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ThE MorTGaGE ISSUE Let The Loans Begin Marketing to Gen Y Leaders CU Employs iPads for 20% Member Growth and 15% Loan Growth JUNE 2012 VOLUME 7 ISSUE 6 9.95 Credit Unions Shouldn t Shy Away From Lending Executive Compensation Is a Strategic Thing EXECUTIVE RECRUITING COMPENSATION SERP DESIGN MARKET RESEARCH MERGERS Credit Unions stand for fairness and honesty As a credit union your team is committed to helping people. And so are we. Our goal is to stand behind you in all you do to help your credit union be the best it can be. From compensation and SERP design to executive placement and many more customized services D. Hilton Associates Inc. is here to support you with decades of credit union expertise. EXECUTIVE RECRUITING COMPENSATION SERP DESIGN MARKET RESEARCH MERGERS Call us at 1.800.367.0433 or visit dhilton.com To download our app scan this Q R code o n y o u r iP hone or search for D. Hilton on iTunes app store. CONTENTS Credit Union BUsiness jUNE 2012 V O L U M E 7 I S S U E 6 4 6 8 pov introducing susan L. Kelly Tim O Hara 20 23 CU ConTEnT Don Curristan MarkETInG executive Compensation is a strategic Thing Marketing to Gen Y Leaders CU employs iPads for 20% Member Growth and 15% Loan Growth Laura Enock Wescom Resources Group Celebrates 10-Year Anniversary aChIEvInG SkILLS prodUCT ShowCaSE Move it 5 Tips On Getting Your Work Done While Benefitting Your Health Holly Herman 26 31 36 37 40 TECh BIz 11 13 15 Time to Think Again About Your Mobile Banking Platform MarkETInG MaTTErS Tony Rizzo prodUCT ShowCaSE Cfo CUrrEnCY Par Values for non-Maturing Deposits Just say no Emily Hollis rECoGnIT Ion The Real Marketing Challenge CU Realty services Passes 10 Years Helps Credit Unions Grow Mortgages CroSSword Ken Schroeder CU SpoTLITE PsCU names six Credit Unions First Winners of new M-PRO Awards MorTGaGE LEndInG Let The Loans Begin Jim McDonald Credit Union Quote Digging for More Financial Literacy survey exposes Areas of need Sharon Sweda Credit Unions shouldn t shy Away From Lending www.cubusiness.com June 2012 Credit Union BUSINESS 1 ABOUT US Publishing Team Tim O Hara Publisher tim cubusiness.com Joyce Moed Managing editor joyce creditunionbusiness.com Iliana Nord Operations Manager iliana cubizmag.com Patti Manzone Designer Mary Lynn Rogers Copy editor THE MORTGAGE ISSUE Let The Loans Begin Marketing to Gen Y Leaders CU Employs iPads for 20% Member Growth and 15% Loan Growth JUNE 2012 VOLUME 7 ISSUE 6 9.95 Credit Unions Shouldn t Shy Away From Lending Staff Writers Emily Hollis CFO Currency W.B. King TechBiz Sharon Sweda CU SpotLite Executive Compensation Is a Strategic Thing Contributors Don Curristan Holly Herman Tony Rizzo Ken Schroeder Jim McDonald 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.O. Box 2223 Palm Beach FL 33480 (561) 282-6015 (561) 588-7711 (fax) info cubusiness.com Sales and Advertising Contact 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 2 Credit Union BUSINESS June 2012 www.cubusiness.com BENEFIT FOCUS We Specialize in Executive Benefits for Credit Unions In today s environment of ever-changing regulations your organization needs someone entirely dedicated to your industry. We understand your needs better than anyone and no one is better equipped to help you develop implement and administrate executive benefit plans that will attract and retain the most talented executives and directors. You can be confident knowing we have designed your plan to be compliant from the moment we put it in place and will work to make sure it remains compliant for its entire life. Let us show you how our focus will benefit your Credit Union. FROM OUR 888-494-8911 BFBbenefit.com tyler BFBbenefit.com FROM tIM T Publisher s POV she is thrilled to be at PsCU where she is helping the brand promise We promise to be a bold innovative payments leaders that empowers credit unions to help their members. she is also thrilled to be in the United states. she and her husband emigrated from Toronto many years ago. sue says the opportunities are real and she says that credit unions are a supply chain of good Do good have fun and make money it s a three-legged stool With her new employer she feels she can help make a real contribution toward people helping people. Unlike global (companies) where you get bogged down with politics and it s hard to get anything done she said. The people here (at PsCU) are on a mission like rolling up your sleeves and fixing what you have it s a high integrity mission to care about members. i suspect sue Kelly will be well received in the CU business Thanks for reading. he credit union industry gained a new and enthusiastic disciple when susan L. Kelly joined PsCU as the new Chief Marketing Officer a few weeks ago. i had the pleasure to spending a few minutes with sue in her office in st. Petersburg Fla. recently and found her to be a world-class addition to PsCU and to the CU industry susan has worked in the world of large corporations having come directly from a top marketing position at Xerox Corporation where she served as VP of Communication and Marketing services. While working for Xerox she supervised projects for a credit union industry client CUnA Mutual Susan L. Kelly Chief Marketing Officer PSCU Group and she says she came to admire the credit union philosophy. she says that credit unions have high integrity and they are all about their members. The difference between CUnA Mutual and Citibank (another former customer) is that it has a true mission To care about members vs. public companies that are too distracted worrying about profits she said. Get it for the entire executive team www.creditunionbusiness.com subscription 4 Credit Union BUSINESS June 2012 www.cubusiness.com PrOdUCT ShOWCASE Wescom resources Group Celebrates 10-Year Anniversary F CUSO delivers a decade of producing successful credit union technology products and services through insight innovation and collaboration. rom 0 to more than 230 credit union clients in 10 years Wescom Resources Group (WRG) a provider of software and technology service solutions for credit unions celebrates its 10th anniversary providing credit unions nationwide with financial technology services ranging from its first service ATM Deposit Processing (Kinecta FCU October 2002) to its latest solution Memberedge Online Banking 3.0 (April 2012). WRG has grown year-over-year at an average rate of 25 percent subsidizing continued investments in infrastructure and product development. As a result WRG s staff has almost doubled in the last five years from 50 to 95 today. Wescom Credit Union s CeO Darren Williams and eVP Technology Finance Rob Guilford spearheaded the formation of WRG in 2002 in response to numerous credit union requests for similar technology products the credit union developed for its own members. some of those products included online banking ACH transfer Automated Lending and Pin select. since then many others such as Bill Pay and Memberedge Mobile Banking have helped launch the CUsO to achieve numerous successes throughout the past decade. significant milestones for WRG include 2007 BMi FCU becomes WRG s 100th client with the deployment of Memberedge Online Banking. 2008 WRG acquires eCU Technologies a technology CUsO of Pennsylvania state employees Credit Union adding a Consulting practice Upost Remote Deposit and a stronger presence in the eastern region of the country. 2009 WRG launches TextMe Mobile Banking the sMs mobile offering that would soon be followed by smart phone applications and a mobile browser solution. 6 Credit Union BUSINESS 2010 WRG introduces in October the iPad Mobile Banking app. 2011 WRG forms the Mobile Advisory Group (MAG) with Alliant CU BCU Corning CU suncoast schools FCU and Unitus CCU. 2011 WRG launches its Partner eCo-system bringing together best-in-breed providers including Geezeo PFM Vertifi RDC and PayPal P2P. The challenge in growing a small business is that you don t want to get ahead of your headlights said Tim Dolan president of WRG who joined the CUsO in 2007 as its second president following Kevin sarber (now a WRG Board Member along with Williams and Guilford). We believe we have accomplished that feat with an incredibly smart and experienced team of technology experts both on the Board and on staff. This philosophy allows us to innovate new products for credit unions that aren t me too solutions they are highly configurable solutions that meet the individual needs of each of our credit union clients. Tim Dolan President of WRG June 2012 www.cubusiness.com PrOdUCT ShOWCASE One example of this team philosophy was the creation of WRG s Mobile Advisory Group (MAG) by WRG s CTO John Best who joined in 2003. This group consists of a small number of prominent credit unions that are able to collaborate and provide feedback on future WRG technology projects which ensures a better mobile banking product that works very well for members ultimately adding value to the credit union. Dolan said WRG s differentiator has always been its close relationship with Wescom Credit Union developing testing and launching technology products. That bond with Wescom CU still remains in place today but the CUsO has expanded its product development relationships with many other credit unions for a more robust feedback channel MAG being a prime example. Our benefit over the years can be seen in the way we as a CUsO have helped redefine the vendor client relationship to a form that is more befitting of true partnerships providing better value to the client Dolan said. WRG is part of the force that has leveled the playing field much more toward the clients. This helps level that field for everybody and putting credit unions in a position of being able to innovate which bodes well for the industry as a whole. For more information visit www.wescomresources. com. www.cubusiness.com June 2012 Credit Union BUSINESS 7 AChIEVING SkILLS Move It 5 tips On Getting Your Work Done While Benefitting Your Health i By Holly Herman subscribe to a blog called Zen Habits. Recently there was a guest post from Matt Madeiro of Make every Day Count. Following are some great tips from Matt for those of us who sit at a desk for most of our day and after our day is over we sit yet again watching TV. Here s how you can get your work done and benefit your health Tip 1 Move. Any motion is better than no motion at all. Your job might demand you spend a lot of time in a chair. You can t always change that but there s nothing stopping you from doing your best to work within those constraints. Tip 2 Set a timer. Most modern phones come with a built-in timer but you can always just keep an eye on the clock if you re not keen on the sound of an alarm. You ll be at your most productive state for 50-minute intervals. When time is up stand up take a stroll move and then return to your work. Tip 3 Incorporate bodyweight exercises. saving your exercise solely for the gym misses a simple point several small sets of bodyweight exercises--knee or wall pushups and air squats as an example--throughout the day can be just as beneficial as 30 dedicated minutes on the treadmill especially if those sets are timed to interrupt hours otherwise spent barely moving at all. You don t need more than five minutes to get the blood flowing before you re forced to move back to your seat. Tip 4 Keep walking. You ve heard the usual tricks take the stairs where possible park out as far as possible and so forth. That s solid advice to be sure but there s no reason to stop there. When your timer goes off pace around your office for five minutes. At the end of your lunch break don t sneak back to spend some time on Facebook --take a walk around your office instead or head outside to soak up the sun while you circle the block. When you take a phone call don t lean back in your chair to accept it. Pop up and move around for the duration of the call instead. in the case of long calls this can easily--and effortlessly--add minutes of walking into your daily routine minutes you otherwise might spend with your jaw flapping and both legs stuck motionless to the floor. Tip 5 Take a stand. This is revolutionary thinking so brace yourself standing is not sitting. it s so far-removed in how it tasks the body in fact that you could call it a 8 Credit Union BUSINESS June 2012 www.cubusiness.com 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 www.iwsgroup.com or call 800.333.3028. When your members need reliable vehicle protection you need a dependable partner. You can depend on IWS. AChIEVING SkILLS kind of exercise in itself. standing desks unfortunately haven t hit the mainstream. if you re stuck with a regular desk however you can still see the benefits of taking a stand. it might seem like an obvious trick but try this when given the choice of sitting or standing choose standing first. When you re visiting someone s office stand for a decentsized chunk of the conversation. When you re enjoying your lunch break don t be afraid to stand while you eat or prepare your meal. if you find yourself closing the door to your office for a good think why not do it up on your feet When you get home from work too don t immediately drop down on the couch. stand in the kitchen while you cook stay upright while you talk with family and just try and delay that familiar combo of TV and couch for as long as your legs allow. A sudden increase in your standing time won t come too easily at first but stick with it and you ll see your endurance rise within the span of a week. The tips above might not replace dedicated exercise to be fair but i think they can do one better supplement your existing routine or even put you on the path towards implementing one in the first place. Remember lastly that exercise doesn t have to be difficult. it doesn t demand three hours in the gym or long sleepless nights on the treadmill but it does ask you now to take an interest in your well-being and to take small steady steps toward improving your health. Do you have any tips to share How do you keep moving during the day 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.AchievingSkills.com or contact her at Holly AchievingSkills.com. 10 Credit Union BUSINESS June 2012 www.cubusiness.com CFO CUrrENCY Par Values for Non-Maturing deposits just Say No By Emily Hollis F ranchise value is a great thing. i just finished writing an article of how progressive credit unions are not actively seeking hot money but rather are focusing on stable core deposits. examples include increasing merger activity converting to community charters and just plain promoting share draft accounts. These credit unions are making strides and directing major resources to obtain new territories and more stable funds. They understand that when rates rise this is a natural hedge. 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. i recently received a call from a credit union reluctantly asking if ALM First could place all core share deposits at par as another vendor was requesting such an action. At times this request will come from an examiner and we have to defend the position that such an analysis isn t logical. However i don t usually expect it coming from an ALM vendor. i refused. i have decided that this is worth a fight Why conduct an analysis that is just plain wrong Why cause confusion to the boards of directors and examiners when these progressive credit unions are doing the right thing The analysis would show that all their efforts are in vain. Most credit unions understand the vast difference between these non-maturing type accounts. The differences are indeed huge. Par values recognize no economic gain or loss in the value of non-maturing deposits. This means that the model results are unaffected whether a credit union pays zero percent or five percent on its share draft accounts. Obviously net interest margins (and subsequently net economic values) are grossly affected by such decisions. industry theory generally holds that if a financial institution attracts funds at lower rates than its borrowing costs it www.cubusiness.com June 2012 Credit Union BUSINESS 11 CFO CUrrENCY cally changed the interest rate on a share account in lockstep with the market and the market is represented by the effective fed funds rates the analysis will show little sensitivity in economic value in different interest rate scenarios regardless of maturity or decay rate. Hence for these deposits the resulting values would be close to par in all scenarios. Another input is the decay rate. The decay rate is the rate that cash flows mature within a given year. Remember that the neV does not take into account new shares but those that currently exist therefore an assumption has to be made on how long they will be around. normally decay-rate assumptions are conservative at 10 percent on checking and 25 percent for money market accounts. (extensive studies can be made to verify lower decay rates). Let s assume a decay rate of 15 percent. The remaining balances of share accounts at the end of five years would be 36 percent and at the end of 10 years remaining balances would be 14 percent. so extending the maturity to 15 years produces only minimal differences of economic value. This is because the present value of the balances is such a small percentage of the original and the maturity is so far out that the premium value is insignificant. The third important assumption the maturity date is not as significant of an assumption as detailed in the explanations above. Generally the relatively high decay rates used in our industry brings account balances to low levels by the time the maturity date is reached. Placing par values on all non-maturing liabilities provides equal modeling results between having 100 percent of funds in money market accounts paying six percent or 100 percent in share drafts paying zero percent. not only is this erroneous but such an assumption could be dangerous. Emily Hollis CFA is a Partner with ALM First Financial Advisors LLC. Par values recognize no economic gain or loss in the value of non-maturing deposits. This means that the model results are unaffected whether a credit union pays zero percent or five percent on its share draft accounts. creates economic value in its balance sheet. Par values also embrace the assumption that your dividend rate will correlate 100 percent to overnight funds. in those rare instances of aggressive high-dollar money market accounts this indeed is applicable. Otherwise this method is erroneous. The greatest weakness of this method is that by grossly understating liability duration it causes the analysis to miss the danger of spread compression in a downward-rate environment. We know that in practice non-maturing liabilities do have duration as accounts remain with an institution over time regardless of the prevailing interest-rate environment and dividends paid. We also know that banks have paid significant premiums for low-yielding funds. so how do you value non-maturing deposits We believe that careful consideration of three major modeling inputs (in order of importance) would produce much more accurate results the dividend paid on the deposit the decay rate and the maturity date. Further we believe the most critical determinant of value for a non-maturing deposit is the projected dividend rate paid by the credit union. Consider a fixed-rate bullet. (A bullet is a cash flow that has a single maturity. it is void of any amortizations puts calls etc. An example is a CD instrument that matures in 10 years.) it has significant interest-rate risk (or price volatility). if we changed the fixed rate to one that adjusts monthly with the market it has no interest-rate risk and its effective duration is zero. Therefore if your institution has histori12 Credit Union BUSINESS June 2012 www.cubusiness.com rECOGNITION PSCU Names Six Credit Unions as First Winners of New M-PrO Awards Awards Recognize Innovative Successful Programs That Enhance Member Loyalty and Revenues PsCU President CeO Michael Kelly presented six of the CUsO s member-owner credit unions with M-PRO awards at the 2012 senior Leadership Workshop & Member Forum. Recipients include 360FCU Windsor Locks Conn. Andrews FCU suitland Md. Citadel FCU exton Penn. Founders FCU Lancaster s.C. Pen Air FCU Pensacola Fla. and sPiRe FCU Roseville Minn. These awards are linked to our M-PRO (Member Owner Payments Revenue Optimization) strategy that is designed to enable our credit unions to increase member engagement and acquisition while boosting revenue Kelly said. We want to recognize and celebrate the success of these credit unions for their use of bold innovative strategies technologies and programs that collectively move our CUsO and our industry forward. Award recipients include 360FCU As the first credit union in new england to offer home banking and online bill pay 360FCU continues to enhance member loyalty with its innovative virtual branch strategy that now includes mobile banking. it has an average of 1.4 branchless services per member. its successful marketing strategy includes technology-based giveaways of iPods laptops iPads and UsB-driven coffee mug warmers. The credit union uses PsCU s Total Member CareTM contact centers for online account opening and funding and 24 7 365 support which the credit union views as essential for its members. Andrews Federal Credit Union An Andrews credit union branch in Germany served as the pilot launch site for PsCU s Visa Credit eMV card. The credit union s employees and members fully embraced this new technology. in the first six months the branch has opened over 1 200 accounts and has 2.5 million in outstandings. The credit union continues to work with PsCU as it finalizes development of this new card product. Citadel Federal Credit Union each call center and branch employee engages members by providing the highest level of service Citadel Class service. This engagement includes selling new products. each employee has a monthly sales goal and performance is measured against these goals. in addition Citadel surveys member satisfaction through net Promoter research. All Call Center and branch employees are measured on an individual basis as are PsCU s Total Member Care representatives who handle overflow and after-hour calls. Citadel employees receive a salary and variable pay that is based on goal attainment. Along with monetary rewards each year the top performers are invited to a special weekend get-away with executive management where they share ideas and success stories and have fun. Citadel is very pleased with its overall performance including a 16-percent growth in assets in 2011. Founders Federal Credit Union Founders staff worked closely with PsCU to test AccessPoint which dramatically improves the ability of members to access credit card account information online. AccessPoint delivers robust customization including full color with graphics and branded messaging for each credit union. Members can view transactions by category and other popular features. Credit unions can boost member loyalty and utilization with customized rules-based messaging that presents offers to members based on FiCO age account usage and other criteria. Pen Air Federal Credit Union Pen Air created a new Premier Account to boost member loyalty and address rising attrition. The Premier Account is offered to members who have a checking account debit card share account and estatements. Member Loyalty Rewards points are earned for various products and services including estatements Bill Pay and new loans. The debit cards on these accounts also Credit Union BUSINESS 13 www.cubusiness.com June 2012 rECOGNITION earn merchant funded rewards through PsCU s CURewards Mall. This new rewards-based account has reduced the closure rate attracted Gen Y members and reduced the average age of membership for the credit union. About PSCU established in 1977 PsCU (st. Petersburg Fla.) is a leading credit union service organization (CUsO) and serves more than 1 500 financial institutions nationwide. As a nonprofit 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 M-PRO 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 www.pscu.com. SPIRE Federal Credit Union By employing PsCU s targeted Advisors Plus marketing campaigns for its credit card product the credit union achieved an impressive 68 percent jump in new accounts and a 2 percent increase in interchange income. This credit union s experience proves that well-designed marketing programs continue to deliver dramatic results at a very affordable cost. PsCU s comprehensive set of services includes credit debit ATM and prepaid cards loyalty rewards electronic banking and online bill payment mobile banking 24 7 365 contact center services and strategic consultants that work with credit union staffs to achieve strong growth in assets revenue and new members as well as exceptional retention and member loyalty. 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 almfirst.com or visit our website www.almfirst.com 14 Credit Union BUSINESS June 2012 www.cubusiness.com MOrTGAGE LENdING Credit Unions Shouldn t Shy Away From Lending Originating and servicing mortgage loans is an excellent opportunity to gain additional funds as well as to provide members with a one-stop shop. ith the time resources and costs associated with offering mortgage lending services to members not to mention the increasing compliance regulations and risk concerns today credit unions have typically shied away from mortgages. But as credit unions constantly seek ways to improve member relationships originating and servicing mortgage loans is an excellent opportunity to gain additional funds as well as to provide members with a one-stop shop that meets all the financial needs members have. Credit unions shouldn t turn away from mortgage lending instead they should focus on how to best embrace this service. Let The Loans Begin W By Jim McDonald Now May Be The Time For Mortgage Lending The question is why would a credit union want to enter the mortgage industry now Why is this an opportune time Historically credit unions have had limited funds liquidity and may not have wanted to tie up their funds for 10 20 or 30 years with the process of offering mortgage lending. One solution is the mortgage secondary market whereby other investors such as Fannie Mae Ginnie Mae and Freddie Mac invest in the mortgage and let the originator the credit union actually service the loans. When a credit union reserves the mortgage www.cubusiness.com servicing rights there is fee income to be made which could be a .25-percent or an even higher percentage annual service fee. Adam Rebandt president of Michigan Lakes Mortgage Company explained This is probably the best time in the last several years for any financial institution to begin offering mortgage loans. Rates are at all time lows and property values are also at recent historic lows. What once was not affordable is now within reach. The dream of home ownership is alive and well. so i would ask why not now According to the American Credit Union Mortgage Association credit union mortgage market share is up to 6.5 percent from 4.8 percent in 2010. in 2011 approximately two-thirds of credit unions with assets from 20 million to 50 million granted a first mortgage loan during the first nine months. it Credit Union BUSINESS 15 June 2012 MOrTGAGE LENdING was only in 1978 that credit unions gained the authority to offer mortgages. in 2007 CUnA reported that more than half of credit union members had mortgages outside their credit union. Credit unions are latecomers to the mortgage industry but the recent market share jump shows that now is an opportune time. In-House or Outsourcing Servicing Which is Best for Your Credit Union Originating mortgages which generally includes all the steps from taking a loan application through disbursal of funds (or declining the application) is just the first step of the lending process. After that comes servicing those loans which covers everything after disbursing the funds until the loan is fully paid off and is the process by which a mortgage servicer collects payments from borrowers. The level of service can vary depending on the type of loan and the terms negotiated. With all these moving pieces the process becomes infinitely more complicated. However with the right software solution in place originating and servicing loans can be a new service credit unions can offer members. servicing loans in-house enables the credit union to retain 100 percent control of those loans meaning member satisfaction is completely in their hands. should a credit union use a third party servicer that company s idea of service may not be the same as the credit union s. servicing loans is not a simple task especially with the different loan types that have emerged not to mention the sheer number of foreclosures in today s market. Technology must be deployed to help servicers keep track of all these loans which often carry alternative terms and adjustable interest rates. Finding a technology solution that meets the needs of the credit union and one that can easily conform to changes within the industry is not always an easy task. servicing functions involve direct member contact and any servicer or sub-servicer should keep in mind that member satisfaction is important to maintaining the loan. Member service is a high priority for credit unions that have a vested interest in the loan portfolio and its performance. Often these same priori16 Credit Union BUSINESS ties are not mirrored by a sub-servicer and in order to prevent disconnect with members credit unions should heavily weigh their options before jumping into sub-servicing. Throughout the years servicing technology has matured to better accommodate the industry. select systems offer real-time information automated workflow environments and have all compliance regulations addressed. With the internet some provide everything via the Web which allows members to access their loan information from anywhere in the world via a secure internet connection. According to Rebandt servicing has many factors to take into consideration. if a credit union does not have a large volume of loans that it services a month it may be in their best interest to look at a sub-servicing agreement. if there isn t someone at the credit union dedicated to the process and focused on it full time managing it could be a challenge. For credit unions that are challenged to maintain their servicing department because of the time required working with a sub-servicing company may be the right answer. Working with them can eliminate an in-house servicing department. Choosing the right servicing partner is mandatory. sub-servicers charge anywhere from 15 to 20 per loan each month. Depending on the number of loans in a portfolio that cost per month can quickly escalate. You may realize that for that amount you could hire a full-time staff person to manage servicing thus making an investment in a servicing technology system may be in your best interest. Michigan s Wayne Westland Federal Credit Union knew it needed to offer mortgage loans its members had asked for the service but the credit union simply did not have the staff it needwww.cubusiness.com June 2012 MOrTGAGE LENdING ed. Thelma Dasho CeO said if we had the capacity having in house mortgage originating and servicing would have been ideal. However our current staff could not handle originating and or servicing loans so it was a smart business decision for us to outsource the entire process. Our goal is to provide our members with the services they require. Evaluating Options To Determine The Right Choice 1. Credibility When choosing a partner either for its technology solution or to be a subservicer it is important to ensure a long-term business relationship. Consider seeking the counsel of knowledgeable colleagues who may have valuable insight. The history of the company can be telling of the future. How long have they been in business How many times has the ownership changed speak with people who have worked with them find out their opinion of the relationship. mortgage loan servicing system provides members with the technology they deserve. 5. Security and Service With constantly changing compliance regulations credit unions must select a technology provider who adheres to all the latest regulatory demands. is the provider s software on a secure network Members expect credit unions to protect their information this is critical to privacy issues. 2. Trust Credit union must feel that their needs are being met. it is imperative that the credit union uses strin- Keeping Focus on the Members gent guidelines when selecting a business partner. Offering mortgages is a service credit unions should be proud to provide their members. The market is ripe for credit unions to 3. Accessibility Credit union members expect issues make an entrance. it is of utmost importance that credit unions to be resolved quickly. in actuality most do not know if consider implementing the right software solution for their their loans are being serviced by the credit union or by a members if they decide to handle servicing internally. Whether sub-servicer. The bottom line is the member should always the credit union decides to handle in-house or outsource the be able to get an answer to address any situation that arises. time has come for them to step up to the plate and offer all the Also if the credit union s loan servicing department has services that today s financially savvy members demand. any issues with the technology provider they should be able to get someone on the phone to immediately answer their Jim McDonald is the founder and president of McDonald questions and provide a quick resolution to their problem. Computer Corporation based in Southfield Mich. a pri4. Business Knowledge While word of mouth is a vately owned mortgage servicing software company. Web great way to seek insight on business partners it is equally T.I.M.E its flagship offering is an automated servicing important to look into their business model. Credit unions platform that allows servicers to access loan information should thoroughly investigate the work history past rela- online in real time through a secure SSH VPN connection tionships as well as any negative comments that may come enabling them to service all loan aspects from any location up. A critical factor is the technology. Credit unions should at any time. The company also hosts Myloaninfo a Weblook for a partner to provide access to their information based service allowing mortgagors to view their current loan via a secure website. A fully automated on-line real-time information 24 7in real time. www.cubusiness.com June 2012 Credit Union BUSINESS 17 2013 CU BUSINESS DIRECTORY LISTING FORM Publishing Date November 1 2012 8 200 C-Level Readers. Mailed to entire CU Business circulation of ders. E-mailed to thousands of digital E-CUB rea year long And on the web www.cubusiness.com all EARLY BIRD SPECIAL IF SUBMITTED BEFORE AUGUST 5 2012 FROM ENTIRE ORDER SAVE 15% CU CONTENT Executive Compensation Is a Strategic Thing primary responsibility of credit union boards of directors is the long-term continuity and succession of the institution. Attracting retaining and appropriately rewarding the right leader is vital to the execution of a credit union s long-term strategic planning. it makes sense that the compensation of the CeO and his or her team be structured so that it is aligned with those strategic objectives. Aligning the elements of the executive compensation program with the interests of the credit union and its members is more than negotiating salary and perks. it is important that the directors know what they are looking for in values skills experience and expectations for a CeO. it follows that they understand the market for leadership talent and what constitutes a compensation package that is reasonable meaningful competitive and affordable. Reasonable is usually a matter of optics and perception. There is statistical data that enables boards to make decisions about what is reasonable to their credit unions and their members. Meaningful is a measurement that says the CeO sees value in the compensation package consistent with the contribution the CeO brings to the credit union. Competitive is how the compensation package is gauged against a comparator group. Affordable measures the impact of the compensation package on the financial statements of the credit union. All of these decision factors are important in determining what is fair and what fits the credit union. Applying these decision criteria to all four of the compensation elements of executive compensation is less difficult when the board has a written compensation philosophy and methodology that guides it through the process of (1) setting salary (2) targeting annual at risk incentives (3) deciding on appro- A By Don Curristan priate perks and (4) developing long-term incentives and retirement plans. Most important all of the elements of executive compensation work best when they are aligned with the strategic goals of the credit union and the interests of the members. There should be an understanding of the level at which the board wants the CeO salary and the balance between the guaranteed delivery of annual base compensation and at risk incentive compensation. There should also be a balance between guaranteed retirement replacement income and long-term at risk incentive compensation which is linked to sustainable results. Base salary level should consider factors including experience skills and desired placement against peers or comparators. short-term incentives should be targeted at where the board wants the CeO to be when measured against the total cash compensation of comparators for both salary and bonus. The difference between those two measurements may be defined as Total Target Bonus. Perquisites are a way to round out a package by offering company cars tuition reimbursements and cell phones. Retirement and long-term incentives can establish a link between sustainable executive performance and future delivery of compensation to executives. Because there is usually time to offset the cost of these compensation elements the long-term pieces are probably the most flexible places to adjust compensation to alignment with expectations and strategic goals. There is specific regulatory authority for offsetting the cost of employee and officer benefits which is in essence what the delivery of retirement and long-term incentives are. nCUA Rule 701.19 says that credit unions can move money to investments that would otherwise be impermissible if they are directly related to the credit union s expenses obligation or 20 Credit Union BUSINESS June 2012 www.cubusiness.com WITH C d t U all s s t CU24 al dt PIN d b t t gv s sav a d p t h ad t h ad th th ba k g d st y Th y a th ss th p ativ sp t Alv P s d t CEO M C y F d al C d t U O la d FL J C a s CCUE 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 CU CONTENT potential obligation under employee benefit plans. These otherwise impermissible assets should have a higher return (and perhaps some additional risk) than permissible under typical 703 investment authority. These redeployed assets are continually owned by the credit union and do not belong to the executives. it is common practice for credit unions to redeploy assets associated with executive benefit funding into annuities mutual funds or institutionally designed life insurance contracts. The gains on these assets can offset the credit union s benefit costs over time. When specifically related to the cost of executive long-term compensation and benefits the additional earnings on these assets can result in financial statement neutrality over the life of the executive plans. Clarifying letters that follow nCUA 701.19 also say that these investments can be held as long as the mitigation of the obligations or recovery of the obligations is the intent. Credit unions can pay the long-term benefits from a low yielding source within the financial statement and hold assets that are performing and permissible because they are related to the recovery of the benefit costs. A reference to the nCUA 701.19 clarifications also reveals that assets including life insurance may be held to maturity so long as there is a benefit to fund or a cost to recover. There is also authority in iRC 101(j) as to the best practices for holding such investments. Retaining insurance policies is a best practice if the insured consented to the 22 Credit Union BUSINESS coverage and was an officer at the time of purchase. The ability to hold funding assets over long periods and up to maturity allows credit unions to acquire assets without surrender charges and with higher rates of return. it is also easier to match asset gains to benefit liabilities over longer timeframes. As credit union boards address the process of designing and funding executive compensation and benefits it is paramount that there is an understanding of what factors best align the package with the strategic goals of the credit union. An objective third party with external information data and expertise can bring altogether different perspectives to the project with respect to designing and funding executive compensation benefits. While the design function and funding function are really separate projects they are inexorably connected. Collaboration with a consultant who specializes in data interpretation and translation compensation and benefit design funding and long-term administration can bring order to the process. These plans are supposed to be strategic and the longer view is essential and short-term challenges and actions should not compromise the longer-term strategic outcome. Don Curristan is the Principal of Executive Compensation Solutions. June 2012 www.cubusiness.com CU CONTENT Marketing to Gen Y Leaders CU Employs iPads for 20 % Member Growth and 15 % Loan Growth osh McAfee marketing director at Leaders CU in Tennessee has lots of experience in marketing to Gen Y. in fact he recently presented during a Credit Union Toolbox webinar on the topic of marketing to this much heralded generation. What makes Josh so knowledgeable Well for one as a 24-year old credit union marketing director Josh is on both sides of the desk at the same time he s actively involved in marketing to today s younger members while being a part of this unique demographic himself. i ve been working with my credit union for exactly two years McAfee says of the 163 million in assets and 28 000 members Leaders CU. During that time he s been involved in launching a new website an online loan application mobile banking and tablet banking. Additionally the credit union is now getting ready to release another new website and iPad account opening to members. Over the next 12 months we plan to introduce OAO (Online Account Opening) and remote deposit capture. We re also partnering with the Filene Research institute to build and pilot a mobile payments system. One of the cutting edge initiatives McAfee has been involved in at Leaders CU is using iPads to enroll new members. We ve developed a business process that uses the iPad as a way to enroll new members and make changes to existing accounts McAfee says. This process has one fundamental differ- J By Laura Enock ence from most iPad processes to-date we have found a way to take applications and verify identity without the use of an Online Account Opening (OAO) web form or application. This process is completely core agnostic and can be used by any credit union in the marketplace. sounds good but how is this practically done since the iPad is an all-inclusive device (scanner signature pad and computer) it eliminates the need for several compo- www.cubusiness.com June 2012 Credit Union BUSINESS 23 CU CONTENT nents that are all fairly expensive individually. This process has also freed the credit union to vertically integrate mobile account opening organization-wide. That means mobile account opening is not limited to business development executives but is also in the hands of the credit union s mortgage representatives investment brokers and branch staff all of whom can complete member service tasks while away from their desks. We re fully bought-into the idea that the definition of member service has changed from a friendly handshake and a smile into the level of convenience and sophistication with which a member can interact with your institution remotely McAfee explains. The credit union is now working toward being able to centralize all sales staff in the contact center and make the entire product service portfolio accessible through online and mobile channels. Our strategic objective is to be able to secure members regardless of geography and keep attrition at a minimum because our remote service offering is so strong McAfee continues. An added benefit is that this will keep the credit union s fixed asset footprint as small as possible and still give members the convenience and the experience they d normally only get at a large institution. While the iPad program is still in beta and tangible results have not yet been measured the initial response has been very positive. One thing is clear though. And it s an early sign of what will most likely be a success story not just for Leaders CU but for every credit union looking to bring in new members while conveying the message that the credit union is on the cutting edge of progress. since Leaders CU rolled out the mobile and tablet banking platforms last fall it has seen impressive growth in the channel of more than 20 percent of its membership. Furthermore Leaders CU now receives more hits on its mobile-optimized website than on the traditional desktop version. That s a trend credit unions should be watching out for and be prepared to offer. if you don t have a mobile-optimized version of your website now is the time to look into going that route. Member feedback has also been overwhelmingly positive. Most members love the dialogue-based approach of applying shoulder-to-shoulder sitting next to the loan officer rather than talking across the member service desk. Leaders CU has received an impressive 4-plus star ratings in the App store and Android Market for its innovative approach to full-featured mobile applications. Our flexibility and quick-to-market strategy for technology really resonates with our members McAfee says. We ve done everything possible to offer the types of electronic delivery services that we d want personally while still keeping the expense footprint as small as possible. if your credit union is looking to move towards mobile banking and iPad loan originations McAfee recommends you find the MVP (minimum viable product) and then build on that. Just because your data processor or online banking provider offers an app or OAO product it doesn t mean that you have to use it McAfee explains. instead you may want to find a third-party or combination of providers that can be built together to give your members a truly unique experience while saving as much money as possible. For example Leaders CU found that its online banking provider wanted to charge 2.50 per mobile banking user. The credit union took the time to research various options and found a solution with a flat pricing model. The result Leaders CU is now saving about 1 200 per month. Additionally don t assume that because something hasn t been done before there s a good reason for it. Challenge that assumption think out of the box and look for ways to make it happen. We wanted to open accounts with iPads and our website 24 Credit Union BUSINESS June 2012 www.cubusiness.com CU CONTENT didn t support OAO so we found a way to take an application that didn t use our website and was secure enough to meet auditors expectations. As McAfee says color outside the lines doing so may make for a prettier picture. What about resistance from the board or the credit union CeO Our leadership is fully bought-in on technology McAfee says. They understand a simple fact for credit unions to truly win in the future we have to continue our traditional member service excellence while also having the best technology offering. The board of directors at Leaders CU was the first to have iPads two years ago and the CU ensured they were able to access all of its governance content through the device. They understand the value and are supportive of the credit union s progress on this front. The results of using iPads throughout the credit union speak for themselves. The credit union saw more than 20 percent member growth and more than 15percent loan growth last year due in large part to the centralized sales and mobile banking initiatives. McAfee sums it up What i m most proud of is our near 2 percent ROA (after assessments) and 12 percent capitalization which shows that we have not sacrificed anything to reach our production levels. To assist other credit unions in reaching the same levels McAfee has branched out and opened a startup consulting firm. You can reach him at lcu.jmcafee gmail.com. Laura Enock CEO of CUVA Publishing provides credit unions nationwide with content for their websites newsletters and social media through CUcontent.com. 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 CUponDeals.org and sign up for free content at CUcontent.com. Enock can be reached at laura cucontent.com. ANALYZE behavior and mine your data for opportunity. MAIL letters with offers based on behavior the next day. CALL requests are generated for your call center to contact your member to close the sale. RESULTS are tracked daily so you immediately know the effectiveness of your efforts and investment. Tony Rizzo at 214.778.3037 tonyr gomarquis.com GoMARQUIS.com MARQ73-05-11-06202011 CU Ad www.cubusiness.com June 2012 Credit Union BUSINESS 25 TECh BIz time to think Again About Your Mobile Banking Platform M THINK By W.B. King any new Yorkers have recently been muttering Bloomberg is at it again. The threeterm mayor is notorious for many reasons but among them is his broad-stroke effort to change the Big Apple into a healthier place. it s been almost 10 years since he passed the smoking ban in bars and restaurants which was initially met with sneers and skepticism but is now commonplace. now he is trying to ban restaurants from selling soft drinks (the Big Gulp phenomenon) exceeding 16 ounces. What these initiatives hope to achieve is a perceived positive change. For the most part people are not willing to make drastic changes even if there is an implied benefit. C.s. Lewis perhaps said it best Getting over a painful experience is much like crossing monkey bars. You have to let go at some point in order to move forward. When it comes to the credit union industry change is also a word many c-level executives consider but not always embrace as a means to an end. Why There are plenty of good reasons not to change all of which have to do with the bottom line. i understand and am sensitive to the bigger picture the helicopter approach to running a successful credit union. industry statistics however can provide a closer view of the topography--the playing field. The Rancho Cucamonga Calif.-based CO-OP Financial services hosts an excellent event each year THinK bigger thinking for bigger results. This year s THinK12 was in Boca Raton Fla. and included a slew of inspirational speakers including Brett King (no relation). His best-selling book Branch Today Gone Tomorrow The Case for the Death of Branch Banking provides unique insights noting that U.s. transaction volume in-branch will be down almost 60 percent between 2006 and 2015. 26 Credit Union BUSINESS For credit unions that are in an increasingly competitive market with big banks community banks and other credit unions taking a look at the probability (and need) for branches is tantamount to letting go of the monkey bars as it is time to move forward. King provided the following statistics which are worthy to note. in 2000 59 percent of payment transactions were done by check. in 2011 that number fell to just 3.2 percent. Between 2010 and 2015 a 17 percent reduction in cash transactions in the U.s is expected. in a typical credit union with 100 000 members 300 members will call or email each day 850 members will visit the ATM daily 2 200 will use a mobile application 7 500 will visit the website 80 000 will use credit debit to make a transaction and just 100 members will visit a branch. Consumers don t want to give up the utility of banking THinK speaker neil Goldman senior partner at Goldman Consulting and strategy noted. But we need to ask if there are ways to make banking more enjoyable relevant and connected to people s daily lives. We need to move beyond thinking of fiwww.cubusiness.com June 2012 Download a complimentary white paper. www.themembersgroup.com adrenewal CREDIT DEBIT ATM PREPAID P2P ANALYTICS TECh BIz first mobile-direct banking proposition. For credit unions it s a tough call because many members (and banking customers for that matter) see security in brick and mortar branches. The idea is to enhance branch locations deemed necessary and invest in mobile solutions that will cater to the all-important 18 to 24 demographic because if they are captured and become brand loyal they will stay with the credit union possibly for life. While researching this topic i came across the Mt. Carmel iL-based 3Rivers Credit Union which has been in business for 25 years and serves an approximate 66 000 members. in the last year the credit union has earmarked 4.5 million for technology investment. For the existing 18 branch locations 65 inch touch screens were installed. in smaller locations such as in grocery stores iPads were installed for ease of use banking whether it is setting a 529 savings account applying for a car loan or opening a new checking account. From my vantage point upgrades and investments in current brick and mortar structures is essential for success but equal thought should be considered when assessing your credit union s core operating system and what can enhance it. According to Callahan and Associates when it comes to mobile banking it s a numbers game. For example 44 percent of credit unions in the U.s .with assets more than 1 billion offered mobile banking to their members. For those credit unions with assets between 500 million and 1 billion the number dropped to 33 percent. The smaller the credit union the less chance of these offerings. in my discussions with c-level executives (and ancillary research) i am finding that more smaller credit unions are getting this message and looking into platforms that are both affordable and competitive. The san Francisco-based mFoundry is a leader in the mobile banking and payments space. They recently welcomed the indianapolis ind.-based eli Lilly Federal Credit Union (eLFCU) to its growing list of clients. With more than one billion in assets and 60 000 members Tim Greene AVP of eCommerce explained that they wanted to find a solution that offered not only the standard mobile banking features members wanted such as apps and remote deposit but also a flexible platform that would allow for easily adding new features and functionality throughout time. An additional requirement of the platform was that it had to integrate with eLFCU the credit unions new Open www.cubusiness.com mFoundry s mBanking solution is built on a flexible fully-hosted architecture that enables customers to quickly deploy and scale their mobile banking solution across the membership base Drew Sievers co-founder and CEO nancial services as maintenance to looking for ways to provide enhancement. What would make dealing with a credit union better During his session Growth Through Marketing Troy B. Hall COO for south Carolina Federal Credit Union provided the following statistics that when combined with the aforementioned underscores the importance of revaluating how to streamline branch operations. He notes that 17 percent of the U.s. population is between 18 and 24 and of that demographic just 4 percent are credit union members. 24 percent of Gen Ys do not care or differentiate between banks and credit unions while 38 percent of Gen Ys are satisfied with their current banking relationship and just 16 percent believe branches are important. Remaining Relevant The competition to attract or retain members is significant and credit unions aren t only facing the usual suspects. King was recently named the Top innovator of the Year for 2012 by American Banker in the Bank Technology news Annual innovators of the Year edition. Why He is launching Movenbank which works with banking and payments partners mobile operators consumer credit groups social media partners merchants and many others to help consumers live smarter financial lives. Based in new York City Movenbank might well revolutionize the day-to-day banking experience with the launch of the nation s 28 Credit Union BUSINESS June 2012 TECh BIz solutions core (it does). Greene noted that 40 percent of customers use eBranch. mFoundry s hosted solution also gave us comfort with scaling the solution and adding new features with little to no disruption of our members banking activity. now operational eLFCUmobile is a full-featured mobile banking solution that includes native mobile applications mobile Web and sMs text banking. Additional features include native mobile banking applications for Apple iOs Google Android and RiM BlackBerry devices. The system supports mobile remote deposit capture for its smartphone users provides account balance monitoring transfers between credit union accounts and branch and ATM searches using built-in maps or GPs. Greene explained that a month after launch the credit union has realized 1 101 unique users using eLFCUmobile with 780 using the app 518 using Web banking and 120 using text banking. Members have logged 6 726 sign-ons of which 1 639 viewed account details history and 440 completed remote deposit capture of checks via photo. mFoundry s mBanking solution is built on a flexible fullyhosted architecture that enables customers to quickly deploy and scale their mobile banking solution across the membership base explained Drew sievers co-founder and CeO. The cloudbased solution currently serves more than 675 financial institutions. On a daily basis more than 10 million users conduct banking transactions. eLFCU can now provide members with a wide range of banking services such as account management mobile deposit or two-way text alerts to manage their banking relationship from virtually any device sievers said. With the large percentage of eLFCU members that rely on remote access mobile is sure to become the most popular channel for members in the months to come. Mobile banking and related solutions is the change that is to be embraced. There is no other option. The noted statistics and uptick in client retention with companies such as mFoundry says it all. While Mayor Michal Bloomberg might get thwarted with his latest change initiative he has let go of the monkey bars in an attempt to move forward. How about you W. B. King has more than 15 years experience writing for business and technology publications. Email him at wb wbking.com. 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 30 Credit Union BUSINESS June 2012 MArkETING MATTErS On results. What Works Best Three Marketing Tests By Tony Rizzo e ach month we produce hundreds of direct marketing campaigns. some with letters some with postcards some with emails some with incentives and some without. no matter what we are working on i always get one consistent question what works best The answer to that question can of course vary depending on target offer competitive environment and creative execution. Here are the results of three recent tests we completed in pursuit of the answer to what works best. For this checking acquisition campaign this credit union tested in incentive versus a contest versus a classic features and benefits offer. receive a 100 incentive and keep a marginal balance per the contest requirements in order to not have to forfeit the cash. The group that was incented with an opportunity to win a tablet was the lowest performing group in both responses and in balances. Test one No incentive versus cash versus prize drawing. For this 400-million credit union a sample size of 9 000 households was selected based on lifestage and product propensity models. The group was then segmented into three groups and selected to receive one of three offers for a checking account. All features and benefits between segments remain the same the only variable was the incentive or lack thereof in the offer. One group was to receive a 100 cash incentive if they open an account. The second group was offered a chance to win a tablet computer regardless of whether they open an account. The last group was made a straight feature and benefit offer to move their checking account to the credit union. The last received no special incentive. After the results were tabulated the strongest performing group was the segment that was selected to receive a 100 cash incentive. However it only outperformed the non-incentive group by a handful of accounts and cost the institution thousands in additional incentive costs. What is interesting to note is that balances of the non-incentive group outperformed the incentive group by a margin of almost 2 to 1. This begs the question of whether or not someone would open an account just to www.cubusiness.com Test two Stamps versus postal indicia. Remember when you used to receive birthday cards from your grandma Those envelopes were always heralded with much anticipation because even before any of us read what grandma wrote we always opened the card and hoped to find cash. Wouldn t it be nice if our members would open our direct mail with such anticipation While i can t promise your members will rip through your direct mail with glee i believe one way of increasing your open rates is to consider using a live stamp instead of indicia. We recently tested this with one client who is executing a prequalified personal loan campaign. six-thousand members were selected and the group was Credit Union BUSINESS 31 June 2012 MArkETING MATTErS At one point or another over the past four years most of us have used gift cards to entice members to open accounts move balances or refer new members. But do they really work to modify behaviors and elicit the type of response that we re looking for then randomly split in half. One group received an envelope with the standard marks and barcodes the other received an envelope with no marks just a live stamp. All other elements of the mailing were the same among both groups. While the response rates were quite close between the two groups the average balance of those that received the live stamp was considerably higher than that of the indicia group. in fact the average stamp recipient had a balance 55 percent higher than the indicia based group. Was that higher average balance due only to the use of a live stamp it is difficult to tell without doing an additional test. However if all things are the same (which they were) one would have to look to the only difference in the mailing as the potential driver of increased results. Which envelope would you rather open Test three Gift card versus no incentive and segmentation. At one point or another over the past four years most of us have used gift cards to entice members to open accounts move balances or refer new members. But do they really work to modify behaviors and elicit the type of response that we re looking for is it worth the additional expense and operational headache to incentivize a member for new business On the other end of this marketing spectrum is a school of thought that believes that being personal relevant and specific can drive results without offering any additional incentives. After all if you re speaking to me as an individual or at least to my life stage you should be able to connect with me without needing to dangle a prize carrot. This premise was tested by one of our clients with a recent auto acquisition campaign. A group of 18 000 members was first prequalified based on a series of criteria designed to find those members with loans outside the institution. Based on analysis we believed we could save these members money with a refinance offer. That group was then split evenly into two segments. Fifty percent of the group received a prequalified offer with the 25 gift card incentive the second group was segmented based on lifestage modeling and divided into four groups. The segmented groups were not offered an incentive. in short 78 percent of the responders came from the segmented lifestage group. Again with any test to validate the results one should retest and revalidate. However based on this test all things being equal clearly the use of the incentive had nothing to do with driving results. www.cubusiness.com 32 Credit Union BUSINESS June 2012 Streamlined Compliant Lending from Origination and Processing to Closing In the midst of constant regulatory change one thing remains stable -- LaserPro Harland Financial Solutions industryleading compliance solution supported by a 50-state Network Counsel and used by more than 3 000 financial institutions nationwide. For more than 25 years LaserPro has provided lenders with the latest technology and the flexibility to produce compliant loan documentation for a wide variety of loan types. The solution now includes LaserPro Consumer Origination & Processing and LaserPro Mortgage Origination & Processing modules to better support the origination and processing phases of consumer and mortgage lending. To learn more about LaserPro visit our website at www.harlandfinancialsolutions.com origination20 Contact us at 800-815-5592 2012 Harland Financial Solutions Inc. All Rights Reserved. Laser Pro is a registered trademark of Harland Financial Solutions Inc. MArkETING MATTErS Direct mail continues to be the workhorse of marketing. Few mediums can be analyzed and tracked like direct mail. Testing should be a staple discipline within your marketing department because it s only through testing that you can truly understand the dynamic of expense and response. so the next time your marketing department is looking to give away something encourage them to test their premise and report those results. it could help you save thousands of dollars in needless expense while generating the best possible results. 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. To gift card or not gift card That is the question. 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 34 Credit Union BUSINESS June 2012 www.cubusiness.com PrOdUCT ShOWCASE CU realty Services Passes 10 Years helps Credit Unions Grow Mortgages CUSO and participating credit unions collectively save members more than 10 million CU Realty Services LLC a CUsO based in scottsdale Ariz. is celebrating more than a decade of service to the industry. The CUsO offers a turnkey real estate services program to help credit unions increase their purchase mortgage business. Throughout its decadelong history the firm has worked with more than 100 credit unions in 19 states and 49 metro areas recruited and trained more than 400 real estate agents and has generated more than 10 million in total cost savings to credit union members. Mike Corn CeO who co-founded CU Realty services with real estate broker Craig Davis developed the idea for the CUsO from experiences he had while buying and selling a home. The roots go back to 1998 when i was working with an agent to find a new home and sell my existing home Corn said. Craig and i started talking about how much easier it would be if you could put your home search on the web let consumers study properties give access to inspectors title companies and so forth. We could see it saving consumers a lot of money and they would probably prefer it. And remember 10 years ago there were no web-based home searches no Realtors online search sites. Launched in 2001 CU Realty services was one of the first in the country to offer internet home searches. since then this trend has grown representing a major shift in how buyers and sellers connect. Today almost half of all searches begin online according to the 2011 national Association of Realtors Profile of Home Buyers and sellers. Just this past year CU Realty helped credit union members who bought or sold their homes through its agent network save a collective 1.8 million equating to approximately 20 percent of real estate commissions. At the same time the CUsO s credit union partners have increased their purchase-mortgage business some by as much as 40 percent. Our success has come from helping our partner credit unions become the first point of contact for members buying or selling a home Corn said. That helps to build stronger relationships with their members. in addition our network of trained qualified Realtors helps to generate more business for the credit unions. To help ensure credit unions are getting in front of members wanting to buy or sell a home CU Realty offers a complete package of services that is mutually beneficial to all parties. it allows buyers to search listings and find pre-screened agents while providing credit unions with interested borrowers and connecting agents with pre-qualified leads. For more information visit www.curealty.com. 36 Credit Union BUSINESS June 2012 www.cubusiness.com CrOSSWOrd CrEdIT UnIon QUoTE by Kenneth Schroeder Across 1 5 8 14 15 17 18 1 14 19 22 25 33 37 42 45 51 56 61 65 66 69 79 83 87 96 101 88 97 102 70 80 84 89 98 90 85 91 99 92 100 62 67 71 72 73 74 75 81 86 93 94 95 76 77 82 63 68 78 52 46 53 57 58 47 34 26 27 28 35 38 43 48 54 59 49 55 60 64 23 29 36 39 44 50 40 41 30 31 2 3 4 15 16 20 24 32 5 6 7 17 21 8 9 10 11 18 12 13 19 22 23 24 25 29 30 32 33 37 38 39 40 42 44 45 50 51 53 54 56 57 59 61 65 67 68 69 71 76 78 79 83 84 85 86 87 89 90 93 96 98 99 101 102 Down 1 notwithstanding (8) 2 Goes with moon pie (4) 3 Assisting the crook (8) 4 imitate (3) 5 Four eighths (4) Collection of useless information (3) A snit (4) What the week is divided into (8) Language code for one from Beirut (3) Dallas suburb (5) Abbreviated knight (3) Ohio standard grade school achievement test (3) Credit Union Quote (Pt 1) (19) strike the best seller (3) sold on the Mercantile (7) Wide _____ Katy Perry (5) sound made by board game hitting the floor (4) Geology imaging tool acronym (4) Who you don t want a letter from (3) Mr. Brynner (3) Quote (Pt 2) (16) Type of code (7) Half of a town in Georgia (2) soccer Cup org. (4) Hawaiian pudding (3) squeeze (3) Rush away (4) Quote (Pt 3) (13) Country Code in Berlin (2) Credit Union directors (5) A sound in the night (4) Warrior Princess (4) it can by a C an s or a sub-s (3) savory Jello (5) speech defect (4) Quote (Pt 4) (17) small Business institute (3) Alcoholics Anon. (2) A vintner from sonoma (5) eggs (3) sister s daughter s brother (6) Mark Antony s 502 (3) nuku Papua new Guinea Airport code (3) Quote (last part) (19) A type of party (3) Animal rights gp. (4) electrical engineer (2) Found on cars from the Hague (2) Abbreviated red light (4) Army short for long haul tractor (3) A sheep s head on the platter (5) Facilities Managers organization (4) Really wide lens (7) Moroccan hat or city. (3) Group of italian gentlemen (7) Weapon with no bullets (5) Quote Author (13) 6 7 8 9 10 11 12 13 16 17 20 21 26 27 28 31 34 35 36 40 41 43 44 45 46 47 48 49 it really isn t fair (6) Athlete s Foot (4 3) Where the CU puts its money (4) evanescent (7) Where Turkey is found (7) Two days before the day after tomorrow (5) Poem in Osaka (5) Branches (10) Music phrase in Los Angeles (2) Who takes the seeds out of apples (5) Describing rocky road (5) entertainment Weekly Twitter name (2) ..a tough road to ____. (3) What the new path was (6) 5 Down of MiV (3) stomach ailment (6) nerve cell (6) evil plotter (7) Aei sequence end (2) River through Turin (2) Youth challenged (3) Adagio allegro and lento together (5) A girl s name (6) Ms opposite (2) stock symbol for Tandy Brands Accessories (4) The attic vs living room (7) Adv. programmable interrupt controller (4) Belief (8) 51 52 55 58 60 62 63 64 66 70 72 73 74 75 77 79 80 81 82 88 90 91 92 94 95 97 98 100 Preference (4) not stillness (10) What some seek (6) spirit sought in all CU employees (3-2) A type of dot (5) Unit of purchase (2) What the knight wore (7) Type of drink (8) West Czech region (7) stomach muscle (2) engraver (6) A path gone awry (4) What she wasn t (2) sound of the asthmatic (6) not the ego or super-ego (2) What the CU guards against (5) OPQ follower (2) Type of spare part. (3) Toss the affair (5) Tag on the suitcase going to Reims FR. (3) W s brother (3) Food additive (3) Yield in escrow (Abbr.) (3) not against (3) Military field rations (3) Where patients without appointments go (2) What the CU annual report is base on (2) Air Gabon iATA code (2) www.cubusiness.com June 2012 Credit Union BUSINESS 37 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 www.bancography.com branch info bancography.com 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 www.cubusiness.com vISIT ThE MarkETpLaCE paGE aT www.CUBUSInESS.CoM for advErTISInG InforMaTIon Call GreG Halpern 561-282-6015 4 GreG Cubusiness.Com CU SPOTLITE digging for More By Sharon Sweda Financial Literacy Survey Exposes Areas of Need s the nation makes short steps of recovery from the greatest housing collapse and longest recession of recent history Philadelphia Federal Credit Union is taking steps to insure that members and potential members are armed against future financial disasters. While plenty of institutions offer financial planning or homebuyer seminars Philadelphia FCU decided to dig for more. The build it they will come method of financial education wasn t the path that PFCU was content to follow. Philadelphia FCU decided to ask first evaluate need and then respond with targeted and specific education. if it sounds out of the box for them to contract a thirdparty research group to explore the literacy quotient of the residents served by PFCU you may be right. But that is exactly what PFCU did. in March we hired Amplitude Research to launch a comprehensive literacy survey for us said Karl Bernhard financial educator at Philadelphia FCU. A survey that would ask the tough questions and get answers to serve as our indicator of which skills to teach. We wanted to identify consumers current habits and provide methods to improve. The survey tackled topics aimed at evaluating respondents current knowledge base along with their debt and payment profile. The questions delved into background comfort level with their current financial condition and delinquencies. Of the 350 respondents older than the age of eighteen there were both pleasing and scary surprises. On the short side 37 percent affirmed that they had not been able to save any money in the past 12 months. On the plus 56 percent confirmed confidence that they would eventually own a home and 78 percent had not missed any payments in the past year. One immediate area that we plan to improve upon is the 52 percent who had not checked their credit reports in the past year Bernhard stressed. everyone is entitled to a free credit report each year. We teach folks to develop the habit of checking their credit annually. 40 Credit Union BUSINESS A Philadelphia Federal is cautious to recognize that while 78 percent may not have missed a payment during the previous 12 months 22 percent did report making late payments. Of the 22 percent 7 percent were late four or more times. Of that group 45 percent disclosed carrying a balance on credit cards. Our goal is to offer the education that people need Bernhard said. This survey gives us direction. We want members to realize that we are willing to go into the trenches with them. We want to teach how to budget and create solid financial habits. Just by accessing an annual credit report borrowers are able to identify and correct mistakes that reduce credit scores. While the financial literacy survey has set the stage for targeted training at Philadelphia there is other excitement as well. The credit union is embracing a re-branding initiative to change the look and feel from their traditional image to that of a more progressive one. The effort includes a well-executed social media presence a PFCU blog and billboard and bus stop advertising. educational classes have been amped up to include a Homebuyers seminar every six weeks a two-hour budget and credit class every three months a basic spending class and ongoing offerings for its select employment groups. All classes are also open to the general public. The literacy survey revealed that 53 percent had never spoken with a financial adviser and half of those are not comfortable about retirement. The statistics reveal wide gaps in the financial literacy goals of PFCU and an opportunity to make a significant difference. Their new tagline not here for our profit. Here for yours is an accurate fit 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 SwedaSweda.com to SpotLite your CU. June 2012 www.cubusiness.com The status quo is our enemy. What sets PSCU apart is our bold promise to help our credit union members grow and outperform the market. This is more than a vision. It s the reality we deliver through a powerful strategy focused on optimizing payments revenue. It s the industry-leading service we provide to our members backed by strategic guidance for growth and prosperity. Innovation is the path forward in our new marketplace. As we remain committed to innovation we ll constantly leverage new payment technologies and empower you to proactively deliver the products and services your consumers need both now and in the future. We re redefining the industry standard. Are you with us pscunew.com Download a complimentary white paper. www.themembersgroup.com adrenewal CREDIT DEBIT ATM PREPAID P2P ANALYTICS