Credit unions are at a critical fork in the road right now: the financial industry is changing and customers’ expectations are rapidly evolving, credit union membership is aging, and mergers are increasingly the path to growth and competing with commercial banks.
A lengthy report from the University of Toronto’s Rotman School of Management identifies some key areas where credit union boards need to improve. Most importantly of all, credit union boards need to look at the hard facts of their place in the market and how they can compete against commercial banking and online banks.
Time Management – One key theme emerges from credit unions across Canada, that boards want more time to discuss strategy and risk management and spend less time on operations and routine agenda items. Directors want to spend more time looking at forward-thinking agenda items, and this is one area where board portals can make a key difference. One of the benefits of using a board portal like Aprio Boardroom is that it opens up the freedom to do more work in-between meetings, and that can mean voting on minutes electronically before meetings or clearing up other routine matters. That means directors can spend their time in the room discussing strategic items, instead of getting bogged down in routine.
Meeting Inertia – Meeting inertia is another issue faced by directors; all too often meetings seem to revolve around the same discussions without ever reaching a conclusion. Everything needs to be “revisited” at a later date or put to further consideration. A board portal allows directors to push the issue to a conclusion without having to wait for the next meeting. Using annotation tools such as those offered in Aprio Boardroom, directors can add their final thoughts and vote through the platform on a resolution.
Recruiting Younger Members – Volunteer credit union boards almost universally agree that they want younger and more diverse members to join, but most directors don’t feel equipped to recruit them. It can be a challenge to find younger members with the combination of talent and the willingness to commit to a volunteer board, but when only 6% of CU directors are under the age of 40, more work needs to be done. Consider the fact that many younger candidates may not even be considering board work yet as part of their careers, but have the skills and the commitment if they were approached with the idea.
Continuing Education – Board performance and engagement can all be improved with ongoing education, especially when it comes to compliance and risk management. These are key areas for credit unions, but often boards lack this kind of expertise, often meaning there is little oversight on the executive.
Director Evaluations – In order to focus on strategic discussions and face the challenges of the future, credit union boards need to become more honest with themselves and stop renewing the terms of under-performing directors. Director evaluations are key to trimming underperformance and refreshing board membership with younger and engaged directors. Anonymous, remote director evaluations are possible thanks to the latest board management software, allowing peers to be honest and forthright with their criticisms.
Credit union boards need to face these 5 challenges in the coming years, and a software solution is only one part of a greater strategy that can help this happen. Directors need to get out and start recruiting, while organizations need to promote director education and put in place better systems for evaluations.