With increased market volatility and advancing digital infrastructures appearing across all industries, credit unions, traditionally regional and relatively conservative financial institutions, are emerging as one of the most transitional and rapidly-evolving subsets of the financial sector. Their risk-averse, nonprofit statuses have steadily deteriorated in the face of changing consumer behavior and digitally-driven global economies. Credit unions need to be as adaptable and innovative as their commercial bank counterparts to retain a stable position in the marketplace and survive the onslaught of economic shifts.
The demands of the credit union CFO, therefore, have modernized alongside the broader organization. Finding the right candidate for the job has become increasingly difficult.
In this new dawn of 21st-century credit unions, a CFO must embrace many dichotomies at once: The spirit of local, small business and the competition of global economic marketplaces; data-driven examinations of financial risks and creative strategy development; specialized financial expertise and a broad understanding of an entire operation. A successful, modern credit union CFO synthesizes old-school accounting with new-age technologies to actively lead the institution, both internally and externally, toward a better bottom line and more lucrative position in the marketplace.
Technical accounting and financial reporting have never been high on the list of qualifications for a credit union CFO, but they should be. Not only do members deserve accountability, but CEOs rely on data from financial projections to make informed decisions. And with the accelerated rates of technology adaption and market volatility, decision-making has never been a more complex or multifaceted process. Accurate financial reporting and subsequent detailed data projections are a critical cornerstone in strategic planning.
A strong technical accounting background was considered less relevant for traditional credit unions. In today’s day and age, credit unions need a CFO with experience in managing complex technical accounting operations to support sophisticated financial projections. Infusing credit unions with strategic business intelligence while retaining their local roots and relationships gives them a duality that will ease and streamline their evolution.
Because of the sheer amount of readily-accessible cash, credit unions have always been particularly vulnerable to fraud and embezzlement. Indeed, this pattern stretches back hundreds of years to the very beginning of banking itself. This is perhaps the only unchanged element of credit unions. Too often, stories of embezzlement and fraud have surfaced in the financial industry.
Bringing in a CFO who can construct and implement internal controls that mitigate both internal and external fraud and embezzlement risks is critical.
Asset and liability management, while often viewed as a regulatory requirement for credit unions, holds enormous potential for financial gain. Historically, small, local credit unions were less focused on providing significant returns and more focused on avoiding big losses. That risk-aversion left significant opportunities untapped.
Now, in a modern, evolving marketplace, no credit union can afford to pass up opportunities. A modern credit union CFO can be a valuable source of knowledge and innovation in helping the institution understand depositor and borrower behaviors and trends, spot and capitalize on new growth opportunities, and maximize returns on capital deployment. The task of assisting credit unions in their efforts to transition their asset and liability practices from a defensive, risk management strategy to an offensive money-making strategy falls on the modern credit union CFO.
A modern credit union CFO demands an awareness and understanding of, and participation in, all aspects of credit union operations because so much of their value is derived from acting as an advisor to the CEO.
Deloitte’s “Four Faces of the CFO” accurately assesses that today’s CFOs should be stewards of an organization’s mission, strong operators, strategists, and positive change catalysts. CFOs now develop meaningful partnerships with CEOs to establish a positive company culture, inspire change, create strategic and long-term solutions, and improve the bottom lines across all internal departments. Modern CFOs leverage their experiences in daily operations as well as their financial and technological skills to advise the CEO on strategic decision-making and formulating thoughtful long-term goals and strategy.
Seeking a CFO with a thorough comprehension of lending and operations is also pivotal to choosing someone who can serve as a strategic advisor to the CEO. Lending and operations lie at the very core of credit unions, regardless of changing priorities and approaches.
Now more than ever, credit unions must recognize the more complex challenges presented to CFOs and diversify the areas from which they source their candidates. Credit union-specific experience, while helpful, pales in comparison to a candidate with sophisticated financial management skills and a creative, visionary approach to leadership.
Finding candidates who diverge from traditional CFO traits, like introversion and narrow areas of expertise, will be the most fundamental investment credit unions make in their future.
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Our President and Co-Founder, Shawn Cole is a thought leader on all things CFO, has been featured in the Credit Union Times and contributes to several publications, including the Credit Union Times, CFO Dive, CFO Magazine and SHRM’s HR Today.
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