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th E UNDER THE HOOD E-CommEr C E IS S U E FEBRUARY 2013 VOLUME 8 ISSUE 2 9.95 Back To The Future Banking at the Point of Sale Want to Increase Your Facebook Activity you Need a game plan EPL Drives Core Processing in a New Direction how Shopping is transforming the Nature of retail Banking LOYALTY REVENUE AUTO LOANS with AUTOPILOT LENDING by SWBC AutoPilot Lending helps you manage the lending lifecycle from beginning to end enabling you to grow acquire and retain borrowers increase auto loan volume and improve your auto loan performance and revenue. CALL AN SWBC REPRESENTATIVE AT 866-316-1162 OR SCAN THE QR CODE BELOW TO LEARN MORE SWBC 2013. All Rights Reserved. 5540-922 0213 A Lending Success Story Pegasus Community Credit Union Pegasus Community Credit Union (PCCU) was originally chartered in 1935. They have more than 200 million in assets and nearly 11 000 members who have always been a top priority. They currently have five branches in the Dallas Denton area and one branch in Midland. THE CHALLENGE LOYALTY Previously at PCCU loan officers had to go to several websites at one time in order to quote and close loan products. This made the process of selling each product an arduous task. This lack of integration not only impacted how they got quotes but also how they received reports. Instead of one consolidated report PCCU was getting different reports from each carrier. This meant a lot of time wasted on the back-end piecing all of the information together before being able to analyze how they were performing. When the economy showed signs of recovery and vehicle demand began to increase PCCU saw the need for a solution that would streamline the lending and reporting process so that they could spend more time focusing on their members. THE SWBC SOLUTION When PCCU heard about SWBC s latest solution AutoPilot Lending they were intrigued. SWBC did a phenomenal job showing us the benefits it would bring to our credit union said John Tatum Vice President of Business Development at PCCU. What stuck out the most was that it was unlike any other solution on the market. Its simplicity and streamlined lending process was exactly what we needed. THE RESULTS REVENUE Since launching AutoPilot Lending Lite in April 2012 PCCU has seen a tremendous increase in efficiency and their income has increased dramatically. In our first month productivity increased four times the previous month and our fee income increased six times the previous month said Tatum. Our employees are able to deliver up-to-date information to our members and we now have more time to focus on our members needs. We are also able to deliver new world-class products such as the MPOWERTM loan to our members in a more hands-on effective way. In addition PCCU gets consolidated reports eliminating the time that was previously spent piecing information together. This means they can see their tremendous success with AutoPilot Lending quickly and easily. PCCU saw some additional benefits of the solution as well. SWBC s UNITY software which is used for quoting and reporting is also a fantastic cross-selling tool. UNITY loan documents include information about all of the products available to enhance the value of a loan increasing the probability that members will purchase these products. AUTO LOANS SWBC 2013. All Rights Reserved. 5540-922 0213 with AUTOPILOT LENDING by SWBC AutoPilot enefits f helps you manage the lending lifecycle even for special situations. We r you to had a acquire Also PCCU bLendingrom ongoing support of their members from beginning to end enabling ecently grow member and retain borrowers increase needed a volume and improve your auto loan performance and revenue. whose vehicle was totaled and he auto loan vehicle A.S.A.P. He had purchased a full MPOWER loan package less than 60 days before and he needed the funds quickly. Even with contact afterhours the AutoPilot Lending team was able to CALL AN SWBC REPRESENTATIVE AT 866-316-1162 get his current products canceled and a check in his hands the next day. This is unheard of in today s industry this is OR SCAN THE QR CODE BELOW TO LEARN MORE huge Because this member received such phenomenal service he purchased the MPOWER loan package again and is extremely happy. SWBC s AutoPilot Lending has proven to streamline lending increase revenue and improve the member experience. For more information call 866-316-1162 today PSCU Member-Owners Outperform. PSCU Member-Owners lead other credit unions in the race to growth and prosperity. Added more members (4.7% v. 3.2%) Achieved a higher credit card penetration rate (18.6% v. 13.7%) pscu.com 888.918.7357 Opened more checking accounts (8.6% v. 6.4%) Added more credit card accounts (5.5% v. 4.8%) Ride with a winning team. Growth rates based on data sourced from Callahan & Associates for the period from 3Q 2011 to 3Q 2012. Payment Card Programs Fraud Management Digital Wallets Strategic Consulting Loyalty Rewards eCommerce Solutions 24 7 365 Contact Center Support CoNtENtS Credit Union BUSINESS FEBrUAry 2013 v o l U m E 8 I S S U E 2 6 8 POV Mobile Apps & E-Commerce Tim O Hara ACHIEVI N G SKILLS 34 E-COMMERCE Technically Speaking Roy W. Urrico Shared Branch Concept Opens Digital Wallet to Credit Unions Help Wanted Holly Herman Great Tips for Hiring Managers in Addition to Those Seeking a New Job 38 42 48 CU CONTENT Want to Increase Your Facebook Activity You Need a Game Plan Laura Enock MARKETING MATTERS Tony Rizzo PRODUCT SHOWCASE 10 14 24 26 29 EXECUT I VE COMPENSATION Best Executive Compensation Practices James S. Patterson C. Daniel Sherman and Tom Telford UNDER T HE HOOD Strategic Auto Loan Acquisition Service-Profit Chain in Motion Front Cover Photo The FPL team Front left Rhiannon Stone (Vice President Client Services) Front center Wayne Benson (President & CEO) Front right Larry Linville (SVP Operations) Back left Cathy Hulsey (VP Human Resources & Legal Services) Back left middle Denise Taylor (EVP & Chief Customer Officer) Back middle David Gibbard (SVP & Chief Sales & Marketing Officer) Back right Paul Nichols (SVP Engineering) Back To The Future EPL Drives Core Processing in a New Direction Sharon Sweda CFO CURRENCY Emily Hollis LEADERSHIP Efficiently Running ALCO Meetings Ten Ways to Know if You Are a Leader Dr. Sandra L. Torres DEBIT MATTERS Banking at the Point of Sale Suzanne Savage How Shopping is Transforming the Nature of Retail Banking www.cubusiness.com February 2013 Credit Union BUSINESS 3 ABoUt US publishing team Tim O Hara Publisher tim cubusiness.com Steve Magnuson Managing Editor steve creditunionbusiness.com Iliana Nord Operations Manager iliana cubizmag.com Patti Manzone Designer Homer Marshman Operations Manager THE UNDER THE HOOD E-COMMERCE ISSUE FEBRUARY 2013 VOLUME 8 ISSUE 2 9.95 Back To The Future Banking at the Point of Sale Want to Increase Your Facebook Activity You Need a Game Plan EPL Drives Core Processing in a New Direction How Shopping is Transforming the Nature of Retail Banking Staff Writers Laura Enock CU Content Holly Herman Achieving Skills Emily Hollis CFO Currency Suzanne Savage Debit Matters Sharon Sweda Under the Hood Tony Rizzo Marketing Matters Dr. Sandra L. Torres Leadership CUB_FEB.indd 1 2 10 13 8 10 AM Subscriptions Credit Union BUSINESS is published monthly (12 issues per year) by CU Business Magazine Inc. A one-year subscription costs 89. An online subscription form is available at www.cubusiness.com. Contact Information Credit Union BUSINESS Magazine P Box 2223 .O. Palm Beach FL 33480 (561) 282-6015 (561) 588-7711 (fax) info cubusiness.com Contributors James S. Patterson C. Daniel Sherman and Tom Telford Roy W. Urrico Sales and Advertising Bernie Fitzgerald Advertising Executive Bernie cubusiness.com or 561-282-6015 1 Greg Halpern Advertising Services Manager Greg cubusiness.com or 561-282-6015 4 4 Credit Union BUSINESS February 2013 www.cubusiness.com FROM TIM T Publisher s POV elcome to the e-Commerce issue Clearly the near future holds great promise for medicine and for credit unions in the technology realm This month s cover photo takes us Back to the Future with an Under the Hood look at Birmingham Alabama based and credit union owned EPL Inc. EPL has re-tooled its offerings to match the desires of leading CU CEOs. According to its CEO President Wayne Benson Credit unions are hungry for the tools that will enable them to differentiate themselves from their competitors. EPL has those resources and the desire to provide CEOs with the products along with the relationship that can differentiate them and enhance their ability to accelerate efficiencies broaden service platforms and attract growth he added. Please turn to page 14 to find out how they do it. It makes for great reading oday I received an e-mail from a neighbor with the subject line iPhone apps for medical testing along with a note that this is worth watching and a hot link. I clicked on the link and was directed to NBC s Rock Center prime time show hosted by Brian Williams. I watched a totally fascinating segment about Dr. Eric Topol one of the world s top cardiologists who has developed a way to make medical care cheaper with an I-phone Dr. Topol has become the foremost expert in the exploding field of wireless medicine according to the segments outline. The broadcast opens with an interview of Dr. Topol as he attaches a small electrocardiogram (ECG) device which is about the same size as his I-phone. His patient who has heart problems holds the lightweight device with his thumbs and seconds later wavy lines appear on the screen of the device to record his ECG. Dr. Topol claims that physicians can purchase this device for 199 and it saves around 100 for each test. Dr. Topol then attached the I-phone to a V-Scan and performed an ultrasound by holding it against his patient s chest. The V-Scan manufactured by General Electric saves 800 in technician s fees for every scan and there are more than 20 million performed each year W 6 Credit Union BUSINESS February 2013 www.cubusiness.com AChIEvINg SkIllS Great Tips for Hiring Managers in Addition to Those Seeking a New Job help Wanted By Holly Herman I heard a tip from someone the other day Hire slow and fire fast My experience has been that many managers hire fast and fire slow. There s a lot of pressure to quickly fill a position when you re short staffed. When managers act too quickly they can hire someone who is not a good fit The new hire doesn t have the right job skills enough experience to handle the job or they simply don t work well with existing staff. The wrong hire ends up costing you time money and patience Here Are a Few Tips for Finding the Right Person. Tip 1 Job description. When someone leaves a position take the time to examine what that person actually did versus what you wanted him to do. Compare your findings with the written job description and make sure what is written down is exactly what you want done. Job descriptions should be as specific as possible in identifying the tasks and responsibilities you want performed as well as the precise skills you are looking for in the right candidate. Job descriptions date quickly take out anything that no longer applies. what might stick. It s incredible how many resumes you ll get that have nothing to do with the candidate you re looking for. If a resume doesn t grab you once you ve read the first twenty-five per cent put it into the no pile. Tip 2 Skills. The advertisement you write will reflect the description. Think about which skills--out of all you re looking for--are most important the ones you can t live without. The more specific you can be the better your chances are that a perfect match will apply. Tip 3 Reading Resumes. Job applicants tend to act a bit like Tip 5 Be Selective. Someone who seems just OK is a no. Ask people throwing spaghetti against the wall they just want to see those who wow you to come in for an interview. And remember Tip 4 Telephone. Phone interviews can save lots of time. Prepare a worksheet with a list of the three to five questions you re going to ask for each candidate and use the worksheet to winnow out those must haves in each candidate before you talk on the telephone. Let the interviewee know that the phone conversation is a preliminary interview and should take between 15 to 30 minutes and take notes as you talk and review your written comments as soon as you get off the phone. Sorting through your thoughts right away will help clarify your thinking. 8 Credit Union BUSINESS February 2013 www.cubusiness.com AChIEvINg SkIllS Tip 8 Spot Check Facts. Verify everything that s on the resume schools old jobs etc. I once almost hired someone who said they had a degree when they didn t. Sadly they didn t need Tip 6 Get a Second Opinion. Ask other staff members to a degree for the job and were otherwise a perfect candidate. I interview your final candidates. They may pick up on skills or might have hired him had he not lied. warnings you ve missed. While the final decision must be yours one or more additional opinions help clarify your decision- Tip 9 Use Social media. You can find out a lot about a permaking. son by checking them out on You-Tube Facebook and Twitter. One candidate left an interview and twittered about how lame Tip 7 Prepare a Writing Test. Create a written test de- the interviewer was. Not a great way to win friends or get a job signed to highlight the skills you re looking for. One of my cli- Taking your time to find the right person will save you time and ents interviewed two candidates--one wowed everyone and the prevent headaches later on. other was pretty good. The wow candidate took three hours to complete the test which revealed that he couldn t perform Holly Herman is a former CEO of two credit unions Chief simple math spell or write while the pretty good candidate of Staff for National Credit Union Administration Chairman completed the test in one hour with perfect math grammar and Johnson and currently an Achievement Coach helping individuals and organizations. She can be found at www.Achievspelling skills. She got the job. ingSkills.com or contact her at Holly AchievingSkills.com. hiring people who are more talented than you only makes you better. www.cubusiness.com February 2013 Credit Union BUSINESS 9 ExECUtIvE CompENSAtIoN Executive Compensation practices Best B By James S. Patterson C. Daniel Sherman and Tom Telford y carefully managing executive compensation a credit union s board of directors can minimize the risk that executives members the public or regulators will complain about or challenge how they compensate top management. We have discovered what does and doesn t work after years of working on executive benefits for tax-exempt organizations. Here are some ideas your organization should consider adopting. Develop a Compensation Philosophy A compensation philosophy is a formal document that codifies the credit union s guiding compensation principles and objectives and establishes performance targets. It should be signed by the board chair and added to board minutes. The philosophy should 1. Identify a peer group of employers 2. Target positioning within the peer group 3. Specify the balance between guaranteed and incentive compensation 4. Define the mix of cash compensation and benefits Once approved the board should regularly review their compensation philosophy document to ensure that compensation practices continue to conform to its guidelines. The board should not set the compensation philosophy aside and ignore it. lish consistency in compensation levels that can be especially helpful as positions open up and new executives are hired to fill those slots. It also creates a measure of fairness that reduces the risk of a disgruntled executive suing the organization for employment discrimination. The philosophy is helpful when board members change as it gives them a strong basis on which to continue the status quo or to make necessary changes in compensation. Seek Comparability Data Knowing the compensation levels and practices of a peer group is critical for setting executive compensation to achieve the objectives stated in the philosophy. The board should not rely on just one source of data. Instead it should review two or three reputable sources and compare the data it receives. A board s analysis of compensation levels may involve averaging or sometimes eliminating an outlier if results seem skewed. It is impor- Some Benefits of Having a Documented Compensation Philosophy Having a documented compensation philosophy helps to estab10 Credit Union BUSINESS February 2013 www.cubusiness.com ExECUtIvE CompENSAtIoN tant to compare similarly sized credit unions and comparable positions within those credit unions. If the board uses a consultant to find the comparability data it should verify that the consultant is providing reliable data. The board should not rely solely on comparability data provided by the executive team. Require Regulatory and Tax Compliance Boards should ask legal staff or consultants to confirm that the plans and their funding vehicles comply with all applicable regulations. An audit is the wrong time to find out that regulatory review or approval was required before the plan was implemented and the funding assets acquired or that benefits were taxable earlier than expected or subject to penalties. The 46 states that have state credit union charters each have their own set of credit union laws and regulations that must be followed and federally insured state-chartered credit unions must understand and comply with all federal regulations and standards as well. On the other hand federal credit unions do not need to comply with the state credit union laws in the states where they are headquartered they are covered only by federal law and regulations. is woefully over or under-funded. Executives should be given an opportunity to ask questions or raise concerns. With all of its various compensation components--salary incentive compensation benefits and perquisites--an annual review is a good opportunity to look at the big picture and see how all of the components interrelate. Consider the Multiplier Effect An executive s benefits are often tied to base salary. A defined benefit SERP for example may specify that the executive receive payments of 1.5 times base salary on a certain date. If base salary increases this will directly increase the SERP payments. SERP benefits may also be based on total compensation (i.e. base salary plus incentive compensation) which significantly increases the complexity of managing the changes in the projected SERP benefit. Incentive compensation plans can be designed with large variances in possible awards creating an even greater impact on the executive s SERP benefit. A board needs to be aware of these multiplier effects as it analyzes appropriate levels of base salary and incentive compensation for its SERP participants. Review Compensation Annually Although a compensation package may be fair and consistent with the standards set forth in the compensation philosophy Compensation issues are complicated. As credit unions increase in size and complexity the board should consider establishing a compensation committee or executive committee to oversee Establish a Subcommittee for Executive Compensation compensation issues for the board. Compensation issues are complicated. As credit unions increase document some executives will still perceive they are underpaid or have inferior benefits. Annual reviews can help avoid the surprise and disappointment of an executive resigning to accept a better offer or discovering that after many years a plan in size and complexity the board should consider establishing a compensation committee or executive committee to oversee compensation issues for the board. The board should choose committee members based on their experience with and interest in compensation issues. A committee can dig more deeply www.cubusiness.com February 2013 Credit Union BUSINESS 11 ExECUtIvE CompENSAtIoN into and address more knowledgeably compensation details that are too tedious to be addressed in a typical full board meeting. The committee members should receive materials well in advance of the meeting so they have adequate time for analysis and are prepared for discussion. Committees Must Communicate Effectively With the Board Although such committees can add significant value to the board their role is to administer the board s policy not to create the policy itself. Effective communication between the compensation committee and the board is critical. Benefit levels can get out of control and create division when compensation committees fail to communicate effectively with other board members. At the end of each year the committee should give the board a full report that reminds the board of the compensation philosophy it approved that clearly and accurately discloses compensation levels of its executive team and relates that compensation to peer data and provide minutes that summarize the committee s discussions throughout the year. Before approving a plan modification the board should understand the reasons for the change their costs and the impact of the changes to benefits. CEO s direction. With executive compensation however board members need to analyze consultants recommendations lead out and make decisions without any pressure from the CEO. In the past many boards allowed the CEO to set compensation for the other executives but more and more boards are realizing that they need to take a more active hand in setting compensation for the other senior executives as well. Inspect Plan Modifications Before approving a plan modification the board should understand the reasons for the change their costs and the impact of the changes to benefits. As it reviews suggested changes the board should meet in an executive session to ensure that executives and any board members with a personal stake in the outcome do not participate in the final decision. The board should also document its intent as it approves changes to plans so it is clear to future board members and executives why the board approved the change. Engage Consultants Who Report Directly to The Board Consultants live and breathe compensation and benefits whereas most board members have only a general understanding. A specialist s review can ensure the credit union s compensation dollars are being used efficiently and that plans are fulfilling board and executive expectations. Consultants retained by and reporting directly to the board help ensure that the board is receiving accurate unbiased and unfiltered information. Consultants help boards understand complicated concepts such as the nuances of comparability data. Ensure Plan Dcumentation is Compliant and Terms Understood A plan sponsored by a credit union is subject to state and federal regulations as well as a number of provisions under the Internal Revenue Code--Section 457(f) and Section 409A to name two. Since 409A s inception in late 2004 the Internal Revenue Service has issued over 1 000 pages of guidance under that section alone. Having plan documentation prepared by a benefits attorney minimizes chances for regulatory or tax violations or for disagreements with executives or beneficiaries. Periodic professional review ensures that law changes are incorporated into the documents in a timely manner. No Screening or Filtering by the CEO Boards received clear direction through NCUA s Rule 701.4 in January of 2011 that the NCUA is concerned about senior executives especially chief executive officers having too much influence over the executive compensation set by the board. The NCUA clarified that the board must set executive compensation without any screening or filtering from the CEO. In most areas of credit union governance boards appropriately follow the 12 Credit Union BUSINESS February 2013 www.cubusiness.com ExECUtIvE CompENSAtIoN In a recent review of a SERP designed with annual payments following termination we discovered that the board and executive believed that the SERP benefit would be taxed as the credit union paid the benefit each year. We explained that taxation under Section 457(f) occurs when the substantial risk of forfeiture lapses (e.g. retirement date attained during employment) regardless of when the credit union pays the benefit. This resulted in a significantly lower projected net benefit than previously anticipated and required some difficult discussions for all parties involved. Associate With Professionals to Monitor Legal Developments The legal environment is fluid. Regular consultation with compensation professionals helps keep boards informed and prepared for the changing landscape. For example the Internal Revenue Service in 2007 indicated it would issue guidance under Section 457(f) of the Code but despite some occasional rumblings the IRS has yet to issue any guidance. If and when the IRS does issue guidance boards will need to review their plans to ensure compliance with the new rules. Summary Compensation best practices bring comfort to boards and executives in knowing that their executive compensation is competitive compliant and an appropriate use of credit union resources. Jim Patterson is an attorney with Sherman & Patterson Ltd. a law firm focusing on executive compensation in credit union and other tax-exempt entities. Jim has worked closely with state regulators in the 46 states that have state credit union charters as well as with regulators at the National Credit Union Administration. www.SPLawFirm.net. Dan Sherman is also an attorney with Sherman & Patterson Ltd. Tom Telford Chris is an Executive Vice President with BurnsFazzi Brock & Associates (BFB). Tom specializes in executive compensation consulting for the credit union and other not-for-profit industries. www.BFBbenefit.com. www.cubusiness.com February 2013 Credit Union BUSINESS 13 UNdEr thE hood Epl drives Core processing in a New direction Back to the Future By Sharon Sweda T he 1985 popular adventure film Back To The Future spins the tale of Marty McFly the time-traveling teen and Doc Brown the nutty professor who accomplishes the impossible feat of harnessing technology in new and intriguing ways to transcend time. There is plenty of fun and excitement along the way. So much so that the team at EPL has taken a cue from Doc Brown as they master the art of time travel to provide customer service and relationships that are reminiscent of days gone by while delivering the advanced technology of today. EPL is re-inventing the credit union-owned CUSO through a metamorphosis that has provided the trajectory to catapult the company back to the era when exceptional service providers were the norm rather than the exception all while providing a modern core data processing technology platform that meets the current and future needs of credit unions. Ironically the idea is light years ahead. EPL is a unique service provider that has been creating and delivering a strong credit-union-focused value proposition ever since its reinvention in the early 2000s. The company s vision is to empower credit unions to meet the needs of their members and to enable them to accomplish their strategies without controlling them. Empowering and enabling are typically the first elements removed from the customer equation with other core service providers. EPL is building its time capsule around the preservation of empowerment for credit unions frustrated with core service products that offer little customization or integration with solutions that are not their own. At EPL multiple technology solutions are delivered in an integrated fashion that meet the needs of individual credit unions not simply in the static or standalone forms that are typical of many technology providers. Of course the rest of the industry touts this as an unmanageable and less profitable concept meeting the needs of credit unions while delivering unparalleled service. EPL believes that growth and size should never outrank service and that the member must be at the center of all decisions. Meeting the individual needs of each credit union in the slow paced core data processing environment driven by legacy technology has become 14 Credit Union BUSINESS February 2013 www.cubusiness.com UNdEr thE hood offered the first real-time processing system for credit unions. That was back in the late 1970s and early 1980s. Then in the early 1980s EPL s technology was sold to public shareholders only to be re-purchased by a group of its original credit union customers in one of our first Back to the Future moments. We spent the early to mid-2000s catching up and tackling challenges that evolved over the period of public shareholder ownership. We are excited to be back in the hands of the Credit Unions we serve and to be fully engaged in our reinvention. Re-establishment of credit union ownership inspired EPL s Back to the Future attitude and serves as a driving force for the energetic CUSO. The desire for greatness became the engine of growth and focus for EPL as the company engaged world-class consulting firm Pricewaterhouse Coopers to evaluate the purpose and strategy of their technology solutions. The end result would establish a goal through development of its base technology to accentuate the difference between EPL and the seemingly one-size-fits-all technology providers within the credit union marketplace at that time. Dissatisfaction exists among customers who feel as though other technology providers refuse or are simply unable to meet their needs. It is an all or none proposition from vendors who offer little to no flexibility for adaptation of client-specific needs Benson tells. We have no desire to enter the market with the same kind of products or solutions. We are creditunion focused and want credit unions to be empowered to choose the solutions that meet their unique objectives. EPL accomplishes this goal by interfacing its solutions with third parties utilizing its CU-HUBTM. EPL s CU-HUBTM enables diverse technology solutions to communicate with our i-POWER core system and each other said Benson. In a bold step that often attracts criticism EPL has sought out strategic partners to contribute to its own innovation. By partnering we are not constraining our credit union clients by having them rely solely on our solutions the CEO affirms. We provide credit unions with the ability to select best-of-breed solutions provided by strategic partners and integrate those partner products into a seamless solution. Through our outstanding client services department we support all the a thing of the past--until now. In an effort to limit development expense and mass migration others attempt to add new user interfaces to old technology rather than invest in modern technology platforms. EPL likens that strategy to the common political campaign slogan of putting lipstick on a pig. The EPL team is excited to go as far back to the future as necessary in their quest to advance their credit union clients forward. Credit unions are hungry for the tools that will enable them to differentiate themselves from their competitors explains Wayne Benson chief executive officer and president of EPL. EPL has its resources dedicated to providing credit union CEOs with the solutions they seek. Solutions that put the member at the center of the relationship not the transaction. Solutions that empower credit unions to enhance their efficiencies and achieve growth by meeting the ever-changing needs of their members. It s a set of solutions today s credit union needs. Credit unions face real uphill challenges as they expand their fields of membership and compete with banks and non-traditional financial service providers. We want to be there to help them succeed. At a key point several years ago EPL made a strategic decision. The strategic direction was based upon creating ways to best meet current and future credit union technology needs. It is EPLs open and relational platform that has set the stage for a dynamic credit union future. During our reinvention we recognized the need to transform our core data processing company into a technology solution provider Benson said. In our formative years we www.cubusiness.com February 2013 Credit Union BUSINESS 15 UNdEr thE hood solutions offered by EPL creating an exceptional customer experience. We enable and empower credit unions by allowing them to select the solutions that will best meet their individual needs rather than delivering solutions that have been chosen by a core data processor without regard as to what they really need to effectively manage their credit union and service their members. Studies reveal that credit unions undergo a core data processing conversion at least once every 10 years. While this constant need for conversion can be attributed to a variety of factors much of it can be attributed to the rigid nature of most core processing solutions. EPL is confident that if a credit union s core system can be customized and seamlessly interfaced with products that fit the credit union s specific needs the the words process technology and relationships are woven tightly into nearly every conversation concerning Epl. Our strategy and products are designed to grow with the client affirms Gibbard. Our member and credit union solution-based strategy which incorporates strategic partners enhances the credit union s ability to stay current and meet the ever-changing needs of the credit union without requiring them to seek a new core data procession solution. Our strategy is the opposite of our competitors. Our focus is on empowering credit unions to build and strengthen their member relationship not solely on processing transactions. All core data processing systems do a relatively good job processing checks loans new accounts etc. We are different because we not only handle the transaction processing very well but we also deliver management member information and dashboards along with the expertise on how to use the technology so that the credit union can strengthen [its] relationship with [its] members. There is a clear distinction between EPL and other providers. This is not a choice between two apples but rather a choice of an apple or an orange says Gibbard. The philosophical and foundational differences reveal obvious distinctions reinforces Cathy Hulsey JD vice president of human resources and legal services. Our team is experienced loyal and capable of fulfilling our vision for what a credit union partner should be. The average employee has been with EPL for more than 11 years and shares our passion to be customer focused. A repetitive theme exists within the EPL formula. The words process technology and relationships are woven tightly into nearly every conversation concerning EPL. EPL knows that both process and relationships are paramount to supporting and growing the technology. The company brings that clear connecting vision to training and credit union staff support and a willingness to roll up its sleeves and work shoulder to shoulder need for conversion can be greatly reduced or eliminated altogether. EPL s longstanding customer relationships are proofpositive that this strategy works. EPL made the bold decision to totally re-write [its] system as opposed to just modernizing the user interface of old technology said David Gibbard senior vice president and chief sales and marketing officer for EPL. We want to be an extension of the credit unions we serve and we recognize that we accomplish this by empowering and enabling them with a flexible technology platform that is able to meet their current and ongoing needs. Because EPL is owned by credit unions we have an innate understanding of their needs and the important structural business differences between a company focused on shareholder revenue versus a becoming a partner and a credit union asset aimed at success. With that clear understanding we are employing technology solutions that meet the needs of today s credit union while positioning them for the future. 16 Credit Union BUSINESS February 2013 www.cubusiness.com UNdEr thE hood with its credit union partner. EPL knows that technology is best delivered through an engaged and ready staff. Once that core element is engaged technology and innovation are maximized. Innovation abounds at EPL. In addition to i-POWER and CU HUBTM EPL is positioned to deliver the most innovative technology available to align credit union philosophies and needs. Technology extends back in time at EPL and is utilized where many may not even recognize. It was EPL that created the core-neutral teller platform that shared branch networks operate throughout the country. Creation of the easy-to-use interface for members and ensuring ease of credit union adoption are both key drivers at EPL. The company is constantly on the innovation trail that will exceed current and future credit union needs. CUe-ORB an acronym that stands for credit union online relationship builder is an example of how EPL and a strategic partner are leveraging innovation for easy adoption by credit unions. Cue-ORB is a next-generation online and mobile banking solution that offers customization capabilities and member marketing features. We view the rollout of CUe-ORB as a solid point of differentiation for EPL said Stephen Bohanon president of Alkami. We have partnered with EPL to deliver a product that basically takes over where other products fall short. CUe-ORB is an exceptional relationship-building tool because of its uniqueness and execution. Alkami s president was accustomed to hearing the frustration voiced by credit unions while attending industry trade shows and conferences. Ironically it was at one such conference where he was first introduced to the EPL team with whom he immediately struck a chord. Bohanon and Benson connected and shared their mutual desire to offer a solution that exceeded the limited rigid template-styled products in the market. Each left the meeting with a sense that they had found the type of partner they had been looking for. I was immediately sold on EPL after speaking with Wayne Bohanon said. He is a CEO with a strong desire to offer cuttingedge solutions to his customers. For Alkami EPL is the heart of this relationship. Partnering with the EPL team is exciting and we are able to feed off each other. Our client-centered cultures are very similar and we truly appreciate their bold vision. At the same time it was the research and development at Alkami that truly impressed Benson. Alkami was in complete agreement with the need to offer a solution that would replace the template mentality that exists with most online and mobile banking providers. The result is a product where each credit union has the ability to deliver an integrated unique and personalized experience to [its] members. Realizing that technology is also about relationships EPL is further expanding its reach through the formation of its strategic partnership with Financial Services Inc. (FSI). This union will expand EPL s reach throughout the northeast portion of the country. Patrick Schunke better known as P. J. is the third-generation president of family-owned FSI. FSI is largely recognized for its tradition of hands-on service for its clients throughout the Northeast. FSI had not solicited credit union core data process solutions in the past Schunke said. It wasn t until we saw EPL s i-POWER platform that we became excited about the possible joint efforts to combine FSI s heritage and name recognition with the progressive and aggressive agenda of EPL. Each organization was inspired by the other. Each embodied similar goals and visions as well as unflinching dedication to customer service. EPL recognizes that the strong name recognition of FSI in the Northeast combined with its customer service reputation makes FSI the perfect distribution partner. It seemed to be a match made in heaven said Schunke. We engaged in an aggressive due diligence process [that] reinforced our confidence in EPL and our subsequent relationship. We are experiencing quick success and are eager to introduce and convert more credit unions throughout 2013 and beyond. The marriage of FSI and EPL will likely be the pivotal ingredient in the success formula. The two-prong system ensures daily on-site training throughout the conversion process and the results speak for themselves. EPL is proving its ability to deliver unparalleled service that is more proactive than reactive. Nearly 90% of all customer service cases are resolved within 24 hours which EPL attributes to the fact that it embraces a face-to-face problem-solving philosophy whereby the company initiates communication and interaction. They offer a consistent experience that includes full-service web features marketing mobile access and financial education regardless of the point of access. In a broad and un-tapped market FSI and EPL are 18 Credit Union BUSINESS February 2013 www.cubusiness.com UNdEr thE hood knocking above all the noise surrounding health care reform. EPL and Health Partners of America are seizing upon the changing landscape and transforming it into an additional opportunity for credit unions to position themselves as a trusted resource for health care interpretation and access. The new health care provisions are going to be confusing for everyone explains Josh Hilgers founder of Health Partners of America. It could potentially deliver turmoil for the next 36 months as nearly 185 million citizens who are currently covered by employee-provided insurance have the option to purchase prepared to keep step with the momentum they are fueling by leveraging the two organizations in a way that adds value through their unyielding exceptional service standards. Schunke and Benson stress that credit union CEOs are seeking meaningful ways to be different. That is exactly what we enable them to do with i-POWER Schunke said. As EPL continues in its Back to the Future quest the engineering manual is filled with prototypes of futuristic products aimed to enhance the value proposition further. Later in 2013 the company will roll out its i-MarketTM product an introductory ROI model that guarantees credit unions will be able to pay for EPL s i-POWER core system. This is achieved by incremental gains in members income and assets so that virtually every credit union will be able to access the power of EPL. We are so confident in our ability to help credit unions meet their goals that we are providing a risk-free way to leverage i-POWER explains Gibbard. We will be providing an unprecedented guarantee that should turn a few heads says Gibbard. As EPL prepares to share its new solutions and innovations publicly the company like all its strategic partners is running faster and harder. Amid the mega-transition EPL continues to search outside the box for relationship tools that further accentuate differences. The result is a wealth of ideas that have all the hallmarks of genius. EPL heard the clear sound of opportunity Epl heard the clear sound of opportunity knocking above all the noise surrounding health care reform. private insurance. The next two to three years could deliver a massive turnover and a massive opportunity for credit unions. Together with EPL we are rolling out the Credit Union Exchange Blueprint product to create a direct portal for the employees and members of our participants. This is an incredible relationship and member growth opportunity for credit unions. The Credit Union Exchange Blueprint is a solution that will help members navigate through health care reform s complexities and position credit unions as a trusted advisor. As members wrestle to understand options and coverage the CU Exchange Blueprint will become an informational resource for them while enabling credit unions to leverage HPA s expertise and products. 20 Credit Union BUSINESS February 2013 www.cubusiness.com THAT S THE A WE DO WHAT LLIED ADVAN TAGE. IT TAKES. [Whatever i t is] The Allied Advantage means unparalleled service for credit unions. From risk management to consumer lending we provide solutions that put you in control. Solutions that give you more opportunities to deliver precisely what your members need.We re ready to apply our expertise and enthusiasm to help you attain your goals. That s the Allied Advantage. For more information visit AlliedSolutions.net or call 866.633.1480. W W W. A L L I E D S O L U T I O N S . N E T UNdEr thE hood We weren t actually seeking a relationship with a CUSO partner said Hilgers. This is just one of those situations where we were approached by the perfect partner. Wayne s previous insurance experience eliminated the need for training which made it great for us. HPA would not have engaged had it not been for Wayne and EPL. They are great for us and we look forward to helping them position their clients as a trusted advisor in the health care arena. This is a unique opportunity for our credit unions to participate in a turnkey program that will develop stronger relationships and new member growth with subsequent revenue streams Benson said. HPA helped us develop a comprehensive program that will enable credit unions to better understand health care reform and become the only necessary point of contact for members. They will train and educate credit union personnel provide all of the tools and technology as well as supply marketing materials. Credit unions will have access to many health insurance products in the marketplace and have the assistance to facilitate the transition on behalf of credit union members. Initial estimates predict that a mind-boggling 50 to 150 million consumers will be seeking assistance. Another 63% to 68% of individuals will be eligible for various government subsidy programs. Through EPL s CU Exchange Blueprint credit unions will advance their relationship by light years. There s a famous Back to the Future quote that Dr. Emmett Brown shared with Marty McFly when Marty suggested they back up the car because they didn t have enough road to get to 88mph. Roads asked Doc. Where we are going we don t need roads. Roads or no roads EPL will find a way to promote the member need and ensure credit unions are empowered for growth. Its what enthusiasts call Back to the Future its what we call good business Credit Unions who would like to contact EPL in this generation or the last - can reach Wayne Benson or David Gibbard www.eplinc.com 22 Credit Union BUSINESS February 2013 www.cubusiness.com CFo CUrrENCy Efficiently running AlCo meetings G By Emily Hollis CFA Partner enerally board members are responsible for directing the interest rate tolerance of financial institutions and management s job is to carry out the mandates of the board s defined risk philosophy and tolerance. As I work with credit unions across the country I find that those who struggle most have blurred these lines of responsibility from both directions. In other words management should ensure that interest rate tolerance has been agreed upon discussed and set at the board level and the board should trust management to conduct the day-today operations of the institution within the framework of that predetermined risk tolerance. To help delineate responsibilities more and more credit unions have established two separate Asset-Liability Committees (ALCO) a Strategic ALCO and an Operational ALCO. The Strategic ALCO Most credit unions are good at conducting long range planning sessions but too often the issues discussed are not acted upon once the planning session is over. The Strategic ALCO s primary focus is exactly that--to follow up on strategic development and decision-making once the parameters have been set. By not spending time on individual member issues which aren t germane to the ALCO s mandate the Strategic ALCO s agenda becomes focused and objectives clearly identified Emphasis is on the future not the past. All departments and branches including the board should be represented and board education should be part of its focus. Here s a sample agenda Review of the balance sheet Economy--direction of interest rates Action plans Strategies Review of the balance sheet should include individual line items including earnings liquidity and trends as well as a review of ALM reports. ALM reviews should encompass both net economic value analysis and net interest income simulations. During this level of review focus should be on general degree of risk and what if scenarios that incorporate future projections of risk and were these risk events to occur how they would affect the balance sheet. For example if the Strategic ALCO decides to take on more risk by holding additional mortgages and loans to increase revenues because a board member is concerned about earnings there should be dialogue and analysis to support that decision. The Committee should discuss the direction of interest rates what level of risk is acceptable what would happen if rates move in an unfavorable direction and when this might happen. A key question should be Can the balance sheet sustain such www.cubusiness.com 24 Credit Union BUSINESS February 2013 CFo CUrrENCy action while remaining within acceptable risk parameters If the strategic ALCO decides to proceed action plans and recommended strategies should be adopted including implementing timing guidelines and assigning responsibilities. Action plans should include strategies for investments as well as loans. Try to avoid action plans that mandate high earnings and low risk. Obviously this can be very confusing and could backfire as overzealous loan or investment officers reach for yield. When risk is taken in loan portfolios financial institutions should follow a conservative investment strategy by gearing to shorter duration products with lower credit risks. At the Strategic ALCO level there should be an annual review of ALM investment liquidity and concentration policies. Quarterly meetings for the Strategic ALCO are adequate. When thorough quarterly ALM reviews are conducted monthly meetings are often overkill because changes within the balance sheet do not occur that fast. As a matter of fact monthly ALCO reviews can sometimes mask changes as they appear gradually. The reporting package should be clear concise and stripped of irrelevant detailed information. Minutes Both the Strategic and Operational ALCOs should keep complete detailed meeting minutes and include Discussions during the ALCO session Discussion of What if strategy scenarios Who was in attendance Evidence of the ALCO evaluating interest rate risk (IRR) exposure and a comparison of results to policy limits. Evidence that contingency plans were developed when risk thresholds are approached or exceeded. Determination on whether the current risk measure ment system adequately evaluated IRR and liquidity risk exposure. Occasionally management--or even the board--is uncertain about the accuracy of the underlying ALM reports which is critical given that strategy development is dependent upon the validity of these reports. In such cases credit unions often ask for validation. Validation includes a review of the ALM model s calculations and an audit of the ALM s process to ensure the accuracy and strength of internal controls. They also conduct reviews of the logic and conceptual soundness underlying a credit union s ALM model. A validation should not be thought of as a purely mathematical exercise performed by quantitative specialists since a proper validation should encompass any activity that assesses how effectively a model is operating. Validation procedures focus not only on confirming the appropriateness of model theory and accuracy of program code but also tests the integrity of model input outputs and reporting. Having two ALCOs will make your ALM process run more smoothly. Separating operational and strategic matters will generally allow you to better focus on issues that are relevant to either management or the board decisions. At the very least it will place more emphasis on strategic issues which is critical for any credit union s success. Emily Hollis CFA is a partner with ALM First Financial Advisors LLC. The Operational ALCO The Operational ALCO should focus on issues affecting daily operations such as rate setting monitoring of major loan programs including delinquency product profitability cash management and promotions. The Operational ALCO should be comprised of the credit union s management staff including branch managers representatives from lending collections accounting mortgage and commercial departments and executive staff. This is where longer more detailed ALCO reports should be used and the Operational ALCO committee should identify reporting requirements such as production and significant branch budget variations. Committee members should discuss collections and delinquencies reports loan production reports monthly financials and comparisons to budget operational expense ratios setting rates and other comparable issues. The Operational ALCO should feed or tie into strategies dictated by the Strategic ALCO. For example loan-mix strategy is set by policy and the Operational ALCO should discuss the current CU position where it wants to be what steps are being taken to achieve mix change and so forth. The Operational ALCO should meet monthly. www.cubusiness.com February 2013 Credit Union BUSINESS 25 lEAdErShIp ten Ways to know if you Are a leader By Dr. Sandra L. Torres T 26 he quote leaders are made and not born is attributed to Vince Lombardi. Lombardi is best known as the head coach of the Green Bay Packers during the 1960s when he led the Packers to three straight league championships. He believed that leaders were made by hard effort and that hard effort was the price all of us must pay to achieve any worthwhile goal. Lombardi was right about effort. In leadership effort is a quality that must be worked on continuously. If you observe people who have the ability to influence others in order to reach common goals you will see that this is best accomplished when trait and process leadership are combined. People who have charismatic and persuasive personalities are often assumed to be natural leaders because of their behavior. But with accomplished leaders these traits only work in their favor when comCredit Union BUSINESS bined with a process. A process leader is someone who possesses observable knowledge and skills. When these cognitive abilities are combined with traits such as perseverance intelligence extroversion fluency and charisma true leadership will emerge. It is important to note that all leaders who possess trait and process leadership abilities are not necessarily good leaders. During the past few years we have witnessed how some political and business leaders with both trait and process abilities have exhibited non-ethical behaviors. These leaders not only dishonored themselves but also wasted a tremendous amount of effort striving to reach the top. They also alienated their followers. If you want to find a good leader look for followers who are also willing to make an effort. You will more than likely also find successful results. www.cubusiness.com February 2013 INSURED VEHICLE. PROTECTION PLANS. IMMEDIATE FEE INCOME. TURN-KEY ONLINE SALES. As a nationally recognized administrator of top quality vehicle service agreements NAC is focused on providing the products credit unions need to unlock new fee income and expand membership. NAC s fully insured coverage plans provide YOUR MEMBERS with peace-of-mind protection against expensive vehicle repairs. Our powerful online technology provides YOU with a simple-to-use sales tool that automatically matches vehicles to eligible plans displays cost-effective options and generates a contract PDF instantly when finished FOR YOUR MEMBERS Great Benefits - Roadside Assistance Rental & More Superior Customer Service Fast Claims Processing FOR YOU Online & On-Site Training Fast Personal Support Easy Online Submissions Custom Marketing Materials Auto Powersport & RV Coverages NACSOLUTION.COM 800-664-5724 UNLOCK NEW MEMBER BENEFITS & FEE INCOME WITH NAC. lEAdErShIp Ten ways to know if you are a leader lEADErSHiP If this sounds like you congratulations You are a leader or well ensure that leaders develop one. Leadership is not this Thankson your way to becoming skills in this area. Take only about exgiving season to make your workplace the exception the effort and perience education or talent. It s about making and use every opportunity to choosing to lead. demonstrate your gratitude to your Author speaker and leadership consultant Miami-based team. Dr. Torres has researched leadership practices around the world. More than 20 years of experience in the credit union Author speaker industry has made her an ardent believer and practitioner of and leadership the credit union philosophy people helping people. Leaderconsultant Miship Si offers bilingual leadership expertise via her writings ami-based Dr. training workshops and speaking engagements. Her specialTorres has researched leadership practices around the world. ty is women s leadership. Get to know her better by visiting More than 20 years of experience in the credit union indusleadership-si.com. try has made her an ardent believer and practitioner of the credit union philosophy people helping people. Leadership Si offers bilingual leadership expertise via her writings training workshops and speaking engagements. Her specialty is women s leadership. Get to know her better by visiting leadership-si.com. 9. You walk your talk not perfectly but sincerely and ed message will bring you success in employee motivation as intentionally. well10. in building a positive productive workplace. as You are a learner. You read listen to podcasts attend For conferences and ask questions of other leaders. their many leaders employee appreciation is part of DNA but for others it can be a scarce commodity. in fact many organizations are offering leadership development training to You long to make a difference. leaders need to say thank You re discontent and dissatisfied with the status quo. you in await for more resources to accomplish You re don t genuine manner. your vision. Your team members will likely 4. Your dreams are often so big they seem impossible. work refuse to blame others forifyour circumstances they feel 5. You much harder and take responsibility for doing really that what they re finding solutions. and 6. You foster unity by bringing people together makes a difference and that encouraging dialogue. 7. You are quick to say I messed up. Here s what I am their to do to fix theare noticed by efforts problem I created. going 8. You value relationships more than tasks. those with power. 1. 2. 3. Dedicated to developing leadership across cultures. Leadership Programs Develop Talent and Achieve Results Studies show that on average leadership development programs have a 20-40% significant impact on the following Personal Ability--Communication - Collaboration--Teamwork Productivity--Quality and Cost of Work Consider how an investment into coaching mentoring or training initiatives will result as a positive ROI on your organization s income statement. Dr. Sandra L. Torres Leadership authority and founder of Leadership Si (see) offers bilingual leadership expertise via her writing training programs workshops and speaking engagements. Become an extraordinary leader www.leadership-si.com November 2012 February 2013 Develop great leadership skills. For more information contact her at drsandi leadership-si.com www.cubusiness.com Union BUSINESS 28 Credit 21 Credit Union BUSiNESS www.cubusiness.com dEBIt mAttErS Banking at the point of Sale how Shopping is transforming the Nature of retail Banking By Suzanne Savage U sually we don t think about meeting member needs at point of sale but that is often where members acquire financial services that are most profitable to credit unions. The market dynamic that pushes members to remote channels--namely consumer adoption of technology--changes how members consume the financial services they need. Non-bank providers are promoting to members outside the traditional banking channels by offering mobile wallets prepaid cards auto loans and mortgages which means that credit unions are losing new business opportunities to non-bank competitors. Technology is transforming the member shopping experience so our collective thinking about connecting our products with members needs to evolve. Two significant changes in retailing are impacting how members acquire financial services first the evolving way consumers shop for goods and services and second how non-bank third parties provide financial services at the point of sale. Both trends threaten a credit union s ability to sell products and services and should compel credit unions to think differently about how and more specifically where they provide banking services. We need to develop new strategies that will help us shift from thinking only about where members bank to include thinking how we can offer services where members shop. www.cubusiness.com Showrooming How will an evolving shopping experience impact the way members acquire financial services Showrooming describes the practice of using a brick and mortar store to shop for goods and or services then buying online to get the best price. Consider how your members might purchase a television set. The Internet is often their first stop which they use for research--checking product ratings models and features and determining preliminary pricing. Armed with this information they narrow down their list of choices before heading off to the local electronics store to test drive new televisions. There the friendly staff answers questions and demonstrate the various TV features. Credit Union BUSINESS 29 February 2013 dEBIt mAttErS Once the member selects a particular TV he uses his mobile device to find the best price by doing a simple Internet search or using one of the price checking applications such as the one offered by Amazon. If their local shop does not offer the best price the member may look elsewhere to make his purchase. Meanwhile the local shop has fixed costs to cover rent and utilities inventory salary and benefits etc. Yet in spite of these costs the retailer may not make the sale. Increasingly retailers are adding additional value such as same day delivery financing extended warranties rebates or other perks in order to overcome the showrooming dilemma and make the sale. consumers integrate more Internet research into their buying habits for all types of goods and services our ability to reach potential members via the Internet becomes even more important. An Internet presence is no longer about having a great website it is about leveraging the Internet to connect potential members to your credit union. Integrating Shopping with Payments The role of the retailer in members financial lives is changing. Retailers are becoming increasingly deft at adopting successful strategies to offer financial services at the point of sale by integrating these services into their product offering and eliminating opportunities for banks and credit unions that offer the same Shopping for Financial Services It seems logical to assume that if your members know how to services. At the most basic level many retailers offer discounts work the system in order to get a good deal on a television set or perks when you pay with the in-store card. This allows merthey are savvy enough to extend this behavior when shopping chants to avoid paying interchange on transactions and earn inLending at the Point of Purchase for other types of goods and services including financial ser- terest income on the proprietary credit accounts. Look at vices. Think about how consumers might shop for a financial Just how are members fulfilling their lending needs today what s happeningmembers shop for payments. If you think in the world of mobile institution or specific products such between accounts and credit unions think again. Credit unions including loans by comparing rates as savings banks and Mobile wallets incorporate a shopping component by bank loans. It is market lending productsvisit the Internet members through their website statement use with primarily increasingly likely that they will to existing loyalty and couponing applications. Facilitating coupon long before they step into your branch. And what happens when a of credit union is a logical extension of the mobile coustuffers and branches. If members are aware payment transaction products competitive consumers search the Internet If you Google Find a bank in pon.increasingly functionfor loan to both facilitate sales pricing can often seal the deal. But members And the payment look is designed product Losinformation single credit union will appear in the search banking. Our members purchases with see our vendors. Angeles not a in conjunction with shopping not and get consumers to make may never partnering results even though there are roughly 150 credit unions head- Some mobile wallet schemesout that a lending of the unmost profitable lending products because third parties have figured encourage replacement derlying bank or it starts with a MasterCard quartered doesn t usually begin with a trip to a financial institution credit union issuedpurchase. or VISA with need in Los Angeles County. While credit unions are passionate about their credit union a prepaid card issued by the wallet provider. MasterCard and roots and identity theymember may shop for a car As Visa have responded with mobile wallets of their own. They too Consider how a exist to provide banking services. How oBen does the member think about the credit union at this stage Research( On the Internet Visit(Dealer( Make Decision Loan(App Close(the( Deal Member(Needs( Loan( ...but more focused on the car Member(Needs( Loan( ...but more focused on deal Member(Needs(Loan( ...but doesn t care who gives it just wants it approved Member(Gets(Loan( ...but may not have received the best financing deal In 30 this diagram if aBUSINESSunion has an opportunity to collect a loan application it is in February 2013 Credit Union credit www.cubusiness.com the middle of the buying process when getting a loan is more important than who dEBIt mAttErS will come equipped with loyalty and couponing components in order to leverage their relationships with large merchants. Many of the mobile wallet schemes allow for multiple cards. Before long members will be able to carry all their store cards digitally in mobile wallets without any need for wallet fattening plastic. Will the credit union card carry enough perks to make it to the mobile wallet Our members may never see our most profitable lending products because third parties have figured out that a lending need doesn t usually begin with a trip to a financial institution it starts with a purchase. Lending at the Point of Purchase Just how are members fulfilling their lending needs today If you think members shop for loans by comparing rates between banks and credit unions think again. Credit unions primarily market lending products to existing members through their website statement stuffers and branches. If members are aware of credit union products competitive pricing can often seal the deal. But members increasingly look for loan product information in conjunction with shopping not banking. Consider how a member may shop for a car In this diagram if a credit union has an opportunity to collect a loan application it is in the middle of the buying process when getting a loan is more important than who provides it. Let s look at how non-bank players in the transaction offer lending services. Like buying a TV the front end of the car purchase transaction is often the Internet. Car research and car shopping sites such as Edmunds.com and Autotrader.com contain payment calculators and advertising for non-bank lenders where your member can get preapproved in 3 minutes Look at any of the car manufacturer websites and you will find quick ways to get preapproved loans with financing offered by the automobile manufacturer finance company before you ever set foot in a showroom. Mortgage shopping is similar Begin research on the Internet find a realtor select a house get a pre-approval and make an offer. Take a look at Realtor.com and check out the financial calculator www.cubusiness.com February 2013 Credit Union BUSINESS 31 dEBIt mAttErS tools they offer as well as all the non-bank lender advertising on this site. Realtors may offer referrals to mortgage brokers who can source mortgages for borrowers with a wide variety of credit needs. Homes purchased directly from homebuilders often come with sizeable incentives to use the builder s preferred mortgage provider. Members often acquire mortgages through someone other than their credit union. Home search websites realtors and homebuilders all understand that loan provisioning begins with the purchase. costs are lower The retailing of financial services is becoming more about selling these services at the point of sale. Credit unions have to become better retailers of financial services and find ways to meet and serve members where they shop. Here are a few tips for better retailing Credit Union Website - Make sure your Internet presence is supporting your goals. When members begin to showroom for financial services like they do for TVs or cars will they be able to find you Will you be able to capture their attention and steer them from other third party products in favor of your own Prepaid Cards The Checking and Are your most profitable products prominently displayed Don t Debit Alternative forget search engine optimization so basic queries can connect Prepaid cards are undergoing another change cycle as retailers consumers with the credit union. and issuers enhance product features and reposition prepaid card products for transactional banking. American Express re- Card Program Loyalty Do your debit and credit cards cently launched the Bluebird card sold at Wal-Mart stores. At represent the go to card for your members If not they are not its core the Bluebird card is essentially an AMEX branded pre- likely to be placed in mobile wallets. Incorporate a shopping paid card but the card s marketing positions it as a checking angle to your card programs with loyalty points or merchant and debit card alternative. The Bluebird card s features include funded rewards. Connect card usage with shopping benefits not direct deposit online bill pay mobile deposits and surcharge just payment capabilities. free ATM access. Do these features sound exactly like the ones associated with the credit union s checking account Think Rethink Prepaid Programs Prepaid cards are not just about the sales pitch No NSF fees because there are no over- for gifting anymore. Can your prepaid program be expanded drafts no monthly fees as with a checking account and you to support more member needs Perhaps a prepaid card could can direct deposit your paycheck to your Bluebird card. The be a DDA and debit alternative for young or credit challenged Bluebird is not marketed as a prepaid card but as a checking members. and debit card alternative. AMEX has managed to move banking away from the bank. No branch or teller needed. Just purchase Loan Referral Programs Don t underestimate the value of relationships with local realtors homebuilders and car dealthe card from the cashier at Wal-Mart. AMEX and Wal-Mart have managed to eliminate the need ers as sources of loan referrals. Give your car buying service for a bank or credit union for basic transaction accounts and more prominence in lending marketing efforts. Consider using can leverage their brand power and large retail store network to services like CU Direct for auto lending. Credit unions may not have the budget to advertise on Realtor.com or Autotrader.com offer this financial service directly where consumers shop. but the credit union can find other ways to be inserted into the member purchase cycle. Adopting New Strategies As non-bank financial service providers permeate the retail Financial services retailing is not what it used to be. It should be clear that members are acquiring financial services particularly world with banking products credit unions are no longer comthe most profitable ones at the point of sale. Retail banking is peting with banks. Competitors now include American Express no longer about getting members to our friendly branches so we Wal-Mart Kohl s Ford Motor Credit PayPal Google Lending can sell them stuff. Anyway aren t we trying to keep members Tree and myriad other non-traditional financial service providout of the branch and in the remote channels where transaction ers. The success of these players comes from the ability to meet 32 Credit Union BUSINESS February 2013 www.cubusiness.com dEBIt mAttErS consumers where they shop. Credit unions can step up to meet these new challenges by rethinking traditional marketing methods and finding new ways to engage members at the point of sale. Suzanne Savage founded the Savage Consulting Group (www. savagecg.com) in 2001 after holding a number of management positions in various financial institutions networks and consulting firms. Savage Consulting Group provides credit unions a wide range of consulting and project management services with a primary focus on the card programs. Savage specializes in strategic development business planning and operations market research and the evaluation of payment systems products services and technologies. She holds a master s degree from the California State University at Fullerton and a bachelor s in Business Economics from the University of California at Santa Barbara. Suzanne is also a certified Project Management Professional (PMP). CEO SubSCriptiOn WiTh BeneFiTS Benefit your CFO COO CMO CCO CLO CIO HRD With FRee Monthly E-Newsletters Subscribe NOW www.cubusiness.com www.cubusiness.com February 2013 Credit Union BUSINESS 33 ECommErCE Technically Speaking Shared Branch Concept Opens Digital Wallet to Credit Unions O By Roy W. Urrico volume records for itself in 2012 including 2.5 billion transactions for the year. Now CO-OP hopes to up the ante and bring the shared concept right to the consumer s fingertips with a virtual branch. The country s largest credit union service organization with about 1 400 credit union participants in its shared branch program for a total of roughly 4 400 branches extended components of the shared branching model to include digital commerce using centralized processing resources which will allow credit union members to access mobile payments along with other digital capabilities. Changing technology evolving infrastructure requirements security concerns consumers and a changing payments landscape is driving the advancement of member channel options within the credit union market said Dr. Kathy Herziger-Snider vice president product development for CO-OP Financial Services. CO-OP is responding to this dynamic shift in member service by propelling the emerging payments landscape forward and positioning our credit unions for continued growth and sustainability. Mobile especially in the 18-29 year old age group is becoming firmly entrenched as a highly favored channel for member service. She added Part of the success with mobile and emerging technology may lie in providing a wide variety of services that are secure personal relevant dependable and yes even fun to position credit unions to retain and grow their membership. CO-OP Sprig is a multi-institution virtual credit union branch giving members the ability to make person-to-person (P2P) payments and aggregate their accounts in a single portal. CO-OP Sprig is the first phase in CO-OP s multi-phase plan to expand the product s P2P features and network range into a true digital wallet. In its initial phase CO-OP Sprig is an in-network solution allowing members to make transfers between or payments to any of their accounts. These transactions can nline banking through mobile devices and personal computers holds the key for many financial institutions survival. That much is obvious as banks hoping to save on infrastructure costs closed 2 267 branches last year and opened just 1 149 according to research firm SNL Financial. These financial institutions hope to keep accountholders with cheaper-to-operate online and mobile services. Simultaneously more and more accountholders want the flexibility of reaching their financial institutions anytime anywhere by using their preferred device. That is why many credit unions with fingers on their members pulse hope to capitalize on member loyalty and satisfy member needs through a shared branching approach to virtual banking. For credit unions shared branching is a means of competing with the big guys. A shared-branch network allows credit union members to Dr. Kathy Herziger-Snider Vice president Prod- conduct a number of uct Development CO-OP Financial Services banking transactions at a variety of participating credit union locations within the network just as if they were at their home branch. CO-OP Financial Services (Rancho Cucamonga Calif.) the leading processor of electronic payments by credit union members established new annual monthly and daily transaction 34 Credit Union BUSINESS February 2013 www.cubusiness.com ECommErCE include savings checking or loan accounts at any credit union participating in CO-OP Shared Branching or connected to CO-OP Connect the switch that enables CO-OP Sprig. In this structure an accountholder s routing and transit numbers are used to accept and process transactions among their large network of credit unions and is analogous to a member walking into the another credit union branch to perform banking transactions. Consumers don t even need to put a routing or transfer numbers into the credit union s mobile device to execute a transaction. Members simply have to pick a credit union name from the list of participants and enter an account number. Members can then transfer funds execute a P2P payment access digital banking at a branch or make deposits via a mobile RDC app that s downloaded from CO-OP s shared tech bench. Using CO-OP Sprig credit union members transfer money from their deposit accounts based on the real-time good funds availability model rather than the delayed automated clearinghouse (ACH) model. Members can make transfers between their accounts and immediately verify that funds are available in the destination account. The timing could not be better since the global P2P market is currently experiencing unprecedented development driven by both changes in global consumer dynamics and the impacts of emerging and potentially transformative technologies. P2P payments are among the most fundamental forms of transaction but the methods used have many implications for payment providers. Many established payment tools including cash and checks continue to hold basic advantages and will remain in high use. However the growth of new tools such as digital wallets means that consumers are grasping onto the shift towards newer platforms. In-network me-to-me and me-to-you payments are supported in this release of CO-OP Sprig as well as RDC via www.cubusiness.com February 2013 Credit Union BUSINESS 35 ECommErCE reasons given for using mobile RDC were ease of use (50 percent) and urgency of need for making deposits (48 percent). Among those who reported switching primary banks in the previous 12 months 48 percent said having mobile banking services played a role in making their decision. Consumer mobile financial services will take off and the more services you can put on a mobile device the better it is for credit unions. No matter how the payment environment continues to develop credit unions need to focus on simplifying and enhancing the member experience and building out their digital platforms to provide access when and how the consumer demands points out Herziger-Snider. She sums up what is at stake clearly ...expanding services will also require credit unions to implement service alternatives which are easily and quickly integrated into existing platforms with minimal development and expense leveraging their investments in key partnerships and online access. Clearly mobile is not only here to stay it is a revolution in access and service which is well on its way. Roy Urrico is a freelance Ghostwriter and byline writer of books articles newsletters guides case studies and white papers about financial institutions financial technology compliance information security credit and collections foreign exchange and many other financial topics. To find out more about how Roy can help your organization check out Roy s profile on LinkedIn visit his Web site at brightideaswriting.com or email him at roy brightideaswriting. com Apple iPhone. Future phases of the service will include out-ofnetwork me-to-anyone payments a point-of-sale option and RDC via Android-enabled smartphones. Again recent activity suggests that the timing of mobile RDC is spot on with its emergence as more appealing alternative than desktop RDC especially for Millennials. While progression of RDC holds great promise for corporate applications much of the demand for new solutions such as mobile check deposits remains consumer-driven especially given that so many already carry a check capturing device in their pockets in some form of mobile gadget. Mobile RDC is a technology that permits consumers to deposit a check using their mobile phones. In order to use mobile remote deposit capture consumers must have access to the mobile web as well as be able to take a digital picture using the camera on their cell phone. Mobile RDC lets the consumer take a picture of the paper check and send it via their mobile phone to the credit union or in this case to the virtual branch sharing CO-OP Sprig. Data presented by AlixPartners LLC drives the point home. In a survey of consumers owning smart phones or tablets 12 percent had made at least one mobile check deposit in 2012 up from 5 percent in Q4 2011. Additionally the top two CEO SubSCriptiOn WiTh BeneFiTS Benefit your CFO COO CMO CCO CLO CIO HRD With FRee Monthly E-Newsletters Subscribe NOW www.cubusiness.com 36 Credit Union BUSINESS February 2013 www.cubusiness.com CU CoNtENt Want to Increase your Facebook Activity you Need a game plan O By Laura Enock but at a much slower rate. Now what Without a solid game plan in place things remained quiet for the next few months. We should have developed an ongoing marketing plan--other than simply mentioning our Facebook presence in all our member communications--before launching Cuoco concedes. Many credit unions find themselves in this position. A certain amount of energy and excitement generally accompanies any new marketing campaign and Social media promotions are often launched with a contest to help them get off the ground. Of course this isn t enough to last much beyond the initial excitement or after the contest ends. Sometimes it is only after all the dust has settled that you realize you don t have a viable longterm plan in place to sustain growth. In October 2012 Cuoco decided to relaunch Greater Chautauqua s Facebook page. This time we were determined to do it right. Credit goes to Cuoco for acknowledging that they had initially neglected to develop any plan for sustained growth and for deciding to take their launch back to the drawing board in order to design a solution. The idea for a solution came to me at home Cuoco says. My six-year-old son wanted to play board games with me and being a great dad I said sure . I was thinking about how he must have a million games in his closet when it clicked We should figure how to turn a board game into an online game that members could play on our Facebook page. Before investing any money in developing an on-line game Cuoco hosted an on-line survey in which he asked his members what games they were interested in playing. Bingo came most up often. How could they play Bingo on Facebook Once Cuoco drew up a terms and conditions document and n January 1 2012 the board of Greater Chautauqua Federal Credit Union approved developing a Facebook presence for the credit union and has experienced some tremendous successes--as well as some quiet spells--in their first year. Jason Cuoco Marketing Director at Greater Chautauqua shared some of his best practices trials and errors and a few of his exceptional ideas with Credit Union Business. We ran our first promotion in February 2012 Cuoco explained and started getting members to like our page by offering a drawing that included a drawing with a chance to win a 50 gift card. In the first month the credit union hit 169 likes by running this one promotion. Members Jason Cuoco Marketing Director learned about the 50 Greater Chautauqua Federal Credit Union gift card drawing from tellers as well as from signage placed in branch lobbies but for the most part the campaign s success was fueled by word of mouth. For the hard cost of just 50 the Facebook page was quickly launched. Not bad for the first month out Once the promotion ended however things quieted down. Members continued to like the credit union s Facebook page 38 Credit Union BUSINESS February 2013 www.cubusiness.com CU CoNtENt had purchased 4 500 bingo cards he was set to go. Each member reOUTSIDE ceived two Bingo cards and a printed form detailing the game s terms and conditions. Prizes included a 50 award for the first person to redeem a card in each INSIDE of the credit union s four branches. Every winning card qualified members to enter one big drawing for the grand prize of a Kindle Fire. The credit union posted one bingo number each morning and another every afternoon on every weekday in October. We received so much feedback Cuoco said. After the first week we asked members how they re doing with the game and we got 48 comments and 61 likes just from that one post Greater Chautauqua started what was to become a very popular bingo game. Cuoco thinks the reason this campaign went so viral was because members had to check the numbers on Facebook there was no other way to see the bingo numbers. Occasionally a member would come in to the branch and ask for the numbers but was told--politely but firmly--that the only way to get the number was by checking on Facebook. After all it s a Facebook promotion Cuoco pointed out. On October 1st the credit union had a total of 212 likes. For the relaunch the credit union set a goal of 500 likes by the end of October. The planning committee thought that goal was too aggressive and didn t expect to meet it. Yet by the end of October the credit union had a whopping 539 likes--more than double their previous total--in just 30 days which exceeded their supposedly aggressive goal. Today the credit union has 550 likes. Yes very few additional likes came in once the October promotion ended and it became clear that the only way to grow Greater Chautauqua started what was to become a very popular bingo game. a Facebook presence is to nurture it. And in order to continue growing their Facebook likes the credit union will begin rolling out a new promotion on February 1 2013. While using Facebook the credit union learned that Facebook establishes timeline postings according to how often you navigate different pages which means fans won t even see your page if it isn t viewed often enough. So just because you are posting information doesn t mean members will see it. Cuoco has an idea for fixing this and will use social media content that s available to credit unions daily free of charge at Facebook.com credituniontoolbox. Prior to October the credit union was getting 20-30 hits per post. After the Bingo promotion every post got 200-300 hits which is an astonishing 600% increase. Additionally there s been a 14 000% increase on the virality of the page which measures the amount of interaction on your page and among friends of fans. That means Facebook is counting two generations of fans. Virality is a measure of the possibility of what can happen with that post. At this point the credit union has a viral reach of 92 000 people all the credit union s friends and all the friends of those friends. A Bingo game is really nice but did the credit union realize more tangible results 40 Credit Union BUSINESS February 2013 www.cubusiness.com CU CoNtENt Absolutely. For one thing the Facebook page has become more interactive. In addition to checking for Bingo numbers members started asking questions about loan programs and home banking services. Once the credit union added an enhanced security feature comments started coming in and the credit union was able to take part in the conversation. Greater Chautauqua instantly deals with each issue--whether it s an opportunity or a problem--the moment it comes up an ideal situation that is a direct result of having a well-managed Facebook page. Now that the Bingo campaign has ended the credit union is struggling with some downward trending based on Facebook statistics. People don t stay in touch with us as much when there s no promotional campaign Cuoco says So we re starting to think about different types of content like the ugly sweater contest we ran during the holidays. Of course Facebook isn t the only marketing platform or function at the credit union and even though it was so successful there is a limit to how much time they can spend on it. Cuoco leads all of the CU s other marketing as well and oversees all of their graphic design. Acknowledging this reality the credit union has opted to devote specific months of the year to social media and has approved the February campaign. The campaign is simple Each week the credit union will pick a topic such as favorite vacation destination favorite movie or where to get the best local pizza. Some topics are tied into finance but not all. Every time someone posts to the page they re entered into a monthly giveaway and qualify for a prize. Since there will be four weeks of questions members can enter multiple times. The CU anticipates that member responses to this campaign will boost interest in their Facebook page. Then the credit union s posts will hit member timelines because they re interacting with the CU page. At this point Cuoco is not looking for more likes or ROI but to interact with members and appear on their timelines. It ll take just ten minutes on a Monday morning Cuoco explains. The goal rebuild communications and relationships so when something else is posted members will respond. Two other promotions the credit union is working on are an ad promo for members and a photo contest with a unique twist. Whenever a member closes on a car loan for example the credit union will ask them to take a picture of their new car and post it to their own Facebook page with the title Bought my new car through Greater Chautauqua FCU and tag the credit union in the photo. Members who do so are entered into a drawing for a grand prize such as a Wii system tablet device or something similar. Another example might be to ask members who purchase an ATV through the credit union to post a picture with the title Enjoying our new ATV thanks to Greater Chautauqua FCU . Given its higher value the grand prize will be awarded quarterly. The one thing Cuoco would do differently if he could start again would be to have a master game plan before jumping in. We ve found that it s imperative to have a master plan before opening a Facebook page he says. Nothing looks worse than a Facebook page that s neglected. It is better to not have one at all. With Facebook Cuoco says you can either look really good or really bad. We have plans for everything--our chapter golf tournament youth week and annual meeting--but if there s no plan for Facebook it will be neglected Cuoco says. He s attended many webinars since starting the Facebook page and finds that social media comes up a lot. Much of the discussion assumes you have a budget and a staff. But Cuoco s credit union has 50 million in assets and serves 10 000 members. Like many credit unions he doesn t have a full marketing staff. And that s what makes Cuoco s success all the more impressive It proves that you can get big results on a small budget. Even if you re a one-man (or woman) marketing shop you can still be well in the game Laura Enock Managing Editor of Credit Union Toolbox and founder of CUcontent.com provides credit unions nationwide with content for their websites newsletters email marketing and social media communications. Enock moderates the popular CreditUnionToolbox webinars on best practices and provides individual credit unions with social media marketing and PR support on a consulting basis. Contact her at laura cucontent.com or follow her on Twitter CUtoolbox. www.cubusiness.com February 2013 Credit Union BUSINESS 41 mArkEtINg mAttErS Strategic Auto Loan Acquisition WARNING If all you have to do is change the logo and colors on your marketing materials and it looks like the credit union or bank down the street this article should change the way you look at marketing. L By Tony Rizzo keep an existing one. Since this group is your profit driver it makes financial sense to spend more time and money cultivating and communicating with this group however often times this segment is just lumped in with everyone else and not given the credit for the importance they bring to your bottom line. Con sider phone calls to this group in addition other touch points. ong the lifeblood of the credit union industry vehicle loans have continually been a bright spot on our bal ance sheet. However as you are painfully aware it is becoming increasingly difficult to increase market share year-over-year. From gift cards cash inducements rate incentives and deferred payments the incentives get bigger and the margins get smaller on all kinds of loans not just our old friend the auto loan. The offers seem to be more complex and tend to reduce profit for the sake of breakthrough creative. How can you cut through the clutter Can auto lending once again be a position of strength for your credit union How will you accomplish it Can you craft a compelling message that goes beyond price - and returns more profit to your institution The answer lies in a 3-tier strategy and an intense focus on data mining and results tracking. Cross-sell Your Marginal You have members that are ripe for a new auto loan or can re finance an existing loan with you. Using an MCIF identify those members who by adding one additional product will then mi grate into your top 10%. This does not mean cross-selling every one. In order to focus your marketing dollars just look at the segment that is on the fringe. The Strategy No matter what product your marketing department is sell ing this month look for an overall approach to the three main needs of your business retention of your top 10% cross-selling your marginal members and acquiring new members. Acquisition of New Members If you are not increasing your net new members by 10% per year you are missing an opportunity. Make sure Marketing in cludes a strategy and budget allocation for new member acqui sition. A good practice is to map your market penetration in the immediate area around your branch. If you don t own your back yard do not spend money on broader media (TV Radio Outdoor). Let s face it if we place every branch of every bank and credit union less than two miles apart it s enough to create a string of branches from Maine to Califor nia. Clearly there is not a market void for financial services. Stay close to your branch where it makes common sense for a family to build a long-term relationwww.cubusiness.com Retention of Your Top 10% Each year 14% of your membership walks out the door. Do you know how many of these members are in your top 10% Does your marketing department Each significant marketing effort must reach out to this group and sell an additional product or 42 Credit Union BUSINESS February 2013 mArkEtINg mAttErS ship before you look to conquer the world. Once you have the strategic frame work established your next step is to mine your data to look for high opportunity segments. This is less about being ultra-creative and more about translating your data into action. This approach has been proven to drive revenue with less overall marketing investment. A dataenhanced MCIF is required as it is focused on micro-segmentation tracking. tions more personal (and increase response) but will also reduce the marketing expenditure since you are practicing better target marketing. Consider these data points 1. Beacon score 2. Member and prospect auto loan data found on a credit report (origination date original balance current balance) 3. Member and prospect credit card data found on a credit report 4. Member and prospect mortgage data found on a credit report 5. Member and prospect home equity loan data found on a credit report 6. Prospect income 7. Prospect and member distance to branch 8. Prospect wealth and life stage indicator 9. Member specific next product indicator 10. Member s profit deciles 11. Bill-pay transactional data 12. Presence of teen children Elements to Add to Each Communication By now you ve probably guessed this approach is not designed for the mass market. Forget TV radio outdoor or social me dia. While those tools have a place for branding to get specific you will need to deploy direct marketing channels. Direct mail email and phone calls are your best tools to use here. In a best of breed program a combination of these channels will be used to dramatically increase your results. You will need to add a number of data points to enhance your current and prospective member intelligence. Remember it s this data-richness that will not only make your communica- 00000000 It s nice to pay less. Refinance your auto loan and save up to 200 on your payment. Dear Carson Could you use an extra 200 in your budget each month It s easier than you think. Smart Financial Credit Union has pre-approved you to refinance your auto loan and if we can t save you money we ll give you 100 You re pre-approved for a rate as low as 3% APR. With our low rates and terms up to 72 months you can have a brand new payment quickly and easily. The minimum loan amount is just 5 000. Why pay more than you need to Refinancing your auto loan is a smart move. There are no refinancing fees so your savings will start right away Just say Yes We re ready to handle all the details. Call us at 800.392.5084 (select option 2) or visit the secure personalized website below to take advantage of this offer. Questions Just call or stop by any branch. Double your loan volume by communicating with members who have loans at other financials. Our proven strategy will add loans to your portfolio today. ri-bureaureviewofmembers T loansoutsideofyourCU. orldclassdirectmaildesign W andproduction. 30 000 PLUS Pre-approved for 455 PLUS Monthly payment as low as 200 OR Monthly savings up to 100 800.555.5084 (select option 2) Savings guarantee www.personalURLforCarson.com You can choose to stop receiving prescreened offers of credit from this and other companies by calling toll-free 1-888-567-8688. See PRESCREEN & OPT-OUT NOTICE below for more information about prescreened offers. NOTICE SEE REVERSE SIDE FOR TERMS & CONDITIONS OF THIS PRE-QUALIFIED OFFER. Letter Template Tony Rizzo at 214.778.3037 tonyr gomarquis.com GoMARQUIS.com MARQ73-05-11-06202011 CU Ad www.cubusiness.com February 2013 Credit Union BUSINESS 43 mArkEtINg mAttErS Once you have added this data to your MCIF you will be able to execute the below communications. Should you do all of them Yes. To maximize the marketing investment and increase overall response rate you should do as many of these as possible. Share these with your staff. Chances are they will come up with many more micro segments to increase your chances of success. message by adding VIN data to give the member an estimate of their vehicle s worth. 16. It s important to note the above segments may also apply to your next strategic audience cross-sell. Execution Cross-sell Your Marginal One additional product or service sold into these member relationships will slash attrition rates in half. Look for additional opportunities to place one more product in the household. Some suggestions include Members who have closed any loan in the past 30 days. Members with your bill pay service that pay ve hicle loans outside the credit union. Members whose next predictive product is an auto loan. Members who have teens in the household. Data Makes Execution More Specific With each segment you will link the relationship (found in the data) with the message. Your goal is to demonstrate knowledge of the current or prospective member to build trust and then make the offer. Sample headlines here can include Save 250 per month when you refinance today. Your checking account can save you money on your auto loan. Lower your monthly payment by 100. Each of these headlines is based in data is specific to the individual and is grounded in one thing we all want ... to save money. Your message should also leverage data to make the com munication easier to get the loan. Consider adding a loan officer contact and branch location map. A personal URL (tony. abcfcuauto.com) or quick response code (a square bar code) can also be used to bring the current or prospective member to an online experience to create a shorter sales cycle. Execution Acquisition of New Members Here s where you can accelerate your growth. It s important to note that every campaign should have an element of acquisition. Prospects with vehicle loan Prospects with other loans (mortgage credit card home equity) Prospects with a teenager Execution Retention of Your Top 10% This is the segment that you do not want to leave your credit union ever. Why These most valuable relationships (Top 10%) deliver more than 100% of your profit. In other words it is because of the business these few relationships repre sent that great rates can be offered to all as they bring the profit you spread around to the membership as a whole. It s important to constantly look for meaningful ways to com municate with this group to provide value and an outstand ing member experience. Here are some suggested segments Members with an auto loan outside the credit union with a checking account or mortgage at your credit union. 13. Members with any loan (not including a vehicle). 14. Members with a single vehicle loan. Cross-sell an additional loan (or refinance an outside loan). 15. Members with current vehicle loans whose term is in month 32 or have a remaining balance of less than 3 000. You can further enhance this segment s Final Thoughts To further maximize the impact of a campaign of this type additional analysis will be needed and can include beacon cutoffs distance to branch and member value-scores. Is this approach easy No. Does it work Yes. There are hundreds of financial institutions embracing these techniques for growth and profit right now. Why aren t you Challenge your marketing depart ment to a communications event like the one above to drive auto loan growth. Your bottom line will be glad you did. Tony Rizzo is the general manager of MARQUIS Creative a Dallas TX based company that provides MCIF CRM and compliance software as well as an array of consulting and direct marketing services to over 700 financial institutions worldwide. E-mail tonyr gomarquis.com. 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