The Wall Street Journal published an article titled “Beyond Payday Loans” last week, written cooperatively by political cartoons Bill Clinton and Arnold Schwarzenegger.

In the article, they discuss the $8 billion problem of payday lending.

Here’s a snippet:

Here is one initiative that can unite progressives and conservatives as well as business leaders and community activists: helping the “unbanked” enter the financial mainstream by opening checking and savings accounts, and working collaboratively with financial institutions and community groups to develop and market products that work for this untapped market. This will put money in the pockets of individuals and grow the economy. And it won’t cost taxpayers a dime.

Is it just me, or do Bill and Arnold seem to be channeling the credit union philosophy?

Two credit unions tackling the problem are Wright-Patt CU with their StretchPay loan and Prospera CU, with GoodMoney.

StretchPay is a short-term loan of either $250 or $500 available to Wright-Patt members. The loan comes with a low 18% APR, and is payable over 30 days.

GoodMoney, with branches located in Goodwill stores, offers short term loans at half the rate of the average payday lender, lower-fee check-cashing, bill payment options, wire transferring, and financial education through Goodwill’s Financial Information and Service Center.

Check out this video on GoodMoney from the 2007 Herb Wegner Awards:

Both initiatives stem out of the National Credit Union Foundation’s program REAL Solutions. Full disclosure, REAL Solutions is a client of ours – it’s how I’ve been exposed to some of the awesome things they’re doing for the movement. REAL Solutions is helping credit unions develop products to serve low-income and unbanked consumers.

When we were discussing this, Charlie asked this question:

Are CUs really helping people by making it easier and the rates lower, rather than helping people get into a better financial habit?

I think offering attractive alternatives to predatory lending is step one in the process, but it is kind of a band-aid on the greater question – How do you truly effect people’s financial behavior? Can it be done?

(Also, hat tip to Payment News for highlighting the WSJ article.)

Credit unions have the benefit of being a part of a close-knit powerful network, the credit union industry as a whole, while being tightly woven into the communities they serve at the same time. This opens up huge opportunities for competing with banks and other financial institutions at every single level.

COMPETING BIG

Why do people choose large banks like Wells Fargo, Chase, and B of A? I’d argue that a large part of that is accessibility. They want access to the same services, branches, and ATMs across the country. When I moved to from Houston to College Station for school, I moved my money from Energy Capital Credit Union to Wells Fargo. I knew that college would be a mobile time – I’d be visiting family at home, friends at other schools, going on trips in the summer, etc. I knew I’d be able to access Wells Fargo pretty much anywhere I went.

I had absolutely no clue about the Shared Service Centers, the Co-op Network, and the depth of service they offered. Credit unions, although appearing more disjointed and less accessible, are actually kicking banks’ collective tail when it comes to POS access. Chase markets the heck out of the 8,500 ATMs nationwide. The credit union co-op network has 25,000.

Yesterday, I needed to grab a cashier’s check from my FORUM account. I was at a Starbucks. I literally looked out the window, saw a GHCU branch, and they were on the network. My credit union (and office), is in Indianapolis, I live in Dallas, I’m in Seattle right now. I couldn’t do this if it weren’t for the network credit unions have created.

Credit unions can compete on geographic convenience. They can compete big where big matters. Right now, communication of this is effectively nil. You folks should be shouting it from the rooftops.

This message is where large-scale cooperative advertising can really make a difference.

competing small

Credit unions have the benefit of deeply understanding, at the executive level, the community they are serving. This could mean the SEG or local area. Either way, because individual credit unions are relatively small, this gives them agility to react quickly to the needs of their community.

The Lower East Side People’s FCU (disclosure: they’re a client of ours) has several products that no big bank could have, or would have, pulled off. This includes low-income, cooperative housing loans and a matched education savings account (LES matches savings dollar-for-dollar). LES People’s FCU was created when all of the banks gave up and left the Lower East Side of New York. They are the community, and you can tell.

Vancity’s ChangeEverything is, as always, a great example. Let’s change our community, our city. It’s ours, not theirs. Not one single big bank can ever say “We are Vancouver! Let’s fix it, because it belongs to all of us!”

FORUM’s CGM campaign is an example. Yes, a large bank can say “upload a video of your story and why you love us to YouTube, and we’ll make an ad out of it!” But there is something completely different about FORUM’s campaign – a mass of members lined up at their actual headquarters, some are passionate about FORUM, some just want to be on TV, but all of them are spending the day together, with FORUM, because FORUM brought them together to be a part of the message.

Seth Godin spells it out like this (from “Small is the New Big“):

Small means the founder makes a far greater percentage of the customer interactions. Small means the founder is close to the decisions that matter and can make them, quickly.

Small is the new big because small gives you the flexibility to change the business model when your competition changes theirs.

Small means you can tell the truth on your blog.

Small means that you can answer email from your customers.

Best of both worlds

Through a combination of their cooperative network and individual agility, credit unions can both compete huge and compete small in a way that no other financial institution can. It’s just a matter of rallying together and understanding what about huge and small will make them outstanding.

(Tip-of-the-hat to Ross Graham from Eli Lilly FCU for the good conversation about this topic over the past couple of days.)

On Monday, we were received back at CUA, the Central organization for credit unions in Ghana. They had good reports about our visits from the hosting credit unions and were eager to listen to a debrief of our visits.

Each coaching team highlighted the important aspects of the reports presented to the credit unions. The credit unions here in Ghana are similar to others in the world – there are progressive and innovative credit unions and there are some that are entrenched in the old ways. They all understand that change is required, and are wanting to learn where the change needs to take place.

What have I learned over the past 3 weeks? Well first of all, for those that don’t have a sense of the origins of credit unions and applying co-operative principles, this is a place to get a solid grounding. It is truly invigorating to see the volunteer commitment of the boards of directors and the committee volunteers that each credit union has. And they are involved simply because the banks wouldn’t lend to the common folk – the farmers and small business people. A simple loan for a sewing machine for the mother in a household to earn extra income sewing garments is enough to enable a child’s future to be changed so that they can attend secondary school.

And what can a bunch of credit union managers from Canada offer to these small, mostly manual operations? We have such diverse backgrounds, that we are able to provide insight and facilitate a knowledge exchange on many issues. A key learning that I believe we have left behind is for the credit union employees to know that change can be good. Just continuing with the same old way of doing things may be correct, but consider other options. There may be a better way.

Later this afternoon at 4:00 we head off to the airport for our long trek back home from Accra to Lagos to Frankfurt to Vancouver. Barry and I arrive in Vancouver about 1:30 Vancouver time (8 hours difference from where we are). Even though we are the furthest away, we will actually get home sooner than most as we don’t have airport connections to make once we get on board to YVR.

The Coaching Program is an invaluable tool for the credit unions in developing countries and has provided me with a terrific personal development opportunity. I know that is difficult on spouses and children at home, particularly for mine as Wendy works full time, our daughters attend different schools and have basketball and soccer practices and games to get to. I couldn’t be a coach in this program without their help. Thanks, Wendy.

On Saturday, Barry and visited with Aba Hagan, the manager of AAK Teachers Credit Union in Abura Dunkwa, Ghana. Aba was a participant in the CCA Womens Mentoring Program and Prospera Credit Union I hosted her in October. Aba was billeted with me and my family.

Aba is the Presiding Member of the local district council and is elected to represent 7 communities in her geographic region, so she is well known. I had arranged for about 50 pairs of soccer boots and 2 sets of soccer jerseys to accompany me to Ghana. Aba allocated these out to 3 communities including her home village. So Barry and I had our 15 minutes of fame in 2 of the 3 communities.

We were introduced to the chiefs and the school head mistress. We had school choirs sing us a welcoming song, and many words spoken about us in the local language, Fanti. The last presentation was in Aba’s home village and included a meeting with the chief and his tribal council at the chief’s palace. This was a formal affair and we had to be introduced by Aba. Aba was able to do this as she is the queen mother and is in the blood line of the hereditary chief family. Her two sons could become chief of the village at some point in the future.

As part of the honor to speak with the chief, we had to offer up gifts. One was the traditional gift of a bottle of schnapps. The other was 200,000 cedis as a contribution toward the village electrification project. The village doesn’t have electricity and needs to get the utility poles in place before the government will put the electrical line in. Each pole costs about $200 US, and they asked us for more money – we said we would try when we get back to Canada.

I was asked to speak to the local school mistress in Aba’s home village. I provided the “purpose” of our visit to her and the crowd that had gathered at the chief’s palace. She thanked me and then I responded in the equivalent of “you’re welcome” in Twe and that got a roar of laughter from the crowd. I was also interviewed by the local radio station as to the purpose of our credit union visit.

It was a hectic day full of schedules and 2.5 hours driving each way to get to Aba’s credit union. But, I am glad we were able to visit. The villages we visited are very poor, yet the people are so cheerful and upbeat. For many of the local residents, particularly the children, we were the first “obruni” they had ever seen or talked to.

On Monday, we travel back to Accra and have a meeting with the credit union officials at CUA House.

February 13, 2007: Credit Union with an Exciting Future

St. Theresa’s credit union in Begoro has had its challenges and faces many more to come, but they are prepared. Everyone on the board and the mandatory committees is new – they have only been on the job (volunteer) for 2 months. The previous board had lavish spending practices on office and administration expenses and let the loan delinquency get away from them.

With the urging of CUA and the auditors, the members elected a new slate of directors in December. In only two months, the new board has developed a sound business plan with 7 goals in 4 key performance areas. This business plan would hold up to many business plans at Canadian credit unions!

The core membership of the credit union is teachers (the board are all teachers). For this group of members, delinquency and building savings is a non issue as the savings contributions and loan payments are deducted from their paycheques.

However, the membership was opened up a while back and the credit union now has a delinquency of 36% with inadequate loss provisions and insufficient retained earnings to support a delinquency level of 36%. The credit union has sound plans in place to reduce this number to 15% by June 2008.

Some initiatives include informing the delinquent members that their savings will be seized if payments are not restarted. Another tactic includes posting the names of the delinquent members on the wall of the credit union office for all to see. Ghanaians are very proud people and will rush in to have their names removed from the list.

St. Theresa’s credit union impressed Barry and me. They have a new board with lots of energy, commitment and focus. They understand that it will take some time to make the corrections and we told them we were confident they would be successful.

February 14: Happy Valentines Day

Today we popped in to say hello to two of the credit unions I met with last year. One of them is in a new building (Abosomankotere). Look at the first blog entry for a photo of the old building and see the new one on Flickr.

Prosper Aforbu is the manager and he is full of energy and vision. It was his work that enabled the credit union to see into the future and move out of the workplace (they still operate a satellite branch in the hospital) to a street front location. Financially they have had a very good year and have all the controls in place.

He was very excited to see me return and Marcia Greenwood (my partner from last year) arrived later in the day. We went off to his inlaws to see his wife, Elvira and their 6 week old daughter. They are a very happy family.

On Thursday the 15th, we returned to review the credit union’s activities for the previous year. We also visited with Ebenezer Credit Union- one of the highly successful ones in Ghana. They are one of 7 on the country to have a business plan (the second one this week that I have visited).

They had a very successful year income and assets grew – assets by 24%.

We are now in Takoradi which was a grueling 9 hour drive in the hot African sun in a vehicle with manual air conditioning. Whew! The rest of the coaches will gather here and we will exchange notes and prepare a brief report for the CUA meeting early next week.

Tomorrow, Barry and I are off to meet our first Tribal Chief at Aba Hagan’s home village whcih does not have electricity. We will have lunch and then return to Takodori. Aba and her family will join us on Sunday at the hotel. A relaxing weekend…

There were many learning opportunities for us over the weekend. For example, if you buy pirated DVD movies, expect to pay (somehow). Well, they did work, except they skipped and had hideous screech in the audio every minute or so. So we didn’t get to watch the movie.

Our learning took on a cultural flavour when we learned about the role of the village and tribal chief. We will be visiting the home village of Aba Hagan who was in Canada in October as part of the CCA women’s mentoring program. She has told me that we will be meeting with her chief. On Saturday, at a joint board dinner with Tafo and Bunso, we learned about the role of the chief.

The chief is very revered and rules in disputes of all kinds. Petty theft, adultery, land encroachment, estate settlement are among the more serious items. The chief is even used as a resource in the courts if a dispute lands in court. The judiciary will ask the chief to provide advice and counsel in open court when rendering a decision. So their role is not just as a figurehead, but they have a real role in maintaining order.

I also learned that it is customary to provide a gift when meeting a chief and that schnapps is in order. Yeah, right – where am I going to find schnapps? Well, at the local gas station – yes, we walked in and they had a bottle for 50,000 cedis – about 5 bucks. So I am prepared.

On the weekend we also learned that when I present gifts for Aba (shirt, school supplies, etc) that I am to present them to her husband – not to Aba. There is still a lot of gender inequality here.

We visited with Sammy and his mother. She recently had a stroke and is recovering. Part of the tradition is to bring a small gift if you visit, so we brought her a loaf of brown bread. She was pleased.

At the joint board dinner

The joint board dinner was for Barry and me to thank us for our time with the two credit unions from CRIG. Last year, the credit unions didn’t have a dinner for me and Marci, so it must have Barry’s charm. The dinner and socializing was fun and we were presented with several Ghanaian shirts and a smock to bring home to Canada. They will be quite a hit on business casual days at the office I’m sure.

We did a lot of driving on the weekend and of course hit some road construction. This is a big selling opportunity for the vendors as the traffic gets stopped in each direction to allow for the traffic to pass. Swarms of vendors see the obruni (white man) and rush over to try and sell us any and everything. Plaintain, toothbrushes, water, coconuts, bananas, ground nuts – you name it. Then they young kids just want to talk and hear us say a few words in Twe. They laugh … I think more because we try vs. the quality of our speech.

Part of our trip was in to visit with Sammy’s mute brother who is a poultry farmer. We had said to Sammy we wanted to look at some pottery, so he planned to take us to the farm. We had to correct him that we said pottery – but we did go and see his brother’s farm – 120 broilers, 1000 chicks and 37 pigs. The broilers sell for 50,000 and the chicks for 10,000 each. Clearly there is a strong market for chicks.

We are now at our last credit union in Begoro. St. Theresa’s which used to be a teachers closed bond credit union that is now open. There were some “entrenchment” issues with the previous board, and some lavish spending. There is a new board in place now in preservation and correction mode. We can help provide them with some direction.

Tomorrow we are off to Techiman at the end of the day – this is where I was posted last year.

Back to my Ghanaian name, Kofi Mensa Gene. Lets think about this compared to my partner Barry. His Ghanaian name is Yaw.

My name is common to the former Secretary General of the UN, Kofi Annan and we all know what Mensa means. I asked Barry about Yaw, and all he could think of was “wow’.

If anyone is keeping track, Barry lost that one.

Today was sunny and hot. Barry had some school supplies that his wife Ramona sent over. We dropped these off with the school headmaster. They were extremely pleased.

We worked with the cu for the whole day looking at loan policy and how to compete with the banks who are lowering rates to battle the credit unions. We meet with the board tomorrow late in the afternoon to review our recommendations and then have a joint gathering with both of the 2 credit unions we met with this week – sort of a bit of Saturday Night Fever!

Early in the morning, we will plan to golf 9 holes! The course looks fine, although the greens are a little coarse. Sammy our right hand man and driver will join us for his first time ever. Last night, Sammy had his girlfriend, Fortunate, join us for a beverage. She is a fine person and she and Sammy are a great couple. Look for their pix on Flickr.

Tomorrow after golf, we are going to visit a place that makes pottery, yes clay pots!

This year I am placed in the eastern region of Ghana near Lake Volta. This is apparently the largest artificial lake in the world and because of its proximity, we have a shower each day about 4:00 and it is very humid. The temperature is in the mid 30’s but it feels like it is in the mid 40’s. I just drip perspiration and it runs everywhere!

We have started with a new credit union today; TAFO CRIG Co-op Credit Union in Tafo. This credit union had funds stolen in the past by elected officals and thus had some issues. They have recovered very well with new controls in place, a new board, more committee oversight, and a very competent manager.

There seems to be only a few things we can help them with, although they do have concerns with competing with the large banks and we should be able to give them some ideas.

They are located within the grounds of the Cocoa Institute and as such have nice facilites (comparatively) and are right outside a school for the children of the institute’s workers. The children love to talk to us in English, wave at us, and hear us talk to them in Twe. They smile and giggle when the obrunni (white man) talks in their language, but they understand me!

We are in a community where there are a lot of people of Muslim faith and the call has just went out for thier evening devotions. It is blaring in the background right now across the street.

My African name is Kofi Mensa Gene (Kofi is Friday, the day I was born and Mensa is for the 3 son born in a row). The local people are so suprised when we can tell them our African names.

Meko…. (I am leaving)

(keyboard sticks sorry)

Last night on the state tv station, the soccer game from London was televised. This was a highly nticipated match as Nigeria hass for many year been the strongest and highest FIFA ranked team. Ghana had not beatem them in over 15 years. Last night that changed.

WE could hear the people from town singing and chanting in the street from our tv room at the guesthouse. It was cool to ee them celebrate.

WE visited with a beadmaker yesterday….she was 76 and made jewellry by hand from a special rock; there is no English name. She has been doing it all her life and it looked difficult and dirty. See Flickr for her picture.

I have recovered, but Barry is under the weather today. Hope he is able to recover by 5 – we have a meeting and presentation to make to the board on our observations and recommednations.

The people are so hospitable….they won’t even let us buy a beer, yer we are the ones with the means…..

February 5

Yesterday we traveled from Accra to our destination for the next 10 days or so, Tafo and Bunso, where Barry and I will be working with 3 credit unions. Our drive was quite spectacular once we got out of the city. We drove inland, up and over one of the mountains and down some terrific jungle-like valleys. The air was cooler and the views magnificent. The smaller villages up on the mountaintop reminded me of the towns in Europe with small, tight roads flanked by two- or three-story buildings.

We are staying in Tafo. This is the home of the Cocoa Research Institute of Ghana. This was once a very large employer, over 1,000 staff, but has seen significant cutbacks in recent times. We are staying in a part of the complex called the guesthouse.

The rooms are large and clean with private baths, but the décor is very old. It is outside of the town core, and we are a little more remote than we would prefer. One activity that I liked from last year was being able to walk the street and talk to the vendors which isn’t really an option for us here.

However, it has one of the few golf courses in Ghana. We might play 9 holes on Saturday.

Internet access is intermittent, so I apologize for not being able to send earlieer. I hope to upload some great pics tomorrow.

February 6

We are at a closed bond credit union that is successful -700 members and 4 billion cedis in assets. They have not had an AGM in 3 years, and the board members have all exceeded their term limits. So we have some recommendations and observations for them. They need some help with delegating authority to the capable manager. The credit union is sound; they have just taken it on their own to bend some rules.

The credit union is in the research institute and the grounds are quite something. We’ll be going for a full tour tomorrow.

We were talking today with the asst. manager, Jacob, about hairstyles and he said that God cuts Barry’s hair – he is bald on top.

Good thing I have prepared for everything – got a bad bug and had everything happening at both ends last night. I can’t recall being that sick before. I am only about 50 percent today.

Hopefully I can recover fully for tomorrow -

Cheers from Tafo, Ghana!

The Super Bowl gets some coverage over here on CNN. (There are only four channels on the TV.) As the Seahawks are out, I won’t worry about the game.

We’re going to a remote village tomorrow – our assigned area for the next two weeks in Bunso. There are three credit unions in the area that have asked for our support.

There is only one hotel and many villages don’t have electricity but the one hotel in the area does – this means yes to air conditioning. AC is important as I burnt my receding forehead today – it was hot and sunny.

The team of coaches was invited to have lunch at the home of the General Manager of CUA, Emmanuel Darko. CUA would be the equivalent of Credit Union Central of Canada in Toronto. The meal was superb, and prepared by the daughter of one of his office staff, and his daughters. Chicken, plantain, beef and onions, talapi fish (with its eye staring at you as you ate it) goat soup, salad, and rice followed up with ice cream and fruit. The soup was great, although several commented to me it was too hot (spicy). Truly a feast for Ghanaian people to host.

From there, Darko took us on a tour of a school he has set up. There are currently 350 students enrolled at his school – Asmag International School. It has taken him eight years or so to get to this point and it will be fifteen years before he gets it complete.

Darko also drove us to a place of vision – the training and conference center for credit unions in Ghana. Two buildings are under construction – one is the training center and the other is a hotel. The credit unions in Ghana typically host their training in Accra and it is very expensive. The business case shows that by building their own conference centre and hotel there will be significant cost savings.

The hotel will have 91 rooms. The association is building these facilities as they have available cash, and thus this is a multi year project. This has required significant vision and planning to execute successfully.

As I mentioned we’re off to our assignments tomorrow. And yes, I get fresh socks and underwear as our bags did show up. My razor grated its way through 3 days of growth, and luckily I was able to dress up for the important lunch today. I know how looking my best, even with pants that are too short is important (right, TLC and TCF?).

I don’t know how accessible internet access is from our posted location, so check in often!

Happy Groundhog’s Day from Ghana! If there were groundhogs here, there would be 6 more weeks of winter … the day was warm and humid – 34 degrees C and 70% humidity.

We’ve been welcomed with open arms and with great appreciation. The people here are just terrific – it was like we never left.

Getting here:

I arrived last night with the other 9 credit union coaches from other credit unions across Canada. My partner coach and I (Barry Delaney – who also is from B.C.) started our journey on January 31st from Vancouver and arrived in Accra on February 1 some 24 hours and 12,500 kms later via Frankfurt and Lagos.

We met up with our crew in Frankfurt where Barry and I only had 40 minutes to get from our aircraft to our connecting flight. All was well until we arrived in Accra and were waiting for our luggage. Our success rate was 50% as 2 of 4 bags showed up. After learning about the lost luggage, Barry and I were treated a local brew by the team – it turns out we weren’t treated per se, there were only 2 coaches who had the local currency, so they bought for everyone.

The good thing for me was I got to change socks this morning. I put the sock from right foot onto my left, and the sock that was on my left foot went onto my right. The bag that did show up for me contained 50 pairs of soccer cleats and 2 sets of team uniforms that I am going to leave with Aba Hagan, a Ghanaian participant in the CCA Women’s mentoring program. Hopefully my other bag shows up tonight with the Lufthansa flight.

This morning we had the typical orange juice, Nescafe and toast for breakfast. Then to make us all feel rich we went and exchanged currency and walked out with a small grocery bag full totaling 1.8 million cedis. (Sounds bigger than it is.)

It was so hot in the hotel that the beads of sweat on the top of Barry’s head looked like the inside of a sauna, with beads of glistening moisture all over it. (Barry’s chosen hairstyle is maintenance-free, no hair on top style.)

At the CUA House:

We met with the staff from the Credit Union Association of Ghana at CUA House this afternoon and all had a briefing on our assignments and our return visits to the credit unions we were with last year. Credit unions in Ghana are sponsors of two great programs. One is a program to set up savings programs for schoolchildren. The other is an AIDS/HIV awareness program. So, the women in charge of the AIDS/HIV encouraged all of us to use a condom. A first for me at a credit union meeting!

After our briefing we had a great lunch with the senior staff from CUA and then several of us, Barry, Larry, and Owen visited the National Cultural Centre. (This is the “market”.) As last year, we were mobbed by salespeople; however, they did restrict themselves to the area nearby their booth. There are many booths, so there are many salesmen. Each of us made some purchases – shirts, dress, and handbags for family back home.

Hopefully the jet lag won’t hit us tomorrow …

Heads up: Brent and I will be in Seattle next week. We’re going to be chatting with the King County Chapter of Credit Unions and afterward we’ll be holding a social media workshop for credit union marketers. Come hang out with us!

Also in February our friend Gene Creelman, VP of Marketing and Communications at Interior Savings Credit Union, will be making guest posts as he and nine other Canadian CU managers share their skills and experience with CUs in Ghana.

They’re leaving in two days as part of the Canadian Cooperative Association’s annual Credit Union Coaching Program. Gene will be using Open Source CU to document the group’s travels via posts and pics. This is Gene’s second time around in Ghana (the picture above is from his first visit) and it’s the Association’s fourth consecutive year managing the Ghanaian project.

For new readers to Open Source CU, Brent chronicled his travels to Jamaica as part of a Texas-Jamaica credit union partnership in September 2005. If you want to get caught up on that, it’s a three-part series.

• Out of many, one people (Part I)
• Get up, Stand up (Part II)
• One Love, One Heart, One Brand (Part III)