China, Australia, Poland and Canada have models in place now that could propel credit unions past their competitors.
To help replicate those archetypes, the ProCon Group LLC. (www.theprocongroup.com), a Middleton, Wis.-based consulting firm specializing in building effective board governance and management teams, recently hired Ralph Swoboda as a principal and co-owner. A 35-year industry expert, he served as president/CEO of CUNA from 1987 to 1995.
Swoboda also has extensive experience in other countries, having served as chair of CUNA's Management Committee of the Association of British Credit Unions Ltd., the principal trade body for credit unions in England, Scotland and Wales. He also headed CUNA Mutual Group's international operations where he was responsible for subsidiaries serving credit unions in twenty countries.
"Not only does he have a great respect for and knowledge of the industry but what he brings, especially in these times, is the message that credit unions may have to look beyond the United States for solutions," said John Gregoire, principal, who founded the ProCon Group in 1997 and worked with Swoboda when he also served at CUNA.
Mobile banking in China is the dominant consumer application as is it is in other countries, said Swoboda, who spent several years there while with the World Council of Credit Unions. There are also international small business lending techniques that can be modified and used in the U.S.
"There are a lot of things credit unions can learn from credit unions in other countries," Swoboda said. "You start realizing that we're not as good as we think we are."
The ProCon Group's specialties include strategicplanning, succession planning, mergers-cultural assimilation and executive and incentive compensation. It just so happens that credit unions with more than $500 million in assets tend to seek out the firm's services more than others, Swoboda said. There a handful of clients under that threshold "but will be larger in the future," he added. Regardless of size, all are committed to the credit union model of serving members in the most efficient and excellent way, Swoboda noted. The firm works with about 30 credit unions each year.
In his new role, Swoboda will help credit unions with strategic direction, a common request given how rapidly the financial landscape is changing. He's currently working on more than a dozen projects and writing a proposal for United Kingdom credit union officials.
"Consumers are cutting back on borrowing. Credit unions' primary business is lending. Some are gathering deposits to provide fuel for credit. We're helping our clients with how they approach lending and what their objectives should be," Swoboda said.
The timing is ripe given an increase in consumer lending at credit unions in the third quarter of 2008 as other lenders scaled back. Swoboda said the loan underwriting process may need another approach because the trend has shifted toward relying mostly on credit scores to close deals. Consumers with strong scores in the 720 range have fallen to the 680s based in part by some bad decisions made by banks, he said. Indeed, one of ProCon Group's clients is looking more at judgment-based lending to stand out from competitors.
Swoboda said another pressing area for credit unions is governance and how senior boards and senior management can maintain focus and effectiveness during the current environment. The emphasis has to be stronger as the credit union industry grapples with mounting losses.
"Boards are understandably anxious. What will be their role in defining the [credit union's] future?" Swoboda pondered.
The nuts and bolts of managing the credit union will also have a different look. When times are good, the impulse is to go off in different directions simultaneously implementing this and that project, Swoboda said, adding this has implications on how much will be spent where.
"Credit unions are not as efficient as they can be. This is a time to look more closely at how things are structured and where things are deployed."
Gregoire said as the viability of the corporate credit union system and the share insurance fund are under the microscope, Swoboda can bring some rationale on why both are in place. His international connections could possibly help U.S. credit unions rethink familiar models.
"Australia's credit unions are under a single regulator and they seem to be making it work," Gregoire said. "We're going to take a look at more innovative solutions."
–msamaad@cutimes.com

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Looking Overseas for Innovation, ProCon Taps Swoboda's Expertise

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