BECU Says Purpose and Passion Drive Success
Posted by Joseph Phillips on Friday, May 25, 2018 at 12:59 PM PDT
Purpose and passion drive long-term success. That was the key message from Benson Porter, CEO of BECU, the featured speaker in the Albers Executive Speaker Series on May 22nd. BECU is the fourth largest credit union in the US and largest Washington based financial institution, with over $18 billion in assets and more than 1.1 million members.
Porter has served as president and CEO of BECU since 2012. Prior to joining BECU, he served as president and CEO of First Tech Credit Union in Palo Alto, California. He also worked at Washington Mutual Bank, departing as executive vice president and chief administrative officer. He currently serves as board chair of the Federal Home Loan Bank of Des Moines and is a former director of the Federal Home Loan Bank of San Francisco. His law degree is from Seattle University.
Purpose driven organizations outperform other organizations, according to Porter. For BECU, purpose is built around providing financial health to members. The organization focuses on this, stays true to its values, and is not focused solely on profitability.
Porter offered REI, Tom’s Shoes, and Patagonia as other examples of purpose driven organizations. While not singly focused on profitability, he said, these organizations deliver strong financial performance because purpose leads to strong customer and employee loyalty while attracting a group of shareholders focused on developing long-term value.
Porter discussed the importance of being a purposeful leader, one focused on the culture of the organization. He offered six keys to purposeful leadership:
- Be brave – to lead, you have to make hard decisions
- Be grounded in your values – or as he put it, “be the flagpole, not the flag,” flapping with the prevailing winds.
- Know yourself - make sure your values align with those of the organization
- Build a team you can trust – you need people willing to give you the good and bad news
- Be clear and set expectations – model the values and be prepared to be held accountable for them
- Be a strong communicator - communicate with your team around all important issues
In the question and answer that followed, Porter was asked what advice he had for students wanting a career in the financial services industry. He noted that it was important to find a fast growing organization because that would provide more opportunity, and you also need to make sure your values align with the organization’s culture.
What has been his biggest challenge since taking over at BECU? Finding the right team. He said about half of his board and half of his executive team have turned over as they have moved to find the right skill sets and talent. One of the things he values is a team that will tell him what is working and what is not working and will not hide the bad news from him.
What lessons did he learn from his time at WAMU, which ultimately failed in the Great Recession? He learned the importance of culture. When he started there, it was still “the old WAMU,” he said. The culture started changing after converting from a mutual bank to a publicly traded company and that change in culture led to growing problems in the institution. (Porter left WAMU in March of 2007, and the institution failed in September, 2008.)
What one word does he want used to describe BECU? Value – bringing value to customers and earning their trust, as well as bringing value to the communities they serve.
How does growth benefit members? In recent years, BECU has split profits 50/50 between providing new benefits to members (such as establishing a new branch location) and to pursuing growth and finding new members (like starting to serve small business customers).
What does he see for the future of banking? Fintech is creating many interesting possibilities. Fintech firms have plenty of ideas, but no customers. Financial institutions like BECU have customers, so this sets the stage for partnerships between banks and fintech firms.
He believes block chain has the potential to be very disruptive to the financial sector as it can help solve problems with such things as authentication, fraud, and data breech. It might prove to be especially disruptive to the title insurance sector, for example.
A student from Brazil noted that he found the US payments system to be antiquated. In Brazil, he never went to a bank branch and only used his smart phone. In the US, he has visited bank branches more than he would in a lifetime in Brazil. Why is the US payments system technology so far behind? Porter suggested the US would be catching up, as they are seeing new possibilities emerge in the system.
As for why the US is behind, there are at least two important reasons. One is that we are in a relatively efficient system with relatively high switching costs to a system like that found in Brazil. A second, pointed out by Professor Carlos De Mello E Souza afterward, and a Brazilian native, is hyperinflation. The hyperinflation Brazil experienced in recent years gave them a huge incentive to use a system that reduces float and quickly clears payments to minimize rapidly declining purchasing power! No such catalyst like this in the US!
For Benson Porter, it is about creating an organizational culture built around purpose and passion. The cooperative model of a credit union is a strong platform for creating purpose, and an effective leader will inspire passion for the organization on the part of employees and members. That is getting to Porter’s leadership beyond the balance sheet!