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7TH ANNIVERSARY EDITION Leaps and Bounds Embracing Change JULY 2012 VOLUME 7 ISSUE 7 9.95 D. Hilton Associates Inc. Grows and Changes with the Credit Union Industry 8 Tweaks to Help Strengthen Your Management Skills Individuality and Conformity What Leaders Can Learn From Tim Tebow CONTENTS Credit Union BUsiness jULY 2012 V O L U M E 7 I S S U E 7 4 6 pov D. Hilton Asociates inc. (& the CU industry) story Tim O Hara aChIEvIng skILLs 30 markEtIng mattErs On Results Tony Rizzo How To execute The Right Market Analysis To Achieve Your strategic Goals 8 Tweaks To Help strengthen Your Management skills Holly Herman embracing Change 36 40 41 44 CrEdIt programs Kiss Your Credit Card Portfolio Ondine Irving produCt showCasE The Credit Card Portfolio Vultures are Back 9 12 workfLow Workflow Technology Michael Ball undEr thE hood The entire institution investment PsCU First to Launch VisA Prepaid eMV Cards in U.s. produCt showCasE Leaps and Bounds Tim O Hara D. Hilton Associates inc. Grows and Changes with the Credit Union industry Global eTelecom selects norseCorp s eCommerce Fraud Prevention service to secure Payment Processing Cu spotLItE 18 20 23 25 28 CompEnsatIon Mobility Takes Motion at sharon Credit Union Sharon Sweda incentive Compensation Adam Zelinsky LEadErshIp if You Build it Right Results Will Come soLutIon-CrEdIt unIon QuotE Kenneth Schroeder MBCP MBCI VP--Business Continuity Corporate One FCU 1 1 4 1 9 2 2 individuality and Conformity What Leaders Can Learn From Tim Tebow Dr. Sandra L. Torres Cu ContEnt A L T H O U G H B I A S T H E F T 2 N E H I 3 A B E T R 2 6 4 1 5 A P E 1 6 5 H A L 6 U J U 7 F O T O 2 0 F 1 7 8 S A F E 9 E V A S V C 1 0 E U R 2 1 N E 1 1 1 8 T O D 1 2 H A I K U 1 3 S A T E L L I T E S L A 2 3 N O B U P Y C O R 3 6 F 2 9 2 4 3 1 A W A S I A 4 4 3 2 2 5 3 4 T I N H O E 2 7 U N T R 2 8 D I I D 3 5 S T 3 8 R M E R O 3 9 4 3 3 0 I V E S R E F L U 4 9 Y P O 5 0 4 1 3 3 3 7 4 2 Auto Loans Laura Enock N E R S C H E M E N 4 0 T T B A C 4 7 U A I C 7 6 5 8 O L D P O L K 6 4 The Marketing Campaign that never ends 5 1 5 6 U G 4 5 5 2 T 4 8 5 4 B E N I T A 7 8 5 5 M O R H 6 2 6 7 S 4 6 5 3 5 7 M E S T I 7 5 R E L I G I 8 2 O N A C T I V E N 8 8 7 0 D E A 7 1 8 0 8 4 6 3 U M P P I C A N D X 5 9 A S Y L U 6 0 Cfo CurrEnCy Emily Hollis tECh BIz W.B. Kng 6 1 6 6 6 9 P A N P 7 2 R E T C H E 102 7 3 A P H A T 9 8 7 4 L 6 8 7 7 F O U N T interest Rate Risk Policy and Program Farewells and new Beginnings July 2012 6 5 B O H E I A A B R H E 9 7 H E 9 0 E W R 8 5 8 1 I 8 6 7 9 8 3 8 7 9 6 R O S 8 9 H O O E E Z E E M M 9 9 9 1 9 2 D O N Y I E 100 F L I 9 4 M A F R 9 5 M E S S L Y J E B 9 3 M A R E I N E R F Y S G N O 101 R O R G N G 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 Audrey Green intern 7TH ANNIVERSARY EDITION Leaps and Bounds Embracing Change JULY 2012 VOLUME 7 ISSUE 7 9.95 D. Hilton Associates Inc. Grows and Changes with the Credit Union Industry 8 Tweaks to Help Strengthen Your Management Skills Individuality and Conformity What Leaders Can Learn From Tim Tebow Staff Writers Emily Hollis CFO Currency W.B. King TechBiz Sharon Sweda CU SpotLite 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 Contributors Michael Ball Laura Enock Holly Herman Ondine Irving Tony Rizzo Ken Schroeder Dr. Sandra L. Torres Adam Zelinsky 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 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 July 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. FROM tIM Publisher s POV Leaps and Bounds the D. Hilton Associates Inc. (& the CU Industry) Story Our Under the Hood cover article this month follows the illustrious career of David M. Hilton of D. Hilton Associates inc. the powerhouse Houston Texas.-based credit union resource. The D. Hilton story has lots of credit union history where a young man and a former credit union CeO himself strikes out on his own to found a company specializing in helping credit unions. And help credit unions he has Today D. Hilton Associates inc. employs 40 professionals including his wife Debbie who has won numerous accolades for her financial services expertise. it s a great story Please turn to page 14 to see for yourself Almost every day includes a trip to the West Palm Beach branch of Tropical Financial Credit Union where every member of my family have been members since the early days of CU Times in1990 When we started Credit Union BUSINESS seven years ago it became a business member of TFCU and every transaction that has been made by and for CUB has gone through Tropical. Last i heard CUB is the only credit union trade pub that deals exclusively with credit unions and i m very proud of that fact Happy 7th Birthday to Credit Union BUSINESS This issue marks our seventh year in publishing this wonderful magazine. There have been many highs (and a few lows) during the past seven years but mostly it s been a whole lot of unadulterated fun for me and for our small staff of creative folks. We all look forward to growing our small business and i hope that we ll eventually have the same level of success as our cover subject on this anniversary issue Credit Unions Are My Life At the CUB offices we have a local computer genius by the name of Glen Merchant who knows more about fixing broken hardware and software than anybody i ve ever met. Consequently Glen is in and out of our office all of the time with connecting wireless printers and VOiP phones and all kinds of stuff that i don t quite understand. One day about five years ago he installed a new component to our computer system that needed to be password protected. He asked me for a password and i asked him to think of one. it was creditunionsaremylife. Pretty easy to remember eh Credit unions aren t really my life but like you i spend a major portion of my life reading about talking about and thinking about just about all aspects of credit unions. Get it for the entire executive team subscription 4 Credit Union BUSINESS July 2012 WITH T Sta C d t U p s s b s ati d ATM a ss v t a sa ti sp d a d sa ty C dtU h lps s d l v p s v y day W j y th h gh st l v l s v a d p ss al s th CU CU24 Th la g st ati al dt PIN d b t t Call 877-570-2824 d k Find out MORE J ffK dy P s d T Sta C d t U Oly p a WA t MORE th CU Call Judy Lazzerini toll-free email visit MORE OUR MEMBERS GET ACHIEVING SkILLS Embracing Change 8 tweaks to Help Strengthen your Management Skills ou may be a great manager of things. Are you a great manager of people The no. 1 reason people look for other work is due to poor management. it costs an organization from 125 to 200 percent of the salary to replace an individual. strengthen your management skills it may not take much on your part. Following are some tweaks you might want to consider embracing. Y By Holly Herman Tweak 1 Take time. You ve got lots of priorities every day. There never seems to be enough time to get everything done. A good manager makes time for his or her staff. spend at least 20 percent of your time focused on your staff. Make sure your employees know that they are your no. 1 priority. Sub-tweak ensure your staff has access to procedures and training. You want to be available to answer ques- Tweak 3 Walk around. sitting in your office sets you apart tions however you don t want to become a human procedure from your team. shooting off emails to staff who are just outside manual. your office is silly. Face-to-face discussions build deeper relationships with the people you work with. Get up from your desk Tweak 2 Meet regularly. Your employees want to know what and see what s happening. is going on in the organization. schedule weekly or bi-weekly meetings to update everyone on a regular basis. The meetings Tweak 4 Respect others. examine your expectations. Your may be five minutes or an hour. Avoid the trap of thinking there employees are busy completing their work they are not workis nothing to talk about. Your employees want to hear from you ing to serve you. if you expect staff to respond immediately to and want to be heard. every email you send your department s productivity will be cut in half. save up your questions for one discussion rather than several emails phone calls as questions occur to you. 6 Credit Union BUSINESS July 2012 Insights We think payments... What do you think As a thought leader in the payments industry we think...a lot. We think about payment adoption trends and how they impact your business. We think about new and innovative ways of accepting payments to help you build revenues. And we think about you and how we can help you compete and win. You ll find our thoughts on the payments industry at Vantiv Insights. Stop by and let s see how we can help you turn ideas into solutions. Vantiv Insights cubm-Insights Copyright 2012 Vantiv LLC. All rights reserved. ACHIEVING SkILLS Tweak 5 After work hours. You may be sending out emails or texts after work hours just to clean these thoughts off your plate. This translates to your employees that they must be available 24 7. Remember you re the boss so most employees will be pressed to respond to you even if you ve told them they don t have to. save up those thoughts in draft form when you start your next business day send them off. can enlighten you about what is happening in your department and organization. You may find ways to improve your department s efficiency and effectiveness. Tweak 8 Ask. Remember to ask your employees about how you can support them. What can you or the organization improve upon You may not get much dialogue at first keep asking and your employees will begin to open up. Have i left anything out Think about the greatest boss Tweak 6 interest. Find out the work goals of each staff member. This is a one-on-one conversation that takes place once a you ve ever had how did they treat you What behavior did they quarter not once a year. The goals are theirs not yours. Use the exemplify in the work place quarterly meeting to understand progress and see if something has changed. Do whatever you can to support your employees Holly Herman is a former CEO of two credit unions Chief of Staff for National Credit Union Administration goals and development. Chairman Johnson and currently an Achievement Coach Tweak 7 Pitch in. When things get hectic join in on the proj- helping individuals and organizations. She can be found ect. employees like to see that you re part of the process. Don t at or contact her at Holly be afraid to get your hands dirty from time to time. Helping out 8 Credit Union BUSINESS July 2012 WOrkFLOW Workflow Technology The Entire Institution Investment T By Michael Ball ighter budgets increased compliance requirements and greater competition are all driving credit unions to find new ways to perform more with less. Through all of this technology has unarguably been a valuable tool for automating business tasks and boosting operational efficiencies however many credit unions remain hesitant to invest in newer systems. Too many tech investments are limited to addressing a single task after all. While technology spending comes down to each institution s particular priorities investing in a solution that carries a significant positive impact across virtually all departments within the credit union is the wise business decision. For credit unions that want to increase productivity and enhance managerial oversight while also strengthening compliance or governance initiatives automated workflow is already proving to be a successful option for many institutions. no single credit union has the same understanding of electronic workflow and the benefits it delivers and that is fine. The need for automated business processes and electronic forms can differ between institutions though they must realize the value can be infinite across both member-facing and internal procedures. Consider how consumer lending and account origination change management requests marketing approvals and general HR tasks can be impacted with the removal of paper trails and addition of instantaneous workflow routing and that barely scans the surface of opportunities. Enhance any and all processes Perhaps the most valuable benefit of workflow automation is the immediate growth in productivity post implementation. enterprise-wide efficiency gains are ongoing highly desirable goals for every credit union and any business for that matter. For internal processes as well as those supporting member services implementing automatic document routing greatly accelerates tasks by directing documents to the right individual or department at the right time and then notifying that party of the action required for that document or document set to continue its predetermined path for completion. Workflow technology monitors processes and activities to ensure they are completed within the credit union s prescribed timeframes. if the established timeframe for the task passes without the required activity being performed the system can automatically notify management of the delay as well as reroute the task to another individual to complete the task. This level of time management naturally drives efficiency and results July 2012 Credit Union BUSINESS 9 WOrkFLOW Optimize Operational Governance and Compliance Regulatory compliance is a priority for all financial institutions today one that seems to become more complex and costly every day and with every regulation that passes. The increasing number of legislative changes makes it is almost impossible to keep up without assistance Dodd-Frank alone introduces 387 rules from 20 separate federal agencies. As a result credit unions must devote a great amount of their resources to implementing the necessary modifications required to fulfill each regulation tracking tasks and deadlines and reporting countless pieces of data. Compliance requirements are extremely time sensitive leaving little room for mistakes or obligatory tasks. Under the Mortgage Disclosure improvement Act (MDiA) financial institutions must provide disclosures to borrowers within three days of receiving their loan applications. Apply automated workflow to this environment and now the institution is assured that each step occurs on time as prescribed. Moreover imaging systems capture and archive all documents as permanent records making every document easily accessible at any moment. Automated workflow produces an audit log of each step within a transaction which can be indexed along with associated documents for a more completed audit trail. This new approach to reporting gives credit unions peace of mind knowing that they are prepared for examinations upon a regulator s arrival. The ability to quickly produce documentation during an audit examination demonstrates that standard policies and established procedures are being adhered to on a consistent basis. Workflow technology can also help credit unions more strongly enforce their own established business policy and conditions as well as manage operational governance. Automating organizational processes from the on-boarding of a new teller to performing an audit review of a loan file ensures that each employee observes the same defined policies follows established guidelines and meets required deadlines for every service or transaction performed across the institution. At the same time management is given complete visibility into all business processes and activities to not only assess performance but also opportunities to optimize or refine process structure accordingly. Additionally workflow technology allows credit unions to take accuracy and efficiency into their own hands while taking paper documents out of their hands. in tasks being performed in minutes or hours versus days or longer which can be expected from traditional manual-based processing. Additionally workflow technology allows credit unions to take accuracy and efficiency into their own hands while taking paper documents out of their hands. such workflow incorporates electronic forms displacing the paper-based documents that drove what were previously manual-based processes. Also referred to as intelligent or online forms they allow for work to be completed more intuitively securely and with fewer errors. Manual processing and shuffling paper from one employee to the next is risky as it is very easy for a document to get lost and never make it to the next individual or be significantly delayed. Think of the physical transport of loan documents from a branch to the lending department or to underwriting. electronic forms remove the opportunity for pages to go missing when passed between automated workflow. Recently a credit union employee shared the challenges his institution once had keeping up with the multi-point process and multiple forms associated with its skip-a-pay payment deferral program. Prior to implementing workflow technology steps were routinely forgotten time delays occurred and errors were often made. By removing manual steps however the credit union streamlined its decisioning process to ensure more timely completion of all appropriate system updates. Credit union executives attribute the program s improvement and ongoing success to workflow technology. 10 Credit Union BUSINESS July 2012 WOrkFLOW and complex workflow can change this too. streamlining any internal operation from payment deferrals to plastic issuance gives employees more time to devote to quality member service. And most importantly automated workflow allows credit union employees to provide a faster and more pleasant member experience. electronic forms can be created for virtually any process or member service operation for any need and any user to aid every department and process within the institution. Whether a member is opening a new account or applying for a mortgage loan creating a positive technology-driven experience and relationship will ensure that member returns to your credit union for his or her next financial decision. Today s credit unions must commit to innovation and leverage contemporary technology to remain prosperous and relevant to the member community. Adopting workflow technology as a next-generation solution can significantly increase productivity improve compliance and governance initiatives and extend greater visibility for management into the activities and processes within an operational environment. Workflow can be applied to virtually any business function with the same level of positive results obtained over and over again. At the end of the day all of the value that can be delivered by workflow will not only drive key benefits but it will also ultimately drive a reduction in total operating costs. As credit unions focus on serving their communities while boosting membership consider workflow technology as a short- and long-term positive investment. Michael Ball is vice president of product strategy for Linden N.J.-based Integrated Media Management. The company develops and delivers innovative technology than enables financial institutions to streamline business operations and processing environments through electronic document presentment workflow automation and Web tablet and padbased electronic signatures. Electronic forms can be created for virtually any process or member service operation for any need and any user to aid every department and process within the institution. Proactive Fraud Prevention Credit unions require systems that maintain an interest in protecting both their reputational and financial risk in addition to members personal assets. As security concerns grow for both credit unions and consumers the implementation of proactive fraud prevention measures is essential and workflow technology can be a valuable component of those objectives. it provides detailed logs identifying when and where action was taken and by whom for each document as it travels through the process stream. Having greater insight to every form because of comprehensive fully accessible records acts as a silent alarm for internal fraud detection. Add to that electronic forms and automated document archival promote a greater sense of protection for all. switching from paper documents boosts a credit union s level of security in the ability to set user controls for data and user access have documents transferred automatically between only the necessary parties for each process and eliminate the physical open storage of confidential information in-branch. Much of the same benefits carry over to members who additionally are assured sensitive documents remain safe and on time for delivery without any of the associated risk with documents traditionally sent via the mail or fax. Upgrade member satisfaction Consumers today require the utmost convenience in every aspect of their lives and their expectation for banking is no different. Certain processes such as loan closings are lengthy July 2012 Credit Union BUSINESS 11 UNDEr THE HOOD Leaps and Bounds D. Hilton Associates Inc. Grows and Changes with the Credit Union Industry A look at the man behind the industry s first full-service consulting firm how it s stayed ahead of the curve and the future of the industry. D By Tim O Hara avid M. Hilton founder and President of D. Hilton Associates inc. is renowned for his insight on industry trends and his company s ability to offer innovative solutions to help credit unions stay competitive in the market s constantly changing conditions. D. Hilton Associates is a management consulting firm that became an inc. Magazine 500 company in less than five years. The new York native Ph.D. and former credit union CeO has been a part of some of the industry s greatest successes controversies and innovations during a career that shows no signs of slowing down. Hilton began his career in banking. After graduating from City University of new York he worked for Bowery savings Bank while completing his MBA. His transition into the credit union industry happened by chance after seeing an advertisement for one of the nation s largest credit unions located on Long island. Tired of the commute into the city the job was intriguing because it would reduce his travel time considerably a perpetual career goal for most new Yorkers. He joined Bethpage Federal Credit Union during a time when the industry was known for its plain vanilla approach to financial services. We did not have checking accounts ATMs or any type of brokerage or insurance services. Remote delivery consisted of a rotary dial phone. But i had a feeling this was going to be a growth industry recounts Hilton. During his tenure at the organization Hilton rose to the no. 2 position and became known for process improvement and David M. Hilton Founder D. Hilton Associates technology innovation. He understood that credit unions would need to improve their delivery systems to compete with banks. i recall going to a big presentation at Diebold s corporate headquarters in Dayton Ohio in the late 70s to evaluate a brand new automation concept. They built a wooden replica of an ATM and had a guy in the back with a fistful of 20s. After 12 Credit Union BUSINESS July 2012 UNDEr THE HOOD punching in a few numbers (they didn t call it a Pin) into a fake keypad the guy handed you some bills through a slot. i bought 10. Knowing his ultimate goal was to become a chief executive however he began to field offers from credit unions around the country. There were not really executive recruiters who understood credit unions in the early 80s Hilton recalls. Most boards ran ads and screened candidates themselves with mixed results. Hilton thought the process could be improved and the genesis for what would soon become D. Hilton Associates was born. He was 30 years old when he accepted a CeO position for a 120 million new Jersey based credit union with a military field of membership. Regulators were involved at the time but i was sure that the organization was going to be fine Hilton recalls. However after immersing himself in the organization Hilton realized he had inherited a credit union with negative equity little cash and dim prospects for income. Within 24 months Hilton had returned the organization to profitability. it was a lot of hard work but i hired some really talented people to help me and we made it work Hilton remembers. i realized that these were the types of individuals that all credit unions were going to need to be successful. However there was no process for identifying the right individuals and matching them to the credit unions most in need of their capabilities. Realizing that he loved problem solving and working with Boards he decided to establish D. Hilton Associates inc. focusing executive recruiting and iT consulting. He had a full roster of clients on his first day in business. Many people say that attending a credit union conference as a vendor is a significantly different experience than as an executive. Hilton is no exception but his story has a unique twist. i knew that credit union conferences had to be a focal point of my marketing effort. i did not realize however it would be where i would end up meeting my future wife at a conference in Reno Hilton said. At that time Debbie Hilton was running a very successful bond brokerage business in Houston. As they made plans to marry David relocated to Houston where the company remains today. Our focus is assessing a credit union s culture listening to what a board wants in the next chief executive and then identifying a candidate who will thrive in that environment. David M. Hilton D. Hilton Associates began as an executive recruiting firm in 1985. During the last 27 years the firm has been involved with many of the high profile executive job placements in the nation. Hilton says Our focus is assessing a credit union s culture listening to what a board wants in the next chief executive and then identifying a candidate who will thrive in that environment. Hilton adds We are in the business of putting executives into their dream jobs and identifying the ultimate candidates for credit unions. That is why we were the first firm to offer multiyear guarantees on our placements. When you have your dream job you re not going anywhere and when a board has its dream candidate they are not about to let them leave. Hilton s unique ability to match a credit union s culture with one-of-a-kind candidates has established D. Hilton Associates as the industry s foremost talent incubator. While i m proud of the number of executives we place at credit unions who ultimately retire where we place them i am equally proud of our consultants who move on to become credit union executives. At last count 14 former D. Hilton employees have moved on to become credit union chief executives and 10 have become senior executives attesting to the fact that Hilton has a pulse on what the industry needs. Hilton says We pride ourselves on becoming trusted advisers for our clients. so when a credit union works side-by-side with a D. Hilton employee it is only natural that job offers follow. eee D. Hilton Associates Today With more than 40 employees D. Hilton Associates provides services to credit unions throughout the United states. Clients range from 20 million in assets to more than 8 billion. Hilton July 2012 Credit Union BUSINESS 13 UNDEr THE HOOD Debbie Hilton D. Hilton Associates We deliver peace of mind to boards by creating retention and retirement plans that ensure senior management continuity. And that is incredibly rewarding to me when we can relieve some of the pressure boards face today. Debbie Hilton was also noted in 2010 as one of the Top 100 independent Advisors in the nation and was appointed to the LPL Financial executive Council in 2011. John Andrews was the third employee to join the company when Hilton hired him in 1986 to build the firm s Compensation Practice. Today the practice focuses on executive and staff compensation variable pay design performance management succession planning and governance training. Andrews says We cherish our independence and i believe our clients understand and appreciate the transparency our independence provides. Andrews notes that D. Hilton does not seek endorsements or partner with trade associations or other third-parties like accounting firms or insurance companies that could bias their work. We are advocates for pay-for-performance and competitive pay practices at all levels of an organization. We believe a credit union has a right to attract and retain individuals who create the best experience for its membership. We stand ready to defend the reasonableness of pay actions that deliver this value proposition. Janice shisler senior vice president of executive recruiting joined D. Hilton Associates in 1998. shisler is well known throughout the industry thanks to her robust network of contacts and unique ability to help executives make career decisions. she says it is so rewarding when an executive realizes his or her ultimate career aspiration and that we had a hand in making that happen for them. adheres to three basic tenets and holds his employees to the same code Do not hesitate to offer clients solutions that may be out of their comfort zones. strive to become a trusted advisor by providing sound data and analytics from which credit unions can make confident decisions. Respect the client s governance model it is their credit union not ours. D avid Hilton credits his senior management team in helping him expand the firm over the years. Debbie Hilton is a seasoned credit union veteran in her own right. serving as executive Vice President for D. Hilton s Retention and Retirement (seRP) Practice she has been instrumental in the implementation of market competitive retention programs for some of the largest credit unions across the nation. Our industry has some amazing talent and progressive credit unions are now doing everything possible to retain those executives says Debbie Hilton. We deliver peace of mind to boards by creating retention and retirement plans that ensure senior management continuity. And that is incredibly rewarding to me when we can relieve some of the pressure boards face today. in 2011 Registered Rep a financial services industry publication recognized Debbie Hilton as one of the Top 50 independent Broker Dealer Women Advisors nationwide. she 14 Credit Union BUSINESS July 2012 UNDEr THE HOOD shisler believes D. Hilton has modified its methodology through the years to accommodate the industry s changing needs. On some days it feels like we are doing forensic recruiting as we go beyond a candidate s basic background to evaluate their success (or failure) during tough economic times. Our goal is to be innovative in sourcing candidates and matching the right candidate to a client s unique needs. Brian Kidwell senior vice president has been with the company for 11 years and agrees with shisler in regard to providing quality deliverables to clients. D. Hilton provides credit unions with a fresh perspective says Kidwell. Our work is never routine. Credit unions partner with us to better understand the changing environment they are facing and how to better compete in the marketplace. The industry has matured rapidly. Credit unions are becoming much more progressive in their strategic thinking. They are adapting more quickly to the changing consumer. John Andrews Executive Vice President of Compensation D. Hilton Associates The Future D. Hilton executives are continuing to prepare for future industry changes including dramatic changes to credit union boards. Despite the significant time commitments David Hilton notes that credit unions continue to be successful at recruiting people because of the volunteer board concept. Hilton states it is such a responsibility to serve on a credit union board. Many people do not have the ability to give up their time like they did 25 years ago. However credit unions continue to successfully find volunteers to serve because the credit union philosophy--people helping people--resonates with many. One welcomed change that Hilton notes is the overall diversity of credit union board members since a number of credit unions now have community charters. i think diversity in We cherish our independence and I believe our clients understand and appreciate the transparency our independence provides. John Andrews credit union board members is a great benefit to credit unions as a whole says Hilton. An increase in community charters has definitely impacted the diversity of the industry opened up membership opportunities and increased credit unions presence within the financial services industry. Brian Kidwell senior vice president says that D. Hilton continues to have its pulse on shifts in the industry. When regulation opened the door to community charters D. Hilton Associates created the first charter application ever and has since completed hundreds of applications leading to a massive expansion of the credit union movement says Kidwell. More recently many of our clients have needed an independent set of eyes to review potential acquisitions of troubled credit unions. in that role we are able to help our clients make better strategic decisions based on the risks and opportunities that are presented. As for the future Kidwell predicts continued consolidations as credit unions look to gain more scale and efficiency in the face of compressed margins. This will result in a stronger industry with higher member value says Kidwell. Perhaps the biggest change the D. Hilton Associates team sees for the future comes with the aging of the executive workforce. David Hilton expects about ninety percent of CeOs to retire over the next five to seven years. We are going to see a massive turnover Hilton says. We are going to have to look for talent within the credit union industry as well as outside industries or actively work on succession before retirements occur. Of the last 15 searches that D. Hilton has completed 12 of them resulted in individuals in no. 2 positions being promoted eee July 2012 Credit Union BUSINESS 15 UNDEr THE HOOD Janice Shisler Senior Vice President D. Hilton Associates Brian Kidwell senior vice president D. Hilton Associates to a CeO position. However i think there will come a point that there will be a talent shortage in the industry and we will have to find a greater number of candidates from outside industries for CeO positions says Hilton. in fact Hilton goes on to state that the current large number of open positions in the credit union industry is an indicator of the need to look outside the industry for new talent. since finding good talent is paramount to a credit union s success Hilton believes that credit unions will need to be more proactive in seeking and retaining talent. if they have good people they need to do whatever they can to keep them. everyone talks about the importance of regulatory issues and i will not make light of those. However i think just as big of an issue in the credit union industry is human resources--and this is an issue that is going to keep getting bigger. This is the first year that the Baby Boomer generation is turning 65 and credit unions are not thinking about this issue as much as they should be. Credit unions do not do as good of a job at succession planning as they do at disaster training which needs to be addressed. if you have good people on staff you need to figure out how to keep them on staff says Hilton. Hilton states that banks are increasingly hiring good talent away from credit unions and he attributes this to a shortage of talent in the banking industry. He says Banks recognize that credit unions have an incredible amount of talent and they want to tap into that expertise. in light of this Hilton s advice for credit unions is to retain those people who run the organization and who run it well--those who do the job in a way that provides excellence. 16 Credit Union BUSINESS Do what you can to keep those people Hilton stresses. Compensation is a motivator and we at D. Hilton Associates are knowledgeable of those compensation trends. My advice for all credit union boards is to keep up in the market and ensure your credit union s compensation philosophy is competitive. shisler agrees with Hilton that there has been an evolution of recruiting and compensation changes in the industry. she has seen an increase in the necessity for recruiting outside of the industry to fill open positions. Credit unions are seeking talented individuals from other financial institutions and this is a definite shift from the past where credit unions were focused on finding talent within their own industry. The focus now is to seek individuals who bring a depth of experience in leadership vision and growth opportunities from high-performing organizations says shisler. One of the most significant changes in the industry according to Hilton is that as talent in the credit union industry becomes younger incentive plans will become more dominant and larger in percentage. Younger employees do not have a problem taking risks for a larger potential gain Hilton explains and therefore they believe in the importance of incentive plans. so what do all of these shifts in industry compensation recruiting and incentive plans mean for D. Hilton Associates We are excited about the future says Hilton. While there is considerable uncertainty right now about what the future of the industry will look like we will continue to position D. Hilton Associates to help credit unions evolve with the marketplace. in the end we will continue to be successful together. July 2012 COMPENSATION Incentive Compensation If you Build It Right Results Will Come e By Adam Zelinsky very credit union has goals objectives a vision for where it wants to go and how it will best serve the needs of its members. The development of this vision is one of the most important jobs that the board undertakes. in setting that vision they must also develop a plan to get there. A well-structured strategic total compensation program for the leadership team can assist the board in creating alignment between its vision for the credit union and the reward to the executive team for achieving it. Traditional compensation structure tells us that there are five potential components to a total executive compensation program base salary short-term incentive programs perquisites longer-term incentive plans and retirement income. each has a role in serving to attract retain incent and reward the executive team and when structured strategically will result in a shared vision by the executive team the board and most importantly the members. in a period of increased scrutiny in the credit union marketplace and abundant competition for executive leadership across the financial services industry the integration of these programs into a total compensation package that supports the credit union vision will serve all constituents well. While each component contributes to the overall effectiveness of a compensation package incentive programs (both short-term and long-term) offer a unique opportunity to incent the executive team and propel the credit union to meet its organizational goals. it has been said you get what you pay for. if an incentive program is properly structured the executive is paid for tangible measurable performance the objectives articulated by the board are met or exceeded and the members are served. When objectives are financially measurable the targets are known and when achieved the team responsible shares in a small part of the financial success of the credit union. everybody wins. Exploration A critical first step in the development of a strategic incentive plan is an environmental scan of the organization and marketplace. This will determine whether a performance-based incentive plan is appropriate and which goals and objectives should be set for the executive team to best serve the needs of the credit union. in the not too distant past retrospective bonuses for a job well done without any pre-determined goals and measures were the norm. in The 2011 survey employee and executive Compensation and Benefits for the Credit Union Movement incentive payments are showing a trend away from a retrospective calculation tied to base salary and toward an evaluation of preset and definable performance criteria. Trial Once it is determined that a meaningful and measurable incentive plan can be designed to align the interests of the executives with the success of the credit union the next step will be for the board to determine what performance will be rewarded and what the targets are for an award to be given. in short what does the plan intend to accomplish establishing the specific metrics that will be used to grow the credit union meet the requirements of the membership and improve other areas deemed a priority to the credit union is key. in the 2011 survey 58 percent of respondents utilized loan growth as an incentive factor and 53 percent tied their incentive payments to a return on assets measurement. Membership growth and membership satisfaction were both employed as metrics by 39 percent of survey participants. The unique challenges of the credit union must be addressed. A cookie-cutter approach in this design phase will not result in an incentive program that works. The plan must be meaningful measurable attainable and affordable. Credit Union BUSINESS 17 July 2012 COMPENSATION An additional question the board should ask itself is which members of the executive team should be eligible to participate. This very well may go beyond the CeO and at the very least the CeO should have the ability to assess and reward his or her direct reports in a similar manner to the way the board will assess and reward the performance of the CeO. Opening participation in the plan to the right members of the executive team must be a part of the strategic plan development. Lacking the right resources Implementation Once a plan is designed and pre-set metrics are fine-tuned and finalized a diligent communication campaign is necessary to ensure that all participants know what is expected and how their performance will be measured. Participants and potential candidates must clearly understand the plan s parameters and intent and have ample ability to successfully achieve the designated incentive levels. decisions to make important That Which is Measured is More Likely To Be Achieved An evaluation of the success and or failures of an incentive compensation program should be done regularly to ensure it not only maintains its meaningfulness to the executive team but its purpose in compensating the credit union s key talent for carrying out the strategies that translate to financially sustainable results. Were the performance metrics appropriate Were your goals achieved Will new metrics be installed going forward Regardless of the increase in demand for executives and the changes in the way they are compensated the key to a successful executive compensation package is an integrated approach that works in a complementary fashion with each element treated and negotiated in the context of the others to achieve the desired goals. The unique role of a properly designed incentive program can serve to support the credit union s strategic objectives both in the short-term and the long-term. Adam Zelinsky has more than 12 years in the executive compensation and benefits industry and is responsible for overseeing and managing all aspects of the day-to-day operations at ECS ensuring they are in sync with the organization s strategy. Adam contributes to short and long-term organizational planning and oversees the firm s long-term strategic objectives. 18 Credit Union BUSINESS July 2012 The best decisions can only be made using the best resources. For nearly a decade The Survey has been providing credit union boards with the knowledge they need to structure executive compensation and benefi t plans to attract retain and reward their key value creators. Participate Now Visit and click on the The Survey 2012 Questionnaire link. For every credit union that participates ECS will donate 10 to Credit Unions for Kids. Not only will you be helping to create a valued resource for the credit union movement you ll also be helping to raise funds for a very worthy cause. Publishing Dat Date Novem Publishing evel Readers. of 8 200 C-LC-Level Readers. Mailed to entire CU Businesiness ulation ion of 8 200 Mailed to entire CU Bus s circcirculat ders. E-mailedailed tousands of digital E-CE-Crea readers. E-m to tho thousands of digital UB UB long r long on on the all yeayear And Andthe web all 2013 CU BUSINESS DIRECTORY LISTING FORM 2013 CU BUSINESS DIRECTORY LISTING FORM EARLY BIRD SPECIAL EARLY BIRD SPECIAL 1 1 2 e November ber2012012 IF SUBMITTED BEFORE AUGUST 5 5 2012 IF SUBMITTED BEFORE AUGUST 2012 FROM ENTIRE ORDER FROM ENTIRE ORDER SAVE 15% SAVE 15% LEADErSHIP Individuality and Conformity What Leaders Can Learn From Tim Tebow By Dr. Sandra L. Torres T he name Tebow a proper noun has now become a verb. There may be some who do not know who Tim Tebow is but they do know what it is to tebow. Tim Tebow a former Heisman Trophy winner (2007) and now a new York Jets quarterback popularized the term tebowing to mean getting down on one knee and praying at football games. To Tebow a highly accomplished athlete also known as being devoutly religious tebowing is merely a personal act of faith. Although many other players have demonstrated similar gestures that could be considered acts of faith or thanks to a higher power such as pointing a finger to the sky or falling down on both knees or even clasping both hands as if in prayer none has had the effect and impact of inspiring so many as tebowing. Although Tebow isn t trying to impose anything on anyone he is making a statement that emphasizes individuality and leadership by being upfront and actually living his core values. Leadership Values and Individuality The term value is used regularly in the credit union industry core values member values value driven products and so on. What about leadership values Depending on the person the organization and the culture some leadership values are more prominent than others. As an individual you know what you personally value. However most organizations have a firmly established culture created by their own value system. it is possible to conform and maintain harmony with your organization without it becoming a tug-of-war with your individuality. The boldness of individuality is a personality trait that many often praise but for others it can be intimidating. individuality Emory the author s granddaughter celebrating her Quinces (15th birthday) tebowing in the Piazzale Michelangelo Florence Italy. can set you apart therefore leading you to conformity. Hopefully you are part of an organization with values congruent with your own. if not all is not lost. Look closely for any disconnects between what you value and the actions of people in your Credit Union BUSINESS 21 July 2012 LEADErSHIP organization. if they are not in absolute contrast seek ways to express your individuality that will help you lead and influence others and at the same time focus on the collective task at hand. Make Your Mark Leaders know what they value. They also recognize the importance of their behavior to their organization and their followers. Leaders who cannot get past their personal beliefs or goals will have a difficult time creating synergies with others in the organization. similarly organizations that demand adherence to their way of thinking limit themselves to objectivity in dealing with leaders who can bring new ideas and possibilities to the table. Organizations look to their leaders for change and creativity. Therefore conformity in any extreme is bad for any business. The best leaders exhibit their individuality in their leadership style and actions without compromising their values or their integrity. The best organizations are open to individuality and do not pressure leaders into a groupthink situation. Your leadership values and individuality should be visible to others by living them in your actions every single day. Are you prepared to make your mark Just like Tim Tebow you can inspire others with your individuality perhaps start a new trend like Jonesing or Fernandezing Conformity Versus Individuality Conformity is not usually viewed as a leadership characteristic yet it can mean holding on to traditional values which many leaders do. Conformity and individuality are not mutually exclusive. Conformity is perfectly natural and so is demonstrating your individuality. Conforming to group norms and rules is necessary to create consistencies of behavior and establish a desired organizational culture. But conformity can become sort of a psychological shelter when it comes to acceptance. Leaders should question whether they are taking shelter and following a group to gain acceptance possibly becoming a clone or are they seeking to leap forward to make a mark and establish their individuality. everyone naturally wants to belong and be accepted by others. However in an organizational context attaining this acceptance means going further than your natural conformity and aligning yourself with the conformity of the organization. By following in the same footsteps as others you risk suppressing your individuality. Holding back your individuality and your own mind can lead to your extinction as a person. You are no longer yourself. There can be a balance between individuality and conformity and rather than strive for one extreme or settle for the other you should make a concentrated effort to find that balance. Conformity versus Individuality and Tebowing Tebow s act of non-conformity became a movement with its own identity. it created an unrelenting source of debate material. it was and still is controversial. Yet independent of the actions of others Tebow made his mark. He risked isolation expressed his individuality and gained acceptance of not only his team but of many followers who joined in the tebowmania. even though some may have tebowed for show others did so out of admiration and solidarity. The tebow take-away is an observable fact Tim Tebow demonstrated his individuality and leadership qualities by sticking to his core values and at the same time gained a countless number of followers. Consider his own words if you believe unbelievable things can sometimes be possible. 6 Ways to Express Your Individuality and Attract Empowering Situations 1. Lead by example and observe the response of others. 2. Own your choices and be responsible for your thoughts feelings actions and relationships. 3. Let your words be direct and totally sincere. 4. Listen compassionately to the concerns of others. 5. express your own opinions but be respectful of the opinions of others. 6. Be true to yourself. Author speaker and leadership consultant Miami based Dr. 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 people helping people. Leadership Si offers bilingual leadership expertise via her writings training workshops and speaking engagements. Her specialty is women s leadership. Get to know her better by visiting 22 Credit Union BUSINESS July 2012 Download a complimentary white paper. adrenewal CREDIT DEBIT ATM PREPAID P2P ANALYTICS CU CONTENT Auto Loans The Marketing Campaign that Never Ends Have auto loans become a commodity L By Laura Enock an auto loan is really not all that complicated. Find the right person or vendor to make it happen because the technology is there and it s so easily available. Also consider delivering content to members via mobile. Ask members to text to a number you set up and have it respond with little-known key aspects to look for when purchasing a preowned vehicle. Or the seven longest-lasting cars in the United states. Or what you should never say when negotiating with an auto dealer. Or anything else that would be of interest to your members. email is another great option for auto loans. Because content marketing isn t a one-time deal and the idea is to build credibility and loyalty by being the ongoing source of information for your members you want to include information. it doesn t have to be full articles. A brief tip or idea will do. But do it on an ongoing basis. if your email newsletter is weekly or bi-monthly you ll want to include a section on cars--buying them caring for them saving on gasoline anything auto-related. When members begin to realize what a wealth of information you ve been providing they ll think of your credit union first when they start thinking of buying a car. social media has its place in auto loan marketing too. But please please please don t tweet or post something to your Facebook page that says something like Great rates on new and used auto loans at ABC FCU even announcing your auto loan promotion on social media platforms should be done carefully. You don t want to become known as one of the many boring promotional credit unions that nobody wants to follow. instead how about asking members about their auto buying experience Get a conversation going because that s the strength of social media. Ask members to weigh in on their favorite ike it or not your members may love their credit union but if a bank auto dealer or anyone else has a lower interest rate that love will not be strong enough to keep their auto loans at your credit union. Other than members who may present a credit risk the member with perfect credit knows she can shop around-- and she will. so yes in a sense auto loans have become a commodity and members can get them pretty much anywhere. in that case what makes your credit union choice no. 1 What makes members think of your credit union as soon as the thought of buying--or refinancing--a car comes to mind in a word information. Yes in this era of information overload you can still be the best information provider on car loans car buying and everything else that s car-related. so while you may not win the rate game you ll still be in a position to compete for the loan--and in today s market that s saying a lot. if you re doing a mailing take a moment to step back and see it from your member s perspective. Another full color glossy brochure saying the recipient is pre-approved for up to 32 000 Lovely. Join the stack in the trash can. But what if the offer provides tips and techniques on buying that next car truck or motorcycle What if it gives members ideas and advice on how to shop what to watch out for what the dealer invoice really means and what to look for What if the mailing was so conveniently sized that members just stuck it in their pockets--or wallets--and took it with them when shopping for a car--giving you the chance to be present when they re thinking about a loan Of course direct mail isn t the only option. if you ve been thinking about getting into mobile your next auto loan promotion is the perfect time to debut. A mobile app for applying for 24 Credit Union BUSINESS July 2012 CU CONTENT buying experience ever on what their experience has been with local dealers on whether or not they d buy a car for a teenaged child or whether that child should participate in making the payments. in this case your members are providing the content. The only catch is that you have to get them started. To do that brainstorm for conversation starting ideas. Do this quarterly and come up with at least one car-related topic per week. Look at what other credit unions are doing. Read up on the specific topics you want to talk about and word your questions or posts in a way that makes people want to respond. Being controversial can work wonders Build in a contest if you like to draw more attention and participation. Find videos infograpics or just humorous pictures and ask members to weigh in. it s time to acknowledge the fact that your members have choices. Coming to the credit union for an auto loan is no longer a given. (Was it ever ) But by being there for members before they need you by providing them with ongoing unique information on everything auto related by positioning yourself as the auto loan source your members will feel like they re in good hands when they come in to apply for a loan. And they ll want to get that auto loan from your credit union. 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 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 MARQ73-05-11-06202011 CU Ad July 2012 Credit Union BUSINESS 25 CFO CUrrENCY Interest rate risk Policy and Program T By Emily Hollis he nCUA has issued a final rule requiring federally insured credit unions to develop and adopt a written policy on interest-rate risk management as well as a program to implement that policy. The rule will be effective sept. 30 2012. According to the nCUA the iRR policy identifies measures monitors and controls iRR and is central to safe and sound credit union operations. nCUA states each credit union should use the guidance in this appendix to formulate a policy that embodies its own practices metrics and benchmarks appropriate to its operations. nCUA s guidance on an iRR policy is very similar to the ALM policy. The major difference is the iRR policy solely focuses on interest rate risk of the entire balance sheet and doesn t include verbiage that might address capital growth income goals or concentration limits. Credit unions have the option of creating a separate iRR policy or incorporating the required components into the ALM policy. Most of our larger credit unions are incorporating a separate iRR policy which references items in the ALM policy. ALM First Financial Advisors starts with a sample iRR policy then customizes it for each client to either include the credit union s pre-established ALM guidelines or to reference items from the ALM policy. The nCUA is providing guidelines for what the Agency wants included in the iRR policy. Within these guidelines nCUA suggests limits set by conducting the Gap net interest income (nii) changes and net economic value (neV) analyses emphasizing that the examples are for illustration only and that management should establish its own limits that are reasonable supported. Working with Examiners in the Federal Register Vol. 77 no. 22 nCUA cites guidelines for the iRR policy including that it does not seek to endorse certain iRR measures measurement techniques or assumptions over others. For example nCUA does not prescribe valuing non-maturity shares at par but it acknowledges that such measures and the use of historical rates scenarios may provide useful information. Part 741.3 lists the criteria required for a written iRR policy. Appendix B to Part 741 gives guidance and embedded in it is a questionnaire that lists guidelines to include in the policy. in the register nCUA the commentary in the questionnaire emphasizes that the guidance items are not mandatory. Credit unions are encouraged to review and discuss these guidance items with their examiners. There is another interesting change remember those five ALM tests that were cited in an examiners guideline paper 26 Credit Union BUSINESS July 2012 CFO CUrrENCY Because of this and other balance sheet traits one test ALM First believes that more credence might show a minimal interest rate risk profile and the other shows high. (intuitively this seems flawed examiners have writshould be put in the NEV analysis ten up credit unions as such however it is not.) While both without it long-term cash flows and should be performed ALM First believes that more credence should be put in the neV analysis without it long-term cash embedded options (i.e. caps) are not flows and embedded options (i.e. caps) are not adequately adequately tested and measured. tested and measured. Because the nCUA does not have prescriptive iRR measurements listed in the Federal Register we strongly suggest adopt(http Resources Documents ALM AiResQues- ing a measurement that is based upon the old Office of Thrift They don t exist in Appendix B which we ap- supervision (OTs) method. The OTs adopted a measurement plaud. Appendix B cites iRR policy limits with examples using table that defines different degrees of interest rate risk. The OTs Gap nii asset valuation and the neV percent change and neV selected the neV ratio as the sole measure of risk exposure for ratio in the shock up 300 scenario. They doUpnot bps Post-Shock - NEV Ratio list what is institutions within its 101-200 bp Interest Rate Sensitivity Measure no- longer ex- Above 400bp jurisdiction. While the OTs 301 400bp 300 Under 100bp 201-300bp Over 10% Minimal Minimal low or high interest rate risk but just use these measures as ists theMinimal concept of modeling and risk measurementMinimal in this Moderate used 6% to 10% Minimal Minimal Minimal Moderate Significant examples. They also do not include net income volatilitytoas an guideline is ideal because it captures both the sizeSignificant of economic High 5% 6% Minimal Minimal Moderate 4% to 5% Minimal Moderate High example which we applaud. capital and its sensitivity to changes Significant in interest rates.High 3% to 4% Moderate Significant High High High As an example anHigh institution that has a base neV ratio of High Below 3% High High High What to Include in the IRR Policy Summary of OTS Guideline for the Level of Interest Rate Risk Interest Rate Sensitivity Measure Up 200 bps Post-Shock - NEV Ratio The nii simulation replicates earnUnder 100bp 101-200 bp 201-400bp Above 400bp Over 10% Minimal Minimal Minimal Moderate ings over a period of time. it does not 6% to 10% Minimal Minimal Moderate Significant 4% to 6% Minimal Moderate Significant High capture cash flows beyond the iniBelow 4% Moderate Significant High High tial horizon period of the simulation. Therefore market value volatility of longerSuggested NCUA Guideline for the Level of Interest Rate Risk term cash Interest Rate Sensitivity Measure flows is Up 300 bps Post-Shock - NEV Ratio Under 100bp 101-200 bp 201-300bp 301 - 400bp Above 400bp not taken Over 10% Minimal Minimal Minimal Minimal Moderate 6% to 10% Minimal Minimal Minimal Moderate Significant into con5% to 6% Minimal Minimal Moderate Significant High sideration 4% to 5% Minimal Moderate Significant High High and subse3% to 4% Moderate Significant High High High Below 3% High High High High High quently its impact is not shown. Maximum rates that are embedded in loans and 10 percent and a post 200 bps shock. (The OTs risk measureinvestments such as adjustable-rate mortgages (ARMs) may ment table assumes a 200bp after shock value.) neV ratio of 7 Interest Rate Sensitivity Measure Up 200 bps Post-Shock - the modeled scenarios do not Under 100bp 101-200 bp Above 400bp not affect income projections ifNEV Ratio percent would201-400bp be deemed to have a moderate amount of interOver 10% Minimal Minimal Minimal Moderate generate interest rate paths higher than the contractual cap est rate risk. When using this table the institution would locate 6% to 10% Minimal Minimal Moderate Significant or level of rate restriction.toMarket value analysis captures the Moderate corresponding range for its post 200 bps neV shock in the the 4% 6% Minimal Significant High effects of embedded caps even when they are out of the money. Significant column of the table and follow the line to the right locating Below 4% Moderate High High first July 2012 Credit Union BUSINESS 27 CFO CUrrENCY This table tackles both the size of economic capital and its The NCUA believes credit unions have changes to interest rates in one test and eliminates the question of two neV tests and the potential of two separate outcomes. increased exposure to interest rate movements. This increased risk has Additional Guidance for Large Credit Unions heightened the importance of having The nCUA gives additional guidelines for larger credit unions strong policies and programs addressing which they define as having assets greater than 500 million. Again the Agency cites examples that credit unions should the credit union s management consider. These include validations and iRR tests using a variety of interest rate scenarios. Other suggestions include a separaof interest rate risk. the column that corresponds to its respective interest rate risk sensitivity measure. in the case of this example the 300 bps (10 percent 7 percent 3 percent 300bps) result falls in the 201 - 400bp column and dictates a moderate amount of risk. We suggest that the table be modified to up 300 bp movement with more categories as shown below. tion between risk-taking and risk measurement. The nCUA believes credit unions have increased exposure to interest rate movements. This increased risk has heightened the importance of having strong policies and programs addressing the credit union s management of interest rate risk. Emily Hollis CFA is a Partner with ALM First Financial Advisors LLC. 28 Credit Union BUSINESS July 2012 TECH BIz New Beginnings Farewells and By W.B. King H enry Miller once said if we are always arriving and departing it is also true that we are eternally anchored. One s destination is never a place but rather a new way of looking at things. Thankfully the credit union industry is anchored due to its guiding philosophy a member-owned democratically controlled financial cooperative. if you are reading this missive you too are a member of this eternal community. i ve had the distinct privilege to write for Credit Union Business magazine since its first issue which launched seven years ago a wild ride. Throughout the years i have written on various topics ultimately penning this technology column a position i ve grown accustomed to existing within. it is with gratitude and fondness that i thank my CUB colleagues as well as the countless executives iT managers and vendors i have interviewed. From this collective talent pool i have been able to tap into respective expertise in a collective effort to enhance my understanding of the often complex intersection between technology and credit unions. Ultimately this column had one specific purpose to share information with our readers our community. i hope these efforts pushed your ball further down the field and closer to the goal line. i will remain working and writing in this industry but in a different capacity. i do hope we have the opportunity to cross paths again in the not so distant future. To this end i always enjoy receiving e-mails and feedback. Before i bid a fare thee well i will once more share some of my thoughts on all things technology. After all that is why we are here. What is your Credit Union Direction The mass exodus of banking customers to smaller community banks and credit unions has been a hot topic and the statistics support the movement. A June report from Javelin strategy & Research noted that an increasing number of bank account holders are looking to take their money and run. Approximately 11 percent of those surveyed said they are very likely or likely to switch financial institutions in the next 12 months. These respondents were labeled vulnerable customers who also happen to be valuable customers as they manage a total of 675 billion in deposits. Four major banks were most identified in the report including Bank of America Chase Citibank and Wells Fargo. Citibank and Bank of America the report noted have a far higher risk of a customer flight risk. After last november s Bank Transfer Day i wrote that credit unions absorbed roughly 40 000 new members on that day. A CUnY survey found that since sept. 29 2011 when Bank of America announced it would charge a 5 debit card fee (since rescinded) credit unions gained 650 000 new members nationally. To place that in context that is more members that joined credit unions in total during 2010. it turns out that these statistics (and others that followed) may have been off. in June Consumers Union found that the reason adoption rates might be low is due to the ability of customers to effortlessly switch direct deposit and automatic bill pay transactions. Additionally some banks charge a fee to close the account. The publication surveyed 10 leading financial institutions (not credit unions) and found that clear instructions on how to exit the banking relationship were hard to find. now Javelin s survey also found that roughly 25 percent of Citibank customers and 21 percent of Bank of America customers are very likely or likely to switch primary financial institutions in the next year. This raises the question is your credit union ready to welcome banking customers July 2012 Credit Union BUSINESS 29 TECH BIz i have switched banking institutions and it was indeed a difficult process. While i had done my due diligence and prepared for the process the assistance provided by my new financial institution made all the difference especially their explanation of services. Recently i came across an article that featured Alabama and Florida credit unions taking bold steps to acquire banking customers via television commercials. One which ran in the Birmingham market depicted a young man walking down the street pointing out people passing by. He says sixty percent of people don t know what a credit union is. What if 60 percent of people didn t know what coffee is or what a car wash is or what pants are First Federal Credit Union hired an outside advertising agency to produce that advertisement and it paid off. While it first ran in september leading up to Bank Transfer Day after a few months the credit union welcomed 38 000 new members and increased their assets by an estimated 1 billion. DB2 relational database. The platform is scalable and can interface with a broad range of enterprise solutions. Additionally XP2 is available via service bureau in-house delivery or facilities management. XP2 is a proven solution with the efficiency-boosting technology and dedicated support staff necessary to help Tech Credit Union and other institutions like it achieve their goals for service and efficiency nasim said. XP2 from Fiserv provides a total account processing solution with the ability to interface with the broad and ever-growing list of value-added technologies needed to remain competitive in today s financial services marketplace. While 43 000 members is an impressive member roster Tech Credit Union like all credit unions is looking to remain viable in the marketplace. it is steps like these that position progressive credit unions to attain any and all market share made available to them. in short banking customers are looking for streamlined processes regarding financial accounting debit card services checking saving accounts and direct deposit mobile banking. To attain its goals Tech Credit Union also intends to implement Wisdom for financial management and ConvergeiT iVR for interactive voice response noted nasim. Additionally the credit union will add the integrated Desktop feature from Fiserv. This platform integrates between XP2 and its existing debit card processing solutions to deliver more immediate access to member profiles and enhanced service capabilities. The integration that XP2 offers with all functional areas in our credit union meets our needs and exceeds our expectations Hussey said. Our staff will have improved access to all member relationships as well as the ability to better analyze member data to offer relevant products and services. With another Bank Transfer Day on the horizon it s imperative to take advantage of the down time the summer affords and ramp up your existing member-enhancing technologies. As such when disgruntled bank customers knock on your door asking for directions (and they will) you can welcome them home. W. B. King has more than 15 years experience writing for business and technology publications. Email him at wb Tools of the Trade in speaking with c-level executives and vendors i hear more and more that the answer to the aforementioned question (is your credit union ready ) simply comes down to effective communication and sound technology. For the former it is advised to train staff members on the necessary protocols required to close a bank account with the top four banks listed above as well as regional banks with a large market share. This will take of the first part of the transition. The second part deals directly with the technology you have in place. There are many vendors offering software solutions and among them is the well-known Fiserv inc. While is some circles a household name there is no doubting the company s ability to provide sound technology solutions. Crown Point ind.-based Tech Credit Union a 305-million institution serving nearly 43 000 members in Crown Point ind. recently selected the Fiserv XP2(R) account processing platform. The level of Fiserv investment in XP2 is impressive and the functionality is indicative of that commitment said Mike Hussey Tech Credit Union s CeO. What exactly does XP2 do naseer nasim senior vice president Credit Union solutions Fiserv noted that XP2 account processing platform features an open tier member-centric Microsoft .neT architecture all of which is backed by an iBM(R) 30 Credit Union BUSINESS July 2012 MArkETING MATTErS On results By Tony Rizzo How To Execute The right Market Analysis To Achieve Your Strategic Goals s summer winds down most of us are turning our attention to strategic planning for 2013. For some this will mean looking at the market and making projections for the acquisition and retention of new customers within our branch footprints. These projections will then be filtered to sales and marketing with one mission hit the goal. How realistic definitive and meaningful are your projections Are they written to sound like this Achieve a 5 percent growth in new households year over year companywide. Or this increase total dollars at the ABC branch by capturing an additional 1 per potential dollar with current members and 2 per potential member. This will be achieved by selectively targeting the financial elite segment within this branch footprint. The latter is more tangible and definitive. it gives more specific direction. it tells your team Here are my expectations here is the target and here is the market. To get to the above goal we need to execute a precise market analysis one that not only gives your team direction but can be measured year over year. Here are the components of such an analysis. it s important to note this process is designed to be executed on a by-branch level and then rolled up to a corporate overview. For the sake of simplicity we will focus on one location. A they like to do in their leisure time How do they make financial purchases Two methods to determine this (and you can do both) are primary surveys and appending lifestage codes. i recommend both but will assume you are using life stage codes. There are a number of lifestage models available today. They describe household demographics (statistical data showing age income education etc.) and psychographics (attitudes values and opinions). This information is used in a wide range of applications including packaging pricing promotion and positioning. Append this data to both your existing membership base and potential market. Table one shows a simple analysis of a sample market. One of the goals for this Fi is to appeal to a broader market. Clearly by just this analysis the Fis market potential supports this goal (see the mass and emerging market indicators on the chart). This chart shows your market penetration vs. your Define who the current users of your product are. This goes potential. beyond the simplistic loans deposits services per member. What do your members look like How do they live What do Step 1 Who is your market 32 Credit Union BUSINESS July 2012 Emerging Market Now you know specifically who you major competitors are. Now you can better position your business. Mass Market MArkETING MATTErS M ass Affluent 82 3 507 594 1 969 312 24 016 1 538 282 18 760 1.87 M ass M arket 69 1 030 192 640 382 9 281 389 810 5 649 1.65 Em erging M arket 118 3 154 952 1 158 495 9 818 1 996 457 16 919 1.66 3.28 Mass Affluent Next look at your primary market s financial relationship with your credit union. The main reason to do this is to establish a benchmark for future comparison to determine if your efforts moved the needle. Table three shows an analysis of high-level household statistics for the selected life segments. Financial Elite Households Total Total Dep Avg Dep HH Total Loan Avg Loan HH Avg. Prods HH 55 4 690 786 3 802 963 69 145 887 823 16 142 1.60 Step 2 What is your market share Financial Elite Once you ve determined who you want to talk to you ll need to 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% know how much of that market you own and what is the growth CU-Aggregate 3 Mile Penetration Market-Aggregate 3 Mile Penetration potential. Using a wide range of data sources you can develop This chart shows your market penetration vs. your potential. some very precise and exciting analytics. Table two continues Step 2 What is your market share our lifestage analysis and shows need to know how much of that market Once you ve determined who you want to talk to you ll the market penetration of each you own and what is the growth potential. Using a wide range of data sources you can develop main precise and exciting analytics. some verylife stage category. Table two continues our lifestage analysis and shows the market penetration of each main life stage category. Branch M arket A Life Stage M arket Area Households M arket % CU Households CU % Opportunity % - M arket Penetration Avg. 2.64 3.07 3.13 Prods&Serv HH Combine life stage and MCIF data to build a benchmark profile. Step 3 Your potential for growth Step 3 Your potential for growth in this last step we will combine life stage MCiF demographic and psychographic data to analyze loan deposit potential and Mass Affluent 1 572 3.8% 82 6.2% 1 490 5.2% product penetration. The importance of this step is twofold. Mass Market 4 756 11.4% 69 5.2% 4 687 1.5% Emerging Market 4 571 10.9% 118 8.9% 4 453 2.6% One identify the profit potential of your efforts. Two further Now you know exactly who your target is and what is your market potential. focus your sales and marketing efforts to specific segments Continuing with this analysis one can determine the product potential in terms of deposits by competitor. In table knowsample bank has who your target is and our exactly plenty room for growth when Now you three that but knowing who the direct competitors are (bycomparedofto thereby lowering your overall marketing investment. market leaders. Not only the type what is your market potential. By analyzing credit data for your existing and potential members we can come up with the following chart. it simply Continuing with this analysis one can determine the product states that for every 1 you own in the market there are X potential in terms of deposits by competitor. in table three our this in potential LOAns waiting MCIF demographic and psychographic data to In last step we will combine life stage for your credit union. it does not analyze loan deposit potential and product penetration. The importance of this step is twofold. sample bank has plenty room for growth when compared to identifya CFO to quickly your efforts. Two further focus your sales and marketing One take the profit potential of determine the profit potential of successefforts to market leaders. not only that but knowing who the direct com- fulspecificacquisition campaigns. see table four for an analysis by loan segments thereby lowering your overall marketing investment. By petitors are (by the type of member you want) one can develop analyzing credit On average for every 1 this Fi owns can come up 8 in life stage. data for your existing and potential members we there are with the following chart. It simply states that for every 1 you own in the market there are X in potential products and delivery channels tailored to better position the potential loans from current members and 385 from potential LOANS waiting for your credit union. It does not take a CFO to quickly determine the profit potential of successful loan acquisition campaigns. See table four for an analysis by life stage. business. members. On average for every 1 this FI owns there are 8 in potential loans from current members and member you want) one can develop products and delivery channels tailored to better position Financial Elite 678 1.6% 55 4.1% 623 8.1% the business. 250 000 200 000 150 000 100 000 50 000 0 385 from potential members. Thousands For every 1 in loans you own you have this potential Members Financial Elite Mass Affluent Mass Market Emerging Market 7 6 13 7 Prospects 90 105 935 412 It s possible to double this CU s loan portfolio WITHOUT adding one new member. Now you know specifically who you major competitors are. Now you can better position your business. For every 1 in loans you own you have this potential it s possible double this CU s loan portfolio adding Now you know specifically who you major competi- because you haveto product does not mean the market wantsWiTHOUTprey to selling Just a it. Don t fall one new member. Next look at your primary market s financial relationship with your credit union. The main everything to everyone. Only sell what the market is buying. Table five displays the penetration tors are. Now you can better position your business. reason to do this is to establish a benchmark for future comparison to determine if your efforts rates for both personal checking and home equity loans financial models we can you Using credit data and additional for each life stage. This data tells moved the needle. Table three shows an analysis of high-level household statistics for the how many members and potential members have your specific products compared with your selected life segments. execute a by-product by-segment view across each life stage. market Em erging next look at your Elite M ass market sM financial relationship with share of that same product. This insight will tell you precisely what to sell to whom. Financial primary Affluent ass M arket M arket This tells marketing how to structure its direct marketing efforts Households 55 82 69 118 your credit union. The main reason to do this is to establish a Total 4 690 786 3 507 594 1 030 192 3 154 952 to maximize response and budget utilization. benchmark for 3 802 963 comparison to determine if 1 158 495efforts future your Total Dep 1 969 312 640 382 Just because you have a product does not mean the market Avg Dep HH 69 145 24 016 9 281 moved the needle. Table three shows an analysis of 9 818 high-level Total Loan 887 823 1 538 282 389 810 1 996 457 wants it. Don t fall prey to selling everything to everyone. Only household statistics for the selected life segments. 16 919 Avg Loan HH 16 142 18 760 5 649 sell what the market is buying. Table five displays the penetraAvg. Prods HH 1.60 1.87 1.65 1.66 Avg. 2.64 3.07 3.13 Prods&Serv HH Combine life stage and MCIF data to build a benchmark profile. Step 3 Your potential for growth 3.28 Using credit data and additional financial models we can execute a by-product by-segment view across each life stage. This tells marketing how to structure its direct marketing efforts to maximize response and budget utilization. July 2012 Credit Union BUSINESS 33 MArkETING MATTErS Interest Personal Checking 74.2% 80% 60% 40% 20% 0% Financial Elite Mass Affluent Area Penetration Mass Market CU Penetration Emerging Market 13.6% 65.8% 48.4% 36.6% 20.6% 10.2% 12.4% Home Equity 22.7% 25% 20% 15% 10% 5% 0% Financial Elite Mass Affluent Area Penetration Mass Market CU Penetration Emerging Market 11.7% 7.5% 17.8% tion rates for both personal checking and home equity loans for each life stage. This data tells you how many members and potential members have your specific products compared with your market share of that same product. This insight will tell you precisely what to sell to whom. These charts compare market penetration of checking and home equity compared to this CU. As you can see there is plenty of room for growth. While this process is not an easy one it is one that high performance credit unions do each year. it not only grounds goals and expectations in reality but provides direction for sales marketing and member service. Additionally this structured process establishes benchmarks for year-over-year measurement. 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. These charts compare market penetration of checking and home equity compared to this CU. As you can see there is plenty of room for growth. 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 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 MARQ73-05-11-06202011 CU Ad 34 Credit Union BUSINESS July 2012 CrEDIT PrOGrAMS kISS Your Credit Card Portfolio the Credit Card Portfolio Vultures are Back i By Ondine Irving cringe when credit unions seek to rid themselves of their credit card program whether through a bank or credit card processor CUsO or any other entity. i don t care if these companies are credit union friendly or not. When you sell your credit card program you are selling your credit union name reputation members and the control of managing your own reputation. We thought we were through this turmoil of portfolio hungry vultures earlier this decade but beware the vultures are back and in very subtle ways. They could be disguised as a consultant adviser or even a processor. Having worked specifically within the credit union industry for the past 28 years i have never nor will ever encourage a credit union to sell their credit card portfolio. if anything i would suggest phasing out a credit card portfolio before selling your credit union s name reputation and members to any company. Be on the lookout for subtle sales pitches from advisers who tend to point out the negative aspects of credit card portfolio management the risk the charge offs and the delinquency. When working with various consultants and advisers be sure to understand their true motivation. Are they painting such a bleak picture in an effort to get you to consider selling your credit card portfolio just to improve their own bottom line The targets are often credit unions in weak positions when it comes to card program operations and knowledge. These are the credit unions that have not likely invested the time to truly 36 Credit Union BUSINESS learn the process of effective credit card program management. My intent is to help credit union s K.i.s.s. their credit card portfolios- as it truly is that simple. in the nine years i have been analyzing and working with 500-plus credit unions throughout the country i have only come across One program that was not profitable- a credit union that offered cash back on a classic card program with an average credit line of 2 200. The credit union ultimately phased this program out of the product line but never considered selling. July 2012 CrEDIT PrOGrAMS Secrets to Loving Your Credit Card Program There are hundreds of credit unions that have great love for their credit card programs- and it shows They flaunt it on their home pages give cards to every member and solicit balance transfers at every loan opportunity. They love their card programs and their members do too What is the secret to their success First and foremost a CeO and management team that is not afraid of risk (and the vultures love to prey on your fear of risk ) These credit unions maintain credit union friendly programs with minimal late fees at 25 competitive rates and very few if any other fees. The usage is driving the profitability due to the attractive features and credit lines of the program. One of the secrets remains in the simplicity of credit line management. if your average credit line is less than 5 000 (and many credit unions are below this) this will prevent cardholder usage which reduces interchange and it will ward of balance transfers which reduce finance charge income. A low credit line credit card will not likely be your members primary card of choice. nationally the average credit union credit card limit stands at a mere 7 200 with 25 000 caps in most cases. You may be surprised you don t need a lot of the fancy schmancy advisory services direct mail and activation campaigns that your card processor may sell. These sometimes outrageously expensive campaigns eat directly into your profitability. if your average credit line remains less than 5 000 not only will you not recoup the expenses of such campaigns your growth and profitability will stagnate as no matter what you are marketing usage or activation if the credit lines aren t strong portfolio growth will always be limited. Do successful card programs of these credit unions have higher than average charge offs sometime yes. But their overall net income is off the charts and more than compensates for the losses. If you re the kind of credit union that is apt to increase member late fees interest rates or add new bank like fees to your card program because you feel you need to cover the risk you re completely missing the boat. I m even seeing some credit unions assess a minimum finance charge and increase the foreign transaction fees. just like the banks charge Keeping Your Program Member and Credit Union Friendly if you re the kind of credit union that is apt to increase member late fees interest rates or add new bank like fees to your card program because you feel you need to cover the risk you re completely missing the boat. i m even seeing some credit unions assess a minimum finance charge and increase the foreign eee transaction fees. Just like the banks charge And you may be thinking Ondine you don t know our program our members or our culture. You re right i don t know these things about your particular credit union. But what you may not know is the secret to credit card profitability is universal finance charge interchange income fee income and controlled expenses. The balance of these factors is key and they need to be measured each and every month for each and every credit card program you have. i won t identify the numerous credit unions that follow the wrong leaders but i see it all the time in my line of work. if the big credit union in your state has 30 late fees minimum finance charges and penalty pricing to manage their risk they must know what they re doing. Guess again. Profitability problems will tend to perpetuate through reduced cardholder usage and reduced balances. As i write this article and working for a sizeable credit union i have just identified an additional 100 000 annually missing in fee income not to mention an additional 50 000 annually in credit card processor expense savings. Certainly not chump change These newly discovered savings just might preCredit Union BUSINESS 37 July 2012 CrEDIT PrOGrAMS card website pages. if from having to increase fees and state of vent the credit union there is one credit union in the rates to Ohio that has worse sell their portfolio. there will be multiple members or a lousy credit card website creditit s not complicatedcredit card pages. This may beg to apunions with lousy at all although others trend also difpliesand program structures rates and fees. Well if ABC Mega fer to baffle you with trends graphs and statistics to add to the Billion Credit Union assessesscenario the old rate or fee they confusion and complication a cash advance analysis paralymust scenario. some try to complicate thethey are the leader in sis know what they re doing- because heck out this product our state. Don t betheirquick to follow the leader Manyi errors and again what is so motivation it s not that difficult promare perpetuating- and more importantly no oneto offer what to ise. it is simple calculations and knowing what is advising the credit unions. ignore and setting pricing and fees fairly and appropriately and What is members know you credit credit card page A letting your a lousy credit union have a card websiteprogram site where thecredit card portfolio you can t find it anywhere. K.i.s.s. your credit card is buried is it under loans or other products to the successMaybe great There are many other secrets and services of a it is hidden card program- unsecured loans. Thereto learn them try credit further within and if you re prepared is often no clear location for the credit to the product you will learn union will them and dedicate staff card. sometimes a credit to love and have a one-paragraph descriptionfrom thecredit card and then protect your credit card program of the vultures beginning to actuallythe rounds again. make 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 credit card rePOrt the CARD Act offounded Card Analysis Solutions (www.carOndine Irving 2009 and a small omission so many forgot to advise credit unions about. November 2003 after a 12-year in i at discovered those credit unions which have Card careerhave Baxter Credit Union five years at CertegyGReAT credit card website pages have a commonwith Raddon FinanServices (now FIS) and a short time thread the card loan to total loan ratio far created the national average of 7 percent cial Group. Irving exceeds the original School of Credit the credit union is actively promoting credit cards andthree-day Card Program Management in 2008 and hosts the credit union realizessessions single best product to havemanagement educational it is the on credit card program it s own dedicated page and from the industry events these are credit unions around the country several times a year. Her focus was alwhosein teaching credit CeOs arein an objective manner the ways management and unions regularly attending card related conference and income opportunities of the credit card expense savings or card related sessions. These credit unions get it Theat a time when portfolio brokers were preying on portfolio single most profitable product for a credit union is the credit card to sell theiryou ve got it flaunt it or other enticredit unions product. if programs to banks let s start with the basics and yes succumb to our pride In 2010 she founded www.CreditCardConnection.ORG and largest aggregation ofin creditUnion marketing areon the see what the leaders Credit card Credit Cards up to. the When consumers are led to theand ethical credit union card Internet with over 1 037 fair websites of Chase Citibank or Wells Fargo for creditconsumers.consumer will see only credit program options for cards the card information. credit cards 38 July funds May 2012 9 Credit Credit Union yes salary Union BUSINESS miss many opportunities for the magic to happen with your 2012 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- 250 000 Credit Union Employees 92 Million Members 100 Million Miracles Since 1996 Credit Unions for Kids has raised more than 100 million for Children s Miracle Network Hospitals giving hope and healing to kids in your local community. YOUR FUNDRAISING DOLLARS IN ACTION MILLION 10 2 1 iMRI machine and surgical suite 1 Cardiac X-ray machine 1 Ultrasound machine 1 Bone marrow transplant 1 Fully-equipped Giraffe OmiBed incubator MILLION THOUSAND 270 THOUSAND 250 THOUSAND 100 PrODUCT SHOWCASE PSCU First to Launch VISA Prepaid EMV Cards in U.S. s t.Petersburg Fla.based PsCU is the first to issue VisA Prepaid eMV cards in the United states. several PsCU credit unions will begin issuing the new cards later this summer and more than a dozen credit unions plan to deploy prepaid eMV cards this fall. Prepaid eMV cards deliver full debit card functionality and are designed for credit union members who are working traveling living or studying in Canada and europe and other regions where eMV technology is the preferred method for payment processing. These versatile cards also contain a magnetic stripe for use in the U.s. We re on a mission to keep credit unions in front of the demand curve said Michael Kelly PsCU CeO president. That means decisively seizing emerging technology opportunities to give our credit unions a leading role in the payments market. We are the first financial services provider to launch Prepaid eMV cards in the U.s. and we re empowering credit unions to attract more members and reach consumer segments that need both domestic and international spending power. Users of VisA Prepaid eMV cards avoid the inconvenience of purchase declines at merchants that only accept eMV cards. Cardholders also gain stronger security with enhanced card authentication cardholder verification and transaction authorization. secure data storage on the chip and issuer-specific keys make the card nearly impossible to counterfeit. The Pin au- thenticates the cardholder and acts as a second level of security in case the card is stolen. While magnetic stripe authorizations contain the same encrypted code for every transaction eMV chip authorizations are processed using unique encrypted data codes specific to each transaction. Chip authentication is proven to reduce transaction fraud and positions credit unions to avoid VisA s liability shift to issuers which is scheduled for 2015. These fully featured cards can be personalized or non-personalized and sold in branch or on a website. Value can be loaded onto the cards from a web site iVR branch using debit credit cards account transfers from checking savings accounts or through direct deposit. For more information visit the PsCU website at 40 Credit Union BUSINESS July 2012 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 Mobility Takes Motion at Sharon Credit Union By Sharon Sweda M obile solution is a relatively new word in the english language. Folks who were born in the 40s 50s and 60s grew up with stationary phones that operated via party lines. it was decades before those generations were introduced to computers cell phones or the internet. in the 50s and 60s even suggestion of such gadgets were more resembling of a science fiction concept than potential reality. And yet seniors juniors and youngsters alike are embracing every form of wireless technology available for recreation communication and convenience. The oddity of mobile solutions is that mobility means different things to different sectors. There are solutions for dieters medical needs athletes music and game lovers and commerce. One provider s opinion and platform for a solution may lack any resemblance to another s. At sharon Credit Union in Massachusetts solutions is clearly a plural word. in the fall of 2010 the credit union rolled out its mobile text banking and followed a month later with mobile web banking. it has been gaining steam ever since. Members have the ability to pay bills transfer funds or locate an ATM right on their smart phones said Brian Arcand senior information officer. in March of 2012 we introduced our first smart phone application to members. it has really taken off with very little marketing effort on our part. smart phones dominate. We recognize that trend. The popularity and consumers desire to have easy access and convenience while maintaining a secure infrastructure is what inspired the mobile solutions initiative at sharon. sharon Credit Union s ambition was partnered with internet software giants intuit and Vertifi as beta testers for remote deposit capture. The check imaging processing was tested for use and duplicate check recognition. Once checks are scanned for deposit remitters are instructed to wait three days and then to destroy them. As with most web sites usage is heavily reliant upon ease of navigation. Difficult registration processes cause many to abandon technological advancements. it is easy for members to enroll in our mobile solutions the siO affirms. set-up is done by enrolling in our home bank online teller. We have applications available for both iPhone or Android users. iPhone users have the additional choice of using Apple s iTunes application or the web-based. either method provides easy access. With intuit s strength and the assistance of Vertify the initial start-to-finish was accomplished in about 180 days. sharon was involved in extensive interval testing and then a full roll out within another 90 days. interestingly of the 7 000 home banking users almost 15 percent have expanded their access to include one of the two smart phone applications. expanding web services is an area that sharon identifies as a valuable enhancement for current members as well as a resource to provide tools that speak to members of Gen X and Y. initially we had no way to determine member interest in mobile access said Mariane Broadhurst senior marketing officer. We built the platform in anticipation that members would find value in mobile access. With no more hoopla than in-branch marketing at each of sharon s five branches and e-newsletter announcements the program was launched. since its launch the numbers speak for themselves. in a credit union where the average member age is just older than 50 technology tools are proving that iPhone and Android Apps are not just for the younger generation. Mobile technology is sweeping society and sharon Credit Union stands at the forefront shoulder to shoulder with national banking giants. We closely watch the industry standard Broadhurst said. Then hop on board the new technology early on. 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. 44 Credit Union BUSINESS July 2012