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The MARKeTING ISSUe MAY 2012 VOLUME 7 ISSUE 5 9.95 State National at Under the Hood Companies Your Credit Card Website Page Come Out Come Out Wherever You Are WITH C d t U gv s b s POS a d ATM adva tag s that ba ks ly sh th y ld ff CU24 al dt PIN d b t t Ja P s d t CEO S g g R v F d al C d t U M ss P t MS sB S th J Th la g st ati Call 877-570-2824 d k Find out MORE MORE th CU Call Judy Lazzerini toll-free email visit MORE OUR MEMBERS GET CONTENTS Credit Union BUsiness mAY 2012 V O L U m E 7 I S S U E 5 4 6 8 11 14 16 20 pov Another Milestone is Just Around the Corner Tim O Hara CoMplIANCe 26 30 34 35 40 41 44 CU CoNTeNT Lake Michigan CU successfully engages Members on Facebook Laura Enock TeCh bIz Leadership and Vendor Management Do Due Diligence Dr. Sandra L. Torres CRedIT CARd RepoRT Don t Turn Turn Turn Away From Data storage Concerns W.B. King pRodUCT ShoWCASe Your Credit Card Website Page Come Out Come Out Wherever You Are Ondine Irving UNdeR The hood PsCU Launches Mobile Bill Pay Platform MARKeTING MATTeRS Tony Rizzo pRodUCT ShoWCASe The Real MArketing Challenge cbanc network Reaches 10 000 Users Milestone CRoSSWoRd Ken Schroeder CU SpoTlITe Getting Personal Joyce Moed When You Communicate everything Goes Right AChIevING SKIllS Holly Herman To Be Or not To Be ... Credit Unions set Records in Loan Originations Assets During First Quarter 2012 Cfo CURReNCy Emily Hollis STAff RepoRT Credit Union Officers not Your Grandparents Credit Union General Credit Union evolving in a Way That Promises to Maintain and Attract Gen-X Members Sharon Sweda To Grow or not to Grow May 2012 Credit Union BUSINESS 1 ABOUT US Publishing Team Tim O Hara Publisher tim Joyce Moed Managing editor joyce Iliana Nord Operations Manager iliana Patti Manzone Designer Mary Lynn Rogers Copy editor at THE MARKETING ISSUE MAY 2012 VOLUME 7 ISSUE 5 9.95 State National Companies Your Under the Hood Staff Writers Emily Hollis CFO Currency W.B. King TechBiz Sharon Sweda CU SpotLite Credit Card Website Page Come Out Come Out Wherever You Are Contributors Laura M. Enock Holly Herman Ondine Irving Tony Rizzo Ken Schroeder Dr. Sandra L. Torres 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 Contact Information Credit Union BUsiness Magazine P.O. Box 2223 Palm Beach FL 33480 (561) 282-6015 (561) 588-7711 (fax) info Sales and Advertising Contact Bernie Fitzgerald Advertising executive Bernie or 561-282-6015 1 Greg Halpern Advertising Services Manager Greg or 561-282-6015 4 2 Credit Union BUSINESS May 2012 Does Changing Enterprise Systems Really Make Sense Today It does if you re looking to run more efficiently. It s a fact you can offset rough economic times by improving efficiencies. Automation integration outsourcing all can lead to operational improvement saving your credit union time and money. Harland Financial Solutions UltraData Enterprise can help you get more done with less by automating processes reducing redundancy and providing the tools necessary to serve all your members efficiently. Don t just believe us here s proof By outsourcing daily operational functions to Harland Financial Solutions Enterprise Resource Services we not only save time and money but our IT resources can now concentrate on more strategic projects that benefit our members. Keith Malbrue COO Affinity Plus Federal Credit Union Read more about this credit union s success at Efficiencies3 Contact us at 800-815-5592 2012 Harland Financial Solutions Inc. All Rights Reserved. UltraData is a registered trademark of Harland Financial Solutions. FROM tIM Publisher s POV Another Milestone Is Just Around the Corner in few short weeks it will have been a full seven years since the launch of Credit Union BUSINESS magazine. i ve had a ball bringing this professional business monthly to you an audience of 100 percent credit union decision-makers from around the United states. i wouldn t trade the experiences i ve had for the world. And i look forward to new adventures each and every month Our staff spends It Will Get Better a great deal of our Forbes on time planning each Economic Trends issue of the magazine Overcoming the from the theme to the Commercial Real Estate Challenge articles story lineup Why Credit Unions Will Be The Industry s Real Players and layout. it s a in Coming Years Mortgage Lending Regulations real team effort and a There s No Such Thing as a labor of love. Little Bit Compliant i ve spent a lot of time lately thinking about the CUB s changes throughout the years. My original editor business partner old friend was John san Filippo. From san Diego John lined up an army of excellent freelance writers located in all parts of the country and assigned each of them topic areas to cover and scheduled the content with military precision. We were off to a great start and a solid foundation thanks to John After a little more than one year John was enticed with an offer too good to refuse to return to work for a former employer symitar systems where he continues to do brilliant work. John did me the kindness of suggesting his replacement Marc A. Bringman a consummate corporate BUsiness Man who wrote my favorite monthly column in CUB from Volume One issue One At C-Level At C-Level always appeared as the THE LENDING ISSUE 1 FEBRUARY 2010 VOLUME 5 ISSUE 2 9.95 first article in each issue and dealt with very real challenges not uncommon to any business structure and the solution to each with a reasoned route to its conclusion. Marc lived in Lake Dallas Texas with his wife who is a BofA executive. We had a great deal in common Marc and i including our age and many of our experiences. We became very good friends who would talk each day about how to make the magazine better and better. Together Marc and i designed monthly articles that matched the work titles of our audience some of which continue today CFO Currency for our chief financial executives Marketing Matters for our marketing directors The Lending Line for lending executives Tech Biz for information technologists. Other columns include HR Roundup Compliance Today and executive Compensation. As you can see Marc and i have the credit union C-Level covered Meanwhile Marc s health was in a downturn. He had mentioned some aches and pains in his chest and was visiting a battery of doctors who discovered that he was suffering from cancer. Marc agreed to an early round of chemotherapy which he described in great detail in his final At C-Level column. it was tremendously brave of Marc to frame a business article around a visit to the depressing oncology lab where he clearly felt dehumanized. The hero of this column was an oncology nurse whose customer service savvy saved the day. Marc had already written a best-seller business book in 2004 titled swapping Lies Deception in the Workplace and he wanted to leave CUB to finish two other books he had begun to write. Marc s final Credit Union BUSINESS issue was December 2009. His final gift to CUB was twofold 1. suggesting our long-time feature writer LaRita M. Heet take over the reins. 2. Telling me that we possessed an exclusive interview from Forbes Magazine publisher steve Forbes FEBRUARY 2010 C R E D IT U N IO N B U S IN E S S L E N D IN G IS S U E 1 V O L U M E 5 IS S U E 2 4 Credit Union BUSINESS May 2012 FROM tIM A New CUB Era BUSINESS Celebrities The steve Forbes interview hit just as the economy was crashing and everybody was looking for some sense of economic salvation. Mr. Forbes provided it with a pretty upbeat assessment of the future. Cover caption it will get better The Forbes cover story was the first of several national business celebrities who were anxious to have their views expressed about credit unions and their future. At that point in time we had two able interviewers to chronicle their views LaRita Heet our newly minted editor and Tom Dluzen a newly appointed CeO of Pontiac Michigan s Chief Financial Credit Union. During the next year Credit Union BUSINESS readers were treated to interviews from national business celebrities like CnBC s Larry Kudlow personal fiLarry Kudlow nance guru suze OrReports To Credit Unions man former speaker How to Build for of the House newt Today s Needs Gingrich former Ways to Show CU Value and Growth presidential candiTwitter Contests date and Vermont Waste of Time or Opportunity governor Howard Dean and the First Lady of Wall street Muriel Mickey sibert. We also heard from credit union superstars like sarah Canepa Bang Dennis Dollar and former Wescorp CeO (during the good times ) Richard Johnson. The expression When the going gets tough the tough get going certainly rang true during this important juncture in credit union history. each one of our noted interviews with views inside the CU industry and especially from the outside concluded that credit unions are here to stay and thrive After having heard from industry experts it occurred to me that industry expertise is just what we need to offer our readers. enter editor-in-Chief Joyce Moed Joyce Moed came to Credit Union BUSINESS with a solid credit union reporting background having previously worked for both CU Times and CU Journal. in fact Joyce and i are the THE MARKETING ISSUE MARCH 2010 VOLUME 5 ISSUE 3 9.95 only two people in the world to have worked for all three of the independent credit union publications Joyce is the wife of a computer genius named steven and the mother of their 18-month-old daughter samantha sami. They also live in south Florida (just a few blocks from Tropical Financial CU where CUB is an official business member the only CU pub so designated). Today CUB s editorial product mainly consists of credit union experts dispensing sterling advice to a growing number of CU executives and we re doing it with column headings that Marc Bringman and i created a few years and another world ago. As you ll see in turning the pages of this issue these days we are excited to share the wisdom and experience of Holly Herman (Achieving The World According skills) emily Holto Newt Former Speaker lis (CFO Currency) of The House Has Always Had a Ondine irving (Credit Bias in Favor of Credit Unions Card Report) Tony Resurgence in Reverse Mortgages Rizzo (Marketing Matters) Brad King The Rising Cost of Risk Assessment (Tech Biz) Laura and Compliance enock (CU Content) sharon sweda (CU spotlite). Thanks for reading Credit Union BUSINESS for the past seven years. You can be sure we ll be working hard to bring you more important BUsiness information in the future THE LENDING ISSUE II SEPTEMBER 2010 VOLUME 5 ISSUE 9 9.95 As Older Americans Try to Recoup Recession Losses Security Should Focus on 5 Key Areas May 2012 Credit Union BUSINESS 5 COMPLIAnCE Leadership and Vendor management Do Due Diligence By Dr. Sandra L. Torres e very credit union leader knows that completion of a robust due diligence process is an essential responsibility and a necessary process to prevent any significant losses to the credit union resulting from a relationship with a third party vendor. According to nCUA (Letter to Credit Unions 07-CU-13 evaluating Third Party Relationships 2007) credit unions were informed that examiners would be focusing on three particular areas of their vendor management process during regular examinations 1. A planning process which assesses the risk in the relationship. 2. A due diligence process which results in the credit union developing an understanding of the third party s organization business model and financial health. 3. A process to measure monitor and control risk associated with the relationship. Credit unions nationwide immediately took notice and either revamped existing processes or created new ones. CUnA created a Third Party Vendor Management Guide to assist credit unions in assessing risk focusing on due diligence and contract formation and monitoring and controlling risk management. Most importantly the CUnA guide created consistencies for credit union-vendor relationships. Vendor management soon became a cottage industry and third party vendors began receiving requests for information from sources other than credit unions. They acted they complied and they rested. Not so fast Credit union managers may have felt comfortable after the initial review but there is such a thing as being too comfortable. nCUA further suggested that Management should periodically review the third-party vendor s operations in order to verify that they are consistent with the terms of the existing written agreement and that risks are being controlled (supervisory Letter no. 07-01 evaluating Third Party Relationships 2007). This applies to all vendors but is particularly relevant to existing vendors. if the vendor is well known respected and enjoys an impeccable reputation in the credit union industry and managers have established trusted and lasting relationships then it may be fine to relax. But if the vendor has had a turbulent life cycle relationships are not defined or solid trust has not been established then good reason should prevail and further investigation is needed. Tangibles and Intangibles Managers ought to focus on two important elements when conducting a periodic review. First and most important is the obvious the tangible or what we can touch. This can be accomplished by following nCUA guidelines particularly the finance and operation review and the contract issues and legal review. it s probably a safe bet that an attorney favorable to the vendor drew up the agreement. Did an attorney favorable to credit unions review the agreement Most likely the answer is yes and 6 Credit Union BUSINESS May 2012 COMPLIAnCE that s the right move. Did the credit union s CFO or comparable representative (could be outsourced) comprehensively review the vendor s financials if there is a parent company what about its financials Beware of a vendor who will not provide its current financial information or that of a parent company. if the vendor or parent company is rated by a classifying organization such as A.M. Best inc. s&P or Moody s what s their rating Another key issue is the vendor s internal control structure. Have they provided some type of audit report that defines their current process second is the intangible or indescribable. What does your gut tell you You know that emotional reaction and reflection of intuition that you get when a feeling of uneasiness comes upon you. This is when you should go into your investigator mode. Look into the vendor s operation and determine if there have been any changes that may trigger a deeper probe. For example ask your staff if service levels have declined Have there been sudden or unexplained changes in the vendor s operation ownership personnel or management Has the vendor been timely on communicating these changes or are they silent or elusive on these matters is there a sudden interest to win over the users of the vendor s product or services Also what s the word on the street The rumor mill usually brings with it unsubstantiated claims but some rumblings may result to be true. Dismiss the incredulous but dig deeper into anything that gives you that gut feeling. Finally take 15 minutes or so and search the web for the vendor the parent company and the principal running the orga- nization. This can lead to discoveries that will prevent surprises down the road. in researching information for this article i interviewed a credit union CeO who stressed that damage resulting from not completing a vigorous due diligence on third party vendors may not show up until years later. Managers who take the lead on a periodic due diligence process own up to their responsibility not only to the credit union but particularly to the members. Author speaker and leadership consultant Miami-based Dr. Sandra Torres has researched leadership practices around the world. More than 20 years of experience in the credit union industry has made her an ardent believer and practitioner of the credit union philosophy of people helping people. Leadership-Si offers bilingual leadership expertise via her writings training workshops and speaking engagements. Get to know her better by visiting sandra. torres on the web. She can be reached at drsandi May 2012 Credit Union BUSINESS 7 CREdIt CARd REPORt Your Credit Card Website Page Come Out Come Out Wherever You Are P By Ondine Irving unions have developed but overall i would say most credit unions fail miserably with marketing their credit card programs via their website. now granted credit union credit cards are my business and passion so i get really irritated when credit unions fail to give the highest profit potential product the bottom of the barrel. i am seeking the best of the best in credit union websites and how they promote their credit cards via a great website page. There are some great pages out there but let s not kid ourselves there are hundreds of simply lousy website pages out there as well. When my reviews are centralized to one region or one particular state i tend to see a lot of follow the leader in credit lease excuse my brutality in the forthcoming article. if you re a credit union executive who feels the credit card product is not worth promoting due to the high risk you may choose to skip this article. Don t circulate within your credit union either as it may reflect on your credit unions culture. For those of you who are willing to listen read on. i among others within the payment processing market for credit unions have come to expect this stand back from credit cards attitude from credit unions. Perhaps this is the reason only two out of 10 members have a credit union card why only 52 percent of all credit unions offer a credit card program. it is also this attitude and fear of risk that many credit unions succumbed to the pressures in 2002-2007 time frame to sell their credit card programs to banks. But guess what They re coming back from the dark side with a new appreciation for the credit card product. We can thank all those portfolio brokers for squeezing into our market and misleading so many credit unions. As part of the work i perform for my clients i review credit union credit card website pages on a consistent basis as part of the competitive comparison i perform for my clients. What do i find with regards to credit cards not much in fairness there are some tremendous credit card pages that credit 8 Credit Union BUSINESS May 2012 CREdIt CARd REPORt card website pages. if there is one credit union in the state of Ohio that has a lousy credit card website there will be multiple credit unions with lousy credit card pages. This trend also applies to program structures rates and fees. Well if ABC Mega Billion Credit Union assesses a cash advance rate or fee they must know what they re doing- because they are the leader in our state. Don t be so quick to follow the leader Many errors are perpetuating- and more importantly no one is advising the credit unions. What is a lousy credit union credit card website page A site where the credit card is buried you can t find it anywhere. is it under loans or other products and services Maybe it is hidden further within unsecured loans. There is often no clear location for the credit card. sometimes a credit union will have a one-paragraph description of the credit card and then actually instructs the user to call the credit union for an application. Better yet if you want to know the credit card rates Call and they ll let you know. What about fees i always have a hard time finding fees which this in itself is a violation of the CARD Act of 2009 and a small omission so many forgot to advise credit unions about. i have discovered those credit unions which have GReAT credit card website pages have a common thread the card loan to total loan ratio far exceeds the national average of 7 percent the credit union is actively promoting credit cards and the credit union realizes it is the single best product to have it s own dedicated page and from the industry events these are credit unions whose management and CeOs are regularly attending card related conference or card related sessions. These credit unions get it The single most profitable product for a credit union is the credit card product. if you ve got it flaunt it so let s start with the basics and yes succumb to our pride and see what the leaders in credit card marketing are up to. When consumers are led to the websites of Chase Citibank or Wells Fargo for credit cards the consumer will see only credit card information. credit cards May 2012 9 Credit Union yes salary miss many opportunities for the magic to happen with your funds plastic insurance expense andBUSINESS expense. The credit card program. On the other hand the position should not highest expenses tend to be charge offs cost of funds and pro- CREdIt CARd REPORt Where is Your Credit Card on Your Website Most credit unions view the credit card as a lending product and therefore place the credit card product under the loan tab of the website. What is wrong with this picture The consumer does not view the credit card as anything but a credit card not a loan product. so if you want consumers to find your credit card on your site please take it out of the loan tab. The best bet especially to maximize the exposure for your credit card program is plain and simple. Give the credit card it s own tab on the home page. marketing material . Therefore you are required to place the Terms and Agreements on your website and placing it on the Credit Card Page would be a good place to start. The Terms & Agreement is the lengthy disclosure document with all the fine print. secondly the schumer Box the handy little reference box that highlights the interest rates and fees needs to be in clear view on any marketing materials which includes your website. The schumer Box must contain Long-termratesmustbeinatleast18-pointtype Otherratesanddisclosuresin12-pointtype AnnualFee(ifapplicable) APRforpurchases OtherAPRs(balancetransfer cashadvances default penalty pricing) GracePeriod FinanceChargeCalculationMethod Anyandallotherfeesforthecreditcard Until next month Ondine Irving founded Card Analysis Solutions ( in November 2003 after a 12-year career at Baxter Credit Union five years at Certegy Card Services (now FIS) and a short time with Raddon Financial Group. Her focus has always been to teach credit unions in an objective manner the expense savings and income opportunities of the credit card portfolio at a time when portfolio brokers were preying on credit unions to sell their programs to banks. She has worked with over 500 credit unions. Ondine is also the creator of the original School of Credit Card Program Management in 2008 and hosts three day educational sessions on credit card program management around the country several times a year. In 2010 she founded www.CreditCardConnection.ORG which has more than 1 037 fair and ethical credit union card program options for consumers and has been mentioned on countless national news media outlets. Consolidate Key Benefits and Features to One Page Once you get the consumer or potential member to your credit card page you don t want them to leave Many credit unions have a separate page for rates a separate page for fees a separate page link for applying a separate page for online account access and the list goes on. Therefore it is prudent to place everything and all appropriate links regarding your credit card program on the credit card page Features Rates schumer Box Online Account Access Reward Program Links Catalogs Loan Application ACH forms Balance Transfer Forms etc. some of these links may be duplicates from other pages but who cares Make your credit card page a one-stop shop for the credit card product. And if you are a credit union that makes a consumer call you for rates or an application perhaps you shouldn t even be offering a credit card product. Compliance With Card Act of 2009 Who let credit unions forget about this one And why are so many credit unions out of compliance it is not surprising that many credit unions are in violation of the CARD Act of 2009 when it comes to the credit card page. Does this mean the Credit Card gods or even Credit Union regulators will come down on you for violation not likely as first of all i m not even aware of any entity that actually polices credit union card pages. The CARD Act of 2009 requires that the Terms and Agreements of a credit card be clearly and easily located on any marketing materials which includes your website if you are indeed marketing your card via your website. Your credit card page is a 10 Credit Union BUSINESS May 2012 UndER thE hOOd When You Communicate Everything Goes Right State National Companies prides itself for its close communication with its staff and credit unions. hat serves today as one of the largest Collateral Protection insurance (or CPi) providers for credit unions in the United states first began in 1973 when Lonnie Terry and Garry Ledbetter founded state national Companies. At that time i had a small credit life company Lonnie Ledbetter said. i started a company we named TBA insurance mainly working with small banks. it was a very small life insurance company. in those days Lonnie Ledbetter would drive 80 000 miles each year calling on every bank in Texas. We started working with the credit unions in the 80s when we all saw the auto financing was moving toward credit unions Ledbetter said. since then credit unions have been our main focus. My brother and i also made a decision to become an insurance company a carrier and not just an agency. since we are company and not just an agency we control our own destiny. in 1984 we formed state national insurance Company and began writing all of our business through this company. We later changed the name of our entire company to state national Companies. Today we have three separate insurance companies all rated A by AM Best and widely licensed. Getting Personal W By Joyce Moed Editor When comparing working with credit unions versus banks Ledbetter said i think it is more personal with the credit unions. They have very strong ties with their members and the communities they serve. Credit unions appear to care more about their members than banks do about their customers. We have evolved to become more of a member-service organization he added. The company s largest one-year increase into the credit union market occurred three years ago when state national created a partnership with CUnA Mutual. May 2012 Credit Union BUSINESS 11 UndER thE hOOd none of this is possible without the latest technology. it was in the 1980s that technology started playing a major role. We have spent millions over the years in improving ours and believe what we have in place now is second to none. in the world we live in today you have to address the advancements in technology almost every week because it s changing so fast. We try to stay ahead of that curve because we know important technology is with our product. The right technology will increase the efficiency of the credit union staff and help avoid any member noise associated with the program . As an example we just introduced QR codes on the notices we send to credit union members as a way to provide additional information on their insurance requirements. Additionally we have some exciting enhancements on the horizon for our web application insurTrak . Today state national has close to 600 credit union customers located throughout the United states including Hawaii. One of the biggest compliments we get when we have clients come in is that our employees are happy and genuinely care about the quality of our service he said. Many of our key employees have been here for 25 to 30 years. i m very proud of that. The people i bring around me have made state national a success not me. As for the future of state national Companies Ledbetter said the company is always looking for ways to serve more credit unions. We want to grow and expand our market share. it s an exciting time. Joyce Moed is the editor of Credit Union Business magazine. She has worked for 15 years as a newspaper magazine reporter and editor covering news features business politics and community news. Since 2007 Moed has focused on writing about the credit union industry. many of our key employees have been here for 25 to 30 years. I m very proud of that. The people I bring around me have made State National a success not me. since then we have converted about 300 of CUnA Mutual s CPi accounts to state national Ledbetter said. All of the transitions went extremely smoothly. We have real friendships with CUnA Mutual and our alliance has increased our volume by about 50 percent. The relationship we have there is really really good. it s going to be a long-term relationship. state national has seen many changes in the credit union world throughout the years and has adapted to the changing needs of its customers. Ledbetter noted that what its credit union clients may appreciate most is the open communication state national provides. We look at each individual credit union and price our coverage on its own merits Ledbetter said. The pricing of our coverage will vary from one credit union to another based on their experience. We try to make our credit unions aware of this on a month-to-month basis so that we don t go in there at the end of the year with a surprising price adjustment. Because of our years of experience we can reasonably predict the performance of each portfolio. We frequently review the performance of each of our CPi programs to meet the needs of our clients and to make sure each one reflects any changes to their lending practices and the economy in general. if we see anything we talk to the credit union immediately. We then work with each credit union individually. After you work with them closely for a number of years they become part of the state national family. As long as we can communicate everything goes right just like any other kind of relationship. When you communicate everything goes right. 12 Credit Union BUSINESS May 2012 SAFE & SOUND ARE YOUR EXECUTIVE BENEFIT PLANS We work to ensure compliance with State & Federal regulations We specialize in Executive Benefits for Credit Unions. Our knowledge of ever-changing regulations will allow you to rest easy knowing your plan is compliant and defensible. Our consultative approach and experience in designing more efficient executive benefit plans allows us to help you attract retain and reward top talent for your organization. Call the Credit Union Executive & Director Benefit Specialists for a Consultation Today Tyler Quigley tquigley 888-494-8911 AChIEVInG SkILLS To Be Or Not To Be .... hether you re interviewing for a new job or enjoying your current job employers are interested that you re doing something rather than being something. Many people i work with want to be the boss be a manager or be the next [fill in the blank]. W By Holly Herman Tip 5 start now. The time to prepare for your next step is now. Volunteer for special assignments or projects that will give you exposure and experience. Take classes to increase your skills. Look for areas to improve as an employee. Read industry literature to expand your knowledge. Sub-tip Don t neglect your current responsibilities. it s important to continue to be a star in your current position while you prepare for the next. Tip 6 Document. each week keep track of what you ve accomplished. Challenge yourself to do something special and extraordinary in your job each week. Write it down. With so many things happening in your life it s easy to forget your accomplishments. Do something rather than be something. if you re a manager manage. if you re a leader lead. Managing and leading are verbs that require action. Concentrating on the doing will not only keep your motivation up it will motivate others as well. Holly Herman is a former CEO of two credit unions Chief of Staff for National Credit Union Administration Chairman Johnson and currently an Achievement Coach helping individuals and organizations. She can be found at www. or contact her at Holly To keep on track you may consider some of these tips Tip 1 Why Ask yourself why you want to be the [fill in the blank]. What about the position appeals to you it may be a position that helps you grow and challenges you. The position may use your strengths. if your answer is for the fame and glory money or what others want for you you ll want to think again. Tip 2 Offer Looking at the next step in your career think about what you have to offer. employers want employees that enhance their organization. What makes you unique for the next step attitude skill interest or experience Tip 3 What What will you do once you get your next job You may see areas to improve. You might review and document processes and procedures. You might start with a listening tour. employers want to hear your ideas. One word of caution wholesale sweeping change may be premature tone it down a bit so as not to scare anyone. Tip 4 Listen. Find out what the organization needs and wants for the position in which you re interested. Perhaps they would like someone just like the person vacating the position or they may want a different skill set altogether. This is an area for which you don t want to assume anything. Ask open-ended questions to gain an understanding of who they are looking for. 14 Credit Union BUSINESS May 2012 thE LEndInG LInE L Credit Unions Set Records In Loan Originations Assets During First Quarter 2012 oan originations have hit the highest ever volume recorded in the first quarter according to data submitted by more than 7 000 credit unions. Originations during the first three months of 2012 exceeded 72.0 billion up 25.3 percent over the same time period last year says Jay Johnson executive vice president for the financial consulting firm Callahan & Associates. This year-over-year growth is significantly higher than the 13.3 percent recorded in 2011. First mortgage and consumer loans helped fuel the strong 16 Credit Union BUSINESS May 2012 thE LEndInG LInE origination growth with credit unions recording the highest dollar volume of first mortgages originated in first quarter history. First mortgage originations totaled 26.0 billion through March 31 comprising about 36 percent of all originations. Reporting credit unions granted 160 746 first mortgage loans during first quarter with an average loan balance of 161 549. Consumer loan originations rose 16.6 percent to 39 billion but posted a year-over-year decline as a percent of total originations. The overall record-breaking first-quarter originations resulted in a 2.7 percent YOY increase in total loan balances outstanding a positive reversal from the 0.9 percent decrease credit unions reported last year. in addition to record first quarter origination volume credit unions have achieved another historic milestone sometime in early March the industry s balance sheet topped 1 trillion. The number of net new members reported by Callahan s FirstLook credit unions for the first three months of 2012 exceeded fourth quarter 2011 which was itself a record quarter. But members aren t just joining they re bringing their funds with them. shares have increased year-over-year with both regular shares and share drafts posting double-digit growth. Callahan s FirstLook program is the most complete data set available prior to the official NCUA release. It provides analysis and access to quarterly 5300 Call Report data nearly a month before NCUA s official release. For more information visit May 2012 Credit Union BUSINESS 17 CFO CURREnCY To Grow Or Not To Grow By Emily Hollis T hroughout the past four years Americans have been pumping money into banks and credit unions at a blistering pace sending deposits to record levels near 10 trillion on escalating fears that the U.s. economy is on the verge of another implosion. Credit union assets have increased to more than 525 billion. in 2011 alone assets increased 5.13 percent or by some 25.6 billion according to the nCUA Financial Performance Reports. During the housing boom credit unions grew quickly in deposits including plenty of hot money. The collapse of home prices and the ensuing financial crisis caused almost 400 banks to fail more than at any time since the savings and loan meltdown in the 1980s. Depositors seemed to steer toward credit unions as safe havens especially with additional marketing awareness campaigns such as those for Bank Transfer Day. The latest flood of deposits has occurred despite financial institutions paying the lowest interest rates on record. similar flights to safety with huge deposit inflows occurred in late 2008 when the financial crisis struck and earlier in 1999 when fears of massive defaults on Russian debt panicked investors. 2010 Unwanted Deposits Large amounts of cash can add to expenses such as deposit insurance premiums. With lending standards tight as a drum after the financial fiasco and demand for loans growing only slightly it appeared at times that credit unions as well as banks were doing everything they could to demonstrate how little they need new cash. Most large credit unions have a contingency plan for liquidity needs but have you heard of a contingency plan for huge deposit growth Capital ratios can deteriorate quickly. some large banks have non-deposit alternatives to contain asset size and some institutions take measures to communicate to large 20 Credit Union BUSINESS Credit union assets have increased to more than 525 billion. In 2011 alone assets increased 5.13 percent or by some 25.6 billion according to the NCUA Financial Performance Reports. depositors of unwanted deposits. Case in point stanford Federal Credit Union had a member attempt to deposit a 28-million payment from a business sale for less than 60 days. Joan Opp the credit union s CeO called and requested that the member wait until after the quarter s end to deposit the funds. Wayne May 2012 CFO CURREnCY 100 90 80 70 60 50 40 30 20 10 0 Credit Union Acquisitions Bank Acquisitions Source SNL Financial Credit union data were compiled on a best-efforts basis using publicly available information as of Feb. 16 2012 therefore 1Q12 credit union data were adjusted on a quarter-to-dat e basis. Data include whole-institution transactions completed without government assistance. Vann CeO of navy Army Federal Credit Union had a similar experience when an attorney awarded a 76-million settlement deposited the funds in the credit union at year-end 2011. Vann called the credit union member and nicely requested that he withdraw the funds. One new York banking giant even charged big customers for the right to park money there. The Bank of new York Mellon is forcing institutional clients to pay fees if they deposit more than 50 million into an account. Back in 2010 nevada Federal Credit Union (now One nevada Credit Union) had an unusual campaign to decrease deposits. According to Paul Parrish CFO the objective was to quickly shrink the credit union to protect its capital position and minimize its assessment expense during the economic Armageddon of 2009-2010. The credit union divided their membership into two categories. Target members for the Move Your Money campaign were those who parked money in the credit union over the years. nevada FCU dropped its deposit rates for these members to zero. The credit union also implemented a Deposit Maintenance Fee in which the members would pay the credit union 5 basis points (bps) per month on their average deposit balances. We were very generous with refunding the fee once we got the member s attention and were able to engage him in a versation Parrish said. early in the program nevada FCU also paid the members a bonus for moving their money out. This was a bit gimmicky Parrish said but it helped create some buzz and allowed our service reps to have some fun with it. nevada FCU was able to move out 120 million in approximately a five-month timeframe without any notable pushback or unwanted controversy. They believe it saved them 250 000 in annual assessment expense and also preserved about 180 bps in net worth. Back to Growth Mode But things seem to be changing. While most credit unions are not actively seeking hot money deposits are growing with alternative methods. As an example merger activity is picking up as credit unions reach out to obtain new territory and more stable funds. Credit union mergers continued to outpace the number of deals in the bank and thrift sector. There have been 183 credit union deals completed since the first quarter of 2011 compared with the 172 mergers in the banking space. After a steep decline in the first quarter of 2011 the number of deals has been consistently rising for credit unions. Most of the deals have been relatively small. The median Credit Union BUSINESS 21 May 2012 CFO CURREnCY total assets of targets since July 2011 was 5.2 million but some large mergers have occurred as well. As net income increases and capital ratios grow it appears that institutions are less worried about large asset increases. Although loan demand increases in credit unions have been somewhat negligible in 2011 (less than 1 percent) at some point increases will be seen and margins will be enhanced. According to a Federal Reserve survey of senior loan officers at banks demand for busines loans is already increasing. seventeen of 56 banks reported stronger demand for commercial loans and demand among small businesses for loans increased by the most in any quarter since 2005. it appears that a new trend is underway and credit unions are going after more stable funding in share drafts while the timing is right. Part of this strategy entails expanding charters and exploring new territories. Most successful credit unions are paying zero on drafts and less than 25 bps on money market accounts. Funds are being deployed into the Federal Reserve banks either directly or through corporate credit unions. The Fed is paying 0.25 percent to tend to these funds. According to the Fed such deposits rose to more than 1.6 trillion at the end of the year from approximately 1 trillion a year earlier. it is these core deposits that will bring huge franchise value to credit unions especially once rates start rising again. eventually economic growth will occur rates will rise and the stock market will reap gains. At that time consumers will most likely withdraw hot money from financial institutions to generate rewards elsewhere. However credit unions that are growing assets in new territories and gaining momentum with more stable funding will reap the benefits as loan demand increases and spreads widen. now is the time to prepare for future opportunities. Emily Hollis CFA is a Partner with ALM First Financial Advisors LLC. With over 16 billion of investments under management ALM First is an SEC-registered investment advisor acting as an unbiased third party offering commission-free fee-based services to over 150 credit unions across the country. Services include Asset Liability Management Investment Advisory Balance Sheet Advisory Merger Valuations Hedging with Derivatives ALM Validations Balance Sheet Risk Assessments Investment Portfolio Analysis MSR Valuations Training and Education and more... To find out more contact Mike Ensweiler at (214) 451-2393 or mensweiler or visit our website 22 Credit Union BUSINESS May 2012 Managing Payments Driving Solutions We re Vantiv. Dedicated strategic professionals with 40 years of experience developing innovative payment processing solutions for financial institutions and merchants. We offer an extensive suite of debit credit prepaid ATM and merchant services to provide you with new sources of revenue. And we ll help protect your business with our comprehensive data security and fraud prevention solutions. Our people technology and partnerships are the Vantiv difference. Let s discuss your future success. Let s Talk Payment Processing 866.622.2201 cubm Scan here or visit cubm Copyright 2012 Vantiv LLC. All rights reserved. CU COntEnt Lake michigan CU Successfully Engages Members on Facebook mong the first credit unions to embrace social media as part of member communications Lake Michigan Credit union has been actively involved in social media since 2009. The credit union has an active Facebook page as well as a Twitter account that boasts an impressive 1 538 followers. And those Twitter followers are active too. We get tweet mentions a few times a day but see two-way communication demonstrated best through Facebook says Jennifer Dearnley marketing assistant at Lake Michigan CU. Tweet mentions are a social media marketers dream. That means members are not only following your credit union but they re finding what you have to say important interesting and or entertaining enough to share it with their own followers. even if those followers are not members of the credit union the name recognition can be invaluable. Lake Michigan has been using Facebook in an off-the-beaten-track kind of way and it s something many credit unions would do well to emulate. instead of just putting information out there Lake Michigan CU engages its members by asking questions and selecting a winning answer each week. Facebook is actually set up for this with multiple-choice questions but you can also ask open-ended questions that enable members to offer their own replies. While the prize is small it s really about the interaction and by the looks of things members are loving it while interacting with their credit union. Here s an example of a recent posting which drew more than 100 responses A By Laura M. Enock FinAnCiAL FRiDAYs Answer this question to the best of your ability for your chance to win a 25 Visa Gift Card Fill in the blank. if i won the lottery the first thing i would do is ________. Winner will be announced Monday A campaign like this has the hard-dollar costs of just 25 per week. it becomes a Facebook post that members have come to expect every Friday and another at some point before the answer window closes reminding members they still have time to answer. The questions also get members to read each other s response thus generating conversations between members. in fact on Friday March 16 Amy (presumably a CU member) posted to the credit union s Facebook page it s Friiiiday Where s our question ) This is good. it s VeRY good. When your members start expecting something and they like it enough to ask for it when they don t see it you re social media campaign is wildly successful. in addition to Twitter and Facebook the credit union has a blog that is called the LMCU news. The blog features newsletter articles but also encourages and receives comments on blog postings. While there is no one person who is simply dedicated to social media the credit union does have one person who works most often with our Facebook Twitter updates Dearnley says. At the beginning of the week she creates Facebook status updates for the entire week that get approved through the credit union s compliance department. if she is gone on vacation she creates those updates ahead a time and if she is sick they have 26 Credit Union BUSINESS May 2012 CU COntEnt smaller CUs ( 250 million and smaller in assets) are starting to get involved with social media but often because of their size they need to source content which can take away from the personal feel a reader would get compared to content written by a specific CU staffer. it s true. When content is canned there s always the likelihood that it ll sound that way--though even canned content is better than none at all. The solution for small credit unions however is to source their content from a credit union specific content database such as or and make it their own. This can be done by making slight changes or taking the basic idea and saying it in the credit union s own voice. Lake Michigan CU advises credit unions to ask questions in their posts. if you only make statements it does not encourage interaction Dearnley says. The credit union also believes there should not be too much sales messaging in Facebook postings. People use Facebook as a fun form of communication and without a good balance they will unlike or worse block your postings. Building an organization s social media efforts in a way that has relevance with engaging content is critical to creating messages that are valued and of interest takes commitment. While everyone wants to know the ROi immediately it s difficult to quantify the ROi of social media efforts. in a perfect world you could take the variable and fixed costs associated with your social media work (ex. time of staff to research write and post and follow-up) and track the revenue producing results you achieved through your efforts said Don Bratt VP of marketing for LMCU. However that isn t always possible. it is critical to be aware of the need to provide customers members with the information they are looking for in the media (ex. Facebook) they would like to receive it while managing your controllable expenses Bratt continued. already been created for another team member to post. The credit union has eight people who are admins on the Facebook account but only three of them actively respond to member comments. With that much activity on Facebook a social media policy becomes very important. At Lake Michigan CU the social media policy was drafted by the compliance department with input from the credit union s marketing department. Our goal is to manage the content so it is relevant while avoiding any information that could be embarrassing to our organization or violate privacy considerations of our members Dearnley says. The policy also applies to our employee s usage and sets guidelines for use. A member of the credit union s marketing team is responsible for content. she finds content internally by asking all departments for upcoming news and by looking at other popular pages for inspiration. The credit union has seen a major increase in engagement. Total reach has dramatically increased as members continue to comment and like the credit union s postings. so what s next Our goal is get our Facebook likes up to 5 000 by the end of December 2012. However we would also like to sustain the engagement levels we have seen. As Facebook has grown in popularity the credit union has seen an increase in member involvement. We have noticed May 2012 Credit Union BUSINESS 27 CU COntEnt if you can keep those expenses down then whatever benefits your credit union gets from social media is an extra. While many credit unions are concerned about compliance issues and or losing control when embracing social media as a communications tool Lake Michigan CU acknowledges the issue but doesn t let it stop them. Compliance is critical. As an institution you have a fiduciary responsibility to always provide information that is honest and serves the purpose of helping members. To minimize risk and protect the CU there needs to be a compliance oversight. We are fortunate to have a very responsive VP who handles compliance Jeremiah Kossen who always gets back to marketing quickly Bratt states. so far there have been only a few minor instances of negative feedback on Facebook. The credit union has been surprised a few times with what engages members in two-way communication. They experiment to see what type of content works the best and sometimes the things you do not think will work end up receiving the most comments likes. The biggest mistake you can make with social media is not doing it. The second biggest mistake is just putting information out there as if Facebook was a static marketing tool. it s not. Follow Lake Michigan s example by asking questions and using social media for what this tool does best engage in two-way conversations with your members. Laura Enock CEO of CUVA Publishing provides credit unions nationwide with content for their websites newsletters and social media through Author of the popular CUES column Teaching Smart Money Management and provider of political cartoon. Most recently Enock launched a Groupon-like deal-style website exclusively for credit unions. Find out more at and sign up for free content at Enock can be reached at laura 3 EASY STEPS to market more effectively in 2012 1. Analysis. Either through our world-class software or via our consultant team it s all about getting you the right information when you need to move forward. 2. Execution. Our data-based creative team will produce your piece to your exacting standards across multiple versions. You ll speak to micro segments not the mass market. 3. Tracking. ROI is THE most important contribution marketing can make to any company. We track a range of variables so you can demonstrate the results and continually improve your approach MORE BEA BEANS FOR YOUR BOTTOM LINE MCIF CRM CONSULTING DIRECT MARKETING 214.778.3015 jayk MARQ125-12-01102012 CU Business Ads 28 Credit Union BUSINESS May 2012 tECh bIz don t turn turn turn Away From data Storage Concerns hile well-wishers told me it s the new 30 i celebrated cuarenta last month surrounded by good friends family and my rebounding dog Reilly (thanks to those who shared thoughts and concern). i thought about many things of course but most of all i felt gratitude for all the varied experiences in which i have the privilege to partake being a member of the credit union industry family notwithstanding. Two years ago i had the grand opportunity to spend a few days with legendary folk singer Pete seeger. He had just turned 90 and was on the heels of a concert celebration in his honor at new York s Madison square Garden. Big names came out to pay homage to him including Bruce springsteen John Mellencamp Arlo Guthrie Joan Baez Kris Kristofferson Richie Havens Roger McGuinn Ani DiFranco Taj Mahal Ben Harper and Dave Matthews. Months after the event i interviewed him in Beacon n.Y. for a documentary. While thankful for the outpouring of support and birthday wishes he clearly wasn t into the pomp and circumstance of it all. He prefers campfires to massive concert halls. Among pearls of wisdom shared was the following Do you know the difference between education and experience education is when you read the fine print experience is what you get when you don t. i reflected back on that experience and his words on my own birthday which coincided with a conversation i shared with a c-level executive who operates within the credit union space. We were discussing a revolving hot button issue data and specifically how it is stored and accessed. i relayed another gem seeger shared with me during our conversation i m more optimistic about my country then i ever have been. My mantra is 30 W By W.B. King the agricultural revolution took thousands of years the industrial revolution took one hundred of years but the information revolution is only taking decades. We both agreed he is correct but the problem with the information age (i.e. data) is that it has to be safely and seamlessly stored somewhere a significant issue for all financial institutions. You should write about data storage the c-level executive said firmly. What happened in Thailand last year has really impacted the market and is making people think. The Waters Will Rise indeed the massive floods that consumed Thailand last year had devastating impacts in many areas including data. Why you Credit Union BUSINESS May 2012 Your members depend on you but who do you depend on At IWS we partner with credit unions like yours to provide unparalleled service and sales training while delivering vehicle protection solutions that meet the individual needs of your members. It s the true definition of service before and after the sale. For more information on our VSA MBI or GAP coverage visit or call 800.333.3028. When your members need reliable vehicle protection you need a dependable partner. You can depend on IWS. tECh bIz ing mountains of data efficiently. And the thing with data as illustrated by Rubin is that it builds and builds and builds think how much data transpired and has been stored since you began reading this column. According to Aite Group s 2011 global survey of 80 CIOs and other bank IT executives 57 percent of banks now embrace Software as a Service (SaaS). might ask Thailand is second behind China in the manufacturing of hard drives. A report for Gartner noted an 8 to 10 percent cutback in the fourth-quarter supply of hard drives to the enterprise server and storage market. The news wasn t positive for business-critical hard drives that were expected to be troubled in 2012. it was estimated that 50 million hard drives out of an approximate 180 million were lost due to the flood. The market is not expected to right itself until mid-2013 and with the speed and volume of data mounting by the nanosecond problems could arise. Howard Rubin founder of Rubin Worldwide told Wall street & Technology the following in 2006 the average financial services company required 1.29 million instructions per second (MiPs) and .53 physical servers to support the processing needed for each 1 million in net revenue. At the close of 2010 the 1.29 MiPs had increased by 38 percent to 1.79 MiPs and the .53 physical servers increased by 46 percent to .77 physical servers he continued. During the same period net revenue itself grew at a far slower rate (less than 19 percent). in general the need for computing power is growing two-times to five-times faster than revenue. The consulting firm Frost & sullivan conducted a report in the financial services arena finding that server and storage upgrades are deemed a critical need with 41 percent of technology decision makers placing cloud-computing service investments at the top of their priority lists. This is not breaking news of course but what it underscores is that in order for credit unions to continually compete with banks they have to adhere to strict Dodd-Frank Act regulations while storing and process32 Credit Union BUSINESS Technology Solutions According to Aite Group s 2011 global survey of 80 CiOs and other bank iT executives 57 percent of banks now embrace software as a service (saas). Again not big news and saas is something we have covered often. What is perhaps more interesting is that the TowerGroup predicts that by the end of 2015 cloud spending in global financial services will increase by 47 percent to more than 27 billion. But are there other options While somewhat controversial in the iT field due to historical adoption rates i find solidstate drive (ssD) a data storage device worthy of examination. Let s get some tech specifics out of the way. it uses integrated circuit assemblies as memory to store data doggedly. This is accomplished by electronic interfaces compatible with traditional block i O hard disk drives. What s cool about ssDs is that it doesn t employ any moving mechanical components a distinguishing trait from traditional magnetic disks such as hard disk drives (HDDs) or floppy disks. There are a number of leaders in this field including Lsi sandForce and sTeC but i decided to explore Violin Memory May 2012 tECh bIz founded by former Fusion-io and eMC executives in 2005. The company is a ssD pioneer with non-volatile random-access memory (nVRAM) or flash memory arrays that deliver unprecedented sustainability and low spike-free latency for organizations seeking to accelerate its business critical applications and to virtualize and optimize its iT infrastructure. Violin s flashbased appliances scale to tens of terabytes of capacity millions of iOPs (input Output Operations Per second) gigabytes per second of bandwidth at low latency. Credit Union Perspective This all sounds good but quite techy so i thought it would be beneficial to provide a credit union example. enter the san Diego-based north island Credit Union that faced a typical and ever-increasing problem an antiquated storage platform that was adversely affecting daily iT operations. The good news was that the credit union was growing the bad news its storage and data systems couldn t keep pace. As such nightly and monthend batch processing times began spilling over into the next business day transactions which hindered improving member services noted Michael Glogowski assistant vice president of core network systems of north island Credit Union. Additionally the failing platform prevented the iT department from meeting service level agreements. Glogowski and his team did their due diligence realizing that solid state storage solutions could very well solve performance-critical data processing issues. The decision was made to adopt Violin Memory s 3200 flash Memory Arrays. The proof-of-concept results were stunning said Glogowski. The times were unbelievable. Batch reports that took five hours now ran in 90 minutes. Upload jobs that used to run in 90 minutes now took 15 minutes. Violin 3200 series is a redundant modular 3U Flash memory array that scales to 20TB of single Level Cell (sLC) nAnD. it is the first in the Violin 3000 series of Memory Arrays that scales to more than 240TB in a rack with performance topping two million iOPs. The enterprise-grade hardware-based Flash RAiD across hot-swappable memory modules to provide robust data protection and spike free latency of less than 100 microseconds. Glogowski explained that before deployment the north island Credit Union iT department was unable to accommodate requests from business departments to reschedule night batch processing. now nightly batch jobs that previously ran from 6 30 to 9 30 p.m. now run from 6 15 p.m. to 7 00 p.m. Monthend batch processing that ran from 7 00 p.m. until 4 00 a.m. now jets from 7 00 p.m. until midnight he continued. The tremendous performance increase allows north island to reallocate third shift operations and go lights out. Moving forward north island plans to migrate the credit union s document management system to Violin Memory as well. While Glogowski did not mention hard numbers he said that The ROi payback was six months. i ll keep my eye (and so should you) on Violin and similar companies operating in this space as time will ultimately tell if this approach will be a game changer. Whatever your preference an examination and concentration on data storage and access to all-important second-to-second operations is critical. Pete seeger s famed tune Turn Turn Turn contains a lyric that can be applied to technology adoption A time to get and a time to lose a time to keep and a time to cast away. What will you get and what will you cast away W. B. King has more than 15 years experience writing for business and technology publications. Email him at wb May 2012 Credit Union BUSINESS 33 PRODUCT ShOWCASE PSCU Launches mobile Bill Pay Platform Just months after providing triple play capabilities of WAP sMs Text and downloadable APPs for PsCU s mobile banking solution the company launched Mobile Bill Pay capabilities so existing PayLynx Bill Pay users can now make one-time payments manage pending payments and view payment history using their mobile device anytime anywhere. Apps can easily be downloaded for iPhone Android and Blackberry users. Our swift deployment of Mobile Bill Pay following on the heels of Triple Play that added mobile apps demonstrates our commitment to being an industry leader in innovation--not just within the credit union industry but for the entire financial services marketplace said PsCU President & CeO Michael Kelly. We will lead the development and deployment of new payments technologies that equip credit unions to satisfy and grow their membership in part by launching ambitious outreach campaigns that bring young adults into our industry. Alcoa Tenn FCU ( 180 million in assets 20 000 members) is the first PsCU credit union to go live with Mobile Bill Pay. The credit union is targeting younger members and recognized that mobile bill pay was a must have capability. We knew adults under 30 were not going to walk through the door of our branch. We needed to reach out to them and offer the convenient mobile capabilities they expect from a financial services provider said sarah Lawson iT specialist Alcoa Tenn FCU. Mobile online bill pay was first tested with Alcoa s staff. Our staff quickly embraced its increased flexibility and ease of use. Then we began working with PsCU s project team to roll out the product to our members. i can t say enough good things about how smooth this process was and what a pleasure it was to work with PsCU she adds. After an initial soft rollout the credit union plans to launch TV commercials on its mobile offering at the beginning of the summer. Credit union members can download the mobile banking app from iTunes Android Market or the Blackberry App store. established in 1977 PsCU based in st. Petersburg Fla. is a national CUsO serving more than 1 500 financial institutions nationwide. As a non-profit cooperative the company is owned by more than 680 member credit unions representing 16 million credit debit prepaid online bill payment mobile and electronic banking accounts. Comprehensive 24 7 365 member support is delivered through four Contact Centers located throughout the United states that handle more than 18 million inquiries a year. PsCU s MPRO initiative marries emerging technologies with proven strategies and empowers the CUsO to lead the industry in developing innovative payments solutions. This new culture of engagement agility and energy can enhance both revenue and market share for member-owner credit unions. For more information visit the PsCU website at 34 Credit Union BUSINESS May 2012 mARkETING mATTERS The Real marketing Challenge i By Tony Rizzo General Manager and Creative Director MARQUIS Creative recently had a conversation with two people at the same credit union. One the marketing director. The other the CeO. it was startling to me how both had very different views of their business. neither was on the same page with regard to vision or the strategies and tactics required to effectively grow the business. Does this sound familiar We recently witnessed a significant military event that required precision. This effort demanded years of intelligence gathering planning and precise execution. All parties involved had to be on the same page in order for that operation to be successful. To compare that with the growth of your credit union may seem ridiculous however i believe that unless you and your marketing department are on the same page strategically and tactically you will not have the ability to serve your members at the highest level possible. in many institutions it seems the CeO and marketing department are not on the same page. This could be attributed to right brain left brain analysis or it may be that your marketing department does not quite understand the business challenges at the macro level. With that in mind it is your responsibility as CeO to communicate what issues are impacting not only your credit union but the financial services industry. Armed with this information your marketing department can prepare communications programs and sales plans so your institution can succeed. From my perspective i see four main challenges that every credit union in the nation faces 1. Decreased revenue streams due to regulations 2. Depressed loan demand 3. Asset liability management and attrition 4. Factors that affect your overall reputation Given these four challenges what can the marketing department do to create strategies and tactics that position your business for growth note that these challenges don t deal with social media gender-based marketing branding or marketing to culturally diverse segments. These challenges deal with real issues that affect your bottom line on a daily basis. Let s take a look at each one of these challenges from a high-level perspective. Decreased Revenue Streams Due to Regulations There is not a CeO in the country that isn t keenly aware of what Washington is up to these days. But does your marketing department understand the impact of these pending regulations The current proposed regulation regarding the limiting of interchange income will have a tangible impact on your bottom line. From Federal Reserve data the average interchange income is currently 44 cents per transaction 56 cents per signature-based transactions and .34 for Pin -based transactions). Proposed regulation would cap both transactions at 12 cents. While there is an exception rule on the table for financials under 10 billion Credit Union BUSINESS 35 May 2012 mARkETING mATTERS There is not a CEO in the country that isn t keenly aware of what Washington is up to these days. But does your marketing department understand the impact of these pending regulations it is most likely that this will not be included and that this regulation will impact everyone. so what is the impact For a credit union with 750 million in assets this could mean one of the following an elimination of 18 full-time positions or lowering your deposit rate by 1.6 percent or creating a six dollar per month service charge on checking accounts with balances less than 1 000 (which on average is approximately 60 percent of all of your checking accounts) or creating a 3.65 monthly debit card fee. How many people on your marketing staff understand this impact if you do not arm them with the appropriate information it becomes increasingly difficult to prepare real -world countermeasures. i m not suggesting that you marketing department prepare campaigns to celebrate this change i am suggesting that product development pricing promotion and strategic planning cannot properly take place unless pending regulations are taken into account. Depressed Loan Demand From a global demographics perspective an often overlooked facet of depressed loan demand deals with the dramatic reduction in the number of prime borrowers in your market. For the most part baby boomers (born from 1946 to 1964) are no longer in their prime borrowing stages. They have built their biggest house and no longer have the need for substantial consumer goods purchases. At this stage in life we hope most of their children have also moved out of the house. This segment accounts for approximately 78 million people. Generation X (those born from 1965 to 1982) numbers only 34 million. There are simply not enough individuals in this generation to support the loan boom that has occurred over the past 15 years. Generation Y (those born from 1983 to 1995) numbers approximately 72 million. We will not see another loan boom for approximately seven years. Understanding the correlations of a depressed loan demand from a demographic perspective is critical when preparing strategic plans for product development pricing and ongoing communications plans. As CeO your responsibility is to recognize these trends and help guide marketing so it can function effectively. so from a marketing perspective what is the impact i believe this means that gone are the days of the large splashy sexy marketing campaigns. no longer can we throw an attractive rate or toaster at the problem and expect droves of mem- 36 Credit Union BUSINESS May 2012 Stay one step ahead of risk Steps We ve Taken Over the past 10 years we ve delivered over 120 webinars to more than 25 000 credit union professionals to help protect credit unions from new and evolving risks. Technology is always advancing bringing with it a never-ending stream of security threats for credit unions. Our adept risk management team continually monitors the market and works with our innovative product leaders to design tools and products that help you manage and reduce your risk exposure. Contact your CUNA Mutual Group sales executive From cyber risk to employee practices liability we constantly work to help you tackle today s threats and prepare for tomorrow s challenges. today at 800.356.2644 or visit for details. Based on 2011 CUNA Mutual Group Webinar Participant Survey 10002772-0212 CUNA Mutual Group 2012 All Rights Reserved. Common Purpose. Uncommon Commitment. mARkETING mATTERS As CEO it your duty to shape the overall reason for being in your business. Once that s established it s up to the marketing department to define tangible benefits and real reasons why a member wants to do business with you. bers and potential members to come calling. i believe what this means is that from a marketing and sales perspective there must be an intense focus on data analytics specific relevant and timely marketing communications and strict adherence to results tracking. in fact i would go so far as to recommend that each outbound marketing effort have not only a measurement requirement but a formal results review post-campaign. partment know these numbers Have you discussed these as the senior management team One way to have an immediate impact on your institution s profitability is to recognize who your top members are from a profitability perspective. From there your marketing department can develop specific communication plans and strategies on how to dramatically reduce attrition within this group. Asset Liability Management and Attrition Last year both deposit and loan rates have fell dramatically. Liquid accounts have fell 23 percent term account rates fell 37 percent vehicle loan rates 4 percent and mortgage rates 2 percent (BankRate). Your marketing department must have a global understanding of the asset liability management process. How many of your marketing staff sits on this committee Often times i m surprised at rate-based campaigns that are proposed and produced only to be squashed in the final stages of production because the marketing department did not have a clear understanding of what discounting rates does to the bottom line. As CeO it is your responsibility to equate rate trends and a real impact the declining market has on profitability and the types of campaigns and communication programs that you expect your team to produce. While asset liability management and profitability are items that most marketers don t sign up for it is impossible to function as a truly effective component of your strategic team unless marketing is brought to the table and educated on the balance sheet. in terms of attrition on average 10 percent of your membership base disappears annually. 1 percent% of your assets churned each year. Does your marketing department understand the impact of these numbers Does your marketing de- Factors that affect your overall reputation What factors impact your reputation in the marketplace in one recent study the top four items were honest communication open and transparent business practices competitive prices and consistency in product delivery. While these factors may seem obvious to some it s important that marketing understand why your members do business with you. i ve worked on thousands of campaigns and it s rare that i received a straight answer when asked why someone does business with you over a competitor. it s also rare that i received a clear unique selling proposition with regards to market differentiation. As CeO it your duty to shape the overall reason for being in your business. Once that s established it s up to the marketing department to define tangible benefits and real reasons why a member wants to do business with you. Those reasons should be effectively communicated every touch point within your business. This research is easily executed through member research which can take many forms including a formal process as well as simply speaking to members. Two questions that would be on my mind as i have a discussion are one why do you do business here and two why would you leave us. Just by asking these two simple questions your team will yield a wealth of information from which a unique selling proposition can be built. it s impor- 38 Credit Union BUSINESS May 2012 mARkETING mATTERS tant to note that unless you do something with this information this process becomes nothing more than busy work. so what s the solution Once you and your marketing department are on the same page with regards to macro factors and how they relate to your institution you can apply those and build meaningful marketing strategies. in the next three upcoming articles we will detail a focused and targeted approach to growth that will generate tangible results. These strategies will focus on the retention of your top 10% cross selling your marginal households and the acquisition of new members. stay tuned. Tony Rizzo is the general manager and creative director of MARQUIS Software Solutions. MARQUIS is the largest provider of MCIF CRM solutions to credit unions world-wide with a long-standing reputation for excellence. MORE BEAN IT S ALL ABOUT THE BEANS GUARANTEED TO ADD MORE TO YOUR BOTTOM LINE. We will guarantee our performance. From data analysis to creative execution to tracking more beans will be added to your bottom line than ever before. THERE IS NO FINE PRINT MCIF CRM CONSULTING DIRECT MARKETING 214.778.3015 jayk MARQ125-12-01102012 CU Business Ads May 2012 Credit Union BUSINESS 39 PRODUCT ShOWCASE cbanc Network Reaches 10 000 Users milestone From 80 to 10 000 users in three years. That s how fast cbanc network the collaboration community of 4 400 bank and credit unions has grown since its inception. cbanc in Austin Texas surpassed 10 000 Fi member users recently and continues to add about 30 new members per day. it only had 80 members its first year. To date the network has users from 52 percent of U.s. banks and 15 percent of U.s. credit unions. Other user metrics include 80percentofsitetrafficin2012isfromrepeatusers (meaning people are coming back not just signing in once and leaving) 70percentofusersloggedinatleastonceduringthe first quarter of 2012 usersspendanaverageofnineminutespersession usersviewanaverageofninepagespersession 14 258contentitemstraded 3 539vendorreviews Getting 10 000 users means both banking and credit union professionals can find peer content solutions to just about any problem they post to the network states cbanc President Myers Dupuy. Our goal is to get every bank and credit union professional in the industry collaborating with each other to solve any issue that arises. Dupuy says about 90 percent of cbanc s growth has occurred since December 2010 which can be attributed to Google picking up the useful content that cbanc members provide on a daily basis as well as to member referrals. He adds that cbanc is very appreciative of the first 500 members who really bought into the platform. Their participation is what allowed Google to pick up cbanc as an information resource. cbanc users contribute all content posted on the network providing items for every job function at a bank or credit union trading. so everything users look at or download is something that can have a direct impact on their job. Posted content is grouped into these categories tradingactualdocuments(policies agreements best practices etc.) asking answeringquestions examtrends candidvendorreviews surveys peertrends Dupuy sees two reasons why cbanc has grown so fast First it doesn t hurt that it s free to use. second cbanc does not waste users time. Users know they can come here and get actual information they can apply to their jobs he says. Most social collaboration sites have a problem of everyone wanting content but no one being motivated to share. We have turned this problem on its head by giving everyone the right incentives to share their best work. This is not a forum it s a virtual market place of financial intelligence. Dupuy adds that cbanc is currently working on different user programs to dramatically drive up its membership numbers. For more information on cbanc cbanc President Myers Dupuy visit May 2012 40 Credit Union BUSINESS Credit Union offiCers byKen Schroeder CROSSWORD Across 1. Dressed to kill 4. With 3 down and 46 down those who own data centers 10. Magic money machine 12. One type of service 13. Melancholy poem 15. Media credit unions are struggling with 17. not a seiko or Rolex 18. name with Hiroshima 20. Certification for Microsoft Project user 21. Government electronic surveillance org. 23. With 3 down and 46 down those in charge of the money 25. starbucks forte 27. Roswell visitor 28. Where the wizard s from 29. Plea to let host know if you ll attend 30. see 15 across 33. What a venture capitalist does 38. Groom utterance 39. A nag or a fish 41. Poetic description of where the center lies 42. The cast 43. A phone (by Gillette ) 45. Leave behind with the teller 47. An old recipe handed out by the teller 50. executive Council 51. Abraham s birthplace 52. Where ely is located 53. You in the King James Bible 55. Roundabout way to lend 57. Door sign 59. per unit 60. What a scoundrel lacks 62. story deliverer 65. nickname of composer of Rule Britannia 67. sorrel colored horse 70. What you don t want underwater 75. A short Curriculum Vitae 76. Where Col Mustard might have done it 78. stargate characters 79. Paris train network (Metro is only part) 80. Trap or bird 82. Waste allowance after tare 83. What each member has 84. ___ of 1000 days 85. Prize Monopoly property 86. Yup counter Down 2. Wellness insurance Option 3. Head of the clan 4. Owl s grabber 5. Money launderer s goal 6. Lois partner 7. neptunium 8. What you re in trouble without 9. not prohibited 10. see 15 down 11. When doubled a town in Ga. 14. 6th in the scale 15. With 10 down CiA employees 16. Black tropical American cuckoos 17. My grandmother in Frankfurt 19. Los Angeles airport 20. Circumference divided by diameter 22. Cut off 24. What isn t a debit 26. Turkey car symbol 30. What mom wants daughter to wear 31. Female kangaroo 32. Loan rate 34. 315 degrees 35. What YouTube gives you 36. With 3 down and 46 down CU heads. 37. indy oil treatment 39. What an investor provides 40. Deeds May 2012 44. Rhode island 46. Persons of authority 47. Furniture wood 48. Dirty dog 49. Brandy category 54. Father of Helios selene and eos 56. name at birth 58. What 5c piece was made of 61. neither a borrower nor a ___ be -shakespeare 63. electronic funds transfer 64. A tenor oboe 65. Music group of sweden 66. 12 hrs after day change 68. ____ von Bismark 69. Halo 70. W. African guenon monkey 71. With 3 down and 46 down a mitigation department head. 72. nickname for dad s mother 73. ___ Commander business aircraft 74. Unix search utility 77. From new Years to now 81. Beryllium Credit Union BUSINESS 41 CRedIT UNIoN bUSINeSS Marketplace Card Processing Payment Solutions Branch Services Coin Counters Coin Counters Branches still matter Bancography builds branching strategies Branch site analysis Current branch performance Branch network optimization Branch profitability Staffing review Sales goals branch info 205.252.6671 CRedIT UNIoN bUSINeSS Marketplace Insurance Services Facilities & Design CEO SUBSCRIPTION WITH BENEfITS Benefit your CFO COO CMO CCO CLO CIO HRD With fREE Monthly E-Newsletters Subscribe NOW vISIT The MARKeTplACe pAGe AT WWW.CUbUSINeSS.CoM foR AdveRTISING INfoRMATIoN Call GreG Halpern 561-282-6015 4 GreG Cubusiness.Com CU SPOTLITE Not Your Grandparents Credit Union General Credit Union Evolving in a Way that Promises to Maintain and Attract Gen-X Members By Sharon Sweda T here is an economic trend in banking. Large is getting larger and big is getting bigger. The phenomenon is not restricted to Bank of America Chase or Citibank. The practice is spilling over into the credit union sector where the ability to provide a broad product platform while maintaining membership numbers forces the merge or collapse of many. Yet the team at General Credit Union in indianapolis ind. is proving that big is not always better. in fairness of disclosure General is not a tiny single branch credit union. General has four branch offices but is light years away from the mega multi-state credit unions built upon several more decades of history. General was started like many of the many other small credit unions a handful of employees seeking an alternate method to save and borrow. General s success might well be tied to its hands-on attitude. it is apparent in first glance that an environment of ownership starts from the top down. it is ashamedly common for credit unions to allocate resource dollars to create a website only to fail to follow through by leaving the general mailbox unattended and unanswered. not so at General Credit Union. We make every effort to help wherever we are needed stressed CeO Lori Huglin Curry. everyone works together regardless whose job it is evidenced by the her response to the general email box. General s success goes beyond answering email inquiries. The recent recipient of the Dora Maxwell Award for community service has also managed to stay ahead of the default crises. As banks collapsed or sustained with government bailouts General stayed the course with their conservative lending policy holding damages to a minimum. We do not sell our loans. We avoided the sub-prime market Curry adds. Our mortgages are determined by credit score and while we don t necessarily refuse members who have lower scores we remain cautious. still our aim is to help members. Helping members means that mortgages and indirect loans 44 offered at local auto dealerships are not mechanically approved. in a Gen-X kind of way General s auto loan manager is available whenever the dealership needs a loan approval. The loan officer accepts calls on weekends and evenings and can physically approve the loan within 10 minutes. The Gen-X culture isn t spoken of at General but they are evolving in a way that promises to maintain and attract those members. Much like the loan officer who accepts and approves loans on his smart phone the tech-conscious credit union offers Zashpay for members who no longer value currency exchange. The electronic Zashpay allows members to pay vendors babysitters or friends through the internet or their smart phone. Money is electronically transferred with a few swipes of a phone. General s newest project is account aggregation which provides one site for checking savings and loan accounts with tools for budgeting and bill reminders. Another step toward the new model of business designed to attract the youngest generation of credit union membership. Of course there is more to the mix than smart phone access and loan officers on call. The revamp is evidenced in their out of the box bricks and mortar branches where they have teller pods and coffee stations. The physical interior design sends a message that this is not your grandparents credit union and is a visual reminder of why General is ready to leap into their successful future. Sharon Sweda is a freelance writer who has worked in the real estate and finance industries for the past 28 years. Contact Sharon at SharonSweda to SpotLite your CU. Credit Union BUSINESS May 2012