Technology Offers CUs Opportunities, but Also Challenges

Credit union boards all work under their own unique structures, histories, and processes. At the same time, they face many common challenges as they seek to do their best work in governing their respective organizations.

To that end, OnBoard, a digital board management solution that streamlines board meetings, conducts an annual Boardroom Insights Survey, in which it seeks to take the temperature of boards, their current habits, strengths, weaknesses, and concerns. 

The 2024 version surveyed more than 700 board stakeholders throughout the U.S. and Canada across all industries, including credit unions. It offered causes for optimism and concern. 

While many respondents believe their boards have made significant strides toward becoming more effective, rapid technology changes have raised a sense of unease. It’s easy to understand why. Cybersecurity breaches come with an average $4.45 million-per-incident estimated cost. 

Other challenges survey respondents mentioned included inefficient processes, time constraints, and ineffective board members.

Let’s look at the survey, and how credit union boards might draw upon its conclusions to build upon existing strengths and address challenges.

Cybersecurity, Rapid Tech Advancements Are Concerns

Survey results show boards generally became more effective during the past year, but the negative and unintended consequences of rapid technological advances threaten to curb that positive momentum.

Nearly three-fourths (74%) of C-level executives, board presidents, general counsels, and corporate secretaries believe evolving technology, mounting cybersecurity threats, and artificial intelligence (AI) use will have the greatest impacts on their organizations over the next 12 months.

Meanwhile, only 54% said they were more confident in board security now than they were 12 months ago. That’s down significantly from the past year, when 71% expressed more confidence, and two years ago (89%).

Other areas of concern include increasing regulatory requirements (44%), changing workforce demographics (37%), and increased workforce competition (34%).

How Boards Can Make Technology Work for Them

While rapidly advancing technology is creating headaches for boards, it’s also providing opportunities to resolve those problems and others.

Nearly one-third (32%) of respondents said their organizations aren’t effective at utilizing technology. Another 39% said they need to improve ensuring cybersecurity relative to board information and meetings, and 40% cited a need to better facilitate effective communication outside of meetings.

Ineffective Board Members Remain a Challenge

As board members work to overcome the challenges listed above, many remain frustrated at what they see as ineffective board members.

More than 70% of survey respondents said at least one director who was currently sitting on their board was ineffective. More than half said at least 10% of their board members were ineffective.

When asked how board members could become more effective, survey respondents listed these 5 common refrains:

1. Increase engagement and preparation
2. Utilize better technology more often
3. Make use of more efficient governance practices
4. Improve training and education
5. Improve communication and make expectations more clear

The good news for the finance/insurance sector? They perform better than most other industries in this area. Respondents said 16% of their board members were ineffective, better than all other categorized industries except health care/social services (12%).

Where are Boards Thriving?

What are boards’ biggest strengths? Survey participants cited three areas: 

1. High level of engagement in board meetings (88%). In addition, 63% said a more engaged board was the number one driver of their board’s improved effectiveness.
2. Boards are moderately or highly effective at meeting preparation (77%)
3. Boards are effective at onboarding new members and establishing new meetings (66%)

In addition to higher board engagement, participants listed 3 other key factors for their board’s increased success over the last year:

1. Use of board software (37%)
2. Improved board leadership (34%)
3. Better preparedness (33%)

Boards are also more collaborative now. The survey shows 68% of respondents claiming their boards are more collaborative than they were a year ago, which is up from 62% the previous year.

Preparation Time is Key

Despite the successes mentioned above, many survey respondents — including board members and administrators — said limited time was a constant challenge in effectively executing their respective board duties.

A strong majority (60%) of admins say they distribute materials to board members less than a week in advance of meetings, about half of those say send them less than four days out.

This forces board members to often do marathon cramming sessions to prepare for meetings. This is compounded by the fact that many board members juggle their board duties with their full-time careers and other responsibilities.

Half of board members who responded say they spend more than six hours preparing for meetings, while another 41% said they spend four to six hours.

How Boards Currently Use Technology

In addition to the 700-plus survey respondents, another 1,400 were part of an addendum report from board professionals who considered using OnBoard within the last 18 months.

Survey findings indicate a strong correlation between ineffective meeting preparation and issues like poor cybersecurity and subpar communication/collaboration.

Only 25% of those surveyed use digital solutions or specialized board management software to prepare and distribute materials. A sizable majority — 63% — use email and PDF for their planning and distribution process, while 13% still rely on printed paper.

The finance/insurance sector utilizes technology a little more often than boards in other industries. Emails/PDFs are the rule for 47% of boards, while 39% use a digital solution, second only to utilities (50%). Fourteen percent still rely on paper.

The Bottom Line: Solutions to Challenges Are Attainable

The Boardroom Insights Survey shows many of the challenges boards face in our rapidly evolving environment. From cybersecurity to time constraints to disengaged members, boards face hurdles to good governance every day.

The good news? They’re also showing impressive projects despite those challenges.

Michael Head is Director of Sales at OnBoard, a digital board management solution with over 6,000 customers, including 400+ credit unions. He joined OnBoard in 2018.