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ThE PAyMENTS ISSUE APRIL 2013 VOLUME 8 ISSUE 4 9.95 UNDER THE HOOD The Members Group Payments Innovation Critically Important as Credit Unions Evolve Online Security NCUA Alerts Credit Unions as Online Attacks Increase The Next Big Thing health Care Reform is Coming to Businesses Near your Credit Union LOYALTY REVENUE AUTO LOANS with AUTOPILOT LENDING by SWBC AutoPilot Lending helps you manage the lending lifecycle from beginning to end enabling you to grow acquire and retain borrowers increase auto loan volume and improve your auto loan performance and revenue. CALL AN SWBC REPRESENTATIVE AT 866-316-1162 OR SCAN THE QR CODE BELOW TO LEARN MORE SWBC 2013. All Rights Reserved. 5540-922 0213 CONTENTS Credit Union BUSINESS APRIl 2013 v O l U M E 8 I S S U E 4 4 6 8 10 POV Innovative Payment Solutions for Credit Unions Tim O Hara NEW PRODUCT NEWS 28 33 HEALTH CARE REFORM Payment Matters Murray Halperin CU CONTENT Is it Time for a Chief Outsourcing Officer Fast Adoption of Shazam Bolt Application Echoes Market Demands for Mobile Access ACHIEVING SKILLS Holly Herman UNDER THE HOOD Scoring a Touchdown for Financial Literacy A case study of Financial Football at Suncoast Schools FCU Laura Enock Know Who You Are and Aren t The Members Group Shazia Manus 35 40 MARKETING MATTERS Tony Rizzo CU SPOTLITE How MCIF Delivers ROI Removing Roadblocks to the Information Highway at Varity Credit Union Sharon Sweda Payments Innovation Critically Important as Credit Unions Evolve 17 21 CFO CURRENCY What Merging Credit Unions Need to Know from a Back Office Perspective Emily Hollis TECHNICALLY SPEAKING Get it for the entire executive team www.creditunionbusiness.com subscription Online Security Roy W. Urrico NCUA Alerts Credit Unions as Online Attacks Increase 24 SOCIAL MEDIA Leveraging Social Media Insight Reach Gen X and Y Markets Dan Shannon www.cubusiness.com April 2013 Credit Union BUSINESS 1 ABOUT US Publishing Team Tim O Hara Publisher tim cubusiness.com Steve Magnuson Managing Editor steve creditunionbusiness.com Iliana Nord Operations Manager iliana cubizmag.com Patti Manzone Designer Homer Marshman III Circulation Director UNDER THE HOOD THE PAYMENTS ISSUE APRIL 2013 VOLUME 8 ISSUE 4 9.95 The Members Group Payments Innovation Critically Important as Credit Unions Evolve Online Security NCUA Alerts Credit Unions as Online Attacks Increase The Next Big Thing Health Care Reform is Coming to Businesses Near Your Credit Union Staff Writers Laura Enock CU Content Holly Herman Achieving Skills Emily Hollis CFO Currency Tony Rizzo Marketing Matters Suzanne Savage Debit Matters Sharon Sweda CU Spotlite Dr. Sandra L. Torres Leadership Roy Urrico Technically Speaking Subscriptions Credit Union BUSINESS is published monthly (12 issues per year) by CU Business Magazine Inc. A one-year membership costs 89 for print or 69 for Digital. An online membership form is available at www.cubusiness.com. Sales and Advertising Bernie Fitzgerald Advertising Executive Bernie cubusiness.com or 561-282-6015 1 Greg Halpern Advertising Services Manager Greg cubusiness.com or 561-282-6015 4 Contributors Murray Halperin Shazia Manus Dan Shannon Contact Information Credit Union BUSINESS Magazine P Box 2223 Palm Beach FL 33480 .O. (561) 282-6015 (561) 588-7711 (fax) tim cubusiness.com 2 Credit Union BUSINESS April 2013 www.cubusiness.com NAC MAKES IT EASY & PROFITABLE TO PROVIDE YOUR MEMBERS WITH FULLY INSURED VEHICLE PROTECTION. As a nationally recognized administrator of top quality vehicle service agreements NAC is focused on providing the products credit unions need to create new fee income and expand membership. NAC s coverage plans provide YOUR MEMBERS with peace-of-mind protection against expensive vehicle repairs. Our powerful online technology provides YOU with a simple-to-use sales tool that automatically matches vehicles to eligible plans displays cost-effective options and generates a contract PDF instantly when finished FOR YOUR MEMBERS Great Benefits - Roadside Assistance Rental & More Superior Customer Service Fast Claims Processing FOR YOU Online & On-Site Training Fast Personal Support Easy Online Submissions Custom Marketing Materials Auto Powersport & RV Plans NACSOLUTION.COM 800-664-5724 FROM TiM D Publisher s POV credit unions who also graces our cover. Shazia is the CEO and guiding light of The Members Group (TMG) a 25-year-old Des Moines Iowa based CUSO that specializes in payment products for its credit union clients. With a bachelor degree in economics from Iowa State University Shazia graduated from a three-year Certified Executive Program run by the CUES CEO Institute in partnership with some of the most impressive business graduate schools in the world the Wharton School at the University of Pennsylvania the Johnson Graduate School of Management at Cornell and the Darden Graduate School of Business Administration at the University of Virginia. Prior to joining TMG Shazia served as chief executive of Greater Iowa Credit Union where she oversaw a significant turn around achieving substantial profitability and membership growth. She also served on the Legislative Committee and Growth Commission of the Iowa CU League. She is now serving on World Council of Credit Unions Global Women s Leadership network and as an associate member of WCCU. Committed to the growth and quality of the credit union industry Shazia and her team at TMG work hard to provide innovative payment solutions for it credit union clients. I think this article reads like a recipe for success for all credit unions. S 4 uring the most recent CUNA GAC in late February I visited with my old friend and CU technology marketing expert Mickey Goldwasser. As always Mickey had some interesting insights about the fast moving technology evolution to share. Mickey knows what he s talking about he is Vice President of Marketing at Q2ebanking an innovative credit union solutions provider located in Austin TX. We were discussing Gens X Y Z when Mickey asked me an interesting question what age group comes to mind when you think about a group of people sitting together in an Apple store I instantly skewed my thoughts toward a younger set and imagined groups of teens and tweens. That s when Mickey showed me a photo of a group of grey hairs gathered around a giant computer monitor getting a lesson on navigating the i-Mac from a store employee. Once I saw the photo it made perfect sense. Golden agers are more likely to have the financial wherewithal to buy the pricey equipment and are more motivated and have greater need to catch up with the modern conveniences that have become part of everyone s reality. New technology is not just for the young Reinforcing his point Mickey asked me What is the last thing you touch at night and the first thing you reach for in the morning The answer of course is my smart phone. What in the world would we all do without our i-Phones Androids and Blackberries peaking of swiftly moving innovation what could be more evolutionary than the editorial theme of this issue of Credit Union BUsiness--CU Payment Products I am very proud to present you with an outstanding Under the Hood feature article written by Shazia Manus a preeminent payments expert from inside as well as outside Credit Union BUSINESS April 2013 www.cubusiness.com NEW PRODUCT NEWS hether organizing shopping lists tracking investments or watching scores for college basketball pools consumers are increasingly dependent on and demanding of mobile applications that provide on-the-go access to important information. Increasing adoption of mobile devices from the full spectrum of age groups--children to senior citizens-- means those same consumers expect to manage most aspects of their life via their device including managing and protecting their money. According to Forrester Research by 2016 onethird of adults will own a tablet and nearly 60 percent will own smartphones. And according to recent Juniper Research findings by the end of 2017 one billion mobile users will have used their mobile device for banking. Credit union management may fundamentally agree with the need for mobile application development but identifying developing and integrating a mobile application that meets the needs of your members isn t an overnight proposition nor is it an inexpensive one. Delivering on this demand is the SHAZAM network with the new mobile application SHAZAM BOLT . The app is available at no cost to SHAZAM s member credit unions and to their members. With less than 60 days on the market the SHAZAM BOLT app is live at more than 200 of the network s participating financial institutions. This free application for Apple mobile devices including smartphones and tablets allows debit cardholders to check balances anytime and anywhere identify when deposits and payments have posted to their account set parameters for email alerts and eventually initiate person-toperson (P2P) transfers. 6 Credit Union BUSINESS W Fast Adoption of Shazam Bolt Application Echoes Market Demands for Mobile Access Through global positioning system (GPS) technology SHAZAM BOLT will also soon be able to find surcharge-free ATM s through a location service built into the app. This feature coming soon will help credit union members to locate SHAZAM network ATMs and avoid fees sometimes associated with out-ofnetwork ATMS. Mobile strategies are critical to providing the value credit union members demand said Dan Kramer SVP of Marketing and Merchant Services for SHAZAM. Yet mobile products often take many months to become fully integrated and ready for consumer rollout. Our credit union participants are eager to get mobile apps into the hands of their members as quickly as possible and that s exactly what we have been able to offer with SHAZAM BOLT . It s a turn-key affordable mobile offering that can be up and running very quickly. Demand and Competition Drive Turnkey Solution from SHAZAM The member-owned and controlled EFT network recognized the need to offer an application for credit unions to offer their members. In mid-January the company launched SHAZAM BOLT in response to this demand. www.cubusiness.com April 2013 NEW PRODUCT NEWS Credit unions are searching for mobile solutions to help them compete in the growing financial services marketplace said Kramer. It s no longer only the megabank strategies our network participants are competing with it s also those from the Apples the Googles and the Verizons of the world. SHAZAM is working hard to help our network participants remain the best choices for the cardholders in their communities and SHAZAM BOLT is evidence of that hard work. Better helping members understand their opportunities to identify fraud not only minimizes the risk of fraud losses it empowers them to stand a chance against the criminals targeting their hard-earned money. Using SHAZAM BOLT cardholders can also monitor accounts of their family members to which they have access making it easier to avoid unnecessary fees and track spending. These near real-time email alerts have the potential to greatly improve cardholder service as well as halt fraud attempts more quickly. According to Kramer By providing nearly real-time transaction alerts via email a communication vehicle cardholders are using for everyday interaction credit unions will have a more direct line to cardholders not only limiting fraud losses but potentially improving customer service. The Frontline of Fraud Prevention Most consumers know keeping watch over their accounts is a good idea but life gets busy. Even with all of the sophisticated fraud prevention and alert systems the best line of defense in the fight against fraud is often the cardholder themselves. SHAZAM BOLT is designed to enhance the credit union s fraudprevention efforts by alerting cardholders directly to potentially fraudulent activity on their accounts. Your Credit Union Logo Here SHAZAM BOLT is a white label product available free to SHAZAM member credit unions. The application can be configured to match a credit union s branding including their name and logo. This helps members to experience a consistent look and feel across all credit union digital platforms including websites and online account portals. For credit union members who are not mobile device users SHAZAM also offers a web version of SHAZAM BOLT which is available for cardholders who prefer to access the tool from a desktop computer or mobile browser. SHAZAM BOLT is available now as a free download via iTunes for Apple mobile devices and will soon be available for Android devices through Google PlayTM. T he alerts are generated any time a suspicious purchase is detected. Cardholders might set an alert for any purchase over a specific amount based on their normal spending patterns. SHAZAM BOLT automatically sends email alerts 24 7 for any transaction where the debit card was not actually swiped (with an Internet or telephone order for example) and for any transaction in a foreign country. The app also sends alerts for other suspicious or high-risk transactions on their account. SHAZAM BOLT email alerts include instructions for contacting the member s credit union if the transaction is indeed fraudulent. In addition to the potential loss of funds experiencing fraud requires a significant time commitment from the victim to work with their credit union and possibly the authorities to work through the process. To best monitor account activity and prevent fraud credit unions should advise members to Call their credit union before they travel so the credit union will know to expect unusual charges Check their balances often Report any transactions (no matter how small) they don t recall authorizing Take advantage of transaction alerts like those available through SHAZAM BOLT CEO mEmbErships With Benefits Benefit your CFO COO CMO CCO CLO CIO HRD With free Monthly E-Newsletters Join NOW www.cubusiness.com register www.cubusiness.com April 2013 Credit Union BUSINESS 7 AChIEvINg SkIllS S know Who you Are and Aren t By Holly Herman thought 2 Weaknesses Know what you re not good at. You re probably not very good at doing the things you really hate to do. Be realistic as you set your goals. Some goals demand a lot of practice and or preparation so you ve got to enjoy the process of reaching the goal if you are going to be successful. If you don t have the patience to put in the time you ll never achieve what you ve set out to do. Perhaps you want to get an MBA but you don t enjoy the classes reading and study it takes to get thought 1 strengths Know one. This may not be an appropriate or desirable goal for you. what you re good at. Whatever you re good at is strength. Make a list of thought 3 Opportunities all the things you re good at and that Know what excites you. Does the you really enjoy doing. When setting goal excite you Take time to think personal goals make sure an element about how you ll feel once you ve of what you re good at is somehow achieved your goal. Does that involved with accomplishing the thought put a smile on your face goal. For example if your goal is to Do you sense that flutter of joy you ll become a CEO make sure you enjoy public speaking leading feel once you ve accomplished the others setting direction taking risks and taking charge. If goal You ll be much more likely you don t enjoy most elements of leadership you won t be an to reach a goal when it carries an effective leader. element of excitement and opportunity. Ho-hum goals rarely get accomplished. etting goals and making plans can be tricky. Meaningful goals are ones that play to your strengths. I ve known many people who ve tried very hard to achieve something that only ends up in frustration. Most often these unsuccessful achievements--the ones that don t get accomplished--are the ones that tap into that person s weaknesses. While goals may be good in theory practically speaking setting goals that aren t meaningful--that don t play to your strengths--is like preparing to fight an uphill battle it doesn t get won. Here are some thoughts to ponder that may help before you set off to accomplish something. 8 Credit Union BUSINESS April 2013 www.cubusiness.com AChIEvINg SkIllS thought 4 threats Know the difference between barrier and challenge. Your goals may come with barriers or challenges. Thinking that threats are barriers will stop you in your tracks. Framing those threats as challenges enables you to find solutions. Staying on the solution side of challenge will keep you on course. Once you ve done a S.W.O.T. analysis of your goals I offer one more thought. thought 5 Know the difference between interested and committed. Know that there is a difference between the two and always remember what it is. When you re interested in something you ll go ahead and do it as long as it s convenient. When you re committed to something you ll accomplish it no matter what. Interesting goals often fall by the wayside commitment to your goals leads to achievement. Holly Herman is a former CEO of two credit unions Chief of Staff for National Credit Union Administration Chairman Johnson and currently an Achievement Coach helping individuals and organizations. She can be found at www.AchievingSkills.com or contact her at Holly AchievingSkills.com. www.cubusiness.com April 2013 Credit Union BUSINESS 9 UNDER ThE hOOD Payments Innovation Critically Important as Credit Unions Evolve hen you picture the consumers of the future do you envision your credit union playing an essential role in those lives Great credit union leaders know their cooperative will remain relevant and valuable to future members only if they are willing to evolve. The Members Group (TMG) with a former credit union CEO at the helm understands this well and works hard every day to help more credit unions adapt to the changing needs of consumers. How does TMG a 25-year-old Credit Union Service Organization (CUSO) that provides innovative payment solutions for credit unions drive adaptation By using industry-leading and consumer-centric payment innovations. It s becoming increasingly important to offer customers multiple ways to transact whether to pay a monthly bill or to buy a morning latte. TMG s product roadmap and focus on the financial consumer is based on this very idea offering many innovative payment options so its credit union clients keep pace with competitors in what is quickly becoming a very complex marketplace. TMG provides global solutions for payment products including credit debit ATM and prepaid cards as well as emerging payment solutions including digital wallets chip cards for the U.S. migration to the EMV standard and powerful data analytics tools to optimize payment portfolios. Now partnered with CO-OP Financial Services the two companies serve nearly 50 percent of all U.S. credit unions and provide payment services to nearly 33 million cardholders. As leaders in innovation TMG and CO-OP are creating a new standard in payments innovation. The Members group By Shazia Manus W TMG CEO Shazia Manus For TMG innovative thinking is about more than developing new products and services it s about identifying opportunities for strategic collaborative alliances that ultimately help the credit unions they serve. The company believes credit unions have a tremendous opportunity with the financial consumers of today who are looking for a more personal relationship with their financial institution. It is why innovation will be a key driver for being a viable competitive choice for today s consumer. 10 Credit Union BUSINESS April 2013 www.cubusiness.com UNDER ThE hOOD A History of Forward-Looking Payment Solutions Over the years TMG has created customized technology-driven card processing and payment solutions for credit unions and community-based financial institutions across North America. Among the recent innovations of which TMG is most proud are First to launch EMV credit card in U.S. Enhanced Springboard TMG s proprietary web-based interface designed to make accessing and servicing a members card data easier Invested in cutting-edge revolutionary digital payments platform Dwolla Entered competitive prepaid cards market with four unique solutions including a turn-key reloadable card designed specifically for the Hispanic market Developed data analytics tools for better portfolio management and performance Made a strategic investment in IQR Consulting to bring the powerful human aspect of data analytics to more credit unions Enriched fraud monitoring prevention with Payment Defender & SpendTrend Insights Enabled credit unions to become early adopters with the launch of digital wallet services TMG worked hard to earn its reputation as trusted advisor to its credit union partners. As evidence of the company s delivery of superior service alongside leading payment products TMG enjoys a 98-percent client retention rate. This is a rarity among most of today s companies including the most successful financial service providers. Far from a one-size-fitsall shop TMG team members truly listen to their clients gaining an intimate understanding of the cooperatives they serve. The company considers itself an extension of its credit union clients making a rich understanding of the end-consumer paramount to achieving successful partnerships. Evolution in Consumer Demand for Payment Products Much of what makes payments so thrilling for the product research and development teams at TMG is the fast pace with which it is moving today. Beyond the overwhelming number of new products and players entering the market entirely new ecosystems for consumer-initiated transactions are springing up. TMG recognized early on that digital payment platforms would appeal to a new generation of consumers and was among the first in the industry to invest in and offer a revolutionary digital payment platform. Dwolla the online mobile social and location-based payment platform is supported by TMG. The Des Moines-based technology company continues to make headlines for its innovative solutions. With TMG s support platforms such as Dwolla are becoming seamlessly integrated with credit unions own online banking systems. This gives members even more of a reason to see their credit union as a trusted partner and leader in fast convenient affordable and high-tech payment solutions solutions that ultimately make their lives easier. Another example of TMG s work to connect more credit unions and their consumers with head-turning payment innovations is the company s work with Visa s new digital wallet service V.me. The V.me service allows cardholders to enter their existing card data into a secure online service. The service then stores the data securely allowing the cardholder to make online Credit Union BUSINESS 11 www.cubusiness.com April 2013 UNDER ThE hOOD purchases without re-entering their card data every time. Importantly TMG clients who sign on for V.me will not lose any branding opportunities--a concern some credit unions have expressed as they researched digital wallet options. TMG clients card art will appear in the V.me service maintaining the credit union s brand inside of the service. The service will be accessible through TMG s MyCardInfo cardholder portal as well as directly through the client s online banking site. TMG also recently announced it is developing technologies around the CUSO s suite of credit card solutions to support MasterPass a digital service by MasterCard. MasterPass allows consumers to use any payment card or enabled device to make a purchase enhancing the consumer shopping experience online in-store or on any device. With solutions like these Dwolla V.me and MasterPass TMG has become a single point of entry for credit unions into the next-generation banking marketplace. And for credit union members who want more mobility their trusted cooperative becomes a safe source for their digital-payment alternatives. Yes consumers demand convenience and want anytime anywhere payment solutions yet they also value solutions backed by toplevel fraud protection. With TMG in the mix that is precisely what credit unions can offer members particularly early adopters hoping their credit union will take the lead in digital payments. if they have higher-than-average incidents of fraud in a particular geographical region or within a particular type of merchant code. The information which is accessible by TMG staff as well as by TMG clients is detailed in a graphical format that is easy to decipher and simple to navigate. The solution also provides an ad-hoc functionality which enables TMG fraud specialists to examine all credit and debit transactions in near real-time. In addition the specialists can use the tool to model new fraud prevention strategies to see the potential impact of a change. The results of those modeled strategies are available instantly which allows TMG to make faster recommendations to its credit union clients. According to TMG s Director of Client Services Karen Postma When a credit or debit account becomes vulnerable to a fraudster the first few hours are critical to minimizing losses for the issuing credit union. The predictive analytics of First Data s SpendTrend Insights Fraud Analysis Solution speeds up the decision-making process which is absolutely critical to preventing further costly attacks. While many of TMG s products work behind the scenes cardholder-facing tools are also available to credit union clients of TMG. Fraud text alerts for instance is a service available to the cardholders of TMG s credit union clients. The alerts are triggered by the credit union s own custom fraud prevention strategies. If a particular transaction is flagged as risky TMG s fraud experts take a look at the transaction in the context of the account and the credit union s strategies and if warranted verify the transaction by texting the cardholder. Cardholders receiving a text are given two reply options one to confirm that the transaction was legitimate and a second to report the transaction as possible fraud. If the cardholder reports the transaction as fraudulent the TMG team puts a hold on the account to prevent any further transactions and sends the cardholder a second text with a phone number asking them to call into the TMG fraud prevention team for further instructions. According to Postma Many financial-management text alerts including TMG s Visa Transaction Alerts are triggered by cardholder-initiated settings which is excellent for budgeting and account management. However when it comes to fraud prevention you really need those texts to be driven by proven prevention strategies and highly trained specialists. The Best in Fraud Detection and Prevention Card fraud continues to challenge credit union card teams and is only predicted to worsen as the rest of the world races ahead with chip-card technology. Fortunately for the clients of TMG fraud detection and prevention has gotten easier with the help of the CUSO s suite of sophisticated fraud technology. Armed with these tools like SpendTrend Insights Fraud Analysis Solution powered by First Data TMG s credit union clients are able to obtain a clearer and faster picture of their overall fraud loss position. The tool uses near real-time data to better inform TMG fraud specialists who are charged with quickly advising credit unions on the best prevention strategies. First Data s SpendTrend Insights Fraud Analysis Solution allows TMG credit and debit card-issuing clients to get an inside look at their portfolios and to compare them with First Data s consortium of data. This allows credit union card teams to understand 12 Credit Union BUSINESS April 2013 www.cubusiness.com UNDER ThE hOOD In 2012 alone TMG s fraud team had a positive impact for its clients saving credit unions more than 12 million as a result of fraud detection and prevention tools and strategies. Ushering in a New Era in Plastic Cards Fraud prevention efforts are expected to get a boost once the U.S. fully migrates to the EMV standard. Yet there are many unknowns where the future of chip cards in the U.S. is concerned making strategic planning very difficult for credit unions across the country. TMG however is working with individual credit union card teams to help develop customized roadmaps for their own cooperatives EMV migrations. Very soon merchants wishing to reduce their security compliance burden will begin to deploy dual interface point-of-sale (POS) technology to support contact and near-field communication (NFC) chip transactions. Some major retailers including Wal-Mart and Target have already begun upgrading their terminals for chip acceptance. By October 2015 Visa and MasterCard will shift the liability to the party (issuer or merchant) with the least secure method of processing transactions. For the purposes of this deadline both networks deem chip technology to be the most secure transaction method available. U.S. processers similarly are preparing to support merchant acceptance of chip transactions. Both Visa and MasterCard are requiring processor support by this spring. Some early adopters of EMV technology--credit unions that have implemented chip cards to meet the EMV standard abroad--are reporting successes from their individual upgrades. With ongoing results like that it s easy to anticipate more U.S. credit unions will be attracted to the potential of EMV at their own cooperatives. In short many credit unions with high-travel members do not want to lose their top-of-wallet positioning to a competitor. Indeed providing a convenient method for cardholders to transact abroad is the sweet spot for some credit unions. While EMV champions may tout the security and fraud-reduction qualities of EMV it will be some time before the U.S. can fully realize these benefits. That s because EMV issuers today are still required to have mag stripes on their plastic for their cards to be useable at all U.S. merchant locations. Understanding the challenges of EMV s near-term future TMG experts are assisting credit unions with plans for their Fraud prevention efforts are expected to get a boost once the U.S. fully migrates to the EMV standard. Yet there are many unknowns where the future of chip cards in the U.S. is concerned making strategic planning very difficult for credit unions across the country. migration to chip technology. They advise that between now and the end of 2013 every credit union should at a minimum complete an evaluation of EMV and make a determination whether chip cards are a good strategy for the growth of their portfolios. From there card managers should develop a strategic plan including what steps will be taken and on what kind of a timeline (keeping the liability shift deadline of October 2015 well in mind). Budget of course must be a part of the plan. However credit union leadership may find budgeting for EMV more palatable when viewed as an opportunity to earn more loyal customers. Card teams may want to think of chip technology as an upgrade to the card portfolio (similar to Platinum cards a few years back)--one designed to secure or solidify top-ofwallet positioning. Because the shift is not yet a mandate early adopters can consider adding chip technology the same way they would any other upgrade such as rewards or customizable photo cards two other services available to card teams through TMG. The Power of Data Analytics to Understanding Consumer Behavior Wants and Needs With the rise of the new consumer age and digital banking it s become more difficult for TMG s credit union clients to truly know their members. TMG hopes to reverse this trend by connecting its clients with data-driven solutions to create opportunities by focusing on members. With an outside-in approach to a consumer s financial future credit unions can better identify strategic courses of action leading them more quickly to a positive impact on growth goals. www.cubusiness.com April 2013 Credit Union BUSINESS 13 UNDER ThE hOOD would reduce overall costs to the portfolio therefore improving profitability even without the interest rate increase. A second engagement this time with a larger financial institution allowed IQR data analysts to improve the efficiency of the card team s marketing efforts. Leveraging response data from a prior direct marketing campaign data analysts were able to identify which customers were most likely to respond to future promotions. The resulting recommendations led to a campaign that contributed nearly 500 000 in the first 90 days of the effort a nearly 3000-percent return on the marketing investment. TMG recognized the importance of understanding all data elements for growth beyond card portfolios. Big Data is nothing new it s just rising to the top for those business that are looking to be smarter about the way they make investments in growth strategies. Therefore IQR works with credit unions to examine more than card programs. With a deep understanding of data analytics IQR s analysts can apply their methodologies to any aspect of the cooperative s business giving them improved changes of success across departments and initiatives. Across the global business community management of data is becoming a critical business challenge. Without skilled human expertise the billions of data points are just noise. Yet when organized and analyzed by a team of action-oriented and experienced financial wizards that data unlocks numerous secrets capable of stealing cardholder loyalty away from the competition. The major banks have these sophisticated teams on their side. TMG experts believe it s time for credit unions to do the same. Across the global business community management of data is becoming a critical business challenge. Without skilled human expertise the billions of data points are just noise. That is why the company recently invested in data analysis firm IQR Consulting. The California-based firm uses data analysis to help all types of businesses from credit unions to airlines to casinos anticipate market changes and respond to changing business conditions. From EMV readiness to integration with digital wallets credit unions are facing a great number of decisions about the future of their payments offering. Understanding how their members prefer to transact is a crucial component to making those tough decisions TMG recognized its clients were competing with large financial institutions many of which employ full-time data analysts to help them arrive at the right solutions for the right customers. By arming them with the same kind of rich data and consumer insights TMG strategized credit unions would be uniquely positioned for a competitive advantage unmatched by mega FIs. IQR s deep understanding of data analysis now helps TMG s credit union clients better understand how their members behave what they most value and ultimately which products and services have the best chances of earning loyal members in the future. Combining the credit union philosophy of people helping people with the power of analytics cooperatives can create a WOW experience for members. During a recent engagement one card management team asked IQR to determine if an increase in the issuer s interest rate was a smart move. The team believed their cards were priced too low and wanted to understand what would happen if they raised interest rates across the board. After an analysis of the current portfolio IQR found most of the cardholders were indeed profitable. As such the team of analysts made a different recommendation Re-evaluate the non-profitable accounts and focus on enhanced service and marketing to profitable cardholders. Not only would this avoid the price hike potentially reducing the program s walletshare it Optimizing Traditional Payment Products Now Even as the world of payments is rapidly evolving traditional products like credit and debit cards remain a strong revenue stream for today s credit union issuers. TMG s expert staff understands this well and work diligently to help the company s credit union clients make the most of their existing card portfolios. TMG s highly experienced client service team consults with credit union card teams to offer recommendations on credit and debit card portfolio optimization strategies such as reevaluating risk tolerance new card activation and usage strategies inactive accounts management and promotional programs. According to TMG Vice President Brian Scott Before card teams can 14 Credit Union BUSINESS April 2013 www.cubusiness.com THAT S THE A WE DO WHAT LLIED ADVAN TAGE. IT TAKES. [Whatever i t is] The Allied Advantage means unparalleled service for credit unions. From risk management to consumer lending we provide solutions that put you in control. Solutions that give you more opportunities to deliver precisely what your members need.We re ready to apply our expertise and enthusiasm to help you attain your goals. That s the Allied Advantage. For more information visit AlliedSolutions.net or call 866.633.1480. W W W. A L L I E D S O L U T I O N S . N E T UNDER ThE hOOD properly strengthen their card programs for battle in what is poised to again become a jam-packed marketplace they have to identify weaknesses in the portfolio. With the right guidance credit unions can more easily monitor their success identify their weaknesses and give their teams the creative spark they need to ignite a truly competitive card program. unions. With new payment solutions successful partnerships proprietary tools like Springboard and innovative product expansions the company has worked to make life easier for its partners and the consumers they serve. In fact making life easier has become a mantra at TMG. A driving force that mantra powers everything TMG s teams set out to accomplish from product innovations to client service successes to continuous operational improvements. Manus in a recent white paper on strategic planning wrote on the unique culture of credit unions There is a misconception that credit unions are not nimble or progressive that they are risk averse and stuck in an era of complacency with technology products and the types of customers they serve. From the credit union where I built my career to those I now work with every day at TMG I have seen firsthand this is absolutely not the case. Many of these credit unions are leading the charge paving a new path for themselves and their strategic partners. The deep appreciation respect for and experience with the credit union movement have positioned TMG uniquely preparing its development teams to help credit unions evolve. As these cooperatives critical to the financial health of Americans and others around the world grow into a new era of payment solutions TMG will be there making life easier every step of the way. Shazia Manus is CEO at The Members Group (TMG). A former credit union CEO Shazia knows what it takes to make community financial institutions thrive. She applies this knowledge every day at TMG helping financial institution clients across the country usher in new and better payments solutions. An entrepreneur since the age of 17 Shazia s spirit of innovation commitment to collaboration and keen sense of sound business management have compelled TMG to record growth. Shazia Manus earned a bachelor degree in economics from Iowa State University (ISU) and graduated from the threeyear Certified Chief Executive program. Her CCE designation was presented by the CUES CEO Institutes in partnership with the Wharton School at the University of Pennsylvania the Johnson Graduate School of Management at Cornell University and the Darden Graduate School of Business Administration at the University of Virginia. Thinking Like a Start-Up The average TMG employee has logged more than seven years with the payments CUSO providing more evidence of the company s strength and of its leadership s intuitive understanding of what it takes to build a creative energetic and client-focused environment. Strategically designed to mirror the culture of many credit unions TMG values input from all levels of the organization where entrepreneurial thinking is encouraged. According to TMG CEO Shazia Manus Entrepreneurs deal with uncertainty head-on. Whether they re operating from a garage or a skyscraper entrepreneurs take stock of their assets aspirations and market realities to develop a competitive advantage. They craft flexible plans they build a network of partnerships they aggressively seek breakout opportunities. With a team of entrepreneurial leaders credit unions can better tap their internal human capital as well as their networks for the creativity and business intelligence they need to navigate tough challenges. Steve Jobs called Apple the biggest start-up on the planet. In the same way credit unions must stay young and agile forever acting like start-ups. TMG aims to help today s credit unions tackle the uncertainty that has crept into the financial service marketplace. As the profitable business case of payment products particularly those like prepaid and mobile payments make headlines new competitors are taking notice. This threatens the foothold financial institutions have long held in the world of financial transactions. TMG in partnership with its credit union clientele believes this competitive challenge can be addressed head on with innovative consumer-centric payment solutions to make life easier (both for our clients and the consumers they serve). Making Life Easier TMG s ultimate vision is to improve the financial lives of consumers through its trusted partnerships namely with credit 16 Credit Union BUSINESS April 2013 www.cubusiness.com CFO CURRENCy What Merging Credit Unions Need to know from a Back Office Perspective nyone in our industry can tell you that today more members are being served by fewer credit unions. While the trend is toward greater consolidation it s not just larger credit unions merging in troubled ones. This shift is also occurring among healthy equal-sized credit unions as well as with those looking for a competitive edge. Half of the credit unions engaged in merging report that their primary motivation is to expand services to their members. A By Emily Hollis CFA Partner The Urge to Merge In some situations mergers are a matter of survival. In others mergers of choice can make good sense. Doing business in today s marketplace is more costly than ever increased competition tighter margins and an ever-changing compliance landscape all impact the bottom line. By combining operations credit unions are able to share resources expand reach broaden service offerings and improve member return. Of course there s no doubt that many smaller credit unions can survive and thrive--especially those with strong sponsorship support. But for some a better option might be to operate as part of a larger more cost-efficient institution. So when merging is a good option and once due-diligence has been performed what is the next step to take in expanding your footprint Well accounting Credit unions should not be discouraged by the accounting complexities that accompany mergers after all you need to find out whether or not a merger might be a good business decision. However it is crucial that you have access to valuation and appropriate accounting resources. To help evaluate the viability of a potential merger and secure regulatory approvals many credit unions would benefit from outside expertise. Working with professionals who understand the industry and are experienced with the new merger rules can add confidence to the complex merger process. Just be aware that whether your credit union is looking to merge out of necessity or by preference it can be a lengthy process. Mergers typically take 10-12 months to complete from start to finish. And significant changes have made the associated regulatory requirements much more challenging. Accounting Rules The Financial Accounting Standards Board adopted new accounting rules affecting all mergers occurring after Dec. 15 2008. Now instead of pooling the balance sheets of the merging credit unions to determine the book value of the new entity credit unions must use the acquisition method of accounting. www.cubusiness.com April 2013 Credit Union BUSINESS 17 CFO CURRENCy This means identifying the acquired entity determining its fair value and measuring and recognizing the assets that are being assumed along with the liabilities. The new rule also means establishing goodwill and evaluating it for impairment for each reporting period. And unlike past mergers goodwill cannot be amortized. Engage Auditors Early On Auditors cannot complete the valuation analysis because they are required to maintain independence over the audit process. However they must satisfy themselves that the valuation techniques meet the provisions of relevant accounting standards. Because auditing firms have different documentation standards and methodology expectations it can save a considerable amount of time to involve them early in the process. gain is realized by acquiring an institution at a lesser price than the worth of its net assets. Negative goodwill is reflected by the acquirer as an immediate gain to net income. Determine Analysis Level Based on Materiality Different merger situations require different levels of analysis. If the merger is considered immaterial a broad-based valuation analysis may be appropriate. More multifaceted merger events will likely require in-depth loan-level detailed analyses as well as the development of amortization schedules. If the credit union has participated in a bid process an entity evaluation may not be necessary. Check with your auditors for guidance on the level of analysis needed. Entity Value Observations The merger market in the financial services industry peaked in 2007 with acquisition values reaching record levels. In late 2008 and early 2009 merger prices dropped below book value but as the economy has shown signs of recovery merger pricing has been firming albeit at levels well below historical averages. In the face of a declining economy an adverse credit cycle with unprecedented deflation in real values and the required bailout of large banking investment banking and insurance companies merger values collapsed. The plummet in merger pricing of financial institutions reflected the high level of problem assets at companies required to find a buyer investments and loans as well as the drop in stock market pricing in the overall sector. This reduced the ability of buyers to pay earlier premium prices. Determine if Two Valuations are Needed. When considering a merger credit union management often wants an assessment of the target credit union s value. But merging credit unions must receive regulatory approval before entering the process. In both instances it s useful to conduct an initial broad-based analysis. Such a study also helps set realistic expectations and provides critical background information during the early merger stages. Once a merger has been finalized a comprehensive and detailed analysis can be completed if needed. Separating Credit and Interest Rate Impairments When valuing the loans it is imperative to separate the projected losses that are based on credit impairments versus market rates. The loans can therefore be monitored for actual versus projected credit losses and adjustments to the credit portion of the valuation adjustment can be evaluated. Our preference is to use a loan-level detailed approach based upon the loan s FICO scores loan-to-value maturity and issue dates and loan location. Because this information is needed for a more efficient valuation process it is important to submit complete data files. If credit loss projections are Negative Goodwill is Unusual But Can Occur. Negative goodwill occurs when the fair value of the assets and liabilities is greater than the entity valuation. This could result from positive valuation adjustments to net assets a low entity value or a combination of both. Subsequently an accounting 18 Credit Union BUSINESS April 2013 www.cubusiness.com CFO CURRENCy based upon national figures consideration should be given to adjusting the losses to reflect the stronger underwriting of credit unions in the local market. However make sure you have some research to support this adjustment. Be prepared. It is commonplace that loss-severity assumptions for home equity loans be approximately 100 percent especially in Arizona California Florida and Nevada. So if you are considering a merger with a credit union with a good amount of home equity loans especially lines of credit the valuation of these loans tend to be discounted by as much as 50 percent of their book value. Mergers bring credit unions together for a number of reasons. While the process may be more complex the outcome is manageable. If your credit union s strategic plan includes merger activities be sure you have the resources in place whether internal or external to effectively meet the changing valuation and accounting requirements. Emily Hollis CFA is a partner with ALM First Financial Advisors LLC. Obtain Amortization SchedulesFrom a Valuation Consultant Amortization schedules should be developed for each loan type and the core deposit intangibles (non-maturing deposits). One approach to consider for loans is amortizing the yield adjustment on a proportional basis to interest paid (approximation of levelyield method) and the credit adjustment on a proportional basis to projected gross losses. For core deposit intangibles a common practice is to use the straight-line method over a period of 7-10 years. This is a critical area for you to get input from your auditing firm. If the credit union target has a high amount of home equity loans the valuations might be low. 20 Credit Union BUSINESS April 2013 www.cubusiness.com TEChNICAlly SPEAkINg NCUA Alerts Credit Unions as Online Attacks Increase Online Security By Roy W. Urrico O nline and mobile risk and fraud issues continue to threaten credit unions. Even though you may be complying with the supplemental FFIEC guidance deadline your job is not done. Maybe the threats look different but online and mobile banking security vigilance is a constant battle. So much so that the NCUA recently released a risk alert following distributed denial-of-service attacks on at least two credit unions. The alerts re-emphasized the appropriate policies and procedures to guard against these types of security threats as outlined in the 2011 FFIEC supplement to guidance on Authentication in an Internet Banking Environment. The increasing frequency of cyber-terror attacks on depository institutions heightens the need for credit unions to maintain strong information security protocols. Recent incidents have included distributed denial-of-service (DDoS) attacks which cause Internet-based service outages by overloading network bandwidth or system resources. Two credit unions-- University Federal Credit Union and Patelco--were shut down by DDoS attacks in January. Others may have suffered attacks. The two that are named were identified in Web postings as victims of the Izz ad-Din al-Qassam Cyber Fighters the Middle Eastern group that has claimed authorship of the recent highly sophisticated takedowns of financial institutions. On March 12 at least six leading U.S. banking institutions were hit by DDoS attacks the most number of institutions to be targeted in a single day. Even more worrisome the attacks caused by a bot known as Brobot are evolving and increasing. An attempt to make a machine or network resource unavailable to its users characterizes a denial-of-service attack (DoS attack) or distributed denial-of-service attack (DDoS attack). Perpetrators of DDoS attacks typically target financial institutions banks credit card payment gateways and even root nameservers. DDoS attacks do not directly attempt to steal funds or sensitive personal information but they may be coupled with such attempts to distract attention and or disable alerting systems. Many financial institutions think that if they are small or medium sized they are not main targets for hackers because of their size. This very misleading mindset makes them easier targets for fraudsters. Fraudsters leverage opportunity and do not discriminate their targets based on the size of the institution. Instead credit unions may be even more of a target for attack because it is often assumed they might have inferior controls when compared to larger institutions. New denial of service attacks and account takeover attacks such as the Brobot Eurograbber or Zitmo banking Trojan are not the only concern. Exploit kits such as Blackhole Phoenix www.cubusiness.com April 2013 Credit Union BUSINESS 21 TEChNICAlly SPEAkINg NCUA rules and regulations require credit unions to scrutinize systems in order to identify tangible and attempted intrusions into member information systems. As the goal of DDoS attacks is in causing service outages rather than stealing funds or data typical network security controls--such as firewalls and intrusion detection and prevention systems--may offer inadequate protection said NCUA Chairman Debbie Matz in their risk alert. However the NCUA risk alert reports DDoS attacks might also be paired with attempts to steal member funds or data as well. Credit unions significantly affected by DDoS or other cyber attacks should notify their NCUA regional office or state supervisory authority and when applicable follow regulatory notification procedures the agency said. The alert suggested credit unions mitigate DDoS risk by performing risk assessments ensuring incident response programs include a DDoS attack scenario and performing ongoing third-party due diligence in particular on Internet and Webhosting service providers to identify risks and implement appropriate traffic management policies and controls. Credit unions should voluntarily file a Suspicious Activity Report if an attack impacts Internet service delivery enables fraud or compromises member information the NCUA said. The NCUA also encouraged credit unions to participate in information-sharing organizations such as industry trade groups and the Financial Services Information Sharing and Analysis Center. In addition the NCUA said the United States Computer Emergency Readiness Team provides information on the methods used to launch attacks and risk mitigation tactics to reduce their impact. It restates and further emphasizes the need to carry out risk assessments employ effective strategies for mitigating identified risks and improve customer member attentiveness of possible threats but does not endorse any specific technology for doing so. The guidelines serve as a fundamental level for banks and credit unions to shore up their security fences. According to the FFIEC one thing is very clear user IDs passwords and static challenge questions alone are insufficient. Consumer transactions require layered security and commercial transactions need protection proportionate with the transaction level. Ellenore and Citadel are also of concern. An exploit kit is a cybercrime tool that is sold as an off-the-shelf product bundle. It is usable without any kind of technical hacking skills. The more advanced versions of the popular exploit kits being developed have the ability to inject JavaScript into an online banking session (after infecting an endpoint) which is capable of automatically creating and authorizing fraudulent transactions. It is so advanced that it literally requires zero intervention from the attacker. Financial malware authors are also trying to evade new online banking security systems by returning to more traditional phishing-like credential stealing techniques. In Canada an ongoing telephone and Internet scam has defrauded thousands of Canadians of over 800 000. Known as the Anti-Virus Scam there are currently two different versions being used to defraud victims out of money. NCUA Requirements Re-Emphasized Conformance to guidance standards issued by FFIEC which includes the NCUA seems sporadic. According to reports an estimated 40 percent of financial institutions still do not meet basic FFIEC guidelines. January 1 2012 was not a compliance date or due date but the date when examiners began to assess financial institutions enhanced expectations. It is guidance not a hard regulation which means there is flexibility within the FFIEC guidance framework to establish control sets that match the services and functionalities offered by the credit union. Lagging behind could not only trouble examiners who are looking for a good faith effort to comply but leave organizations vulnerable. 22 Credit Union BUSINESS April 2013 www.cubusiness.com TEChNICAlly SPEAkINg Mobile Danger While the larger security bull s-eye is on the online space it is shifting to include mobile. There has been a sharp increase in the number of criminal hack attacks on mobile devices. A mobile phone that is running slowly using an unexplained amount of airtime or acting strangely in other ways could be harboring a virus. Cyber criminals are infiltrating phones and tablets at an alarming rate. Reports of disruptive software or malware that can gather sensitive information have increased 600 percent in recent years. Cyber security expert George Waller of StrikeForce Technologies estimates that nearly 50 percent of all smartphones and tablets are already infected. It could get your banking credentials and essentially go into your bank acting as you Waller said. And if you use a mobile wallet app some experts worry that when you tap and pay using your phone criminals could intercept the short-wave radio chip transmission and send your credit card information to a retailer from whom you ve never bought anything. security efforts. These new updated FFIEC guidelines which apply to both retail and commercial account holder s use of the echannel emphasize and tackle the basics of online banking fraud. At the heart of the matter the guidance calls for layered security expanded authentication mechanisms education and controls to combat identity theft and online fraud. As this guidance reinforces its own approach to online security we could not agree more. While the guidance focuses on Internet delivery channels the principles relate to all forms of electronic banking including mobile and voice. Some specific areas to improve risk management techniques include controls calculated to assess and mitigate online risk appropriately. But technology is constantly changing. Credit unions need to understand what the most effective controls are today but as threats and functionality change they must also try to establish some type of a risk management framework that can be applied as new technology develops. Since regulation is at least one step behind threats and fraudulent activity minimally credit unions should be either up to date with guidance or in partnership with a third party who understands and can protect against cyber threats. Roy Urrico is a freelance ghostwriter and byline writer of books articles newsletters guides case studies and white papers about financial institutions financial technology compliance information security credit and collections foreign exchange and many other financial topics. To find out more about how Roy can help your organization check out Roy s profile on LinkedIn visit his Web site at brightideaswriting.com or email him at roy brightideaswriting. com Threats and Protection According to the Federal Trade Commission in their 13th consecutive year of reporting on national consumer complaints 2012 marks the first year in which the FTC received more than 2 million complaints overall and 369 132 or 18 percent were related to identity theft. Another reason all financial institutions need to pay careful attention to security is that account holders expect it a notion based on the fundamental trust that account holders have with their financial institution. A recent Zogby survey found that more than 70 percent of adult consumers rated the security of their electronic banking transactions and financial data as more important than any other banking service and 66 percent said they believe financial institutions not government are most responsible for securing customers financial assets. The FFIEC acknowledged that fraud has outpaced its original regulations. The supplemental guidance is a great step forward in the process and many expect to see additional refinements added in the future. Until then the current guidance provides a solid baseline on which to focus authentication and www.cubusiness.com April 2013 Credit Union BUSINESS 23 SOciAl MEdiA leveraging Social Media Insight to Reach Gen X and Y Markets T By Dan Shannon Senior Vice President Consulting Services FIS 1965 and the early 1980s and Gen Y customers those born later -- keep their primary bank account with institutions other than credit unions as the graphic below shows. he mounting pervasiveness of social media prompts credit unions to rethink strategies to reach the younger market that s enamored by Facebook Twitter and other such channels. This article explores social media s potential impact on credit unions marketing strategies. Initially we will examine characteristics of the social media chatter that surrounds financial services providers and that reflect findings of exclusive research compiled on behalf of FISTM Consulting Services by NM Incite. Then we ll describe strategies to drive marketing success in reaching Gen X and Y customers. The Challenge of Gen X and Gen Y Research conducted by FIS reveals that younger generations favor patronizing large national financial institutions over credit unions. The majority of Gen X customers those born between 24 Credit Union BUSINESS April 2013 www.cubusiness.com SOciAl MEdiA New Research Offers Hope We believe this trend can shift. The research by NM Incite which analyzed more than 180 million social media sources to gauge consumer perceptions of financial institutions surfaced that most consumers possess favorable impressions of credit unions. This offers the opportunity to woo the Gen X and Y population. Research findings are summarized below The Positive Vibe Surrounding Smaller Institutions Social media buzz uncovered in the NM Incite research relative to credit unions proved to be mostly positive in contrast to large global banks. This offers credit unions an inherent marketing advantage over their larger bank competitors whose buzz tends to be much more mixed. An intrinsic link exists between the aggregated online voices heard through social media channels and the local focus that credit unions can leverage as a lynchpin of their success. The climate echoing throughout the social media landscape reveals pervasive skepticism toward larger institutions which can work to the smaller institutions advantage. Top themes within community banking credit union discussion The collected social media data and statistical analysis reveals three major themes that credit union marketers should leverage to help build the Gen X and Y customer base Continue to show customers you care Provide superior customer service Support your local community (by banking locally) Provide better service Establish service levels to take advantage of inherent smaller institution advantages Have credit union staff indicate the local town they reside in Support local community Buy local bank local This table summarizes both strategies and tactics that can harness this positive sentiment and assist credit unions in penetrating a younger demographic While these tactics may not fit your particular institution they do offer ideas that credit unions can act on today to reach out to Gen X and Y Target Markets. Theme Strategy Care about customers Prove your credit union knows and cares about its customers Offer free Skype or online financial educational seminars to individuals who expressed interest in your credit union online Tactics Solicit votes in social media channels to rank local charities and events. Seek out the type of events favored by youthful participants e.g. 5K run versus golf outing. Create virtual buying groups for patrons of local businesses Tactics Send personal emails or text messages as part of cross-sales campaigns. These must look original and come from an individual at your institution Tie in caring theme into local charity vote Solicit service testimonials in social media. Tweet and forward any positive member experiences via Social Media channels. Tactics Use real-time chat or IM to connect with members on service issues Create Facebook updates or blogs to answer most frequently asked financial questions of younger customers. Target local non-profits for relationships and then publicize success on Social Media channels Follow local small businesses on Facebook and LinkedIn especially those favored by younger demographic e.g. coffee shops clothing stores etc. Tactics Have online check-ins trigger responses from credit unions and tie into loyalty program www.cubusiness.com April 2013 Credit Union BUSINESS 25 SOciAl MEdiA For online customers consider offering real-time chat or instant Messaging as ways to extend personal service to technology-savvy younger customers. done correctly this support is efficient and personal and creates a high-tech image for your customer support staff. Prove Your Credit Union Knows and Cares About Its Customers Perceptions become reality. That can be beneficial when members and prospective members believe their credit union cares about them and they view it as their hometown financial institution. Familiarity and a personal touch go far when competing with larger institutions advantages of more sophisticated products and national advertising campaigns. Personalization demonstrates attention to detail and reinforces an image of caring. If your organization has the bandwidth try to personally text or email younger members as part of a cross-selling campaign. Take the time to personalize messages even if they are being sent via electronic channels. Use your local knowledge of charities and nonprofits to demonstrate how plugged in your institution is to the local scene. Let members vote via your Facebook page on which charity or campaign your credit union should sponsor in a particular month. Crowd sourcing obtaining services or ideas through a large group of people usually online can be accomplished locally and separate your institution from national brands. Another easy tactic to employ to show your credit union cares is to friend or connect with local small businesses with a presence on Facebook or LinkedIn. Following them online shows you pay attention to local small-business owners. It also will help your relationship managers stay abreast of changes and growth within the local business environment. vice exceeded expectations. These kudos offer excellent sources for future marketing campaigns websites and newsletters. They also provide strong content for such social media channels as Facebook or Twitter. Accounts of superior customer services provided a younger customer should surface immediately as a top priority. Members relate to personal stories and the more Gen X and Y consumers read about their peers the greater the reinforcement that your institution is a desirable financial partner. For online customers consider offering real-time chat or Instant Messaging as ways to extend personal service to technology-savvy younger customers. Done correctly this support is efficient and personal and creates a high-tech image for your customer support staff. Buy Local Bank Local One comment uncovered in the NM Incite research succinctly captures the sentiment around engaging with a local institution versus a national bank I m now at a community bank and I love them. They actually care about our community and sponsor my station s Food for Families. This favorable impression of local banking offers a huge opportunity for local credit unions. Credit unions understand local sentiment and can use their smaller size to react quickly to local nonprofit opportunities. Provide Superior Customer Service Great customer service may be difficult to quantify but certain For example a local credit union was the first financial institutactics can help credit unions extend their inherent advantage in tion on the scene after a tornado whipped through a small Midthis area. They easily can solicit customer testimonials when ser- western community. The credit union staff simply distributed 26 Credit Union BUSINESS April 2013 www.cubusiness.com SOciAl MEdiA bottled water but their support was genuine and newsworthy. Savvy credit unions can target nonprofits for membership especially local charities favored by the Gen Xers and Yers. They tend to be active and sponsoring 5K races or hip hop dance marathons can prompt further positive vibes. These sponsorships and events should be promoted though all of your social media outlets. Where to Start Any of the three strategies discussed could fit a variety of a smaller financial institution s needs. If you re seeking to leverage the positive sentiment toward your institution how should you start Start with a marketing plan for pursuing activities. This assessment should measure the characteristics of a credit union s market demographics and opportunity. It will help in developing a plan that incorporates these suggestions Link marketing tactics with your institution s Gen X and Y goals and objectives. Target select your customers and prospects by using demographics and customer information. Track and measure results of any and all Gen X and Y campaigns By adopting a well-constructed plan and exploiting the positive sentiment toward smaller institutions credit unions can make lucrative inroads into the huge Gen X and Y customer base. CEO mEmbErships With Benefits Benefit your CFO COO CMO CCO CLO CIO HRD With free Monthly E-Newsletters Join NOW www.cubusiness.com register www.cubusiness.com April 2013 Credit Union BUSINESS 27 hEAlTh CARE REFORM health Care Reform is Coming to Businesses Near your Credit Union By Murray Halperin The Next Big Thing S small opportunities are often the beginning of great enterprises. Demosthenes ometimes great opportunities are clouded by controversy and great opportunity is at your Credit Union s front door now packaged in what is called the Affordable Care Act (ACA). This is an opportunity to provide health insurance options for credit union employees and an opportunity to provide education about the new Affordable Care Act to business owners associations not-for-profits and all individuals. It is an opportunity to offer health life and senior insurance products to every one of your members and their families wherever they are in the world as long as they have access to a phone or computer. All of this can be accomplished through your Credit Union s Private Health Care Exchange Health Insurance Call Center or using outside health care sales professionals This and more is what the Affordable Care Act has brought to your front door. Is your Credit Union prepared to open that door Street. I urge you to take a few minutes to listen to this impartial and unbiased video about the ACA. You can find it on YouTube. With all the political hype this topic has engendered over the past few years many of us have not had the opportunity to examine all of the ramifications of the ACA and how it will change the way health and life insurance are marketed and purchased. Millions of people are going to be affected by this new law. Some experts estimate that over the next few years as many as 100 million people will be shopping for health insurance. It is further understood that a significant number of small business owners--especially those with fewer than 50 employees--may discontinue offering any healthcare option to their employees and even large corporations are seeking alternatives to providing health insurance to their employees. This has the potential to provide CUs with a huge opportunity to expand their base of loyal members SEGS and businesses. ACT NOW Opportunity comes like a snail and once it has passed you it changes into a fleet rabbit and is gone. Arthur Brisbane It is time for all organizations to start deciding how they are going to deliver health insurance to employees and how Credit Unions can use this great opportunity to expand their influence within current market segments while attracting new enterprise core sponsors vendors industries and the community in general. All of this without disbursing one penny on systems software or new employees The open enrollment period will begin on October 1 2013 for an effective date of January 1 2014 so there is no time to waste. www.cubusiness.com ACA History in the middle of difficulty lies opportunity. Albert einstein We all know how controversial the Affordable Care Act has become. Instead of writing at length about how we arrived here I recommend a praiseworthy video written and produced by the Kaiser Family Foundation and narrated by Cokie Roberts news commentator for ABC News and NPR as well as a member of Kaiser s Board of Trustees called Health Reform Hits Main 28 Credit Union BUSINESS April 2013 hEAlTh CARE REFORM PAY OR PLAY The Affordable Care Act of 2010 provides some interesting options for business owners. This opportunity is tagged as PAY OR PLAY . Once proprietors assimilate these new options a move forward strategy may be put in place that will make the most sense for the business owner. This platform will not only reflect the coveted bottom line but also the care and welfare of the employees and their families. Here are the rules that will apply to Pay or Play . PLAY Work Within the New Regulations in 2014) What will it cost to cover all of your Full-Time employees working over 30 hours per week step 1 Define your Population Closely review all staff regularly working 30 hours or more per week or 130 hours or more per month. Classify them as either P Part Time 30 hours not included F Full Time hired to work that way V Variable Hours Evaluate whether your staffing model can be modified to reduce the Full-Time population. Can 500 employees with over 30 hours be reduced to 350 FTE s Focus on your V population and review your data to determine your look back or measurement period. Determine your optimal model and implement your revised strategy. Can you look back to 2013 to decide which Staff measurement period is best 90 days 180 days or 365 days Whatever look back period you select becomes the coverage stability period moving forward. For example if you adopt a 180-day measurement then eligible participants must be permitted to remain covered for at least 180 days moving forward irrespective of calendar year 2014 hours worked. Seasonal employees can be excluded and should be classified as such. PAY THE TAX In 2014 if an employer has 50 or more full time employees (at or above 30 hours per week or 130 hours per month) an annual tax of the lesser of 3 000 for each employee who is eligible for Federal subsidies or 2 000 per eligible employee if coverage is not offered or considered not to meet the new minimum governmental requirements less the first 30 employees. estimated tax Calculation (example) - Assume 500 employees - Net 470 EE x 2 000 or 940 000 non-deductible tax ( 940 000 on a pre-tax basis equates to 1 250 000. 940 000 x 1.3 (assumed tax rate) 1 250 000.) Additional Costs to Consider If an ER adopts this strategy what consideration must be given to employees that previously have had benefits through the Company - 10% increase in salary compensation - 20% increase in salary compensation - 30% increase in salary compensation 1.3 Million likely will become 2- 2.5 Million with salary increases designed to offset the cost of eliminating a benefit plan. In addition an Employer will need to plan its longer-term strategy to include an inflation factor for EE compensation because Health Care costs generally increase at a rate greater than wages. step 2 Waiting period--90 day or less. In 2014 there will be enforced enrollment into one of an Employer s Plans including a new minimum essential plan option. It is critical that Employers adopt a strict enrollment waiver process. Why would an EE waive Because they have spousal insurance costs are too high etc. The 2014 individual mandate uninsured penalty (tax) is very low limited to 95 annually in 2014 and rising to 600 in 2016. All individuals must purchase insurance in 2014 or pay the penalty (tax). The mandated 90 Day Auto Enroll feature has been delayed until 2015. www.cubusiness.com April 2013 Credit Union BUSINESS 29 hEAlTh CARE REFORM Affordable Care Act of 2010 Compliance Workflow for Pay or Play Analysis Does the employer have at least 50 full time employees YES Does the employer offer coverage to its Full Time (30hour or more) Employees NO NO Did at least one employee receive a premium tax credit or cost sharing subsidy in an Exchange YES The employer must pay a penalty for failing to offer coverage. The employer must pay a penalty for failing to offer Affordable coverage. The employer must pay a penalty for failing to offer Affordable coverage. YES Does the insurance pay for at least 60% of covered health care expenses for a typical population No Employees can elect to buy coverage to an Exchange and receive a premium tax credit. YES Does any employee have to pay more than 9.5% of their income for single EE coverage There is no penalty payment required if the Employer offers Affordable coverage START YES Employees can elect to buy coverage in an Exchange and receive a premium tax credit. Penalties do not apply to small employers. If the employer has 25 or fewer employees and average wages up to 50 000 it may be eligible for a health insurance tax credit. The penalty is 2 000 annually times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums. The penalty is 3 000 annually for each full-time employee receiving a tax credit up to a maximum of 2 000 times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums. The penalty is 3 000 annually for each full-time employee receiving a tax credit up to a maximum of 2 000 times the number of full-time employees minus 30. The penalty is increased each year by the growth in insurance premiums. step 3 9.5% of income ee Maximum Contribution Designed to assist the lowest-paid Full Time Employee under the new Minimum Essential Benefits plan option. No tax will be assessed to Employer if the single contribution is no more than the 9.5% of Income. Further guidance may permit Employers to use the Federal Poverty Level income amounts as a Safe Harbor. example Assume the lowest-paid full-time employee earns 18 000 year. The employer can require no more than 9.5% of 18 000 so the maximum contribution equals no more than 142.50 month for Single coverage to avoid exposure to a Penalty tax. The ACA is not concerned about whether eligible employees enroll for benefits but will enforce the waiver process. This is similar to current regulations in Massachusetts. step 4 new Minimum essential Benefits Plan Although the details are yet to be released the cost is estimated to be 3 500 up front Deductible with a 60% co-insurance and subject to a maximum out-of-pocket limit. It is likely that many Employers with adopt this new plan as their baseline to meet the minimum benefit standards. It Will Be Confusing Provide Consulting it is better to be prepared for an opportunity and not have one than to have an opportunity and not be prepared. Whitney M. Young Jr Confusing isn t it If you re like me you are probably scratching your head right now. The chart below helped me get a better grasp of this perplexing subject matter. Take a good look at the 30 Credit Union BUSINESS April 2013 www.cubusiness.com hEAlTh CARE REFORM to take and they want your business. This can become a tricky decision to make whenever any Credit Union makes the strategic decision to enter the health care service field as a way to expand their business. Over the next few years many companies will present your Credit Union with offers of fancy new technology phone rooms and beautiful presentations to help you set up health insurance exchanges. But these trimmings can t replace the one element that business owners association directors HR staff etc. count on most--the knowledgeable insurance agent who has gained their trust. Without this simple but essential component any new provider is likely to deliver disappointing results. Make sure your Credit Union knows what matters. The ACA is obviously confusing and transitions usually are. Most health insurance decision makers will have a tough time learning all they ll need to know about what is going to happen by pouring through the thousands of pages of documents opinions and interpretations that are beginning to muddle the market place. Will they be comfortable enough to pick up the phone and call a phone room to talk with someone possibly unlicensed and minimally trained that they have never met or don t know Are you willing to trust your Credit Union s reputation and possible future to these far off phone rooms Wouldn t they be more inclined to attend a local meeting hosted by the Credit Union where extensively trained insurance professionals introduce the new Health Care Reform Options and the Credit Union s Private Exchange Wouldn t they be more comfortable meeting with someone who represents the Credit Union in the privacy of their own office to review options and make suggestions for the future I believe that the most effective new business plans will include the following features Consulting approach Online Private Health Insurance Exchange Incoming Call Center Allows employees from all over the country to call and learn more about available plan information. Out-Going Call Center - The out-going call center will reach out to the CU SEGS business accounts and other prospects to introduce new products and set appointments for sales people. sales professionals Most people will want a visit from a sales person. The program with professional insurance agents chart and make sure you take enough time to read it through carefully. Only after you recognize how difficult comprehending this concept actually is will you be able to try to digest the information enough to begin making informed health care decisions. Now imagine that you have 35 or more employees working for you and their health and welfare as well as that of their families depends on your understanding. This kind of health care reeducation is happening now with a clear deadline for beginning enrollment of October 15 and affects every community in which your Credit Union operates. It will affect your friends and neighbors most of whom will need expert guidance in choosing the most efficacious path for them to follow. They are going to need someone to help them decipher sort through and guide them through this highly emotional transition process which could present you with an extraordinary opportunity to gain community trust and respect. Of course it also carries with it tremendous responsibility you ll need to know as much as you can and get it right the first time. The doors of opportunity are open and could provide countless streams of new business new members and even greater income possibilities for Credit Unions. The Approach Many insurance companies and their agents even your current insurance brokers along with some core processors and companies you have never heard of are going to start knocking on your door hoping to convince you that their approach to tackling the health care reform reshuffle is the right approach www.cubusiness.com April 2013 Credit Union BUSINESS 31 hEAlTh CARE REFORM who regularly visit accounts will earn more new business. If your Credit Union is looking to use this opportunity to attract the business community as SEGS or business accounts then I recommend that you not piecemeal these components but find an organization that can satisfy all your requirements. rM-Online This program provides support to a Credit Unions business services departments by working with loan applicants to build a loan file for preparation and presentation to the credit unions loan committee and underwriting team. By using RM-Online the Credit Union frees up the time of its Relationship Managers and staff to prospect and close loans rather than push paper with the members. the Breakfast Club Helps build the Credit Unions brand and programs with the movers and shakers in the CRE & Insurance industry by targeting market segment(s) and educating them on why they should refer their clients to the Credit Union for a CRE loan. This is the only program of its kind in the Country that is exclusively crafted for Credit Unions. the Breakfast Club also works in conjunction with USA Benefits Group a nationally known 26-year-old Health and Life Insurance Agency that has crafted a new Health Care Reform Program to place agents around Credit Unions Branch offices to help them introduce the Credit Unions Health Care Private Exchange and drive new business accounts to the Credit Union. Murray can be reached at 561-393-3770 or by email at murrayh bizlendingcentercom. Visit us on LinkedIn at http www.linkedin.com profile view id 29874999&trk tab_pro Geting Started With The Next Big Thing sometimes we stare so long at a door that is closing that we see too late the one that is open. -- Alexander Graham Bell I don t think there is a strong enough incentive for Credit Unions who do not focus on business deposit accounts or the SEGS market place to support a full business and marketing plan strictly designed to take advantage of health insurance reform opportunities. It might be advantageous for those Credit Unions that still service a large SEG base to look into the possibilities of solidifying or in other words protect its turf by finding an offering that will satisfy its SEG base needs. For Credit Unions that offer a robust and active marketing program to attract business accounts and deposits the ACA could provide an ideal opportunity for them to increase their exposure within the business community by becoming the first financial institution in their community to help both its business account base and the community in general find direction and solutions as they troll the waters of health care reform. Bear in mind that your competition is already working towards these goals. So get going and good luck i will prepare and someday my chance will come. -- Abraham Lincoln Murray Halperin is President and Founder of Biz Lending & Insurance Center Inc. (BLC). Since 2004 BLC has created a number of programs all designed to originate and drive CRE SBA Business loans and Business Deposits to Credit Unions all over the United States. Some of its proprietary programs include CEO mEmbErships With Benefits Benefit your CFO COO CMO CCO CLO CIO HRD With free Monthly E-Newsletters Join NOW www.cubusiness.com register 32 Credit Union BUSINESS April 2013 www.cubusiness.com CU CONTENT Scoring a Touchdown for Financial Literacy A case study of Financial Football at Suncoast Schools FCU M By Laura Enock any credit unions are concerned about financial education and there are excellent resources and programs available that will help you introduce financial education to schools or find other ways to reach younger members of your community. While all of these programs are good some work better than others. But is it really possible to get school kids so excited about personal finance that they ll devote hours of their own time to studying it Believe it or not that s what one credit union in Florida accomplished. Before you decide that it s impossible consider this What if there was a financial education competition between classmates classes and eventually other schools What if the competition was modeled after spelling bees Could it work Would students take an interest and participate in something that s optional in their free time Suncoast Schools FCU a billion dollar credit union in Florida successfully led their fourth such an initiative in February with the launch of their Financial Football program. Juli Lewis Youth Marketing Manager spearheaded the program and found that student participation was high but interest and motivation were even higher. The teachers were very supportive Lewis said. Some schools even organized their own competitions to select the students that would represent the school at the main competition . Overall fourteen schools participated and each school sent a team of four students to represent them. Students were required to study a list of nearly 1 000 questions from which they would be tested during the event. This year teams competed against What if there was a financial education competition between classmates classes and eventually other schools What if the competition was modeled after spelling bees could it work each other in a double elimination process and the final two teams went into 28 rounds of overtime during which neither team missed a single correct answer This resulted in a tie for the first time in the four years that Suncoast Schools FCU has run the program. We have parents who come to watch the event that are impressed with their children s knowledge Lewis says. Sometimes the parents don t have as much financial knowledge as their children attain in the course of preparing for Financial Football . Each student on both winning teams was awarded a desktop computer and a 500 check compliments of the Suncoast for Kids Foundation and a number of donors who learned about the competition and quickly jumped in with their support. The second and third place winners also received desktop computers and checks for 200 and 100 respectively. Suncoast gave each contestant a tee shirt and goody bag and lunch was served to all attendees. Each student was allowed to bring his or her family to watch the competition. Any credit union can pull this off Lewis says. You don t need a large budget to make it happen. All in all the entire www.cubusiness.com April 2013 Credit Union BUSINESS 33 CU CONTENT event cost the credit union less than 10 000.00--a small amount for such a big investment in community relations and financial education. Because Suncoast already has student-run branches in schools Lewis had no problem bringing them on board. However any school can benefit from offering a program like this to their students. Lewis gave schools the following reasons to participate Spread financial education among youth Provide schools with a free valuable financial program Spark competition and interest among student-run branches Raise awareness of credit unions and promote membership The football analogy was used throughout. Each team had 20 seconds to answer a question that answered correctly scored the team three points. Points became field goals yards and touch downs. If the team answered incorrectly the opposing team had the opportunity to answer for one point. In addition to the game the credit union brought in Jason Odom as a guest speaker to discuss both football and smart money management. Jason highlighted the importance of budgeting and planning ahead. He emphasized to the students that it doesn t matter how much money you make everyone needs to know how to manage their money and to follow a budget. Going from broke college student to wealthy NFL football player in a very short time was a difficult transition for him. He said that he would have greatly benefited from the kind of financial knowledge that these students were receiving. If your credit union would like to participate in Financial Football Juli Lewis would be happy to discuss details and answer any questions readers of Credit Union Business might have. You can contact her at Juli.Lewis Suncoastfcu.org. Additionally Lewis will present a live case study of her successful Financial Football campaign during the Credit Union Toolbox webinar scheduled for May 7th at 2 00 p.m. ET. Sign up at www.CreditUnionToolbox.com and use coupon code CUBUSINESS. Laura Enock Managing Editor of Credit Union Toolbox and founder of CUcontent.com provides credit unions nation-wide with content for their websites newsletters email marketing and social media communications. Enock moderates the popular CreditUnionToolbox webinars on best practices and provides individual credit unions with social media marketing and PR support on a consulting basis. Contact her at laura cucontent.com or follow her on Twitter CUtoolbox. Teacher Testimonials Thank you so much for all the hard work you put into Financial Football. It was fantastic and my students had a wonderful time. I wondered what I had been thinking as I got up at 4 00 a.m. on Saturday morning. But by the time the day was over I knew why I had said yes We had a ball learned a lot about finance and met Jason Odom and other people in the student-run branches. I hope this event continues and am grateful for the opportunity. Sincerely Nancy Thank you Juli for all you do for the students in all the schools. The format that you put together was extremely well done and proved to be exciting and stimulated much excitement among all the teams. I intend on emailing our new superintendent and letting him know how wonderful this event is--and has been--for the students especially now that Sunlake will be getting the first ATM from the SSFCU installed in a Pasco school. I could not have been more proud of my students and of all the other students for the time and effort they put in in studying the questions. They have learned so much just from this alone. Thank you again. Until next year Sherry V Sunlake HS 34 Credit Union BUSINESS April 2013 www.cubusiness.com MARkETINg MATTERS how MCIF Delivers ROI D By tony rizzo accounts in through the front door they become oblivious to the exodus of existing accounts through the back door. o you need an MCIF Maybe you re not sure. Maybe you need to know how to show why buying an MCIF is necessary when talking it up to senior management. Specifically exactly what will your institution gain by having one Generally speaking an MCIF (Marketing Customer Information File) is the source and pivot point of strategic information that can be used in multiple ways to help you identify and retain your existing members while helping you cost-effectively target new ones. Let s discuss the raw financial benefits of buying an MCIF vs. hiring an MCIF Service Bureau to deliver these same benefits for you. reason three Lack of Business intelligence. How can you reach out and touch your members especially your most profitable ones when you aren t sure who they are or what motivates them as clients What will they buy next How can you better meet their current and future needs To best serve all your members you need better knowledge about your existing members and you need to be able to track who is staying who is going and know the reasons for both. Your institution is looking for an annual growth rate of 10% 12% or more. Isn t it ironic that in order to grow at all you must first replace every member who leaves taking hundreds of thousands of the dollars in profit with them An MCIF can help you identify segment track and reach out to your existing members so that you can reduce your attrition rate. What kind of return can you expect from an MCIF if you only want help in retaining your existing members You should be able to retain an additional 1% of your members at minimum. How can such a small amount as 1% be meaningful According to Frederick Reichheld in his book The Loyalty Effect statistically a 1% increase in client retention translates into a 17% increase to the bottom line. So for every million dollars your institution makes add another 170 000. Not bad. Is this a good enough reason to want an MCIF Yes. Can you imagine yourself being able to accomplish this if you have the right tools Let s put this MCIF financial return model to a different test. How many top members do you have to retain or further develop to pay for the tool that allows you identify them Interestingly enough you only need to keep a few from leaving. On average members in the top 2% at community Attrition The Hidden Cost of Financial Institutions Universally financial institutions of all sizes share one giant risk 15% of their members leave each year. WOW Think about it How can your organization grow 15% when 15% of your existing members are leaving you Why are we ignoring this huge business problem Why are we allowing hundreds of thousands of dollars in profit to walk out the back door each and every year Is it because we don t care Give me a break Every institution wants to keep existing members. So what s causing this expensive churn of members reason One Lack of Attention to Attrition. Until Reducing Attrition is a highlighted bullet point in your institution s strategic plan your marketing group will focus their dollars and attention elsewhere. reason two ignorance of the Problem. Unfortunately many credit unions are simply unaware of this problem. As branch staffers concentrate on stuffing more new www.cubusiness.com April 2013 Credit Union BUSINESS 35 MARkETINg MATTERS banks and credit unions each deliver over 20 000 annually in profit. Saving just two great members per year pays for the MCIF. Saving more than two members impacts your profits dramatically. been said many times that 70% of a direct mail offer s success depends on the relevance and accuracy of the list. Today s MCIF systems allow you to measure the anticipated ROI of various direct marketing activities so you can prioritize campaigns that will deliver the greatest contribution to the bottom line Typically financial institutions want to market to targeted high-value prospect lists. These lists can be supplemented with demographic and lifestage codes that can help you create targeted offers that are more meaningful to new prospects as well as current members. More sophisticated institutions have used an MCIF direct mail management tool called Matrix Mailing to start and manage what is referred to as an onboarding process. Onboarding is a marketing technique that systematically reaches out to new relationships typically through phone calls and direct marketing letters and e-mails 4-5 times over the course of the first 90-120 days. Why should you do this Because recent a study showed that the majority of cross-selling is likely to occur in the first 90 Is Direct Marketing Dead . . . or Have We Been Dead Wrong Is your marketing department churning out direct mail offers with little regard to results An MCIF measures everything including ROI from marketing campaigns. Up to now most MCIF purchases have revolved around marketing department interest in managing and measuring direct marketing campaigns more efficiently. MCIF systems pay for themselves in two ways reducing mailing expenses by not targeting everyone with the same offer and by not sending multiple offers to account holders in the same household and segmenting the client base into likely target groups who have a need and a higher likelihood to respond to an offer. It has RESULTS. NOTHING ELSE MATTERS. gomarquis.com 800.365.4274 MQ CU1-13 Business Ads 36 Credit Union BUSINESS April 2013 www.cubusiness.com MARkETINg MATTERS days with new relationships and a new study reveals that 60% of cross-selling success occurs within the first 30 days. So you should regard onboarding as a crucial tool in your acquisition and retention strategy toolbox. There are numerous examples of institutions that have generated hundreds of thousands of dollars each year in measurable results with their MCIF through highly tracked direct mail. Campaigns that target overdraft protection skip-apay plans and even specific product promotions are all triedand-true methods that MCIF uses to produce profit that benefits the institution. Evidence of broad-scale direct marketing success is so proven that some vendors even guarantee that their MCIF will generate first-year profits in excess of the purchase price provided the CU runs a few basic campaigns. If nothing else an MCIF will add discipline to your direct marketing plan and an ROI component that may be missing. MCIF systems provide reports that clearly highlight your key business information and profit drivers because it has performed both profitability and house holding of your raw account data and it s these data enriching functions that bring your client information knowledge to life both strategically and tactically. Many financial institutions have overlooked this market intelligence relying instead on gut instinct and market experience. Why Why indeed Especially when you consider that the information produced by MCIF systems sets the agenda for strategic planning and insures flawless execution of the resulting strategy. Most systems have pre-built reports that help unlock these opportunities. Many systems also have the ability to export data to report writers which allows you to create specific reports that address to your individual needs. There are even report styles common throughout the MCIF industry that you can choose from to suit specific needs. You get reports loaded with the information you simply cannot ignore. The bottom line is whether you chose to use your own MCIF system or to use an MCIF Service Bureau where experts run MCIF for you once you see how inexpensive MCIF is today you ll want MCIF in your CU. More to the point what is the danger of doing nothing now and dealing with the problems again and again and yet again Is there a financial benefit to MCIF solutions Absolutely After reading this guide to MCIF you can readily understand the benefits to your business. Now the only question is will you put MCIF to work to boost both your profits and membership Or should you hire an outside expert who might not deliver the results you want 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 worldwide with a long-standing reputation for excellence. Re-Pricing your Products Imagine being able to evaluate rate and fee changes to your products without using the back of an envelope. MCIFs can measure anticipated impact rate and fee changes and the resulting migration and attrition will have on the bottom line. Pricing your products is a fluid process. How do you manage this process while tracking the impact of changes you proposed or actually made to your existing account types and product lines Is the result what you expected Do you measure the impact of your changes after the fact Many managers do not buy an MCIF with the intention of managing product pricing better although they should CUs who have used this profitgenerating feature report amazing results. It is likely that someone at your institution is responsible for managing your products and services and the corresponding fees rates etc. that you charge for them in the market-place. This person can be much more effective if they use a tool that will enable them to reliably predict the impact proposed changes or real changes will have on your bottom line. An MCIF is that tool and can help make you money through this application alone. Reports and Knowledge It has been said many times knowledge is power. In banking MCIF is the tool that delivers client knowledge. www.cubusiness.com April 2013 Credit Union BUSINESS 37 VISIT THE MARKETPLACE PAGE AT WWW.CUBUSINESS.COM MARKETPLACE Card Processing Payment Solutions Branch Services Coin Counters Coin Counters Branches still matter Bancography builds branching strategies Branch site analysis Current branch performance Branch network optimization Branch profitability Staffing review Sales goals www.bancography.com branch info bancography.com 205.252.6671 FOR ADVERTISING INFORMATION CALL GREG HALPERN 561-282-6015 4 GREG CUBUSINESS.COM MARKETPLACE Currency Coin Handling What Does Automating Your Currency Handling Needs and Providing Self Service Coin Redemption do for Your Branch It Gives Your Tellers Tools for Success Increases Branch Teller Increases Cross Selling Efficiency Opportunities Helps to Meet Member Strengthens Member Expectations Retention Reduces Costs Adding to your Bottom Line What Does it Take to Learn a Little More Not a Lot... Just ask your Magner Representative Phone 800-243-2624 Email solutions magner.com Online www.magner.com Let s talk about doing things the right way... Self-Service Coin Centers Currency Dispensers Currency Recyclers Proven Performance and Quality Facilities & Design Lending A Nationwide Lender with the Expertise to Get Your Deal Closed Business Partners is a nationwide provider of commercial real estate lending services with years of experience funding loans. We provide financing for most property types in primary and secondary markets Loan amounts of 500K to 20MM Competitive rates Terms of 3 5 7 or 10 years 25 year amortization Up to 75% LTV of appraised value or purchase price of the loan amount Loan fees 1% Atlanta GA - Los Angeles CA - Chicago IL - Dallas TX - Denver CO - Stamford CT CU SPOTlITE Removing Roadblocks to the Information highway at Varity Credit Union I By sharon sweda changed to NW Federal Employees Federal Credit Union in 1969 as they expanded and transitioned from a state to federal charter. Later they became NW Federal Credit Union to simplify their name and are now know as Verity Credit Union. Verity Credit Union currently boasts over 380 million in assets and maintains six full-service brick and mortar branch offices offers round-the-clock electronic banking and provides 24-hour telephone assistance. Varity was the first credit union to have its own website and the first to offer on-line banking giving them a cutting-edge reputation and more pressure to continue finding the best technology solutions available. Security and speedy access had become priority issues and Verity felt best handled by outside vendors leaving their internal IT department the task of continuing to develop innovative member product and services. Verity s mission was to find a tech company who could guarantee secure access without sacrificing log-on speed. That s how they found Imprivata. Varity Credit Union was impressed by Imprivata s OneSign Single Sign On (SSO) system and was hooked when they learned that Imprivata could install their system in a single day. Imprivata s SSO solution provides security central password storage and efficiency for users and is a worldwide leader in the healthcare financial and administrative industries. One unanticipated by-product of the SSO application for Varity was a measurable 25% reduction in helpdesk tickets that translates to a significant savings of over 7 000.00. The intangible benefit of Varity s implementation of OneSign is the fact that OneSign is a first of many steps Varity is taking to provide more and better applications for their members. OneSign s successful rollout fosters goodwill that generates member enthusiasm for the new menu programs that will follow. 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 Sweda.com to SpotLite your CU. www.cubusiness.com t sometimes seems as if the financial service sector is trapped within an IT maze. The demand for large and small institutions to keep pace with advancements in technology is at a fever pitch and new technology tools dominate service platforms. No credit union with an eye to growth and member retention can escape the pressures of providing best-of-show platforms and easy product access to their expanding member base of tech junkies whose insatiable appetite contributes to--if not fuels--member obsession with tech service products and apps. Many institutions that outsourced their websites as recently as a decade ago are now producing them in-house using their own IT staff. Verity Credit Union in Washington State who currently employs a staff of six IT employees is one such case. While priorities are focused on front-end products that attract users like slick I-Phone applications and all the newest mobile bells and whistles the IT team at Verity is keeping watch on the back door as well. Varity s technology gurus understand the oxymoron created by user demands for log-on speed and their expectations of secure access. This oil and vinegar combination is a tough mix for security experts whose mantra is often all about lengthy and complicated passwords. As the group at Varity openly admits lengthy and complicated is synonymous with labor intensive and slow a dreaded combination. The more complex passwords are the more calls they generate to help desks as members need more assistance in resetting lost codes and correcting input errors. This higher call volume takes more of the service crew s time which would be better spent attending to the CU s top priorities new and better mobile banking services. Productivity from service personnel diminishes as they become more and more consumed with password assistance calls. Verity Credit Union (formerly NW Federal Credit Union) has been serving the greater Seattle area since 1933. Originally named Postal Worker s Credit Union Number 8 it was the first credit union chartered by the State of Washington. The name 40 Credit Union BUSINESS April 2013