizable

11:34

and I think you're speaking of

11:36

just general human nature around

11:38

prioritization . But I think the

11:41

chances of success increase If

11:44

you take this idea of simplifying

11:46

really what the problem is that you're in business

11:49

to solve and then amplifying that

11:52

really simple thing that you're trying

11:54

to achieve . So

11:56

, in the course of the strategy making that

11:58

I help credit unions with , we

12:01

really focus in on what is the problem you're trying

12:03

to solve and

12:05

fundamentally , that's really what strategy

12:07

is about and the whole

12:09

founding of credit unions

12:12

. Initially we had very tight

12:15

groups of people that we would serve and it was very clear

12:17

what we were trying to do , what problem we were trying to

12:19

solve . Now , as we go out into the community , it

12:22

gets more complex and we have all of these things

12:24

coming on us from technology , from society

12:26

, and

12:30

the tendency is to try and be

12:32

things all things to all people or trying to

12:34

look at all of these broad problems , and my

12:36

advice would be to really simplify on that floor

12:38

problem that you're trying to solve and then amplify

12:41

it back to the staff so you just keep it really

12:43

really simple . That being

12:45

said , I don't know if that's going to solve it , but in

12:48

my experience . Those types of approaches

12:50

tend to enable people

12:53

to focus much better than they would before

12:55

.

12:55

George , thanks for sharing some of your thoughts regarding

12:57

the digital future and we look forward

13:00

to hearing the full story from you

13:02

at the conference in Manchester

13:04

in November .

13:05

Yeah , me too Look forward to seeing old

13:07

friends and hope to see them soon . Okay

13:09

, take care , Chris .

13:11

Well , it's a big thank you to George

13:13

Hofheimer and looking

13:15

forward to seeing him at the Swaboda

13:17

Credit Union Conference on the 24th

13:20

of November in Manchester . If

13:22

you go on to the Swaboda

13:24

Research Centre website easy

13:27

to find just put in Swaboda into your research

13:29

engine and up comes their

13:31

website and you can see under events

13:34

that there are your registration documents

13:36

there . So that's Disturbance and Transformation

13:38

, the future of your members and your credit

13:41

union , and I guess it'll stretch credit

13:43

union . Thinking about the extent required

13:45

to change in what we thought was

13:47

the digital era that's gone . Apparently

13:49

it's the digital era that's just about to

13:51

start . So here

13:54

we go again and just

13:56

to remind everybody , it's not an IT event

13:58

but it definitely is about what IT

14:00

is going to do to us .