By Ginny Brady
Following my credit union friends on Twitter is often an invaluable source of online information. I choose those I follow because of the interests we share. It’s not unusual to be tweeted with a gem which is thought provoking and broadens my perspective. This is exactly what happened recently when Stessa Cohen tweeted about an article on the Philanthropy News Network, an online resource for philanthropy-related articles. The post Stessa highlighted featured a summary of a survey completed this year by the Centre For the Study of Financial Innovation. The survey examines the effects of the recession on the world microfinance movement and describes the risks as seen by pracitioners in the microfinance movement. A link in the post took me to the entire survey available on line. It has the wonderful title Microfinance Banana Skins 2009 (a free copy of the survey is available on their site).
Microfinance institutions are defined as financial institutions that provide loans and other financial services to those who are traditionally unable to participate in mainstream banking. These individuals and businesses are usually excluded from accessing financial services because of their poverty. Grameen Bank is certainly the most famous of these microfinance institutions because of its Nobel Laureate founder Mohammed Yunus. Although there are clear differences between credit unions and microfinance institutions, we do share the cooperative principles that underlie our missions. This relationship came to mind in reading Microfinance Banana Skins 2009. I was struck by how the insights in this survey are relevant to credit unions.
Banana Skins 2009 included responses from 430 participants (almost identical to the ANPR circulated by NCUA) from 82 countries. Participants included observers (analysts, academics, accountants, consultants), practitioners (half of whom are deposit-taking institutions), regulators and investors. This is the second Banana Skins survey circulated by the Centre for the Study of Financial Innovation. In the original Banana Skins 2008, double-digit growth and new equity and debt funds were lauded. Areas of concern were how MIs would be able to handle rapid growth. Eighteen months later, Microfinance Banana Skins 2009 reports institutions struggling with credit and liquidity risk, the effects of external economic crisis and management quality and succession.
Microfinance institutions like Grameen Bank are not alone. As I was reading this survey I couldn’t help but think that “CUs” could very easily be substituted for “MIs." The concerns expressed by survey participants provide content for discussion at most credit union board and strategic planning meetings. I know our asset/liability management committee has been more active during the last two years than it’s ever been. It’s not unusual for us to spend a large percentage of our board meeting discussing risk factors like loan guidelines and default rates as well as monitoring our liquidity. We take our responsibility for monitoring our ratios very seriously. In addition, our strategic planning process has included a complete review and updating of our board code of ethics, job description and orientation process in preparation for a renewed board succession policy.
Scholarly articles like this survey would have been very difficult to access five years ago. RSS feeds, Twitter and blog trackbacks provide a wealth of information that can be very helpful to credit unions. They also make it possible to communicate with the authors of surveys and online articles almost instantaneously. I tested out this theory with Banana Skins 2009. It was clear to me after reading the survey questions that this questionnaire might prove to be a wonderful tool for credit unions to use. The publication listed the researcher and author of the survey as David Lascelles, senior fellow at the Centre For the Study of Financial Innovation. I e-mailed Mr. Lascelles and asked for his permission to use this questionnaire to get the insights of credit union observers, members, volunteers, practitioners and regulators about credit union Banana Skins for 2009. He responded within hours of my e-mail and very graciously agreed to let me model a survey on the one he used to gather his responses for Microfinance Banana Skins 2009. As soon as I’ve made the survey “our own,” I’ll be circulating it to credit union friends and advocates through Twitter, Facebook, the Boardcast, CUES Skybox and in person. The use of this tool could prove to be an excellent springboard for board/management planning as well as cooperative efforts among credit unions.
Ginny Brady has been a credit union member for over 15 years and has served as a member of the Ufirst Federal Credit Union Board of Directors since 1997. She has held the position of board president and is currently the vice president of the board. Ginny, a CUES Director member, was awarded the 2008 Volunteer of the Year Award by the Credit Union Association of New York. She has also completed the CUNA Volunteer Leadership Program and received the Blue Diamond Certificate. She has also developed a board of directors blog, The Boardcast.
