Filson Calls for Cooperative NCUA

Filson encourages credit unions and their members to sign WhiteHouse.gov petition.

by Jimmy Marks

On Monday morning, just as the CUNA Government Affairs Conference (GAC) was getting underway, Chip Filson, Chairman of Callahan & Associates, Inc. was gathering a crowd of CU professionals for a press conference. As the room quickly filled and places were taken in chairs and along the walls of the meeting room, Filson announced a new vision for the NCUA and for credit unions - a vision based on the seven cooperative principles. Filson's proposal would encourage the administration to allow credit unions to have a say in which individuals would be selected for open NCUA board seats.

From the Press Release that accompanied the conference: 

"The cooperative design is foundational to the success of credit unions and their member-owners. Yet there is widespread concern that the Agency is not practicing cooperative solutions," Filson said. "How can credit unions fulfill their special role in providing Americans with real choices for their financial wellbeing if a cooperative regulatory perspective is lacking?"

Filson called on all attendees - and, in turn, all credit unions and credit union members - to sign a petition on the White House public petitions website, asking the Obama Administration to fill upcoming NCUA board-seat vacancies with "leaders who understand the shared economic value for people and communities created by the Cooperative model". As of this writing, the petition has received 549 signatures and needs 99,451 more to be considered formally by the White House. The 100,000 signature benchmark must be met by March 26, 2013 for the petition to be considered.

When asked whether or not the petition would hold any real significance, Filson seemed adamant that the petition itself was an important example of the openness of governance and leadership, whether the 100,000 signature goal is met or not. NCUA board members are currently appointed by the President and confirmed by the Senate.

Filson's release also served as his declaration of candidacy for the upcoming board seat. Planks in Filson's platform include:

• Reestablishing cooperative principles as the foundation for the credit union regulatory system
• Providing credit union members and leaders an opportunity to demonstrate their support for leadership based on the cooperative principles
• Advancing the vision of a 21st century cooperative regulator.

Filson has a long history of working with credit unions, CUSOs and other finance-based businesses. Between the years of 1981 and 1985, Filson served as the Director of the Office of Examination and Insurance and the CEO of NCUSIF for the NCUA. He was a co-founder of Callahan & Associates, an organization he now serves as Chairman, and sits on the board of several organizations, including DigitalMailer, the owners and operators of this blog.

Remarks and response in the conference room were positive, with some mild confusion about the tone of the message and how to best convey the sum of the ideas expressed to credit unions and their members. Simply put (at least from the writer's viewpoint) - credit unions should want to have a hand in choosing the people that regulate them and the direction the NCUA takes in the future. Members should understand a desire to use a democratic process to choose their leaders - it's a part of the American experience.

If you're interested in the petition or the finer points of Filson's campaign, go to www.coopsforchange.org.

How do you feel about a more cooperatively-minded NCUA? If not Filson, who should take the seat, if credit unions get to choose? Talk to us in the comment section.

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

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.

 

The Top 10 CU Soapbox Articles of 2012

Another year has run its course. We thought we'd wrap up this year of soapy, shouty goodness with a look at the ten best articles of the year (based on number of page visits). 

It's interesting to see what had everyone talking early in 2012 and how much things changed in a few short months. What do you think will be the hot news item of 2013? 

As always, thanks for reading. Here's hoping you enjoy this look back, and we'll see you in a few days for a new year of the CU Soapbox. 

1. The "Overly Attached Girlfriend" Approach to Follow-Up

   We've all met people like this...people who can't let go. They're the people who obsess over their relationships and go a tad bit crazy. It's not just "girlfriends" that do this - boyfriends can be just as guilty, as can best friends or even casual acquaintances.

   Or, in some cases, marketers.

   Click Here to Read the Full Article

2. WTF? What's Next, No "Union"?

   This is a crock. What's next? They start saying we're not allowed to use the word "Union" because labor forces complained? How are you supposed to tell people you're "much more than a bank" when you can't say the word "bank"?

   Click Here to Read the Full Article

3. Suze Orman gets into the prepaid card game -- and out of the good graces of the CU Industry?

   Suze Orman wasn't hired to promote CREDIT UNIONS, she was hired to promote NCUA and their capacity as the insurer of cu deposits. But people read "Suze Orman" and "NCUA" and interpreted that as "Credit Union Spokeswoman".

   Which is unfortunate, because Suze Orman just decided to set herself up as a prepaid card magnate.

   Click Here to Read the Full Article

4. Who Are the People in Your Neighborhood? Four Good Ideas for Getting Locally Known

   I've seen credit unions with extra-inclusive fields of membership. I've seen credit unions that have branches in far-flung corners of the globe. But let's be realistic - where are you?

   Click Here to Read the Full Article

5. Focused on the Community: NerdWallet's Top 10 Community CUs.

   The top ten weren't simply listed, ten-to-one. They were highlighted for specific achievements, such as "Best Business Support", "Most Inclusive", and "Best Loan Assistance Program".

   Click Here to Read the Full Article

6. Guest Author Marvin Umholtz: Stop Feeding the Strategic Crocodiles Snapping at CU Heels

   Although potentially unsettling for those who like easy answers, this overview’s’ fundamental premise is that today’s credit union leaders must thoroughly understand what they are up against and mitigate it. Credit unions aren’t paranoid if malignant forces are truly out to get them!

   Click Here to Read the Full Article

7. Everybody's Reviewing It! Why Gen-Y Depends on Other People's Opinions Online

   Why would the opinion of someone a Gen-Yer has never met mean more than their real-world friends and family? Well, in the real world, maybe not. If someone runs up to you on the street and screams "BUY AN iPHONE!", it might not make you break out your wallet right then and there. But when Bazaarvoice means "stranger", I'm pretty sure they mean a "reviewer". And what does a review have?

   Click Here to Read the Full Article

8. Still don't have a social media policy? Bet you'll write one after this...

   Think about it for a minute. Most of the videos in that story appear to be shot on a smart phone. What happens when it's not feet they're recording, but credit card and debit numbers? Checking account numbers and balances? Still not seeing a problem?

   Click Here to Read the Full Article

9. Too Many Text Messages Might Make Some Unhappy People Into Millionaires

   Papa John's is staring down the barrel of a lawsuit that might cost them $250 million...all over a few dozen text messages. Talk about your overage charges.

   Click Here to Read the Full Article

10. GUEST POST: Mark Arnold on Becoming Your Members' PFI

    Just think about it: what would happen if every one of your members just added an additional product or service per household? Odds are, your net income would skyrocket.

    Click Here to Read the Full Article

GUEST POST: Innovation Unveiled In The Big Apple

Alix Patterson is the chief operating officer of Callahan & Associates and serves on Callahan’s board of directors. She oversees Callahan’s media division and leads strategic planning sessions for credit unions. 

In this article, which originally ran on CreditUnions.com, Alix shares her thoughts about DigitalMailer's My Virtual StrongBox product - and her thoughts on the only company to present at FinovateFall 2012 that has direct ties to the credit union industry.

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Could you deliver all the information needed to set your institution apart from its peers in seven minutes or less? Could you trust your services, people, and products to perform in a live demo scenario, with all the movers and shakers of the financial industry looking on?

That was the challenge for presenters at last week’s New York Finovate conference. These individuals braved a judgmental Twittersphere (the caffeine was flowing freely) as well as technical issues at the venue to share their dreams with potential venture capitalists and financial institution partners.

While credit unions from across the country were in attendance, the second day of Finovate brought the only credit union-owned presenter - Virginia-based DigitalMailer - to the stage. There, CEO Ron Daly showcased the company’s latest product innovation, MyVirtual Strong Box. This solution lets consumers store personal records virtually with the financial institutions they already trust, instead of relying on third-parties whose usage and ownership policies could be a future point of contention.

My Virtual StrongBox integrates with a financial institution’s home banking platform, providing the first layer of security for members wary of using "the cloud" to store their personal documents. Then, My Virtual StrongBox encrypts each individual file as it is uploaded, ensuring that information will only be unlocked by the uploading party.

From the financial institution side, My Virtual StrongBox looks to be not only a retention tool but a potential revenue generator as well.

Credit unions can deploy a freemium business model with My Virtual StrongBox. By offering an initial amount of storage and then letting members upgrade for a fee, credit unions can generate new non-interest income.  Both Northwest FCU and DCU launched the product with an initial offering of 100MB free and members have already started to upgrade after hitting their maximum space allotment.

In good Finovate-fashion, Ron and his team also unveiled a brand new iPad version of the service, featuring all the capabilities of the regular offering in portable, intuitive tablet interface. 

DigitalMailer’s presentation provided a great reminder that credit unions and CUSOs are often at the leading edge of financial innovation. With any luck, next year’s conference will feature even more cooperative institutions bringing their big ideas into the limelight.

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This article appeared originally on CreditUnions.com and is the intellectual property of CALLAHAN & ASSOCIATES. No part may be reproduced, transmitted, distributed, published, or otherwise com­municated, in printed form or electronically, without the express written permission of CALLAHAN & ASSOCIATES.  

My Crazy Ex-Bank: What Some FIs Are Doing to Keep You from Leaving

by Ron Daly 

We all know someone with a "crazy ex" story. Some people just don't handle breakups well and they end up taking it out on the other person. Hopefully, you've never run into a crazy ex yourself...but you might wind up with one if you try and move your money from a big bank to a credit union. 

The "big guys" are going out of their way to "maximize breakage", as Seth Godin says. Some of them are charging big fees for closing an account you've had less than six months. Some of them are making it expensive to do an EFT or a wire transfer. Most of them are making the process itself hard to understand. From the article above:

Consumers Union also found that the account disclosures and websites for all of the banks surveyed failed to provide consumers with clear account closing policies. In the fall of 2011, the consumer advocacy group said it sent 16 secret shoppers to the banks’ branches to ask how to close an account. Some shoppers received conflicting information on how to do so.

I'll bet they did. 

Are the big banks really crazy? No. They know that if a process is difficult enough, you'll give up trying. If you can't close an account easily online, you'll go to the branch. If the process keeps you at the branch longer than a few minutes, you'll get antsy and leave. Either you'll break down and quit or you'll pay the fee to leave - if you feel strongly enough about the latter, you'll pay not to do the former. 

GUEST POST: Mark Arnold on Becoming Your Members' PFI

Mark Arnold, CCUE, is an acclaimed speaker, brand expert and strategic planner. Mark speaks regularly to audiences around the country on branding, marketing, strategy, leadership, personal growth and generational issues.  With over 20 years experience in the financial services industry, Mark’s breadth of knowledge covers areas such as marketing, business development, human resources, training, and sales. You can follow him on Twitter [@jmarkarnold] or via his blog at blog.markarnold.org. 

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BEYOND A SAVINGS ACCOUNT: BECOMING YOUR MEMBERS PFI

“Credit unions must see themselves as relationship managers. As relationship managers, credit unions better position themselves to become members’ primary financial institution.”

—CUNA E-Scan 

While there is a big rush today to get more new members, one marketing strategy your credit union may want to focus on is getting more from your existing members. Most marketing experts estimate it is eight to ten times easier to expand a relationship with a current member than it is to acquire a new member. Just think about it: what would happen if every one of your members just added an additional product or service per household? Odds are, your net income would skyrocket.

Credit unions must get their members to go beyond just having a savings account and strive to become their members’ primary financial institution. “Financial institutions that make retention one of their top three priorities often enjoy deeper relationships, steadier growth and clearer focus on the core business,” says CUNA’s E-Scan.

According to CUNA, here are the odds of your credit union losing a member based on product usage:

• 2 to 1 of losing a member if they only have a saving account
• 10 to 1 of losing a member if they have savings account and a checking account
• 20 to 1 of losing a member if they have savings account, a checking account and a loan
• 100 to 1 of losing a member if they have savings account a checking account a loan and any fourth product

Product penetration and member retention are directly linked together.

Two steps your  credit union can take to going beyond just having your members’ savings account are:

1)      Offer relationship pricing

2)      Get sticky products in their hands

How Often Does "Co-Op" Come Up?

by Ron Daly 

I was at a meeting the other night where Randy Smith from CUinsight was the speaker. He was talking about the importance of local relevance and community building for CUs. One of the things he brought up was the idea of the credit union as a cooperative. With more and more people buying into the idea of a local economy, why not talk up your virtues as a cooperative institution? After all, you're likely serving a certain small area in your state...you're as local as money gets. 

2012 is the International Co-Operative Association's  Year of the Co-Operative. I've read a lot about this in the trades and I've heard a lot about it from the "Net-Set" (my nickname for social media savvy CU folks). But as a credit union member? I haven't heard that much about it. I only know what I've gone out of my way to find out. 

I've tried to look at this from two sides, as I do with most topics here. One part of me says this is a worthwhile talking point. The conversation about what "membership" is takes a while, but the kind of folks that buy Community Supported Agriculture (CSA) shares and shop at farmer's markets are already keen to this concept. What would stop an enterprising credit union from setting up outside a farmer's market, or even better, HOSTING a farmer's market at your branch (parking lot permitting, of course)? Why not talk to a crowd that you know will listen? 

The other side of this seems to be a perception issue. If you talk about how "local" you are, you risk scaring away people who want you to be easily accessible out of town. There are ways to counter this: ensuring you're a part of a shared ATM network; having reliable, easy-to-use online banking; call centers; and so on. But how do you stradle the knot? "Use your money anywhere - it'll still be here." Kinda confusing, but I'm no copywriter. Is there a fear that members will choose a big bank because they believe it's more convenient?

What do you think? Is being a co-op important to your credit union? Is it important to you personally? Which way do you lean? Any great examples of people maximizing this local synergy? 

Tell us about it in the comments.