Reg E Opt-Ins, Part 2: Compelling Arguments

by Ron Daly 

Our last post walked through some of the headaches associated with Reg E opt-in programs at credit unions. Members are reportedly planning to throw away their opt-in forms and not bother with overdraft protection, and there's really not much we can do other than make a compelling argument as to why members should enroll.

An article from CU Journal from the 17th of this month has advice from Rory Rowland of Rowland Consulting. I thought some of it was worth sharing with you.

Some mistakes that Rowland says CUs are making: 

• Waiting to see what happens: "This is not a healthy strategy. Get a plan of action. Place an (opt-in) banner message on your website to encourage people to opt in. When members overdraw, send them and e-mail and tell them about the new regulation and that they need to opt in. If they are in the top 29% of your abusers, call them." 
• Lack of monitoring: "You need to know how much income you are making from courtesy checking-20% to 29% of your members give you 90% of your NSF income. Target those top 29% and get them to opt in before July 1."
• Front-line staff have no idea what they are doing: "Do you have talking points written for front-line staff to tell members how to opt in?"

Tired of the Bank? CBS Says "Dump That Sucker"

by Ron Daly

We've been talking about the "Move Your Money" movement for a while now. CBS's EconWatch published a story earlier this week titled "Hate Your Bank? Dump That Sucker For a Credit Union!" It came with the video below and spelled out the differences between banks and CUs. [Note -- email readers, please click over to the website to watch the video.]

We've had quite a few of these in 2010. Do you find your credit union gets more memberships/inquiries because of them? What do you wish these videos would say? Are videos like these something you share with members via email or your website, like TDECU does on their home page? 

Tell us all about it in the comment section. 

Bank Customers Are Mad As Hell, But What Else Is There?

by Ron Daly 

An article caught my eye on Monday about rallies against banks in major cities around the country. Citizens angry at big banks (with a particular focus on Goldman Sachs, still the whipping boy for public ire) mounted protests in places such as Charlotte, NC, New York City and Washington, D.C. One particularly disturbing protest involves a giant, inflatable banker chewing up people and spitting them out - as in the following video. 

Man, that's weird. 

Anyway, it made me wonder about how credit unions are doing with drawing new members away from their old banks.As a company that works with over 180 credit unions across the country, we know that there are a handful of credit unions willing to poke at the bruise left by the big banks to get new member's attention. 

Where Anger Fails, Marketing Succeeds

It seems like every six weeks, we get a new story about the "big banks" that drives people crazy, but we rarely see an "action step" coming from the other side.

Two opinions to consider when it comes to working with "Bank Rage" - that of Paul Lucas of Paul J Lucas consulting, and that of Ron Shevlin at Aite Group. 

In the April 12 issue of the CU Journal, Paul Lucas outlined three major action items for credit unions looking to sway the opinion of the non-member. 

1. Marketing Core Loan Products - That loan capital is capital you can count on, and do more with in the long run. 
2. Cross Sell Checking with Direct Deposit - says Lucas, "Cross selling at every opportunity is the hallmark of a smart, competitive credit union."
3. Keep Your Promises - "Knowing a member's name when she walks in the front door is not service. Handling her transactions with speed and accuracy is service." 

And speaking of service...I read a very thoughtful article on Marketing Tea Party, the new blog by Ron Shevlin. Titled "Moving His Money", the post tells the tale of a man with a long relationship with his community bank that, because of a series of unfortunate transactions, decides to move from a little bank TO a big bank. Says Shevlin in the post-story commentary: 

"This isn't a good sign for those marketers. The populist anti-big bank sentiment isn’t going to last forever. America loves to find new villains to crucify. Knowing when to jump off the #moveyourmoney wave is a decision that needs to be made."

My Rant: Why do credit unions always fight over the small piece of the pie left to them? Let's quit marketing against each other, continually moving our 6% market share between credit unions and let's figure out a way to collectively go after the 94% opportunity share out there and move it to credit unions before it's too late. 

Comments?

Information: The Number One Enemy of Bad Lending

by Ron Daly 

I recently learned about "Borrow and Save", a program started in Baltimore by the Neighborhood Housing Services, banks and the FDIC. The program allows underserved consumers to borrow as much as $1000 at an 8% interest rate, but requires that they go through a "financial fitness" class to get the money. 

This story from WAMU in Washington talks about one consumer who has already been helped by this program. 

"I grabbed the number as soon as I seen it. I said ‘I can’t believe this is happening.' This is what I want, way better than the alternative was," says Witherspoon.

The alternative was a cash advance loan with a double-digit interest rate. Witherspoon says he did that before and it took about three years to get clear of all the repayments...

Witherspoon used his loan to pay some bills and move to a safer neighborhood with his wife and grand-kids. But he says the financial counseling was more valuable than the cash. One lesson: pay yourself first.

"So now I snatch $40 out of my pay no matter what going to a savings account just to make sure I got a little extra that I don’t need or don’t touch. That’s a plus for me," he says.

Music to a former CFO's ears. 

Here's the cold, hard truth - folks in underserved/underbanked areas that take on payday loans aren't "borrowers" so much as "victims". The rates are ridiculous (650% APR, in some cases), the terms are ridiculous (loans rolled over after the initial period, which many lawmakers are seeking to end), and borrowers who are barely getting by are finding themselves further away from financial stability as a result. A little information goes a long way in getting folks who previously thought financial management was unattainable on the right path to recovery and eventual prosperity.

I know there are community CUs and specialty CUs that cater to folks like Mr. Witherspoon (mentioned in the story above), and if they have programs like this I'd love to hear more about it. I think CUs that offer programs/packages such as this are doing good work, work that should be mentioned and applauded. If your credit union offers similar programs and is fighting hard against the pull of cash advance and payday lending, let us know. We will devote a story to your credit union's anti-payday program and give you the credit you deserve.

Your thoughts and opinions are welcome, as always, in the comments section. 

What do you MEAN, all your marketing's spent on calendars?!?

by Ron Daly

Came across this article on the brand new CU Water Cooler blog. It's called "Top Five Myths You Hear Credit Unions Say" by Mark Arnold. It's worth the read, and it made me want to speak out on two of the five "myths". 

(2) We can’t afford to do __________________

Insert your own project, new product, technology, marketing idea or anything else that gets pinched in a tight budget. Let’s be honest: the truth is you probably can afford to do the initiative, you are just choosing not to do it. So don’t blame money: blame your priorities. If you really want to accomplish your goal then you might have to tweak other areas.

I tend to agree with this. True, many CUs have been dealing with diminished budgets and a smaller staff, but that might just be the right time to bring in a creative solution. Such was the case recently with Northwest FCU's member relations department and their collection email series (click here to read about this). DigitalMailer gave a hand, saved them some money and continues to streamline collections calls.

(4) We have to reduce the training and marketing expenses because of the budget 

 Every year is a tough year on the budget. But if you continually cut the training and marketing budgets in the short term, you only harm your organization in the long run. Stephen Covey said it best, “If you have to cut things out you just cut people; you cut training and development; kill the goose that lay the golden egg; for a short term period of time you improve your profits. But then you’ve liquidated the human resources…in the long run you have to live with the consequences of a dead goose.” The truth is you don’t have to cut training and marketing; now is the time to invest in these key areas.

When it comes to marketing, cutting back is always a heartbreak for the folks that make it happen. 

Denise Wymore has been writing about the death of "traditional advertising" on her blog for the past week or so (click here to read her "RIP" series). Lots of folks have had to readjust, pushing and pulling from print, billboard, and even phone book (that post is a funny one) to get into email marketing and other forms of electronic marketing. Creative marketers find ways to MAKE their budgets work - even in a recession. 

One thing that was (and is) a pet peeve of mine is branded calendars. Calendars are expensive to print, exhaustive to get rid of and are useless to most working professionals. When your phone can plug into your computer and share a common calendar that sends you little messages when your to-dos are coming up, a little pocket calendar doesn't mean much to you. There are whole stores that just sell calendars with whatever you want as the month-to-month theme, why bother shoving stock-photos of mountains and grass at people? Giving away calendars is a money dump for your marketing budget - period. Let's put that money to better use. 

Come on, I KNOW you people have your pet peeves about what your marketing budget "has to have" every year. Tell us all about it, and what you'd do with that money if you could spend it how you wanted.

A Revoltin' Development

by Ron Daly 

We've already established that there's a "debtor's revolt" going on in this country. Our rioters are not people who knowingly drove themselves into hundreds of thousands of dollars in debt, mind you. They're good people who make their payments, don't default and try to get ahead honestly. People that, as we discussed last time with our Suze Orman video and my Chase-chess game, are sick of big banks and lenders trying to rig the game. 

The revolt came to Chicago yesterday as protesters organized by the Service Employees International Union and National Peoples Action marched on the ABA Convention (click here to read the CU Journal story). Even as representatives of the ABA tried to pardon their members, citing that the crisis was not specifically caused by banks but by lending powerhouses like Fannie Mae and Freddie Mac, the crowd gathered outside to register its displeasure. According to the article, the protesters also visited offices of Goldman Sachs and Wells Fargo - two institutions that are not ABA members but did receive bailouts. 

While Some See Red, Old Hickory Credit Union is Seeing Pink.

by Ron Daly

I'm sure football fans have noticed all the pink surrounding their favorite teams, cheerleaders and even stadium equipment the past few weeks. Sports Illustrated even "went pink" in its most recent issue, all to acknowledge the fight against breast cancer. I saw a great program go across the DigitalMailer production line this week and wanted to share it with everyone.

For the month of October, which is Breast Cancer Awareness Month, Old Hickory CU is working hard to increase awareness and contribute to cancer research. Their approach, outlined here in their monthly "Money Memos" newsletter, which by the way is pink this month, is threefold:

1. A team of Old Hickory CU employees will be participating in the Nashville Making Strides Against Breast Cancer event on Saturday, Oct. 24. Their goal is to donate $2500 to the American Cancer Society;

2. Old Hickory CU is selling pink umbrellas for $15, with $7 of that going to the American Cancer Society. These umbrellas also come with a set of coupons for credit union services that benefit members; and

3. All branches are offering information on breast cancer awareness, as well as supplemental cancer insurance policies.

I'll Gladly Pay You on Tuesday...

by Ron Daly 

...for clearing my bad check today! Has overdraft protection (aka courtesy pay) seen its last days? It started with a desire to help consumers when their accounts were overdrawn. Instead of returning a non-sufficient funds item and charging a return fee on each end, some institutions began paying the check and collecting a slightly higher fee. The consumer would then repay the financial institution when their next paycheck or deposit was made.

But, as is typical, the road to ruin is paved with good intentions. 

Larger banks saw the opportunity to let people drive themselves and their accounts into the red. Not only would the person be responsible for paying off all the money they'd spent (unknowingly, in some cases), they'd incur a fee for every debit on their account. Bank of America was recently raked over the coals for paying the higher dollar amounts first so that more of the smaller transactions would incur the $35 fee, According to the Associated Press, consumers pay as much as $17.5 billion every year in overdraft fees. consumers pay as much as $17.5 billion every year in overdraft fees.

Passing the Buck

by Ron Daly 

Wonder why the largest banks in America continue to post profits during these trying times? It’s because they are great at passing the buck (or the bill) on to consumers and small business owners alike. While we were all focusing on the Credit Card Act of 2009 the past few weeks, a story came out on how some banks are sending bailout bills to biz customers (click here).To summarize...

In May, the Federal Deposit Insurance Corp. (FDIC) assessed the nation's banks $5.6 billion to restock its insurance fund after costly bank failures, reported Dow Jones News Service (July 29). It was noted that JPMorgan Chase & Co. paid $675 million out of second-quarter earnings and Wells Fargo & Co. paid $565 million. "But those two banks, along with many others, are passing their FDIC bills to some business customers," the article said. Other banks are burying the cost in the compensating balances at they are requiring business accounts to have in their accounts. 

 Looks like another great opportunity for credit unions to outshine banks when it comes to business banking. Small businesses can’t get the working capital they need to grow and they are getting slammed by fees and poor service. 

How can the CU industry simplify business banking and take advantage of the ill will small business owners have? Are CUSOs like the one in the news this week (click to read about Small Business America), which offers member business loans, deposits and other services to small businesses the answer? 

The questions that linger in my mind as small business owner and loyal credit union fan - Why do credit unions continue to sit on the sidelines when opportunities present themselves? And, for those CUs in the game - Why do we make it so hard for business owners to use credit unions?

Caught by the Fan!

by Ron Daly 

Not too long ago we were all high-fiving over the passage of the Credit Card Act of 2009 and the screws it was going to put to the banking vultures taking advantage of our members & potential members (Click here for a summary of the bill). We were standing behind the fan as the credit card mess hit it and got all over the bankers. Guess what, folks? It was an oscillating fan, and has swung back around and gotten all over our beloved Credit Union Industry.