Having served as a credit union regulator and then as a credit union CFO, Ben Hart has developed a broader perspective than most on the keys to the safety and soundness of financial institutions. But for credit unions, prioritizing stability not only keeps regulators happy, but also provides value to credit union members. In an interview with Katie Kuehner Hebert, Hart, currently chief financial officer of Texans Credit Union in Richardson, Texas, said that her member-driven mission and her career path have led her to risk management, He explains how he has shaped his approach to financial strategy and technology implementation.
Can you describe your experience managing financial risks and ensuring the stability of financial institutions?
During my 20 years in the credit union sector, I have had the privilege of avoiding financial risk and maintaining stability for various institutions. Starting out as a financial examiner for both the Texas Credit Union Authority and the National Credit Union Administration, I gained valuable insight into how different organizations perceive and manage risk.
Specifically, I honed my understanding of risk dynamics as a problem case officer tasked with investigating credit unions that posed high risks to the National Credit Union Stock Insurance Fund. I have come to understand that financial hardship is rarely the result of malicious intent. It is often due to misjudgment of risk, exacerbated by poor management or systems.
When I moved to become the CFO of a credit union for public educators, my perspective changed dramatically. Assessing risk from an internal stakeholder perspective highlighted the critical importance of building a cohesive team deeply committed to effective risk management. Risk avoidance and risk taking, when balanced and informed by diverse perspectives, are fundamental to a financial institution's long-term success.
In working with a team of experts who understand Texans Credit Union's business and the risks associated with it, I have witnessed the power of fostering a culture where diverse opinions are essential to risk mitigation strategies. At Texans, member service remains our North Star, guiding risk management decisions and ensuring alignment with our core mission.
While systems and data are essential to understanding risk, an organization's employees drive effective risk management. Building a team of talented people who have the confidence to challenge assumptions and align strategy to the institution's risk profile is paramount to protecting long-term viability.
How will you prioritize your financial strategy to support the Texans' long-term growth?
My approach to prioritizing financial strategy is rooted in our commitment to member service. Aligning our strategy with the needs and expectations of our members is critical for long-term growth and sustainability.
We remain focused on delivering value to our current members while anticipating the evolving needs of future generations. Without a secure and engaged membership base, our financial strategy would be less relevant.
One of the focuses of the current strategy is the allocation of operating expenses. We aim to strike a delicate balance so that our operational spend directly enhances member experience and satisfaction. At the same time, we allocate sufficient capital investment to technological advances and infrastructure. Every dollar spent goes towards improving the member experience and strengthening our position as the trusted financial partner of our community.
What is an example of a difficult financial decision you had to make and how you approached it?
One of the most impactful financial decisions I made over the past few years involved strategic changes to our lending activities. From 2020 to mid-2022, our strategy focused on leveraging member deposits to drive loan growth. However, the ensuing environment of rising interest rates raised the cost of funds and threatened profit margins.
In response, we have implemented an approach to strengthen our financial performance. This strategy maintained our commitment to disciplined asset pricing and maintained our return on assets, return on equity and capital growth standards. This was a significant departure from the historical loan growth of the past several years.
Our decision-making process includes in-depth analysis, including accurate return on investment calculations and thorough market evaluations, allowing you to make informed choices. Despite the challenges, this decision demonstrated our dedication to responsible financial management and the long-term stability and success of our institution. By prioritizing prudence and strategic foresight, we navigated a dynamic financial situation while protecting the interests of our members and stakeholders.
What role do you see new technology playing in financial services and ultimately in Texans Credit Union's success?
I believe technology should be considered as a tool to strengthen credit unions' relationships with their members, rather than requiring a complete overhaul of traditional practices.
At Texans, we recognize that personalized experiences, fast transactions, and self-service options are the cornerstones of modern banking. We use technology to improve the member experience and build deeper connections.
Our team is committed to leveraging the power of technology and digital transformation to drive growth and efficiency. By strategically and thoughtfully embracing technology development, we position ourselves as an industry leader while staying true to our mission.
