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7 posts categorized "Guest Author"

February 07, 2012

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


The following strategy-focused overview candidly dissects the challenges and risks that are dangerously snapping crocodile-like at the heels of credit union leaders.  The mere fact that there is so much change going on and so much change that could go on in the 2012 to 2013 timeframe makes credit union’s reluctant to take major strategic steps when significant energy and resources might be demanded to manage through these unprecedented challenges.  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!  Use this overview as a discussion-starter at the next Management Team or Board of Directors meeting. 

Strategic Macro-Trends Affecting 2012:

  • Today’s political, legislative, and regulatory risks far exceed the traditional operating risks – credit, interest rate, liquidity, transaction, compliance, strategic, and reputation.  The crushing regulatory burden exacerbated by compliance’s escalating cumulative complexity now drags on the credit union business model and threatens its future viability. 

  •  The polarized Congress and the gridlocked legislative environment that results cause strategic uncertainty in financial services regulation, mortgage finance, and the economic recovery.  The November 6, 2012 elections could lead to a massive macro-directional overhaul of the federalgovernment.  That added ideologicaluncertainty makes scenario planning and financial modeling difficult at best – perhaps impossible. 

  • Many credit union officials claim that the National Credit Union Administration (NCUA) Board has been relentless in imposing its interventionist agenda on credit union decision-makers.  On a regular basis the NCUA Board demonstrates through its policy directives, supervisory edicts, rulemaking, and enforcement actions that its priorities too often stray from an emphasis on safety and soundness toward micro-management and counter-productive social engineering.  However, the biggest burning question – How much is the corporate credit union crisis resolution going to ultimately cost? – remains unanswered.

  • In addition to its own pre-disposition to re-regulate credit unions, the NCUA is mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Consumer Financial Protection Bureaus(CFPB) statutory mission to examine for and enforce additional complex and costly requirements on credit unions.  The NCUA is destined to become a branch office of the marketplace-controlling CFPB enforcing a “level playing field” of fewer consumer choices and limited credit availability.

  • The global economic situation has not been this troubled in decades.  The U.S. Federal Reserve System Board of Governors has promised to keep interest rates at unprecedented lows through 2014.  Only slight improvements are expected in overall economic growth and employment over the next several years.  Consumers will continue to focus on deleveraging their debt and limiting their spending.  The federal debt continues to grow and the political inability to deal with demographically unsustainable entitlement programs embeds more uncertainty into the fiscal dynamic.  The wearying margin-less economic situation obstinately refuses to go away.

  • Additional strategic hot topics: net worth expectations, capital access, deposit insurance reform, moral hazard, too-big-to-fail, systemic risk, loan portfolio mix risks, charter conversions, prepaid cards, consumer activist groups, financial literacy, credit union service organizations, participation loans, partisan political polarization, and many specific credit union-identified hot topics.  

Key 2012 Strategic Takeaways:

1.     Fundamentally Different Decade Ahead.  The next decade will be fundamentally different – economically, competitively, demographically, culturally, and politically – from the preceding decade.  Using the same strategic approach to the financial services marketplace as in the past would be insane.  The economy in particular is expected to inch its way along impeding everyone’s business plan.  To keep the credit union’s metaphoric head above water, its leaders must fully understand the prevailing undercurrents that radically impact on strategy.

2.     External Risks > Internal Risks.  External risk factors – especially political risk, regulatory risk, and complexity risk – will have more impact on a credit union’s strategic success than will internal factors.  What one does not control will exceed what can be controlled.  Get used to it – uncertainty and how well it gets incorporated into strategy is critical to a credit union’s successful operation.

3.     Federal Government Not Friend.  The Congress, the National Credit Union Administration Board, the Consumer Financial Protection Bureau, and the Federal Reserve Board have their own political agendas and are not a credit union’s friends.  Don’t let them fool anyone into thinking otherwise.  Instead, expect them to keep making things more difficult.  Treat their increasingly costly, complex, and burdensome demands with deference – but validate, verify, and when appropriate challenge their directives.

4.     Ultimate Stabilization Costs Unknown.  Regardless of whether the NCUA Board’s loss estimates for the corporate credit union legacy assets are realistic or not, the Board sets the Temporary Corporate Credit Union Stabilization Fund(TCCUSF) assessment based upon those estimates and they drive the credit union’s costs.  Nobody knows for certain how deep the multi-billion dollar TCCUSF hole really is or how long it will take to pay it off.  Plan for the worst, hope for the best.

5.     Industry Infrastructure Fractured.  As a direct result of the 2008 financial system meltdown, the current credit union industry’s legacy infrastructure – including its in loco parentis regulators, non-risk-rated deposit insurance regime, and even its traditional trade associations – are showing signs of rust and structural weakness.  Proactive demolition and reconstruction of these faltering institutions sans dogmatic platitudes, entrenchedoligarchies, and one-size-fits-all approaches could go a long way toward restoring real return on investment for each increasingly diverse and independent credit union.

6.     Heavy Mortgage Loan Mix Untenable.  In the absence of a serious refocus of lending strategies credit unions are at risk of becoming the next Savings and Loan debacle.  Collectively credit union loan portfolios are dangerously loaded with low-return fixed-rate mortgages.  Many credit unions also rely heavily on originating and selling to the secondary market that is currently in flux due to the conservatorship of Fannie Mae and Freddie Mac, the glaring absence of any private market investors, and Congressional proposals that could radically reduce the demand for mortgages.  It’s an accident waiting to happen that credit unions must anticipate and avoid.  

7.     Non-Bank Competition Toughest.  Big banks, community banks, thrifts, and even other credit unions are not a credit union’s biggest competitors.  Big box retailers, insurance companies, payday lenders, and other non-banks are running circles around traditional federally insured financial institutions and it will only get worse because most of the non-banks’ offerings are convenient, uncomplicated, and consumer-friendly.  Credit unions, and especially Congress and regulators, should learn from these competitors’ successes rather than try to stamp them out.

8.     Boomers & Seniors Rule, X & Y Drool.  Aging baby boomers constitute a major portion of credit union memberships and along with many seniors dominate credit union boards of directors.  Generations X, Y, and the very young will not be a credit union’s salvation in the near term no matter how hard they try to attract those smaller demographic cohorts.  Each credit union needs to find out what their existing baby boomer members want and find a way to profitably give it to them.  Neglecting boomers could be fatal to the institution’s bottom line.

9.     CU Business Model Threatened.  The traditional low-cost, high-service credit union business model seems increasingly at risk from its cumbersome governance structure, limited access to capital, reliance on loan and investment income, legacy modest means mission, innovation-killing hyper-regulation, and inadequate products and services authorities.  Credit unions desperately need additional ways to generate income, broaden service offerings, streamline delivery systems, and generate scalable growth.  The credit union business model will need to evolve in ways that will make the traditionalists uncomfortable, but the alternative is stagnation.  Credit union leaders must proactively advocate this business model evolution since it won’t be simply handed to them. 

10.  Urgency for Change.  Lead, follow, or get out of the way.  Credit union elected officials and management executives that are unwilling to be drivers of change should seek early retirement.  The future belongs to credit unions that are committed to and intensely involved in change.  A change management skill-set and a sense of urgency will be required if a credit union wants to emerge unscathed at theother end of the coming decade’s strategy-altering uncertainty-laden gauntlet.

 Have questions/comments for Marvin Umholtz? Leave them in the comment section below. 

September 09, 2010

GUEST POST - On Branding: How to Survive the Bucking Bronco


by Ron Daly 

This guest article was written by Paul Lucas for the Credit Union Journal. We thought it was worth another look. You can contact Paul via his website at or email him at

During the fall of 2007 those of us in the financial services industry — and most consumers in the Western world — abruptly found ourselves astride an angry and bucking economy. Few of us were prepared to go full tilt into the arena on an animal we'd never ridden before. 

In the spirit of our gyrating economic indicators I thought I'd share some basic survival advice. There aren't a lot of manuals out there about how to survive the worst economy since 1929, so I borrowed a bull riding manual from So put on your chaps and join me for a ride on the economic bull, no double entendre intended. With apologies to all the real cowboys and bronco riders out there (and my friends at WyHy FCU in Cheyenne, Wyo.) below are some steps that might help you ride out the economic downturn. 

Step 1: Obtain a bronco saddle that meets rodeo specifications. That's a saddle without the horn that helps a rider keep balance, and with stirrups that swing freely, rather than being attached to the saddle. Bottom line, this means you have to give up the old strategies that worked for decades and find a new way to manage your credit union. 

Step 2: Learn the bronco riding rules and scoring system. Knowing the rules used to be easy, but no more. Some credit unions are trying to save their way back to prosperity while others are working to grab market share in a down market. Everyone is looking for the fine line between investing too little and spending too much.

Step 3: Hold onto the reins with one hand only. Switching hands will disqualify you. Today we're all trying to manage assets with one hand practically tied behind our backs. We need loans to survive, but low interest rates make bringing in cash almost a losing proposition. Members don't understand why they can't roll over share certificates at a decent rate, yet they want even lower auto and mortgage loan rates. It's a Catch 22 that has to be monitored and managed day-by-day.

Step 4: Saddle your bronco carefully while the horse is in the chute. Be sure to pull the cinch tight to prevent the saddle from slipping off during your ride. The fundamentals are always important. Today they are essential to survival. Financial products and services are basically the same everywhere; it's the delivery and messaging that matters. 

Step 5: Grasp the reins with one hand. During your ride you cannot touch the horse or yourself with your free hand. Keep a tight hold on the reins, but stay flexible in the ring. In this economy you have to turn where the bronco takes you but you can still keep a grip on the reins and maintain some degree of control. Mobility is essential! 

When you're out there every day just trying to stay on the bronco remember, every cowboy has to take a turn in the ring. Banks, mortgage companies, investment firms and credit unions are all riding the same unbroken horse every day. It's the clearheaded cowboy and flexible cowgirls who'll be picking up the trophies when the rodeo's over.

May 10, 2010

Anthony Demangone of NAFCU: The 7 Deadly Questions


Anthony Demangone is the Director of Regulatory Compliance at NAFCU. You can read his thoughts on regulation, compliance, NAFCU and CUs at large over at the NAFCU Compliance Blog, and you can regularly hear him talk about current issues in credit unions over at...well, the Current Issues in Credit Unions podcast over at That Credit Union Blog

Recently, Anthony wrote an interesting article for NAFCU's magazine, The Federal Credit Union. I want every one of our regular readers to pop over to Anthony's blog and read the article in full. It's great food for thought and comes with this disclaimer: 

Editor's note: This has been a tough stretch for credit union compliance officers. Regulation Z, HVCC, the CARD Act, the FACT Act, Truth in Savings, Regulation E, MDIA, and HOEPA have all ganged up to throw myriads of new requirements at credit unions. If you want to get the most out of your compliance officers and preserve their sanity, please pass this article around to your non-compliance staff.

Please, give the article a read and let Anthony know what you think. We'll take your comments, too, if you prefer. 

Compliance officers get questions.  That is a fact of life.  We get big questions and small ones.  Complicated questions, and simple ones.  Some questions, though, give us heartburn.  These questions cause us to close our door and bang our head against the wall.  

In a perfect world, these questions wouldn’t exist. The world, however, is not perfect.  We know that.  All compliance officers want is to hold these questions to a minimum.

The following list shows what to avoid when asking a compliance officer a question.  Whenever possible.  When that is not possible, go ahead and ask. But come bearing gifts.  Or antacid.

1. "I heard it from a friend who heard it from a friend…" questions.  These questions often start with the phrase, “I was at a conference, and I heard that we have to do (insert issue).”  Ah, the wild goose chase.  Compliance officers do appreciate it when other credit union employees come to them with new compliance information...

2. Last-minute contract reviews. Often, these questions look like the following: Can you look at this contract?  We need to have it signed today, and we want to make sure that everything is OK...

3. Oversimplifying questions.  Some questions might seem simple, such as this one: What disclosures do we need to have on this (insert document, such as periodic statement, late notice, etc.)? That question is not simple.  It is fairly complicated. What makes this question so troublesome is that the answer turns on many, many variables...

4. Conference call questions.  (The phone rings in a compliance officer’s office.)  Hello. We’re in the middle of a meeting, and a question has come up regarding the Home Valuation Code of Conduct.  Can we do (insert question)? Don’t worry…we’ll stay on the line and wait for your answer...

5. Open-ended questions. These questions might look like this one: What do we need to know about this (insert subject)?...

6. The “onion” question.  I call this type of question the onion, because it involves layers.  A compliance officer gets a question, and they answer it.  But then the person comes back with additional details...

7. The “sneaky” question.  Often, credit union employees have disagreements concerning whether some action is permissible.  Sometimes, one of the employees involved in the disagreement will try to use a compliance offer to buttress his or her argument...

Click here to visit the NAFCU Compliance Blog and read the full article!

July 16, 2009

One Spot, One Thought


Most think that the opportunity for credit unions to grow market share and deepen member relationships has never been better. After all, banks and other financial entities (i.e., CIT) have been falling down for over a year now. 

Shari Storm - Chief Marketing Officer for Verity Credit Union, blogger and author of the book Motherhood is the New MBA - is a fan of making the message simple, clear, and focused. We were very excited to have her as this week's guest author, and we think her advice is very sound. 

You fill your direct mail pieces with every offer available. You mail them twice a month. Your numbers barely shift. What gives? Maybe there is such a thing as "too much to choose from".  


Shari Storm

Throughout my 15 year marketing career, I have had some sort of variation on this conversation at least one million times.

Me (or my team): "Our plan is to tell our checking account holders about our VISA card."
Someone else: "Why don’t we tell them about our car loans and mortgages too?" 
Someone else: "We should send them a menu of products we offer so they can choose from all 64. Who knows what they need right now?"
You can swap out the target and swap out the product, but the suggestion is always same – send as much information as possible. The more words, the better. 

Most marketers know that the opposite is true. There is an old adage, "If you tell them three things, you’ve told them nothing". Or, like Currency Marketing said when we were producing a radio commercial with them, "One spot, one thought". 

Continue reading "One Spot, One Thought" »

April 10, 2009

Guest Author Robbie Wright: BarCampBank


Robbie Wright is the Vice President of the Credit Union Division for Nexcentri, a CUSO of Tampa Bay Federal Credit Union. Robbie is also one of the more prolific bloggers in the "CU bloggosphere", writing the blog The Life and Times of a Credit Union Employee. His insights on being in the employ of a CU and in the CU industry are honest and insightful, with a good eye for observation. His discussion in comments is usually lively, adding more background to the story as more CU professionals weigh in. Also an authority on "BarCamp", we've asked Robbie to walk our readers through the basics of BarCampBank Vegas, coming up at the end of April/Start of may. Robbie can be reached at

Innovation.  Social media.  Core competencies.  All over-used buzzwords that seem to get discussed at every conference by some talking head that's paid to be there and has done the same dog and pony show for a year and a half.  Well, BarCampBank is here to change that.  Commonly referred to as the "un-conference", BarCamps have been around for a number of years and were initially popularized in Silicon Valley.  As Wikipedia puts it, "BarCamp is an international network of user generated conferences - open, participatory workshop-events, whose content is provided by participants."

Continue reading "Guest Author Robbie Wright: BarCampBank" »

April 07, 2009

Guest Author Melina Young: Get a Coffee – Save $300 Million


Melina Young is an owner and president of Credit Union Strategic Planning. Her research has been featured internationally and most recently at a symposium in India. She is a regular guest lecturer at the University of Washington. Melina is the project lead for one of the fastest growing small credit unions in the world. She bats 1000 at grant writing, securing six figures annually for credit unions. Of the five grants she authored in 2008, all have received funding.

Melina is also one of the bright minds behind the American Debt Relief challenge, the widget of which recently debuted at the top of To give you more information, we asked Melina to be a guest author and walk you through the ADR - how it came to be, who's behind it and where she and her group hope to go.  
Get a Coffee – Save $300 Million

"You won't believe the 4-hour coffee conversation I just had," my business partner Jamie Chase said to me a few months ago. "We are going to help credit unions grow their net revenue while saving consumers $300 million." Intrigued? So was I...

Over that coffee our friend Scott Butterfield described a balance transfer program to Jamie which saved the average family $200 a month. That's a table full of groceries or a car payment for most families. "Credit unions across the U.S. are running balance transfer programs," Jamie said excitedly. "What if we measured the national savings?"

Continue reading "Guest Author Melina Young: Get a Coffee – Save $300 Million" »

January 13, 2009

Our First Guest Author: Matt Davis, The Credit Union Warrior, talks Skip-A-Pay

Matt Davis (a.k.a, "The Credit Union Warrior") is the Public Relations Director at Members CU. He's also one of the biggest "CU-lebrities" around, thanks to his blog ( and ambitious projects like the What Are You Saving For? website (, which is helping to promote a save-minded member by offering prizes for folks who are doing a good job of hanging on to their money. 

Matt's dedication to the credit union ideal and fresh, fun writing style have made him a hit with other cu innovators and regular folks alike. Which is why we at the CU Soapbox were thrilled to have him as our first guest author. So, without further ado...

Members Credit Union’s David to ING’s Goliath: Holiday Skip-A-Pay


ING Direct just announced (click here for their press release) that they forgave $861,513 in January mortgage payments for 500 lucky homeowners. For the winners it is hard to imagine a nicer way to start your 2009. For the losers…well, you are just out of luck. 

Enter, $200 million Members Credit Union (Winston-Salem, NC). MCU offered a fee-free "Holiday Skip-a-Pay" to all members for any non-mortgage loan in November or December. The response? 4,089 loan agreements, accounting for $876,772 in member payment obligations, were amended. This accounted for 20.4% of the credit union’s outstanding loans, and an equal ratio of monthly loan payment cash flow. 

MCU launched the program on their CEO’s blog, for zero direct marketing cost. Comments such as "Thanks for caring about my family!!!" and "This is a blessing from God" will forever serve as public testimony on the blog. Whether members took MCU up on the offer or not, they will not forget the sentiment: when times are tough, your credit union is here to help. 

What is your credit union doing to outshine the big (in this case HUGE) banks? What can you do to make members’ lives during this trying economic time a little better? How are you making your program accessible for all members?