Thinking Like a Software Company: Some Thoughts on Mobile, eWallets and Where We're Going

 by Ron Daly 

I caught a look at this article from BankInnovation about Bank of America's mobile users. Recently, BofA Senior VP Marc Warshawsky disclosed that the number of mobile logins to their electronic banking services outnumbered the "online" logins (that is, from a personal computer) for the first time. Apparently, BofA customers can't get enough of the megabank's mobile apps. Warshawsky had a few words for how to manage mobile as smartphone penetration increases.

From the article:

How should banks approach mobile? “Think like a software company,” Warshawsky said. But he added a word of caution to developers: “Not everything is the right thing to do for customers just because you can do it.”

A sharp observation. But I wonder what he means by "think like a software company", especially when software companies aren't really "companies" these days - some are just a handful of developers, or even one developer, working remotely to make an app. Hard for a company as large as BofA to tell other large institutions that the key to success is thinking small and light, don't you think?

To try and expand on this very small soundbite and think it out a bit, I made some notes. Tell me if you agree or not: 

Step 1: Function first, form second, platform third

If I were a developer, I would want to create a product first and foremost. What's the pain I'm trying to salve over with this app? Marco Arment, creator of Instapaper, had a single goal in mind: make articles easy to read when you're able to read them. He worked hard to create the code that would strip out all the ads from an article and present the information in a way that was easy on the eyes (Instapaper makes it easy to adjust brightness and font size - great for guys like me who love their iPad and hate having to find their glasses). He then brought that to bear on the iPhone, the Kindle, the computer monitor, the iPad...and now that he's sold a majority stake to BetaWorks, you'll likely see the app on every platform out there. But what makes it worth the time and money? Simple - it does one thing well on the back end and presents it beautifully on the front end, no matter which "front end" you're using.

Step 2: Change is good, and necessary, and (relatively) easy

There's a world of difference between the "software" we were used to in the 90's and early 00's and the "apps" we can't live without today. "Software" was a big, branded box of discs and booklets and download codes. Want to update that software? You need another box and another authenticity code and another set of booklets. And, most likely, you'll wait five years.

"Apps" live in our little icon squares and update every few weeks...maybe every few days. When developers find bugs or want to push updates, it happens quickly and, typically, efficiently. Adobe's taken note of this - their super-expensive and super-sought-after Creative Suite is going subscription, meaning updates and changes will be pushed automatically - no more buying upgrades to CS packages. Don't be afraid to upgrade your mobile offering when the time comes and be sure to focus on bug reports, breaks and user feedback.

Step 3: Find new ways to simplify and specialize

Malauzai, our mobile app partner for our My Virtual StrongBox app, has made a few headlines recently thanks to their common-sense approach to app development. River City FCU has a high number of Spanish-speaking members. The solution? A multi-lingual app that can serve both English- and Spanish-speaking markets effectively. Users complained about having to enter login credentials to check a balance. The solution? An app that will display balances and recent transactions without logging in but requires a full login for transactions. Simple, compliant, effective. 

Our own app's got some smart problem-solving features, too. Some folks don't have scanners and want to make electronic copies of paper documents. Solution? Take a picture with your iPad's camera app and it stores the image in your online safe deposit space. Simple!

Step 4: Always be closing...er, opening, that is.

Warshawsky warns against overwhelming users with too much functionality in an app. While you may not want to jam every possible user action into your mobile app, you should definitely leave yourself open to opportunity. If a member checks in three times a day, how can you be sure they'll be seeing what they "should be" seeing? That is, how can you make certain that when a member's ready to move on a home loan or an auto loan, they think of you first? Better get smart about giving people clear paths to a deeper relationship.

---

Apps are a way to keep current and bring mobile convenience to members. They are, however, just another mile-marker on the road to mobile dominance in our culture. What happens when that much-discussed "mobile wallet" hits the member's hands? Are you going to be an important player, or an obstacle to progress? How can you be sure you won't be left behind? 

Talk to us about it in the comments.

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.

 

It's "American Pickers"…only the stuff's pretty worthless.

by Ron Daly 

 I like "American Pickers". I'm a big yard sale guy and I love the idea of getting a big return on a junky little find. One man's trash is another man's treasure, after all.

Unless it's just plain ol' trash.

We were cleaning out the office the other day and I discovered a few rare gems from a bygone age. Among them: 

Floppy disks! These little wonders used to be our way of moving files from one computer to another. Then, it was CDs. Then, it was thumb drives. Then, it was shared networks. And suddenly, these little springy disks just didn't cut the mustard. A little creative math tells us that a 2GB thumb drive holds as much information as 1,422 floppy disks. So why bother? 

Picked Price: ~$10 for a box of five in 1998

Current Value: Nuthin'. We don't even have a PC with a floppy drive anymore. 

Phone Books! Two of them. Yep, there are businesses that will still buy yellow page ads and there are still phone companies that will drive around and hurl these fossils out in giant piles. If you think there's anything sadder than an enormous stack of dead trees full of information no one really needs, think again - it could be raining on these piles, making them not only useless, but soggy.

Picked Price: Technically free, but I'm sure I'm paying for them some way or another.

Current Value: Diddly squat.

A big book on writing direct mail letters! And a heavy book, at that. For it's time, I bet this thing was a great value. But with the lack of attention people give letters anymore and the price of postage, this seems like an instruction manual on using your buggy whip. (Note: Yes, I know, I'm biased - but I'm a consumer, too, darn it. I don't give a lot of thought to direct mail pieces, other than whether to recycle them on throw them in the fireplace for kindling.)

Picked Price: Someone bought this in 1997 for $80, and it's in mint condition - we never even cracked the spine on this thing.

Current Value: I dunno...make me an offer. There are some interesting tips in here about writing, but you'll have to filter them through the past sixteen years of marketing changes.

___

So what have we learned from this? Time marches on. We make new discoveries, set new goals and meet them, and the old relics fade away in the process. Sometimes, they become treasure - there's a big-time market on old typewriters, watches, fancy pens, and anything that's both stylish and useful - even in the age of iPads and wi-fi. 

But certain things are junk, plain and simple. I can't imagine a world where artsy hipsters get up early on a Saturday morning to find old Zip-drives and printer cables. They served their purpose. Hopefully, they've been recycled. But I doubt it. Most of that stuff got swept out of an office that was being renovated, driven to a landfill and chucked into one big pile of mess.

When it comes to technology, awareness helps, as well as an aversion to attachment. Consumers are being educated to love the new and the now and to dislike anything that's a generation back. We update our technology not year-to-year, but week-to-week - "apps" have turned the industry of creating and shipping technology on its ear, letting everyday people get in on the game and create apps for the entire world to use. Computer companies are trying to make every generation of computer slimmer, faster, and more powerful than the generation prior. Why wouldn't you want the fastest, the best, the least-complicated version of anything? 

Why would you do business with a credit union or bank that doesn't make the everyday act of "banking" simple?

Are you going to be a relic? Are you going to be rubbish? Or are you going to be so important to the lives of your members that they'd never dream of throwing you out in the trash?

The strong survive, but the smart thrive.  

If you have comments, leave them here. If you need me, I'll be out in a barn, looking through old soda bottles and bike seats. The rich life, here I come!

Why Useful Alerts Mean So Much

by Ron Daly - 

Image Source: "Checkbook with a brain - 1975" by Nesster on Flickr (used under CC 2.0)

Notifications have been a blessing and a curse in the past decade.

"You have two new followers on Twitter!" Well, good for me. 

"John checked in at Boots-N'-Chutes!" Good for John, but why do I care?

"You were tagged in a photo on Susan's Facebook Album, 'Me and My Friends at a Jimmy Buffet concert!' Click to view." ...okay, that one's a good catch. Better untag that one of me with a margarita and a parrot hat. 

Yes, social media has spoiled us for notifications, turning the most mundane and unimportant notes into flashing billboards that you almost can't avoid. 

How do credit unions get heard above the din? By remembering the truth...

Nobody's Thinking About You

Anybody a "Mad Men" fan out there? I've only seen bits and pieces, but one scene sticks out in my mind. Do you remember this past season when Don Draper cheated one of his junior copywriters out of a campaign for shaved ice? The junior copywriter tells Don he feels bad for the way Don is, and Don responds "I don't think about you at all." 

Powerful words. They don't mean "I love you", they don't mean "I hate you". They mean "you don't matter". And, sadly, I think a lot of people feel this way about their banking (er, "credit unioning") relationship. As long as they get approved at point-of-sale and there are no big fees lurking around the corner, most members don't care much what their credit union is "all about". It's usually when there's a NSF fee incurred or a payment missed or a check bounced that people get up-in-arms and start contemplating a switch.

But there's a hidden misunderstanding here - members CAN AVOID huge overage charges, missed payments, and running out of money. They just don't like to think about their accounts or their budgets. And other banks and credit unions are setting high bars by using smart, targeted and actionable eLerts, so when a member doesn't get a warning sign to stop spending, they're left feeling burnt.

JJ Hornblass wrote a great article about this very topic on Bank Innovation. From the article: 

Is it valuable to know when a balance is low? Yes. Is that all a customer needs to know when it comes to low balances? Of course not. A meaningful alert would be one that cross references balances with payments. Let me explain. Say I have $10,000 in my checking account. Certainly, that is not a “low balance” — and US Bank would not send me an alert as a result. But what if I have a future payment planned for the following week in the amount of $11,000? The fact is that $10,000 immediately becomes “low.” And what if I get paid $6,000 every Monday? Well, then that $10,000 is not “low” anymore.

See how a little "extra mile" thinking can turn "Your money's gone." into "Your money's about to disappear, let's do something about it."? See how valuable that is to a member? See how it changes the way they think about you — not just as some brick building that holds their paycheck hostage week to week, but as a partner, a concerned party in their financial future?

Remember how important check registers were to your parents, or maybe even to you? Those days are long gone. Newer generations of members want to see their money come in and go out in real time online and have a rough idea about what's there otherwise.

Meet the demand. Make them think about you, and make those thoughts happy thoughts. 

BTD2012: Will It Happen, and If Not, Will You MAKE It Happen?

by Ron Daly -

Reports vary on how important Bank Transfer Day 2011 was. The 5th of November was supposed to have been the finish line of months of bank-switching and move-making. What came of it? 

According to a new Javelin study, not nearly as much as what might have been. Even though the NCUA and CUNA have speculated that 2011 brought in between 1.3 and 2.1 million members, respectively, Javelin's Mark Schwanhausser has called BTD "a bust". Even though the year saw impressive member growth (by CU industry standards), Javelin's study suggests that 11% of consumers are still eager to switch and some $675 Billion is still up for grabs in 2012...well, what's left of 2012, that is. 

So, when is Bank Transfer Day 2012? Is it needed? Could it happen again as it had before?

Ron Shevlin doesn't think so. From his blog: 

As far as I’m concerned, BTD 2011 was a passing phenomenon. A one-time shot. The pieces came together at a moment in time in 2011, and those pieces aren’t there for 2012. 

What pieces, specifically? An angry public, for one. People just aren't as incensed this year. They haven't had a "$5 fee-asco" like the Bank of America fee that kick-started the whole affair in 2011. Not to say the "Big-Banks" aren't charging fees - far from it. But there's no kick-start, no "straw that broke the camel's back" this year. 

Another missing component? A strong social media groundswell, created by an outsider, pushed on by concerned and eager fans and followers. You can't just drum those up out of nothing, they have to be hand-made by eager participants. 

And what about the insistance that "every day is Bank Transfer Day"? Yes, it's technically true, but are credit unions making the switch an easy one?

I was at an industry event a few weeks ago when someone insisted that "switch-kits" - the online walk-throughs designed to help people move their money - are "worthless" (their words, not mine). So, what's the key? Is there a snappy, easy way to get money from one FI to another and close accounts? 

And on the other side of the coin, there's a much bigger issue: member attrition. How many members that DID show up thanks to BTD are already gone? How many will we lose this year? If we keep sliding backwards, how will we ever get the growth we need? More startling, the fact that people itching to switch would be willing to pay fees for additional services...as much as $92 million. In FEES! Don't you see how important it is to not only offer "great customer service", but to offer sticky, useable products to back that up (as I discussed in my July CU Community article)? 

I can tell you this - if you're hoping another 50% member increase is just going to fall into your lap, you're dreaming. 

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

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: 

• 7 Steps To Build A Successful Virtual Branch (at CreditUnions.com)
• Think Virtual When Thinking Credit Union Branch Operations (at CUinsight)

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.

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. 

_______

 

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

Remember, Folks - "Target"-ed Marketing Needs Humans

by Ron Daly 

I know you've already read the Forbes article about Target sending baby-related coupons to the teenage girl before her father knew she was pregnant. In case you haven't, here it is. If you're too busy to read it, the short version is this: 

• Girl buys pregnancy-related products
• At point of sale, Target identifies those products as products pregnant women buy
• Target sends girl baby-related coupons
• Father finds coupons, calls Target, complains
• Target calls back to smooth things over with the father
• Father has to apologize to Target  -- daughter actually WAS pregnant

Stunning, right? Not really. 

Marketers have lots of information with which to work and can make offers and decisions about consumers that would surprise the average citizen. Target's got their system down. Amazon does it every time you log in, and weekly in an email ("Customers who bought this item also bought..."). Google's got a history of everything you've searched for as a Google user that they're using to put certain items in front of you. 

Is that a bad thing? Not necessarily. But when you take some of the humanity out of marketing, this is what happens - a girl has to break the news to her father that she's going to need those coupons after all. A major, life-changing event, a big secret, gets dropped on the dining room table and left for all to see. Not because Target had any interest in revealing this girl's pregnancy, but because, somewhere along the way, she went from person to data point. 

How do you avoid things like this? I have to believe, after more than a decade of working on things like this, that preference matters. How you communicate things to people, how you make offers, what they've told you, directly, that they want out of your relationship - that has to matter. 

When a consumer says they don't want offers, don't send them. 

When they unsubscribe, don't email them anymore.

When they refocus the message themselves, don't keep drowning them in information they don't want.

In the history of marketing, we've never had clearer insights, or a greater pool of data from which to draw conclusions. Just remember, emotional intelligence matters, too. 

Marketing needs humans and a little more humanity.

What are your feelings on this story? Let us hear them in the comments section.  

 

 

 

The Great Mortgage Refi: Should We?

by Ron Daly 

Remember Superman: The Movie when Superman flew around the world and spun time backwards? That way, he could save Lois Lane, stop Lex Luthor, and whitewash all the unpleasantness that ever happened. I'm not a physicist, but I'm not so sure that would work. And if it did, why stop there? Why not keep flying backwards and stop Lex Luthor before he even hatches his evil scheme? 

I bring it up because someone wants us to fly backwards and undo a disaster. Not a physical or natural disaster, but a financial disaster. The article "Time to consider mass mortgage refinancings" by Allan Sloan in the Washington Post sheds light on a shocking idea: that we could refinance the mortgages of qualified-but-financially-stressed borrowers and actually save ourselves some money and some risk.

From the article:

I’m talking about providing a cheap, streamlined and simple way to refinance fixed-rate mortgages backed by Fannie Mae and Freddie Mac, which own about half the nation’s mortgages and are now effectively owned by the federal government. Fannie and Freddie creditors were bailed out in 2008 when Uncle Sam put the firms into conservatorship to avoid their having to file for bankruptcy; as we’ll soon see, those creditors, consisting primarily of big financial institutions, would bear the cost of helping homeowners.

Mass Fannie and Freddie mortgage refis could provide billions of dollars of economic stimulus and support the prices of homes, many Americans’ biggest single asset. All while costing taxpayers nothing.

This isn't Sloan's idea - it was formulated by a group of experts from Columbia University; among them, a former economic advisor to George W. Bush. Their data and their proposal are available for review [click here to see it]. All of this comes around the same time as President Obama's plan for widespread refi, mentioned in his State of the Union 2012 address [click here], which draws much of its power from new taxes on institutions with more than $50 billion in assets. Many praised that plan, but it seems as though Congress won't play ball [click here].

My questions:

1. Should these massive refis happen? 
2. Will they happen, and when?
3. Will it be the saving grace of the embattled housing market? 
4. How will credit unions be affected? Positively or negatively? Do we get anything out of this? 

If you've got answers, I'd love to read them. Leave us a comment below and let's talk about it.