Credit Union Advisory Committee (CUAC) is undertaking research to - PowerPoint PPT Presentation

Credit Union Advisory Committee (CUAC) is undertaking research to inform a policy paper on Barriers and Supports to Collaboration in the Credit Union Sector in Ireland. 15 th July 2019

The CUAC believes that in the modern financial services landscape, collaboration and the scale it provides will be imperative for future of the Credit Union movement and therefore intends to undertake a piece of work to see what barriers to collaboration are present in the Credit Union Sector in Ireland and if there are any supports that are necessary.

Outline of presentation • Brief description of the your Representative Body current role in the area of collaboration • Challenges & Risks • Key learnings from our experience with collaboration • A phased Approach

We started this with the ‘spectrum’ Œ  Ž   Independent Independent Independent Independent Merger Organisational CU CU CU CU structure Shared & Shared & Joint Venture / Informal Single Types of outsourced outsourced Strategic collaboration entity collaboration projects functions alliance Autonomy Integration Informal relationship Intense relationship Flexibility Stability Joint supply Training, Joint loan Joint HR, Exemplary of uniforms, All member processing, treasury functions functions printing recruitment joint marketing management material etc. • CUDA advocacy – our approach is very inclusive to ensure evidence based • Training • CUSP – regulatory compliance, what and how • Shared resources – RO, IA • Procurement – IA, calendars • Solution Centre 4

Solution Center = Balance Sheet Evolution 5

Identified Roadmap to achieve this evolution A group of Credit Unions collaborated to work on this journey

Outline of presentation • Brief description of the your Representative Body current role in the area of collaboration • Challenges & Risks • Key learnings from our experience with collaboration • A phased Approach

Understand the challenges in Collaboration • While there are numerous benefits and rewards to be expected from collaboration, it can also engage credit unions in a long journey with bumps in the road, pushbacks and frustration. • Gaining awareness of the following challenges in partnering is critical to be set up for success: – Collaboration demands long-term commitment and trust; – Collaboration is time-consuming and resource intensive; – Collaboration requires giving away some level of autonomy and letting go of “we do it best” attitude; – Collaboration may have big impacts on existing staff and service level, especially during transition. 8

Risks inherent in Collaboration • There are numerous risks involved – A partner may exit early and jeopardise the development of the collaboration; – An unsuccessful collaborative initiative may impact the credit union’s credibility with funders and the wider stakeholder base, and compromises future collaborations; – Collaboration could put the credit union at some financial risk or legal liability; – It could require too much time; – The quality of the delivery can decline as new participants join the collaboration; – All participants may not benefit from equal support. 9

Outline of presentation • Brief description of the your Representative Body current role in the area of collaboration • Challenges & Risks • Key learnings from our experience with collaboration • A phased Approach

First Big Learning - The People Challenge • people do not always do what you think they do • people do not always do what you tell them to do • people do not always do what they think they do • people do not always do what they say they do 11

Key Success Factors - What makes some partnerships work better than others? To develop a long-term successful partnership, we believe the following elements are critical: • Assess the credit union’s readiness to enter collaboration and develop a clear long-term vision • Start small with few like-minded partners • Take the time needed to build trust • CEOs and Mgt Team are instrumental in moving the collaboration forward • Get your Board engaged through the entire process • Allocate the required amount of time and resources • Develop strong Services Agreement to ensure all partners get expected service • Ensure participant exit conditions are clearly spelled out in governance agreement • Standardise systems, then processes, then service levels • Consider where you get your consulting assistance from 12

Some of the other key lessons learned 😴 Change needs to come from \ supported by the boardroom, since difference in culture can often get in the way of change: 😴 Determine clear boundaries and enforcement; 😴 Make collaboration a KPI for your credit union: 😴 Credit Unions have different objectives so don’t expect it to be the solution for all challenges [e.g. SME lending] 😴 common vision, objective, culture and equitable investments 😴 Precise objectives and terms of relationship 😴 Underestimated service delivery requirements, becomes a draw on development resources 😴 Funding model 😴 Watch out for level of engagement from third parties? 😴 Negotiate clear terms of engagement 😴 Frequency of Steering Committee meetings & assessment of success 😴 Take a clear phased approach 😴 Develop a Collaboration Toolkit

Outline of presentation • Brief description of the your Representative Body current role in the area of collaboration • Challenges & Risks • Key learnings from our experience with collaboration • A phased Approach

Take a Phased Approach 1. Define the credit union readiness for collaboration 2. Find the right partner(s)and get acquainted 3. Lead early negotiations/develop the concept 4. Develop the business case 5. Review legal options and draft legal agreements 6. Implement and sustain 15

PHASE Objectives 1. Define your collaboration * Confirm collaboration is a relevant option * Identify what level of collaboration your credit readiness and assess partnership union is ready for opportunities 2. Find the right partner(s) and get * Define partner selection criteria * Identify potential partners acquainted * Assess partners' alignment and collaboration's chances of success 3. Lead early negotiations / Develop * Design the targeted collaboration model * Confirm buy-in of partners the concept 4. Develop the Business Case * Assess the viability of the collaboration based on data-informed analyses * Detail the targeted model * Define the implementation plan 5. Review legal options and draft * Select the relevant legal structure * Draft legal agreements collabortation agreements 6. Implement and sustain * Kick off the collaboration * Implement the new structure * Develop SLAs * Develop adequate policies * Communicate and report to key stakeholders 16

Activities PHASE 1. Define your collaboration * Assessment of partnership opportunities based on the readiness and assess partnership strategic plan (what to achieve?) opportunities * Assessment of the key stakeholders' readiness for collaboration 2. Find the right partner(s) and get *Meetings with potential partners to discuss an acquainted opportunity of collaboration and assess compatibility 3. Lead early negotiations / Develop * Structured meetings with partner(s) to address critical the concept topics (guiding principles, scope and level of services, cost sharing, ownership, how decisions are to be made, etc.) 4. Develop the Business Case * Develop the business case 5. Review legal options and draft * Review the legal structure pros and cons collabortation agreements * Draft partnership agreement (i.e. finalise governance structure, funding etc.) 6. Implement and sustain * Set-up governance body meetings * Draft policies, contracts, committee, terms of references, SLAs * Set-up communication process and reporting * Monitor the implementation of the new structure 17

Methodology/Modalities PHASE 1. Define your collaboration * Strategic Planning Session readiness and assess partnership * Self-assessment tool- Questionnaire opportunities 2. Find the right partner(s) and get * Self-assessment tool- Questionnaire acquainted 3. Lead early negotiations / Develop * Completion of the template for designing the the concept collaborative concept (see Appendix 1) 4. Develop the Business Case * Technical assistance to develop the business 5. Review legal options and draft * Legal consulation collabortation agreements 6. Implement and sustain * Regular project meetings 18

Main Stakeholders PHASE 1. Define your collaboration * Board, CEO, Senior Management Team (SMT) readiness and assess partnership opportunities 2. Find the right partner(s) and get * Board Chairs and CEOs of each party acquainted 3. Lead early negotiations / Develop * Board, CEOs, and SMT of each party the concept (Collaboration Steering Committee) 4. Develop the Business Case * Board, CEOs and SMT of each party * Consultant 5. Review legal options and draft * Board, CEOs and SMT of each party collabortation agreements * Solicitor 6. Implement and sustain * Board, CEOs, SMT and staff * Consultant * Solicitor 19