Human resources report

The cooperative banks are facing big challenges in light of far-reaching changes in society, politics, and the financial sector. Drivers such as demographic change and shifts in customer behavior, new technologies, and regulatory requirements have an impact on the cooperative banks and emphasize the need for transformation toward a digital world. To help them with the transformation, the cooperative banks are supported by a comprehensive range of products and services from the cooperative associations, academies, and service providers, for example through seminars, IT applications of the Fiducia & GAD cooperative computing center, and digital solutions of the network institutions.

For the digital transformation of the cooperative banks to be effective, the implementation of new technologies – which is already under way – needs to be accompanied by a fundamental cultural shift at the individual banks. This cultural evolution starts with the broad-based use of digital media and tools, but also encompasses internal communications and necessitates both a revised approach to management and increased flexibility in terms of working hours and location. From a human resources perspective, the future of banking at the cooperative banks will rest on the shoulders of employees and managers who are well-versed in the use of digital applications and tools, open to the opportunities of digitalization, and practice a measured risk culture when it comes to dealing with these new areas.

The requirements associated with the digital transformation also have an impact on the traditional training pathway into banking. At present, around 87 percent of all traineeships in the cooperative banks are banking traineeships. In view of the digital revolution, however, HR planning is increasingly focusing on other occupations too. This includes traineeships in dialog marketing, IT and, since August 2018, a newly created trainee-ship in e-commerce. In addition to traditional traineeships, degree apprenticeships also play an important part. Around one in nine trainees combine their practical training with part-time studies at a traditional university or university of cooperative education.

A vital factor for the future is the ability of individual cooperative banks to recruit and retain well qualified young people. When the ‘next’ training initiative was launched five years ago, many cooperative banks were already finding it difficult to attract career starters to the bank for a traineeship or degree apprenticeship. This challenge is still central to current recruitment efforts – and will probably remain relevant over the coming years. It is therefore all the more important to maintain a strong presence as an attractive training company and employer, especially in the current environment. In 2019, the social media channels of the ‘next’ initiative played a crucial role once again: Instagram, the new ‘next’ blog page wirsindnext.de, Facebook, and YouTube were used to share insights into life behind the bank counter. Participants in the training program are using the #wirsindnext hashtag to celebrate their diversity and trainees from all over Germany have been contributing to the blog.

The popularity of the local cooperative banks as a trainer and employer was confirmed when they were included in the trendence institute’s ranking of the most sought-after employers for school-leavers for the 14th year in succession in 2019/2020.

Although a traineeship in banking continues to be highly regarded as an entry-level qualification, changes are gradually emerging. The proportion of trainees in the workforce of the cooperative banks remained high compared with other industries and stood at 6.3 percent at the end of the reporting year – the same ratio as at the end of 2018 (see chart 'Ratio of trainees to other employees'). But the reorganization of the workforce was also reflected in the number of employees. In the year under review, the number of employees of the Cooperative Financial Network decreased slightly from 176,583 to 174,314 (see chart 'Number of employees').

Long periods of service reflect the loyalty and close bond between employees and their company. As at the end of 2019, about 71 percent of all cooperative bank employees had been with their bank for more than ten years and 35 percent for more than 25 years (see chart 'Staff members’ years of service'). The cooperative banks also continue to offer attractive career opportunities for university graduates, as evidenced by the fact that the proportion of employees with a degree remained almost unchanged at 8.3 percent in the reporting year (see chart 'Proportion of employees with a degree').

Sustainability report

For many years, the idea of sustainability has been a guiding light for politicians, businesspeople, and environmentalists. One of the most widely used definitions of the term sustainability is the one developed by the United Nations in 1987: “Sustainable development is development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs.” This concept of intergenerational justice crucially depends on us ensuring that our business practices take appropriate account of socio-economic and environmental aspects. The international community has set itself ambitious goals for sustainable development and solving the climate crisis (limitation of global warming to 1.5 degrees). To achieve these goals, fast, determined, and concerted action is required by all parties and at all levels. The financial services industry is playing an important part in shaping this endeavor in its role as an intermediary. The Volksbanken Raiffeisenbanken Cooperative Financial Network also promotes sustainable development from an economic, social, and environmental perspective.

Owners: achieving more together

The identity principle is what makes the cooperative different from all other types of company structure. Like members of any cooperative, the members of the cooperative banks are its owners as well as its customers. More than half of their customers have decided to become a member. Across Germany, that makes for a total of around 18.6 million cooperative bank members. The cooperative banking remit to provide development finance entails collaboration in a spirit of partnership. It also defines the strategic focus and how it is underpinned by ethical business practices: According to section 1 of the German Cooperative Act (GenG), the nature of the business has to be oriented to the long-term success of its members. One factor in achieving this objective is to avoid sustainability-related risk and seize sustainability-related opportunities. The very essence of their ‘DNA’ (partnership, personal responsibility, helping people to help themselves) calls upon cooperatives and cooperative banks to support their members through sustainable transformation processes.

Cooperative advocacy, along with the annual general meeting or general assembly of representatives and the supervisory boards of the individual cooperative banks (whose members are mostly businesspeople and distinguished persons from the relevant region), underpins the regional control of the individual banks. It provides opportunities for involvement in the democratic process and encourages dialog within society on economic, social, and environmental issues. At the same time, the local cooperative banks learn from the collaboration with their cooperative governing bodies, adopt business innovations, and embrace changing requirements – including with regard to current sustainability-related challenges – in order to put their business models on an efficient footing for the future in line with market needs.

Regional responsibility

In accordance with their remit to provide development finance, the cooperative banks align the nature of their business to the long-term success of their members and customers. A responsible business policy with a strong focus on the common good is thus an integral element of their corporate strategy. For more than 170 years, they have been supporting, encouraging, and advising local people and companies through their financial services and playing a vital role for the real economy through responsible lending. They operate and do business on the basis of mutuality: Each cooperative bank belongs to its members, who benefit from the strength and solidarity of a powerful community. The practices of local cooperative banks are guided by the principle of sustainability. This is why they share their economic success with the region in which they operate. They play a proactive role in the economic, social, and cultural development of their local area. They expand their cooperative network structure through donations, sponsorship, and the voluntary activities of their employees in the community. At the same time, the remit to provide development finance defines the sustainable value creation process at the core of their day-to-day business. The combination of commercial viability and corporate responsibility underpins their regional strength, which they continually develop and expand.

The cooperative movement’s strengths of customer proximity and regional roots are what is needed in these challenging times of digital transformation and social change. The cooperative banks are updating their values-based business model for the future, in dialog with their members and for their benefit.

Systematic integration of sustainability factors in the management of cooperative banks

The factors that are driving the member institutions of the Cooperative Financial Network to further enhance the integration of sustainability into their management processes are not purely of a regulatory nature. The focus is not only on sustainability risks that could have an impact on financial performance, but also on the sustainability implications of the banks’ own operations and investment behavior. These complex matters require the banks to devote significant resources to transformation. The Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V. (BVR) [National Association of German Cooperative Banks] and the specialized service providers in the Cooperative Financial Network have therefore been stepping up their support services for cooperative banks. In December 2019, a network-wide project to address these issues was launched.

Cooperative banks exploit opportunities in the market by offering sustainability-oriented products

A growing portfolio of sustainability products is becoming established across the Cooperative Financial Network. These products are distributed by the cooperative banks. In addition to sustainable securities products (e.g. sustainability-oriented funds from Union Investment and GLS Gemeinschaftsbank eG), they also offer credit products (e.g. sustainable loans from Münchener Hypothekenbank eG).

Corporate social responsibility (CSR)

Every year, the BVR conducts a survey of all member institutions in order to record the Germany-wide CSR data of the Cooperative Financial Network. This provides tangible proof of how the many different engagement activities in the regions combine to create a force to be reckoned with at national level and highlights the particular contribution that the cooperative banks make to society (CSR reports of the local cooperative banks). The entities of the DZ BANK Group have also established various products, concepts, and processes that are based on environmental, social, and ethical criteria.

The latest figures, for 2019, show that the Volksbanken Raiffeisenbanken Cooperative Financial Network is constantly stepping up its activities as a corporate citizen. The local cooperative banks and their specialized institutions provided financial assistance totaling €158 million to people in Germany. Donations from the Volksbanken Raiffeisenbanken and other cooperative banks reached €106 million and local communities benefited from sponsorship worth €40 million; income from charitable foundations added a further €12 million. This ever stronger commitment, not just in 2019 but also in the years before, reflects the healthy financial results of the Cooperative Financial Network. This shows that good financial performance is not an end in itself but leads to more being done for local needs.

Furthermore, the foundation assets of the Volksbanken Raiffeisenbanken Cooperative Financial Network amounted to €345.7 million at the end of 2019. This sum has been rising steadily for years. To put that into context, the equivalent amount at the end of 2009 was only €125 million. Reflecting the sustainability and long-term orientation of the 841 cooperative banks’ business philosophy, this commitment to charitable foundations represents a very durable way of backing local projects.