Des Moines Business Record
09-08-07
Consulting company leads credit unions into underserved markets
BY SARAH BZDEGA
Looking at the one-room corner office on the top floor of a two-story brick building
on the outskirts of the East Village, it might seem that the Coopera consulting
company is going on with business as usual.
However, the two founders and their first employee have laid the groundwork to
double the organization in size and are just starting some progressive projects
with local, national and even global organizations.
Last November, Diverse Innovative Solutions agreed to give the Iowa Credit
Union League majority ownership in the consulting firm, which this spring was
rebranded as Coopera (related to "cooperar," meaning "to cooperate" in
Spanish). The new partnership is an expansion of the economic development
work that Max Cardenas and Warren Morrow were already doing, but with a
stronger focus on helping Iowa's credit unions reach emerging and underserved
markets.
"They are now at a point where this start-up phase is done," said Murray
Williams, vice president of the ICUL, "and they're really hitting the ground
running."
Coopera is ICUL's fourth subsidiary and is part of the league's efforts to help
credit unions with community outreach. This relationship has also given Coopera
the resources it needed to increase its staff and provide clients with more
products and services, especially new technologies. The company hired Miriam
De Dios six months ago as emerging markets director and plans to hire another
employee within a month.
Cardenas and Morrow also are looking at partnering with other financial
institutions and credit unions across the United States in areas where they see
emerging markets, which includes immigrants, minorities, rural communities,
small businesses, low-income families and young adults.
"We believe there's an oversaturation of financial services for the traditional
middle-class and upper-class markets," said Cardenas, president of Coopera.
"We see the vast underserved markets that are virtually untapped and thus
present opportunities for growth in credit unions and other financial service
organizations that have the best strategies in place. That's where we come in to
develop that."
As financial institutions face pressures from a faltering subprime mortgage
market, Coopera's services give credit unions confidence in entering new
markets, Williams said. "Coopera provides education," he said, "and a comfort
level in understanding by partnering those groups together."
Laying the foundation
Working with credit unions to provide underserved markets more financial
resources is important, Cardenas said, because many people in these
communities tend to use alternative financial products that are more available or
convenient to use than services through traditional institutions.
"Especially predatory lenders, with interest rates of 300 APR (annual percentage
rate), they are destructive in household economies and lead people into debt that
sometimes they can never get out of," Cardenas said. "We're working with credit
unions on how to build infrastructure to allow them to serve their members with
the same degree of comfort, while at the same time providing greater financial
security, and fairer fees and rates."
Credit unions are an ideal group to work with, Cardenas said, because they are
nonprofits, with the revenues they generate going back to their members. Most
also have in their core mission a desire to serve emerging markets.
Coopera uses a three-step process in working with its clients. It first lays the
groundwork with a needs assessment and demographic market analysis, as well
as looking at board training and strategic planning. The next phase, strategy
implementation, involves adjustments to personnel, products, processes and
promotion/marketing strategies. Then it moves toward adding new services and
reaching out to new markets.
"Having the right product in and of itself isn't what gets you into the market,"
Cardenas said. "It's that you really need to complement it with the right
distribution methods, right partnerships and marketing methods and adapt to the
communities instead of waiting for communities to adapt to you."
"Oftentimes [companies] think that they can translate a brochure and Web site
and people are going to be stampeding through the door," De Dios said. "That's
not the case."
A lot of Coopera's current work focuses on providing clients with new ways of
assessing risk, beyond just looking at a credit report. Many people in these
underserved markets, Cardenas said, don't have an extensive credit history, but
would be able to repay a loan.
Coopera also is involved with several new initiatives that could create new
products for credit unions.
In partnership with the Iowa Credit Union Foundation, a part of the ICUL,
Coopera received a $425,000 grant from an anonymous foundation to establish
"The Credit Union Family Partnership," which will go toward hiring its first
executive director and establishing a new individual development account
program. The program will require low-income households that qualify to save a
set amount of money in a set amount of time. If the family achieves its goal, the
credit union will match the amount they saved, which can be used for higher
education, buying a house or starting a small business.
"It's a great way of fighting poverty because you're not just providing assistance
short term, but actually are building a foundation for long-term financial
sustainability," Cardenas said.
Coopera hopes to work with seven credit unions and enroll 186 low-income
families in three years, with the ultimate goal of providing a model that all Iowa
credit unions will adopt.
The firm has started a project with the World Council of Credit Unions Inc. to
market the WCCU's International Remittance Network. That network gives credit
unions a way to provide customers with safe and affordable international and
domestic money transfers, a huge market that many financial institutions are just
starting to notice. The firm also is working with U.S. Central, which manages the
assets invested in all U.S. credit unions, and The Members Group, another ICUL
subsidiary, to develop the next stage in remittance products: a reloadable card
that people can send to family members in the United States and other countries,
giving them access to funds in the account.
The groundwork
The three members of Coopera come from diverse cultural backgrounds, giving
them a keen understanding of what it's like to be in an underserved market.
When Morrow, originally from Mexico City, and Cardenas, born in Peru, attended
Grinnell College, they found they were virtually the only minorities on campus.
"We started wondering, why didn't other people have these same privileges?"
said Morrow, CEO of Coopera, "And we realized then there was an economic
issue."
They founded the Latino Leadership Project, a nonprofit designed to help
minority high school students get into higher education institutions by working on
leadership skills. Grinnell gave them $120,000 to get the organization off the
ground.
As they worked on helping minority communities, Warren and Cardenas saw
more companies also take interest in serving those communities. This realization
led to the conception of Diverse Innovative Solutions, a consulting company that
would help connect the two parties.
After Morrow worked in the for-profit financial world and Cardenas took on
several economic and civic research projects, Cardenas said, "we got to this
point where we had this wealth of contacts in the community, this wealth of
experience in how to make community development projects work and also had
acquired some hard skills in market analytics and deep knowledge of the
financial service industry."
Through Diverse Innovative Solutions, Cardenas and Morrow focused primarily
on economic development, working on projects, such as aiding the
Neighborhood Development Corp. in the development of the Latino commercial
district on East Grand Avenue.
As the company began working with the ICUL, the two groups realized their
goals were closely aligned. The ICUL was in the middle of a two-year pilot project
designed to help credit unions with community development and outreach
initiatives. Williams said the ICUL found that it did not have the staff expertise to
adequately reach underserved markets until it partnered with Morrow and
Cardenas.
De Dios was born in Jalisco, Mexico, and lived in California before moving to
Perry at 13, where her family was one of the first Hispanic families in the
community. After graduating from Iowa State University, she worked at State
Farm Insurance and then John Deere Credit Union before joining Coopera.
Cardenas and Morrow, who still retain leadership of the consulting company,
have high revenue goals with their new initiatives. However, most of the money
initially will go into expanding the company, Cardenas said.
"It was an entrepreneurial dream to enter that relationship [with the ICUL]," he
said, "and one of the best things that came with it was the ability to grow."