Insights for Credit Unions from My Visit to the Dominican Republic

Posted by AnnaPeña on March 12, 2013

Guest blog post by Traci Stiles, Business Development Manager, Des Moines Metro Credit Union

In January, I was honored to be selected as one of 11 young credit union professionals from various parts of the U.S. to go to the Dominican Republic and participate in the International Credit Union Leadership Program. During the trip, I had the opportunity to visit the Dominican Republic’s newest credit union, CoopOriental, which is located in Higuey (a community located in La Altagracia, the easternmost providence in the Dominican Republic near Punta Cana).

While at CoopOriental, I was able to closely observe daily practices, as well as review policies and procedures. I was greatly impressed by CoopOriental’s staff and operations and strongly believe their success can be attributed to four distinct best practices:

– Strong relationship with business partners (SEGs)
– Going directly to members
– Extreme board involvement
– Strong support from its league

Strong relationship with business partners (SEGs)
CoopOriental is not community-based credit union. Therefore, relationships with its SEGs or business partners are extremely important. To generate business for the credit union, the SEGs can pre-approve their own employees for loans, taking the decision-making component of the loan process out of the hands of the credit union.

This works well at CoopOriental because the SEGs know their employees arguably better than the credit union could know them. This is particularly true when it comes to employees’ salary information. Having this insight into borrowers makes it easier for lenders to know if the requested loan amount is reasonable and if the borrower is a good credit risk. The other advantage is that SEGS can guarantee loan repayment to the credit union through employee payroll deductions.

Although there are many challenges to making this concept work in the U.S., I do think creating a stronger bond and layer of trust between a credit union and its SEGs is critical. These relationships can offer much less risk in lending. And, SEGs are a great referral source for credit unions, especially when working with the Hispanic community.

Going directly to the members
Because it is hard for members in rural areas to make regular trips to credit union branches in the Dominican Republic,  many credit unions employ a messenger service (via moped) to pick up deposits and loan payments from members. The idea is simple: Go to the members, rather than expect them to come to you.

This concept could be easily applied to U.S. credit unions with SEGs that are far away from the credit union’s headquarters or SEGs with a large concentration of members in one location. By offering messenger service, credit unions can offer a convenience that other financial institutions don’t offer them, making it easy and affordable to make deposits to their accounts and pay on their loans.

Extreme board involvement
During my time in Higuey, I stayed in the home of the president of CoopOriental’s board of directors. My host father visited the credit union daily to sign checks and discuss business with the manager. But he wasn’t the only board member actively involved in the credit union’s business. The entire board was very passionate about the credit union and actively promoted the credit union in the business community.

What this involvement proved to me was the importance of having an active board, one with a deep understanding of the day-to-day operations of the credit union and a willingness to promote the credit union whenever possible.

League involvement
Just like leagues in the United States, the League in the Dominican Republic (AIRAC) strongly supports their member credit unions. Because CoopOriental is still new in the market, I saw the League support their business through regular staff training and access to technology.

For 13 days in January 2013, 11 young credit union professionals were selected to participate in the International Credit Union Leadership Program, made possible by a grant from the U.S. State Department, World Council of Credit Unions and the support of the participants’ respective leagues and credit unions.

Each was placed in a different credit union or credit union association across the Dominican Republic. From Iowa, Traci Stiles, Business Development Manager at Des Moines Metro Credit Union in Des Moines, Iowa, was placed at the newest credit union in the Dominican Republic, CoopOriental; Erin O’Hern, Compliance Attorney at PolicyWorks, was placed with CoopBUENO; Anna Peña, Client Account Coordinator at Coopera, was placed at COOPACRENE.

Highlights from their experience will be shared in a series of blog posts.

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