Enterprise Magazine

November 4, 2014

Desjardins CEO vaults to global stage

Monique Leroux’s co-hosting of “The Davos of Cooperatives,” highlights Canada’s largest credit union’s growing social mission

Monique Leroux the co-host of the International Summit of Cooperatives has long been a believer in industry events. The CEO of Desjardins Group (6 million members, $212 billion assets) leverages the networking, business and professional development opportunities they provide whenever she can.

The 2014 version of the Summit was no exception. More than 3,000 sector stakeholders from 93 countries gathered in Quebec City earlier this year to discuss innovations in cooperative enterprises and their role in advancing issues such as global employment, food security and healthcare access. Participants profited from a packed program which included seminars, the release of dozens of research papers and world-class speakers such as Robert Shiller, Jeffrey Sachs, Peter Diamandis and David Foot.

Leroux, who along with Pauline Green, president of the International Co-operative Alliance, played a major role in getting the Summit off the ground, was at the center of it all, hosting presentations, press conferences and countless side gatherings. “There are major challenges facing the world,” said Leroux shortly after the grueling event. “But it is increasingly clear that cooperatives can play an even bigger role in helping solve them if we work together.”

Strengthening a global movement

David Sitaram, a director of the Oshawa Community Credit Union (4,500 members, $90 million in assets), one of the many top Canadian and international leaders who packed the event, agrees. “Showcasing the movement’s global collective strength in one room is a major accomplishment. It highlights our attributes as a strong alternative to the publicly-traded companies that dominate existing agendas,” says Sitaram, a sector veteran, who knows Leroux well from his extensive volunteer work on the boards of Central 1 and other associations. “She is a great leader and a real voice for the movement.”

Sitaram, who also attended the International Summit of Cooperatives’ founding event, - which was held in conjunction with the United Nations’ International Year of Cooperatives in 2012, - was particularly impressed with progress made. “The first Summit was supposed to be a one-shot deal,” says Sitaram. “So organizers had to guess what would work. This time they were able to act on the lessons learned. The speakers were fabulous and the organization even better.”

Leroux got a taste of the “out of box thinking” industry gatherings can generate when she attended the World Economic Forum in Davos shortly after taking on the CEO role at Desjardins Group. “It was right after the financial crisis and everyone was discussing what to do.” said Leroux. “However cooperatives were left on the side, despite the fact that none of the major financial and insurance cooperatives needed government handouts. I thought this was strange, because I knew that we had something to contribute.”

Leroux wasn’t alone in her thinking. She had been hearing similar thoughts from leaders in the Canadian and international cooperative movements. These created the groundswell of support which led to the initial International Summit of Cooperatives event, which Leroux likes to call the “Davos of Cooperatives.”

The latent power of concerted action

The movement has great potential to lead a symbiosis between capital markets and the needs of the planet as a whole says Toby Heaps CEO of Corporate Knights which supplies information services to promote sustainable growth. “Cooperatives have the ethical and social responsibility values and the long-term perspective to spur change,” says Heaps. “With more than $10 trillion in assets under management globally they also have the clout.”

Research released at the Summit suggests that Heaps may be right. For example according to a CICOPA survey, global cooperatives provide full or part-time employment for at least 250 million people. The 2014 World Cooperative Monitor, which ranks the planet’s 300 largest cooperatives, calculates that they accounted for US $2.2 trillion in sales during 2012.

Numerous Canadian credit unions and insurance mutuals figured prominently in the rankings. These included Desjardins (#41), SSQ Financial Group (#157), the Co-operators (#161), Wawanesa (#181), the Economical Insurance Group (#234) and La Capitale (#269).

Canadian financial sector coops

One tangible signal of the Summit’s importance to Canadian financial cooperatives was the quality of the personnel they sent. These included Martha Durdin, president and CEO of the Credit Union Central of Canada, who brought along Brenda O’Conner, vice-president and legal counsel and Mark-André Pigeon, director of financial sector policy. “Like all conferences, the real value was in the networking,” said Pigeon. “The session discussions are often the conversation starters that facilitate these informal connections.”

One of the most targeted financial cooperative sector sessions was a Symposium on Innovation, an invitation-only event for credit union practionners in Canada and the United States. According to Pigeon, the session, which took place just before the formal Summit attracted a full house and some people had to be turned away. A key issued broached was credit union capitalization in light of the new Basel III requirements and their expected impact at the provincial level.

Jan O’Brien, chair of Vancity ($175 billion in assets, 500,000+ members) also found insights addressed by the symposium which was led by the Filene Research Institute helpful. These included the increased competition by banks in targeting credit unions’ aging membership, many of whom joined the movement in the late 1940s and early 1950s and the advent of disruptive technologies.

Vancity, which attracted 70,000 members in the past three years, has been handling these challenges relatively well. The credit union even picked up an award at a marketing competition organized by the Summit for its “high level of innovation in the quality of strategic planning, creative execution, media planning and maximization of budgetary resources,” in successfully communicating cooperative values.

O’Brien however acknowledged difficulties credit unions face when innovating. “The sector’s reliance on retrained earnings to finance growth and investments, coupled with complex multilevel governance structures make it harder to implement bold changes,” said O’Brien. “However in many ways these weaknesses are also our strengths. So you have to balance things out.”

While O’Brien’s plaudits regarding the International Summit of Cooperative’s success were convincing, Vancity’s actions spoke even louder than its words. The British Columbia-base credit union sent a contingent of 18 members. These included four directors, three staff, two executives and nine general members.

A need to work better together

The strong representation of financial services cooperatives at the Summit is no surprise, in part as they are among the biggest potential beneficiaries of one of the event’s key messages: that cooperatives need to work better together. That’s because almost all cooperatives need financial services of some kind. So it’s hardly surprising that Leroux’s growing international visibility in promoting social issues has also generated good business leads for Desjardins, a fact she does not shy away from.

“Like other coop managers we’ve initiated or pursued discussions with potential partners here in Canada and overseas,” she admits. “However our mission is not just about providing financial services, we also have a very important social role to play, particularly in the area of education.”

One of the Summit’s ironies is that while its raison d’etre is to provide a forum for cooperatives, many of the presentations focused on some of the same issues that are troubling traditional businesses. These included the effects of technological changes, regulatory challenges and demographics. Several speakers also discussed work the cooperative sector needs to do on the branding and performance fronts.

Opportunities and threats for coops

Cooperatives, which are owned by their members and should thus (one would think) be in closer touch with them, are not dominating their markets says Rob Markey of Bain & Company. Research indicates that the average Net Promoter Score (a measure of satisfaction) of non-coop leaders in their category is 23, compared to just 16 for cooperatives and mutuals. Markey attributes this to the fact that the customer experience is not as core to cooperatives and mutuals’ focus as it should be.

One particularly important finding for financial sector coops to consider - in an era of increasing consolidation, - is that smaller coops, appear to be generating better outcomes than larger ones. The reason that Markey gives for this is that managers in large cooperatives can become alienated from their customer bases if they are not careful. He notes that while larger cooperatives tend to underperform competitors in terms of customer experience, smaller cooperatives typically outperform. Social media was repeatedly cited as a tool that cooperatives can better leverage to improve crucial client contacts.

“Credit unions face many important challenges, particularly related to getting ahead in implementing new technologies,” says Leroux. “When we see at Apple with the billions that they have in cash on hand, launching a product like Apple Pay, we know we have big challenges on the horizon. We need to get together to take on threats like this. Because if we don’t others will take the lead.”

Lode Snykers, a vice-president at CGI, a specialist in global financial institutions and consumer trends, agrees, stressing the broadness of the menace. “Traditional players are under threat from short-term lending as well as new digital and payments entrants,” he notes. “Consumer service expectations are shaping services away from traditional products and channels and increasingly towards a client centered approach.” Security, building trust with members and rewarding them for their loyalty should thus be key credit union priorities.

An educational and professional development experience

In addition to the Summit’s lofty goals in terms of bettering the planet, its speaker and panelist line-up provided enough talent to make the event an excellent investment from an educational and professional development standpoint alone. For example Desjardins sent dozens of employees to attend from all ranks and departments, many of whom brought actionable learning back to their local credit unions.

George Hofheimer, chief knowledge officer at Filene Research Institute provides considerable insight into a suggested roadmap for worldwide financial services innovation. He suggests that cooperatives focus their efforts on key areas in which they either have a competitive advantage or a clear need expressed by their members. These include mobile banking, micro-financing and prized-linked savings campaigns, which have a proven track record of increasing savings around the globe. However Hofheimer warns against innovation for its own sake, noting many “advances” made by publicly-traded financial firms consisted of “scamming, manipulating and exploiting market power and were contributors to the 2008 financial crisis.

Will there be another Summit?

Almost immediately after the original International Summit of Cooperatives in 2012, Leroux was already fielding questions as to whether there would be a subsequent gathering. The 2014 event generated similar interest in part, because of the obvious demand for such a forum that was noted by speakers in numerous presentations. For example Sachs, director of the Earth Institute, delivered a devastating talk about the increasing paralysis of traditional global leaders in tacking major challenges.

In short a clear demand emerged for the kind of long-term thinking, social consciousness and global leadership that events like the International Summit of Cooperatives can provide.

As one panel speaker presented pointed out, governments are now so financially strapped that the recession caused more deaths than cholera. Global central banks, whose solution to almost all problems during the past two decades has been to print more money, have also lost credibility. Large publicly-traded financial institutions, which pay their executives tens of millions of dollars in bonuses and then come to taxpayers for bailouts and hand-outs are similarly compromised.

That said, Leroux who was clearly impressed with the progress achieved so far, remain coy about future plans. “We are waiting for feedback from Summit participants, major partners and of course the International Co-operative Alliance,” she notes. “After that we’ll made a decision about 2016.”

*****

Highlight this quote in bold in a separate text box:

“There are major challenges facing the world. It is increasingly clear that cooperatives can play an even bigger role in helping solve them if we work together.”

Monique Leroux CEO of Desjardins Group

*****

peter@peterdiekmeyer.com

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