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14 posts categorized "Compliance"

January 28, 2014

The State of Credit Unions in 2014, As Predicted by The "Crystal Ball" of Google

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by Ron Daly

Let's face it - Googling stuff is fun. It has been from the very beginning and it's still a hoot.

Sometimes, Google can show you the future. I decided to put Google's "crystal ball" capabilities to the test and see what 2014 had in store for the industry. I simply put

  • "In 2014, credit unions will *"
  • "In 2014, credit unions must *"
  • "In 2014, credit unions should *"

into the search bar and hit return. And voila! all the interesting tidbits about what the industry should focus on this year. Some highlights: 

"[Credit Unions] must focus on enhancing members’ cross-channel experiences, says Belinda Caillouet, chair of the CUNA Technology Council..."

"Charting Your Course Through 2014", creditunionsmagazine.com

Agreed. Members are leaning hard on technology and demanding more channels that work well with one another. That includes mobile apps, online banking and ATM/branch services that all play well together and stay up-to-date and easy-to-use.

"Financial marketers will be accountable for analyzing the real results of content marketing strategies in 2014. Because every channel ultimately affects all of the others, attribution modeling allows marketers to credit a specific ad or touch point along a sales funnel rather than just the last material viewed or clicked."

"Digital Marketing Trends for Banks and Credit Unions in 2014", TheFinancialBrand.com

Yep, right on the money. The technology we're using to sell to members is getting better and we can start making sense of data and offering products and services that make the most sense for each individual member.

“In the next 12 months, mobile will overtake online in terms of number of users. It already has more transactions."

"5 Mobile Trends to Watch in 2014", cutimes.com

I'll be interested to see the outcome of this one. Mobile's a big part of people's lives, but can credit unions rise to that challenge and create great mobile app experiences in the space of a year? A year, mind you, that's already down to eleven months as of Saturday of this week?

"In 2014, the trusted role of banks and credit unions as the collector of funds, provider of loans, processor of payments and advisor of financial relationships will continue to come under fire from non-traditional players including new financial organizations (neobanks), hardware providers, third party payment processors, and mobile app developers that merchants and consumers are using to chip away at the traditional financial services model."

"Top Ten Banking Trends for 2014", bai.org

More sharks in a still-pretty-small tank? This is the moment CUs have been waiting for — the moment to set themselves apart from the upstarts and prove they can be valued, trusted financial partners by offering sensible services and can't-be-beat member interactions.

"To experience loan growth in 2014, credit unions will need to originate significantly more consumer loans to offset the expected declines in mortgage originations."

"Marketing Overview and Data Report", catalyststrategic.org

I'm really curious about what kinds of loans credit unions will be promoting in place of mortgages (assuming they cut back on mortgage promotions, which some won't). Credit cards? Student loans? Where's the "heat" in lending in 2014?

“Looking ahead to 2014, credit unions can expect to see the CFPB expand its fair lending focus,” said Bundy. “The CFPB’s regulatory agenda unmistakably signals that fair lending will be a focal point of new rule making starting in 2014.”

"CUNA Mutual Group Anticipates Broader Regulatory Focus in 2014", cunamutual.com

"...The CFPB has the luxury in 2014 to move on to topics other than mortgages, such as overdraft, prepaid cards, Reg CC disclosures, and debt collection. To keep track of all of it, take advantage of various resources out there—besides NAFCU, and the CFPB, many law firms have compliance blogs and news alerts you can subscribe to for free. Knowledge is power, so grab on!"

"Credit union industry experts: What’s in store for 2014", cuinsight.com

I bundled those together for a reason: the CFPB will be stepping up its game in 2014. Credit unions will need to arm themselves with information, as mentioned in the second story. There are plenty of great resources out there, both free and paid.

Any other big predictions for this year? Leave them in the comments section.

October 29, 2013

Today's Not An Anniversary You Really Want to Celebrate.

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by Ron Daly

Torrential rain. Winds up to 115 mph. An estimated $68 billion in damages. Portions of the eastern seaboard still reeling.

It's hard to believe a year has already come and gone since Hurricane Sandy made landfall in New Jersey. It's not an anniversary you really want to celebrate but it's an important one to mark. It's a prime example of how credit unions are supposed to be rooted in their communities and how, as a community unto itself, credit unions reach out and help one another.

CUs help members

In the aftermath of the storm, stories came pouring in from New Jersey- and New York-area credit unions re-opening and powering through to help members. Some offered overdraft forgiveness, some offered low-rate loans for repairs; a brave and thoughtful few opened up their branches to those displaced by the storm, giving them a warm place to rest, recharge their portable electronics and get their finances in order for the displacement and for the recovery.

If there's a better example of "the credit union difference" than these community-based institutions offering the kindness and care that members need in a time of crisis, what might it be? Because this is the clearest indication to me of what makes credit unions special — a degree of true empathy. It's an empathy that applies to more than money; it applies to the human condition.

CUs help one another

In the wake of the destruction came the cleanup effort. Some issues were tackled quickly and with the kind of focus and calm needed to keep operations on the rails. Some issues have taken quite a long time to address, and some still go unresolved.

One good example of CUs lending themselves a hand? CUaid.coop, which sprang into action collecting donations from credit unions across the nation. The money got passed along to those credit unions that needed it the most. We started the rebuilding process almost immediately after the destruction took place. How many other industries get money going from company to company that quickly? How many other industries bother?

CUs could always do more

The Edelman Trust Barometer tells us that financial services is the least trusted industry worldwide. What can we do to counteract the skepticism and reticence in members and turn the "trust equation" back in our favor?

Stories like the ones above are a good starting place. Showing members that credit unions really do care about their safety and security goes a long way in building our credibility. But how do you really drive that home?

  1. Be Visible - Before, During, and After — If your service area is under threat, you need to be in communication with members throughout the process. When will branches close? Where should they go with concerns or questions? What should they do if they return home to extensive damage or, worse yet, outright destruction? While you're at it, reach out to disaster planning departments in your city or town and ask how you can contribute, volunteer and improve the conditions of those who get displaced or sheltered.

  2. Make Sure Issues are Well Documented — Did an ATM get destroyed in a tornado or flooded or burned up in a fire? Let members know. Did a branch need extensive repairs? Let members know. Do members that frequent one particular branch or area of service need aid and could that aid be provided by members in other locations? Let members know. Don't skirt the issue, don't "dummy up" - play straight, deal fair, do good.

    Recently,  the University of Michigan Health System encouraged doctors to admit to mistakes and bad calls. Surprisingly, the number malpractice suits went down. Why? Because people prefer a company, or a provider, that doesn't try to cover things up or fudge the facts. They want answers and clear communication. Give it to them.

  3.  Give Members the Tools They Need — Do your members know everything they need to know about direct deposit? If they don't, they might find themselves wanting when payday comes on the heels of a hurricane. Municipal CU learned that the hard way during Sandy and shared their insights. During a weather event, people might be lacking the resources they take for granted - mail stops being a priority, phone lines go down, the home computer might be done for due to electrical surges or fire or flood damage.

    But the chances are good that the members leaving their homes aren't leaving without a mobile device in-hand.

    Give members the tools they need most with your mobile offering. Check balances? That's a gimme. Transfer funds? Simple enough. Find branches and ATMs? Those tools are getting better all the time. Get copies of insurance policies, deeds, medical histories and wills? It's possible right this minute. If you're not offering these essential services, where is your operations budget going, exactly?

We hope that credit unions never have to deal with another "Hurricane Sandy". Unfortunately, we know they will. Here's hoping that they'll keep giving aid and comfort to the members that need it most. Here's hoping they'll keep looking out for each other and lending a hand in the spirit of cooperation and community building. Here's hoping that, when the crucial moment hits and it's time to be there for your members, you'll have given them all the information, attention, tools and time they need to get back on their feet. Here's hoping we can build more trust among our members and use that trust to turn them into lifelong members.

Here's hoping.

September 12, 2013

Introvert Media - What "Private" Social Networks Tell Us About the Future of Online Sharing

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by Ron Daly

It used to be that social media was all anyone talked about in business. "How do you use it? How can you grow an audience? Who should we hire to make it happen?"

With social media came a slew of new issues: people sharing photographs of their credit cards on Twitter (that account still exists, but the heck if I'M going to link to it); people sharing account information of every kind with newly-formed social phishing accounts; employees "over-sharing" or, in some cases, taking pictures of members' feet. And then, there's the marketing component. If there's a new medium out there, there must be some way to work in ads and direct sales/customer support, right? 

I don't know if that's true with the offspring of social media - introvert media.

Now, I know - there are nuances to what makes an introvert and an extrovert. I've been around a Myers-Briggs test before - I got a B+ (that's a joke, for any uptight psychologists reading this). But if social media is a more ideal environment for extroverts (lots of sharing, big crowds a must, plenty of feedback) then this new wave of private, shut-off social networks has got to be a big blessing for introverts (small crowds, not a lot of hubbub, not "open").

Take Snapchat, for instance. If you've never come across Snapchat before, ask your local teenager about it - they're likely to have it on their smartphone and use it to send pictures of God-knows-what to their friends. The idea behind Snapchat is pretty simple - take a picture, share with a friend, and a few seconds after they open it, the picture is deleted from their phone and from yours. Snapchat's programmers swear they can't see the pictures and that any attempt to screen-grab shared pictures alerts the photographer that the recipient tried to save the image. The entire point of Snapchat, according to their website, is to "share a moment". Users take pictures, send them to other users, and the pictures vanish. All that remains - at least according to Snapchat's privacy policy - is the memory.

Celly, a service that sends out mass text messages to registered users and is entirely closed off to advertisers and outsiders, is a favorite of plenty of people who are looking to stay in touch...from school systems to small businesses to protest groups. Similar functionality, but built for very small groups with phone access. The app now processes 550 million texts every month to members in 20,000 different groups. It's got nothing on Twitter's size...but it's not supposed to.

Want a better way to talk to your neighbors without having to...you know, actually talk to them? Nextdoor is Facebook for your block association. Users have to register their home addresses and verify they actually live in the community. It's a social network that's only a few "yards" wide.

I went poking around, trying to find an introvert network for people who want to better manage their finances. But let's face it, if you're managing your household's finances, you only want a few people involved in the discussion. Where does it start? What does a network that facilitates private, productive discussions about money look like? Who gets an invite? 

We've wrestled with this a lot in the creation and further development of My Virtual StrongBox. Forget about storage services that sit on your desktop and gobble up your many files and documents for sharing. My Virtual StrongBox is just for you and keeps your information safe and sound behind your online banking. Sure, you can share things with people (with a link that expires after a certain time/number of clicks), and they can send documents to your box if you need them to. But it's not meant to be a catchall - it's meant to be a private place. With all the movement toward introvert media, we see a growing need (as does Barclays, by the way) to present options that keep communications - and communicators - private.

In a world that's getting used to sharing everything, the real show-stoppers will be those that can keep a secret.

Are you getting into "Introvert Media"? Tell us about it in the comments.

July 31, 2013

Watch out for the eStatement Police!

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by Ron Daly

Strangest thing happened to me. I got stopped by the eStatement Police on the way home for work the other day. They pulled me over to make sure that I could view my credit union's online electronic statements.

I was warned that there was a pretty stiff penalty if I couldn't prove that I could view the statement. Any citizen failing to prove that they could view that statement would immediately have their statements switched back to paper and, if the infraction was severe enough, they could cancel my credit union's insurance policy.

Not one to argue with an officer of the law, I quickly reached for my smartphone sitting on the console next to me and he quickly reached for his taser. Realizing that I moved to quickly to comply with his request I slowly raised my hands back to the steering wheel. As his hands came off the taser I asked if it was OK for me to reach back to my iPad in my briefcase in the back seat. With a wary nod and his hand back on the taser, he let me get the iPad. I turned on the device and prayed that I had a decent cell tower to access. Once online I hit Safari, logged into my credit union account and clicked on eStatements. Turning the screen around, I displayed my credit union statement, which seemed to instantly defuse the situation.

The officer made a note in his log and thanked me for complying with his request. Before he walked back to his car I politely asked him "what would have happened if I didn't have my smartphone or iPad to access my eStatements for him?" His response?

"We've been known to escort citizens home so they can prove, on their computers, that they weren't lying on their eStatement enrollment application." WOW!

 

What agency does the eStatement Police fall under? The U.S. Post Office? They would certainly benefit from converting everything back to paper and postage. Maybe they're some elite group of secret insurance networks? 

All I know is that they sure are a tough bunch, having to enforce a section of a law that just doesn't make sense. This is 2013 for God's sake. Even my car has internet access and can read emails and texts to me while I'm driving. Having to prove (and track) that a consumer can view an eStatement is just ridiculous but that seems to be the focus of the eStatement Police. Even if consumers enroll in your eStatements online, you still have to prove that they had the technology to view it...

DUH. 

Yet, the eStatement Police are hard at work looking for the last person on earth that can enroll in an online process and not prove that they can view an electronic statement. When they find them I've got a few old iPhones tossed in a drawer that they can have.

Don't get nabbed by the eStatement Police. Using our eStatement enrollment process gives you a "get out of jail free" card, no matter where the eStatement Police are coming from.

Please be sure to share any eStatement police story or crazy laws still on the books you've heard of in the comments section.

July 02, 2013

The (Somewhat) Fantastic Four! - 4 Quick Snippets You Can Read Before the 4th

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by Ron Daly

Jack kirby. fantastic four

(Fantastic Four is a trademark of Marvel, Inc. and, by extension, Disney. Via this site.)

Yeah, I know - you're on auto-pilot as you cruise toward the July 4th holiday. But focus on these four quick-hit articles and you'll be informed, engaged and (hopefully) entertained.

(Somewhat) Fantastic Four, assemble!

The Invisible Girl...er, Guy, I mean.

Apparently Edward Snowden, the NSA Leaker and man-on-the-run, has had a little trouble finding asylum in the various countries he's contacted. He's written to multiple countries and embassies, looking for a way to evade the authority of the US. Many have turned him down outright, while others have implied that if Snowden wanted sanctuary in their nation, he may yet find it, but only if he can get to their embassy...which is hard to do from the inside of a Russian airport terminal. Ironic that a man whose movements have been followed so closely can't seem to get anyone to recognize him.

I only bring up Snowden because last month (before this scandal broke), I wrote a post on CU Insight about the "Human Factor" in data security. The article talks about employees who don't follow the company's rules on digital security (intentionally or inadvertently) and gives ideas on how to set up strict guidelines on protecting member information. Give it a read here.

The Ever-Evolvin' Multi-Colored Thing!

Remember those wheels that showed every social network and summed up what each did on a big, colorful wheel? Well, it's gotten much, much bigger in the past five years. The "Conversation Prism" by Brian Solis and JESS3 has grown by leaps and bounds. Compare it to the versions of years gone by - especially the 2008 version. How many of these channels is your credit union using? And how many of those are getting members' attention?

Do you have a Mr. (or Ms., or Mrs.) Fantastic?

Get them their very own trophy. Trophy Buffet will allow you to buy a trophy for your favorite person for whatever reason you like - some ridiculous, some worthwhile, all made with material you can write on and modify. Watch their goofy video and contribute to their Kickstarter if you believe that "everyone gets a trophy" is a good policy.

How to Avoid Becoming the Human Torch

And since this is the 2nd of July, it's a good time to remind everyone out there to be safe with their fireworks and barbecue grills. According to recent figures, firework-related injuries are down, even though there are still significant risks associated with the improper use of fireworks. 

What impressed me about this article? The number of people seriously injured due to barbecue grills every year...almost twice as many as those injured by fireworks. Maybe the family and I should just celebrate with cold foods this year. Chicken salad and popsicles, anyone? 

As we do every year, we wish all our readers and everyone out there a happy, safe Fourth of July. We also wish America a very Happy Birthday. Can you believe it? 237 years young and still going strong!

February 07, 2013

The Pocket Merger: Your Phone is Becoming Your Wallet. Will Your CU Be Prepared?

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by Ron Daly 

I'm an iPhone guy. When most of my peers were pecking away at a Blackberry hard-key, I was tapping and swiping my touchscreen wonder-phone. I'm currently working with an iPhone 4s, having bequeathed my old phone to one of my kids (who dropped her iPhone and shattered the screen). 

As someone who sits watching at the cross section of technology and finance, I'm fascinated by the idea of the "mobile wallet". I read a little more about it every day and, despite all my reading, I'm not quite sure what to think. Yes, interest is growing, but it's still small. Yes, the tech advancements are impressive, but also scattered between the people who were already handling payments (Visa, Mastercard and the like) and the start-ups (or is it "upstarts"?) out to stake their claim (Paypal, Square, Isis). Cheap, plastic doodads jut out of your phone that let you physically swipe a credit card with your smart phone. Suddenly, your smart phone's a wallet AND a cash register.

And a bank account? Time will tell, I suppose, if the merger between your phone and your wallet puts CUs at risk.

I pulled a few recent articles about the topic that I think are worth reading: 

Mobile Monday: Square Wallet Provides a Sneak Peek at the Future of Proximity Payment (Jim Bruene, NetBanker, full story here)

"And all your previous transactions, with full itemized receipts, are available within the Square app... It's truly the future of payments available for a sneak peek today. I highly recommend giving the Square Wallet a try."

Are Bankers Ready for The Bank 3.0 Reality? (Jim Marous, JD Power Banking Blog, full story here)

"[Quote from Brett King] The problem is that there are so many start-ups in the financial services and payments space that are impacting the way people view financial services that significant technology projects need to be undertaken by traditional banks just to keep pace. Investing in a technology layer, combined with the new costs of compliance, will be a challenge for smaller institutions. That doesn’t eliminate the potential for smaller organizations to collaborate or to build partnerships to respond to market realities, but I don’t see this happening."

Will You Be Ready When Mobile Wallets Turn Banking Upside Down? (Jeffry Pilcher, The Financial Brand, full story here)

"No matter what consumers today say they think of mobile wallets today, mobile wallets will triumph. Why? Because mobile wallets will simplify consumers’ lives in very personal and relevant ways. For starters, they eliminate the nuisance of thick, cluttered wallets. They also reduce the transmission of germs, because they eliminate  plastic cards, pens/signatures, touchscreens and keypads."

Mobility Matters: The Mobile Wallet Wars (Robert McGarvey, cutimes.com, full story here)

"If you are skeptical about digital wallets know that the skeptics may outnumber believers, at least among financial services executives. Forward motion towards wider wallet adoption has seemingly gotten just about nowhere in the past year. Few consumers have ever used one, few mobile devices have a digital wallet capability, and not many more retailers are equipped to accept them anyway.

But ask the experts and their advice is consistent: ignore digital wallets at your own risk because they are the future.

That clock is ticking."

Stop Spewing Mobile Wallet BS (The irrepressible Ron Shevlin, at Snarketing 2.0; full story here)

"If I've learned anything about doing consumer research it’s this: You can’t ask consumers their opinions about things that they don’t know. So, feel free to publicize your research about which mobile wallets are most popular with consumers, if you want, but I’m not buying any of it."

What are your feelings on the topic? Are you eager to pay for things with your smartphone? Think it's trouble brewing? Tell us more in the comments. 

January 29, 2013

A Penny Saved is…Still Not Enough to Save the Post Office

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by Ron Daly 

Well, my plan to invest my retirement in forever stamps is paying off nicely.

Yesterday, the United States Postal Service increased the price of a stamp to $0.46. The rest of the postage prices jumped, too, but it's good news if you've got a bunch of forever stamps sitting around - they're gaining value all the time. 

The USPS has the right idea - postage prices should increase, considering the fact that letter volume's dropping the way it is (heading to about 150 billion pieces of mail - seems like a lot, but that's actually waaaay down). And, lest we forget, the post office is bleeding about $25 million every day according to the postmaster general. Some estimate they'll be out of money and out of service in the next six months to a year. Will a penny more per mailed letter really save them? No, but it's better than standing still. 

Wait a minute, Mr. Postman...

In 2006, the USPS turned a $900 million dollar profit - yeah, you read that correctly. A profit. Hard to believe about an organization that in 2012 lost $16 billion. Where's all that money going? Is the sharp drop-off in mail volume to blame? Is it all the Postal Service's fault?

No, it isn't. As with just about everything these days, you can blame Congress. 

See, 2006 was the year Congress passed a law requiring the USPS to fund pensions through the next 75 years. I can tell you, this is unheard of in business - nobody's shoring up that much cash to pay employee pensions. Nobody. It's suspected that $11 billion of that $16 billion lost in 2012 went to pension funds and labor. Add to that the fact that mail volume's dropping off and Congress has been inflexible on the idea of killing off Saturday delivery (a measure that could save the USPS about $2 billion annually), the USPS has been fighting with one hand tied behind its back.

So, what's the solution?

There are plenty of people nationwide who are eager to see the post office saved for future generations. This Esquire article goes in-depth about the problem's the USPS is facing and how a complete dissolution of the entire postal service would be a blow to the American way of life. There's a new petition on WhiteHouse.gov to "save the postal service". But how to save it?

One possible way out? Undo the curse of the pre-funded pensions and let the money in that fund be dispersed to the post offices and carriers that need it. But that would require Congress's action in undoing what's been done. 

Congress? Action? Hmm...what's our other option? 

Oh, right...a taxpayer funded bailout. Taxpayers would fund the pension program and alleviate the post office's responsibilities. 

Feel like bailing out one more industry that can't handle the future? 

And speaking of the future...how bad off would USPS retirees be without the pensions in question? 

Not that bad, says Jen Wieczner at SmartMoney

Despite the Postal Service's debt, its retiree benefit coffers are beyond full. Its pension funds are more than 100% funded, compared with 42% for all federal pension funds and 80% for the average Fortune 1000 pension plan. That "astonishingly high figure," according to Williams, amounts to a "war chest" of resources that will take care of older workers for decades to come. 

So either way, it comes down to Congress. Keep your eyes peeled, there'll be a brouhaha on the Hill about all this, likely before the summer rolls in.

And in the meantime, what should you be doing, oh weary credit union marketer? 

The Broken Window Problem

You might be thinking, "yes, let's save the post office - we'll send out more mail!" It turns into the old Broken Window Fallacy - someone breaks a window, the window gets replaced for a certain cost, everyone starts a window repair business, and then all of a sudden...no broken windows. So what do people do? Start breaking windows to save the window repair businesses. 

It's wasteful and stupid. And so is trying to inject more mail into a beleaguered system because you feel bad about its shortcomings. When Western Union announced it would stop delivering telegrams, where did all the protests occur? Where was the petition saying an outmoded form of communication must be saved? 

I like my postal carrier. I like getting a letter every so often. But I don't walk around with 400 pieces of mail in my pocket every day. I do walk around with a small, touch screen computer that manages all my email, sends me text messages and even places phone calls. 

Now, let's look at credit unions. In a time when many CUs are closing their doors or getting merged, who can afford to overlook the significant cost savings that come from online banking, online account opening, eStatements, electronic bill pay, debit cards...the list goes on, but I get the sense I'm not telling you anything new. 

We started  DigitalMailer 13 years ago because we knew that the two things credit unions really want (operationally speaking) are to A) generate revenue and B) cut costs. You can't do that when you're chained to the giant rock of printing and postage. We've delivered close to 60 million eStatements over the years. At $0.46 saved per eStatement, that's $27.6 million that would go out of the pocket of the Post Office (sorry we're not sorry) and back into the pockets of the credit unions we serve. We've created products like One-Click Enrollment to help make that transition easy, and most eStatement converts never look back. Promoting education and organization to members through online account and document management is part of the greater mission of credit unions.

Heed that call and stop worrying about whether or not the Postal Service can survive. It'll take a fight with Congress, but it can be done. And even when it is, don't be surprised if the USPS still cries foul at the drop in volume. They had the chance to latch on to emerging technologies and ignored it, favoring the old ways instead of a new path to profitability. They didn't take it. 

Time for you to consider that new path for yourself. We're famous for avoiding bailouts. 

As for me, I hope postage jumps to $1 - my all-forever-stamp portfolio is looking better and better.

January 23, 2013

People Are Lending Directly to One Another…So What Are We Doing Here?

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by Ron Daly 

Today on CreditUnions.com, I was drawn to an article titled "Beyond the Home Loan: What can credit unions learn from online crowdfunding platforms?" [Here's the Full Article.]

While the article doesn't spell out the overall lessons, there are a handful of examples. Good enough, I suppose, because it got me thinking - what are we missing? 

Credit unions, as best I understand them (and after 30+ years in the business, I can honeslty say I do), were created to give members a way to lend to and borrow from one another. They were created as an alternative to the system. Now, for consumers, it seems like we're just another part of that "system". 

Bank customers and credit union members know that good loans go to good paper. If you're trying to buy a home or a car and you have a good credit score, you won't need to look for too long to get what you need. But if what you're trying to do is create a movie about Linotype machines or start a small business selling weirdly-shaped candles, you'll likely go wanting. And for the people who have rough credit, quick, high-interest loans with fewer strings mean more than "relationships" with a bank or credit union. 

As far as peer-to-peer finance and technology goes, you're crazy if you don't go read "A Game of Leapfrog" by Brent Dixon. 

From the article, originally published on the CU Watercooler

But meanwhile, many credit unions still don't even offer online account opening. We're saddled by regulations. We're a weighty, slow-moving beast. We make excuses.

Consumer finance is not just begging for disruption, it's experiencing it. In a few short years, many traditional institutions will be passed over. Leapfrogged. It's easier to build than reform, and people are building.

So, what can credit unions learn from peer-to-peer finance today?

  1. Time to Re-evaluate the "People Helping People" Message -

    Everyone I talk to in the industry loves that phrase, but how many credit unions are interested in the proof of it? When a person lends to Kickstarter, they get a "thank you" in the form of a gift - maybe a version of the product the borrower is developing or a branded package of swag with the up-and-coming product or company logo. What's the "thank you" gift new members get at your credit union? A letter? A free pen? 

    Better yet, where are the booklets and brochures with member success stories? Show me the story of a member who joined and went from broke to flush thanks to the credit union. Show me the small businesses that have benefited from the CU's guidance. Those stories have got to be there. Otherwise, my fees and interest are going toward nothing, as far as I can tell.

  2.  Partner Big, Lend Small

    According to the CreditUnions.com article above, services such as Kiva and Fundly use proven tech platforms like Paypal and Amazon to process payments and securely move money to and from borrowers and lenders.  Why can't credit unions partner with tech providers for everything they need - better online banking and account opening, smart phone apps, tracking of the loan process, etc.?

    It's not that they can't, it's typically that they won't...or don't want to. Even when vendors provide all the due-dilligence and proven testimonials and case studies, credit unions will still look for ways to doubt results. Who does that help? Not the member, certainly, and not the loan portfolio.

    And look at the amounts certain people are requesting - $300? $500? They'll go to a payday lender before they walk through your front door, how is that a good thing? It's not because the money isn't expensive - the rates on these small, short-term loans are outrageous. But people see fewer barriers to entry. They don't know they're walking into a trap. Shouldn't being more accessible be a goal for every credit union?

  3.  Never Turn Away From Your Social Missions

    People value charity, philanthropy, benevolence - not because they're "trendy", but because they're the right thing to do. We know hundreds of credit unions that partner with great causes but rarely explain the depth and their level of involvement. Why shy away from talking about things like Credit Unions for Kids? Share the good news with more than just a parting shot in your newsletter - make it a cause that you champion, not just "support".

  4.  Play the Game, But Play to Win -

    Sure, LendingClub and Prosper.com are growing enterprises. But are they human enterprises?  Can they really lend and handle deposits the way you can? Are those prepay debit cards celebrities seem to love so much really a better alternative? The answer to all three of those questions is "no". 

    You can provide deposit insurance. You can provide security. You can provide convenience. You can do it all and, if you do it well, you can show everyone that you're not "just another bank" - you were facilitating "peer-to-peer" before it was cool. And you're still here now.

It's not just lending that's being overtaken by "the people" - it's debt forgiveness, too. The Rolling Jubilee raised half a million dollars, bought up thousands and thousands of dollars of debt from banks, and forgave it. These "gifts of forgiveness" went out to average consumers, bogged down by medical or educational debt, and told them their debt was forgiven in its entirety. 

Your average consumer now knows that there are multiple ways to manage one's money - there's the bank, there's the credit union, or there's "none of the above". 

We USED to be the way people loaned money to one another...now, we're a hinderance. We get our "people helping people" status back by being adaptable, affordable, approachable, and dependable. 

Let's get to it.

 

January 04, 2013

The First "Duh of the Week" of 2013 is One for the Record Books

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by Ron Daly 

Ever bite down on your tongue while you're eating a lemon? It's a double-whammy of pain. There's the acidic burn of the lemon juice and the "yow that smarts" of cutting your tongue with your teeth. The thought of it is enough to make you wince. 

It's one of those blunders that you could have avoided in a few different ways. For one, stop eating lemons, you weirdo. For two, chew more thoroughly. You've got no one to blame but yourself. 

The first "Duh of the Week" has a lot in common with this twofer of pain - it's something that could have been avoided and it's easily the stupidest combination of dumb ideas I've ever heard.

A Portland-area teen...

  1. drove home drunk from New Year's Eve, then 
  2. told everyone about it on Facebook.

What a dumb move. For starters, he drives home drunk (under-aged, mind you), hitting TWO PARKED CARS in the process. As if that wasn't enough of a bonehead move, he POSTED ABOUT IT ON FACEBOOK, complete with a little winky-face emoticon. 

If you have young people in your home, now's the time to have "the talk" with them.

  • Sit them down. 
  • Tell them you love them. 
  • Explain that if they need a ride, you'll come get them, no matter the situation.
  • Tell them they should never ride in a car with a drunk driver.

    And lastly...
  • Gently remind them how hard you're going to kick their butt if they ever do something this idiotic. 
Drunk driving kills people, and when it doesn't, it can cause untold damage of another kind. The last thing your kids should ever want to do is drink and drive, and the second-to-last thing they should ever want to do is brag about it on a social network

Kudos to the thoughtful Facebook followers who informed the police and got him booked for his idiotic crime. Maybe now, he'll be sending a status update: 

"In jail :( Not as fun as I though it would be..."

Are your employees behaving resposibly on social media? Is the person in charge of your Facebook account making the right decisions?  How sure can you be about all that? Time to start that long-awaited social media policy, maybe? Maybe employees can use "the talk", too.

Comments always welcome. Happy 2013 to everyone!

July 10, 2012

They'd Like to Leave, You'd Like to Have Them…Technology's the Bridge

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by Ron Daly

When we started this blog, we wanted to call it "CU Soapbox" because it was meant to be a place to stand up and shout about the industry. I've been doing a little "shouting" recently and I thought I'd make it a point to do the same on this blog, because hey, this is the right place, isn't it? 

I've done a little reading about a recent Javelin study about big-bank customers and why they want to make the switch to another FI...but don't. The Financial Brand does a great job of making all this digestible and points out one very important piece of information: 40% of surveyed consumers WON'T LEAVE their big bank because of that bank's online/mobile banking service. Do they want to leave? Yes, of course they do. Who wouldn't? Getting beaten by fees and losing a ton of money that you could hang on to would make anyone want to leave...what keeps them hanging on is the illusion of convenience. 

I say "illusion" because the kind of technology that would bend the bow in credit unions' favor is out there, and it can be had. We could be courting these on-the-fence big bank customers and their billions in collected assets. Why aren't we? 

I believe there are two problems:

  1. We're not promoting the technology/convenience we have and already offer, and
  2. We're not positioning ourselves to bring in the technology that levels the playing field. 

 I wrote two articles recently that sum up my thoughts on the topic. Go read: 

Then, start asking yourself the four major questions that need to be answered, and fast:

Question 1: "Are our current members utilizing the online services we offer, and if not, why?"

The best and easiest research to conduct for yourself is on your own member base. If you have 10,000 members and only 1,000 are using online banking, what could be done to get more people to sign up and start using it? Maybe they already did and it was such an excruciating experience that they swore off of it (I can't imagine that happening, but who knows?). What can you do to make it right?

Question 2: "Is our website (or OLB/mobile app/email newsletter/social media feed) everything it should be?"

Websites need updates and overhauls. It comes with the territory. Marketing hates to hear that they have to write new copy and make new graphics and IT hates the hassle of creating and implementing sweeping changes. I have two words for both: tough toenails. If the site needs a face lift, give it one. If it needs a total reboot, give it one. Make it easy for interested outsiders (and undereducated insiders) to get all the information they need.

Question 3: "What next-generation technology would best suit our members?"

Audience is everything. If you serve a member base that's always on the move (military, air travel industry, etc.), why not include remote deposit capture and a smartphone app? If you serve a large area that's tough to reach on foot, more drive-thru ATMs make sense, don't they? Don't just throw everything at the wall and see what sticks...make an informed decision for the member.

Question 4: "Who's in charge?"

So often, technological advances and purcahses are made without clear goals in mind, or anyone to enforce them. Set expectations and meet them. It's not difficult and it means there's a person driving these endeavors from the inside. 

Final Thought

Did you ever hear the riddle about the frog in the well? 

A frog falls into a well, 20 feet deep. Every morning, he wakes up and hops three feet up the side of the well. Every evening, he falls asleep and slides back two feet. How many days does it take him to get out of the well? 

The answer: Considering he jumps three feet every day and falls two feet each night, it would take him eighteen days to get within three feet of the top. Then, on the nineteenth day, he'd jump three feet and clear the well. So simple it's complicated, right? 

Let's put a CU-spin on this. If a credit union gains ten members a month and loses nine by the end of the month, how long will it take that credit union to compete with Bank of America in terms of sheer numbers? 

The answer: You can't compete with BofA on locations. You can't compete on "number of members vs. number of customers". Their product offering is too abundant, their reach is too wide and too far. Where you can compete is on an emotional level -making a lasting impact on your member. You can also compete on member service. You can also compete on rates. You can even compete on technology...provided you're willing to make it happen. 

Start jumping.