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. 15th 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’

• 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

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Independent CU Informal collaboration Independent CU Shared &

• utsourced

projects Independent CU Shared &

• utsourced

functions Independent CU Joint Venture / Strategic alliance Merger Single entity Training, member recruitment Joint supply

• f uniforms,

printing material etc. Joint loan processing, joint marketing Joint HR, treasury management All functions Organisational structure Types of collaboration Exemplary functions

Autonomy Informal relationship Flexibility Integration Intense relationship Stability

Œ  Ž  

Solution Center = Balance Sheet Evolution

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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.

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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.

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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

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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

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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

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PHASE Objectives

• 1. Define your collaboration

readiness and assess partnership

• pportunities

* Confirm collaboration is a relevant option * Identify what level of collaboration your credit union is ready for

• 2. Find the right partner(s) and get

acquainted

* Define partner selection criteria * Identify potential partners * Assess partners' alignment and collaboration's chances of success

• 3. Lead early negotiations / Develop

the concept

* Design the targeted collaboration model * Confirm buy-in of partners

• 4. Develop the Business Case

* Assess the viability of the collaboration based

• n data-informed analyses

* Detail the targeted model * Define the implementation plan

• 5. Review legal options and draft

collabortation agreements

* Select the relevant legal structure * Draft legal agreements

• 6. Implement and sustain

* Kick off the collaboration * Implement the new structure * Develop SLAs * Develop adequate policies * Communicate and report to key stakeholders

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PHASE Activities

• 1. Define your collaboration

readiness and assess partnership

• pportunities

* Assessment of partnership opportunities based on the strategic plan (what to achieve?) * Assessment of the key stakeholders' readiness for collaboration

• 2. Find the right partner(s) and get

acquainted *Meetings with potential partners to discuss an

• pportunity of collaboration and assess compatibility
• 3. Lead early negotiations / Develop

the concept * Structured meetings with partner(s) to address critical 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

collabortation agreements * Review the legal structure pros and cons * 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

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PHASE Methodology/Modalities

• 1. Define your collaboration

readiness and assess partnership

• pportunities

* Strategic Planning Session * Self-assessment tool- Questionnaire

• 2. Find the right partner(s) and get

acquainted * Self-assessment tool- Questionnaire

• 3. Lead early negotiations / Develop

the concept * Completion of the template for designing the collaborative concept (see Appendix 1)

• 4. Develop the Business Case

* Technical assistance to develop the business

• 5. Review legal options and draft

collabortation agreements * Legal consulation

• 6. Implement and sustain

* Regular project meetings

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PHASE Main Stakeholders

• 1. Define your collaboration

readiness and assess partnership

• pportunities

* Board, CEO, Senior Management Team (SMT)

• 2. Find the right partner(s) and get

acquainted * Board Chairs and CEOs of each party

• 3. Lead early negotiations / Develop

the concept * Board, CEOs, and SMT of each party (Collaboration Steering Committee)

• 4. Develop the Business Case

* Board, CEOs and SMT of each party * Consultant

• 5. Review legal options and draft

collabortation agreements * Board, CEOs and SMT of each party * Solicitor

• 6. Implement and sustain

* Board, CEOs, SMT and staff * Consultant * Solicitor

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PHASE Key Documents / Deliverables

• 1. Define your collaboration

readiness and assess partnership

• pportunities

* Synthesis of the credit unions readiness * Board / SMT readiness assessment and subsequent guiding principles

• 2. Find the right partner(s) and get

acquainted * Analysis of the organisation's readiness results

• 3. Lead early negotiations / Develop

the concept * Document that describes the delivery model structure * Letter of Intent/MOU (recommended as best practice)

• 4. Develop the Business Case

* Business Case

• 5. Review legal options and draft

collabortation agreements * Partnership agreement / MOA / Shareholder Agreement

• 6. Implement and sustain

* Employment contracts * All policies that govern the formed structure * Service Agreement * Board terms of reference * Committee terms of reference

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PHASE Conditions for entering next phase

• 1. Define your collaboration

readiness and assess partnership

• pportunities

* Boards confirm opportunity (scope and level

• f services) and readiness
• 2. Find the right partner(s) and get

acquainted * Sufficient alignment score, compatibility of the organisations * Boards approve start of early negotiations

• 3. Lead early negotiations / Develop

the concept * Letter of Intent / MOU signed by the Board of each party

• 4. Develop the Business Case

* Boards sign off on business case

• 5. Review legal options and draft

collabortation agreements * Boards approve agreements * CEOs sign agreements

• 6. Implement and sustain

* Governance committee is enforced, supervises the activities and reports to each credit union

Key Challenges

• Change in Culture
• Ability to Invest
• Complying with S76j

– retain the necessary expertise to supervise the outsourced activities effectively, manage the risks associated with the

• utsourcing and supervise those activities and manage those

risks, – be capable of resuming direct control over any outsourced activity

• r ensure that alternative arrangements are in place to provide the
• utsourced activities without detriment to the proper operation and

functioning of the credit union or the continuity and quality of its provision of services to members.

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