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THE E-COMMERCE ISSUE AUGUST 2013 VOLUME 8 ISSUE 8 9.95 From A to Regulation Z Breaking Down the New Mortgage Rules Credit Unions and Student Loan Investments E-Signatures Helps Credit Unions Extend Reach and Expedite Loan Process CREATE A CAR-BUYING EXPERIENCE your members will love with AutoPilot Lending With SWBC your credit union can offer a car-buying experience that goes beyond just issuing a car note. Our AutoPilot Lending solution includes the superior MPOWERTM loan with complimentary vehicle and loan protection products giving your members financial security when they need it most. Plus we ll help you provide superior service and member communications that keep you top-of-mind when it comes to purchasing a vehicle. Scan the QR code to download the AutoPilot Lending product sheet or call 866-316-1162 for more information. For more information please visit autopilot-lending SWBC 2013. All Rights Reserved. MPOWER TM is a trademark of Enterprise Financial Group Inc. 5540-987 05 13 CONtENts Credit Union BUsiness august 2013 V O L u M E 8 I s s u E 8 4 6 8 10 pov Calling All experts Tim O Hara achieviNg skills 22 26 29 cu RegulatioN From A to Regulation Z Breaking Down the new Mortgage Rules Andrea Stritzke cu tRaiNiNg Ken Gonyer leaDeRship star Performance Holly Herman leNDiNg liNe Rex Johnson Training to Keep Top Talent Culture and Leadership Universally Desirable and Undesirable Leadership Attributes Dr. Sandra L. Torres cu case stuDy Taking Risk is now encouraged MaRketiNg MatteRs 10 Keys to success with CRM Get Results with CRM at Your Financial institution Tony Rizzo cu coNteNt Laura Enock 31 34 40 15 19 successfully implementing a new Appraisal Management system Clint Cornett techNically speakiNg e-security at Credit Unions Today cfo cuRReNcy Credit Unions and student Loan investments Emily Mor Hollis e-signatures Helps Credit Unions extend Reach and expedite Loan Process Roy W. Urrico cu spotlite Big Dividend Returns from American Airlines Credit Union Sharon Sweda August 2013 Credit union BusINEss 1 aBOut us Publishing team Tim O Hara Publisher tim Steve Magnuson Managing editor steve Iliana Nord Operations Manager iliana Patti Manzone Designer Homer Marshman III Circulation Director ThE E-COMMErCE ISSUE aUgUST 2013 VOLUME 8 ISSUE 8 9.95 From A to Regulation Z Breaking Down the new mortgage rules Credit Unions and Student Loan Investments E-Signatures helps Credit Unions Extend reach and Expedite Loan process staff Writers Laura Enock CU Content Ken Gonyer CU Training Holly Herman Achieving Skills Emily Mor Hollis CFO Currency Tony Rizzo Marketing Matters Sharon Sweda CU Spotlight Dr. Sandra L. Torres Leadership Roy W. Urricho Technically Speaking CUB_AUG.indd 1 7 31 13 1 57 PM 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 register. sales and advertising Bernie Fitzgerald Advertising executive Bernie or 561-282-6015 1 Greg Halpern Advertising services Manager Greg or 561-282-6015 4 Contributors Clint Cornett CU Case Study A. Rex Johnson Lending Line Andrea Stritzke Regulation Contact Information Credit Union BUsiness Magazine P Box 2223 Palm Beach FL 33480 .O. (561) 282-6015 (561) 588-7711 (fax) tim 2 Credit union BusINEss August 2013 FROM tiM Publisher s POV Calling all Experts C CUB is Looking For a Few Good Credit Union Contributors Andrea Stritzke Vice President of Regulatory Compliance at PolicyWorks writes about the new mortgage rules in her article From A to Regulation Z Breaking Down the New Mortgage Rules . You are one of the thousands of top influential credit union executives who read Credit Union Business and I want to invite you to send me (tim any ideas for topics you d like to read more about. If you d like to submit your own well researched and written article of between 1 500 and 3 000 words that could help our readers reach their goal of running a more efficient profitable and growing financial institution please send it to me and I ll be happy to pass it along to your credit union peers. Thanks for reading redit union professionals are widely known for being both smart and generous with their advice to other CU executives. I d like to invite any of the thousands of credit union professionals who receive and read Credit Union BUSINESS to keep us in mind whenever they have a great idea that might help their peers. I launched CUB eight years ago with the express purpose of helping top credit union managers--CEO CFO COO CIO Compliance Lending Marketing and HR managers--run their credit unions. We ve evolved our coverage into a two-step process. The first step involves covering headquarters at the C-level and each month we strive to bring them informed leadership financial management and technical information coverage. The second step entails covering retail branch operations by providing information that will help bring more members in the door and selling them more products. This publication already features contributions from some of the best and brightest CU and former CU execs each month. Look over this issue s Table of Contents to see the roster of writers here for you Currency expert Emily Mor Hollis CFA and Partner at the hugely successful Dallas based CU investment firm ALM First Financial Advisors LLC offers up important information on whether or not navigating through the legal morass of credit union student loan investing is advisable. Lending guru Rex Johnson CEO and Founder of Lending Solutions Inc. tells why taking risks a bad word during the last decade or so is now not only acceptable but also encouraged and how sub-prime loans can help your CU achieve better results. Get it for the entire executive team register 4 Credit union BusINEss August 2013 don t bet on behalf of your members that your credit union won t be a cyber target. As a financial institution you are a favored target for cyber criminals. Are you protected CUNA Mutual Group offers more than just cyber insurance you get ccesstoresourcesthathelpmanagerisk A relatedtocybersecurityanddatabreaches nsuranceprotectionbasedonyourcredit I union sspecificneeds elpfromtrustedpartnerstorecoverfrom H abreach shouldyouexperienceone Learn about your potential exposures and what you can do to protect your credit union from cyber threats by calling your CUNA Mutual Group Sales Executive at 800.356.2644 or visit www. cyber. It s the first step to protecting your credit union and reinforcing trust within your membership. Could you be one of the 64% According to a recent survey conducted by Ponemon Institute 64% of bank respondents said their institution had a Distributed Denial of Service (DDoS) attack in 2012. Cyber Security Incident Policy are underwritten by CUMIS Insurance Society Inc. a member of CUNA Mutual Group. Coverage may vary or may not be available in some states. CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company a mutual insurance holding company its subsidiaries and affiliates. This summary is not a contract and no coverage is provided by this publication nor does it replace any provisions of any insurance policy or bond. Please read the actual policy for specific coverage terms conditions and exclusions. CUP-0213-2442 CUNA Mutual Group 2013 All Rights Reserved. aChIEVINg skILLs star Performance G By Holly Herman Habit 2 Routinely prioritize and delegate your workload. Take time every day and each week to prioritize your workload know what must get done. Choose no more than three items per day to work on. Delegate any tasks that you don t personally need to complete even if it means training someone else to do the work. Leaders keep their eye on the big picture unnecessarily holding on to old tasks can stall your career. Habit 3 Use systems wisely. Star performers master the use of systems. Routine tasks--processing email answering phone calls attending exercise classes running errands etc.-- are performed in the same manner each time. Using one method to capture and control your to do list and keeping just one calendar are simple ways to increase efficiency. Systematizing any recurring tasks frees you up to recognize and grab onto new opportunities as they arise. Habit 4 Take pride in everything you do. Regardless of whether a task is large or small one-time or routine prizewinning or mundane take pride in everything you do. Taking pride is a habit people too often overlook. Taking pride helps reat leaders have developed the habits of star performance. These work habits support high productivity and generate quality work. High productivity is not a mystery it simply requires commitment and the tools training and resources necessary to make it flow naturally. Check out these Star Performance habits some of which you may have already embraced. Habit 1 Be 100% current have no inventory of unfinished tasks. This is accomplished by taking on only those tasks and projects you know you can actually complete. You should realistically assess your own workload before taking on more or doing something extra. Ask yourself which of your tasks you think you can reasonably complete and alert others or get help when you see that you ve taken on too much work. You are perceived to be someone who is unproductive overwhelmed or out of control when you routinely take on more work than you can handle a common problem in the work place. Completing tasks gets noticed delivering on your commitments is star performance. 6 Credit union BusINEss August 2013 aChIEVINg skILLs you set high standards for yourself and ensures that your work is accurate and exemplary. Whenever you complete a task step back for a moment and ask yourself Is this the best that I can do Setting your own standards high inspires others to do the same. emotional roller coasters to invade your space. Master your own emotional well-being. Holly Herman is a former CEO of two credit unions Chief of Staff for National Credit Union Administration Chairman Johnson and currently an Achievement Coach helping individuals and organizations. She can be found at www. or contact her at Holly AchievingSkills. com. Habit 5 Add value whenever possible. You ve got an opportunity to add value to others with every staff member coworker boss and member interaction. It could be as simple as holding a door open or as complicated as training someone for their next promotion. Look for ways to improve a person product service or process. At the end of the day ask yourself if and how you made the world even a little better place than it was. Habit 6 Master the art of performance. Take ownership in your job and become a master of performance. Continue training and learning from others. Research everything about your industry. Leaders are curious They learn grow and improve constantly. Create a crisis free zone around you. Don t allow others especially those who seem to constantly ride CEO SubSCriptiOn WiTH BeneFiTs Benefit your CFO COO CMO CCO CLO CIO HRD With FRee Monthly E-Newsletters Subscribe NOW register August 2013 Credit union BusINEss 7 LENDINg LINE taking risk is Now encouraged I By Rex Johnson automobiles made in Germany or Japan but the dealerships are owned and staffed by American workers. The shirts and pants we wear may have been made in China but the stores we bought them from are American owned and operated. And we pay taxes on almost everything we buy including homes. have been telling credit unions that it s time to start taking more risk for the last six years. It wasn t a fashionable message in 2007-2008 and it still isn t today. But that trend is beginning to turn around and guess who s behind it It s gathering a lot of momentum thanks to President Obama the U.S. Federal Reserve and the NCUA. Why Because everyone is beginning to understand that the only way to jump-start this economy is by creating jobs and that will not happen unless everyone starts spending money. subprime Loans So how does all this specifically help credit unions Consider this in 2012 lenders sold 18.5 billion dollars in securities. What were these securities They were backed by collateral not in the form of real estate but as subprime auto loans. That represents a lot of cars and demonstrates how everybody is jumping on the credit bandwagon. A subprime loan is a loan offered at some rate above prime to individuals who do not qualify for prime rate loans. Subprime borrowers have often been turned away from traditional lenders because of their low credit rating or high possibility of default due to unemployment injury or prior history. Subprime loans are attractive to investors because with the prime rate hovering at an all time low they offer higher yields as much as 20%. Here is the evidence of the growth of subprime lending backed by securities. Loans being packaged and sold have been growing at the following pace Year subprime Loans Backed by securities 2012 18.5 billion 2011 11.7 billion What s happened so far this year In the first three months of 2013 these loans have increased from 4.4 billion in 2012 to 5.7 billion in 2013 an increase of 1.3 billion dollars or 30%. That s right 30%. Last year 2012 ended the year with an increase of 6.8 billion or 58% for the year. If this year s first quarter rate jump of 30% continues throughout the year we could see a 100% increase for all of 2013. Money Money everywhere The U.S. Central Bank started to make money available beginning in November 2008. Here s what they did 1. They went through three rounds of bond buying 2. They cut short term interest rates 3. They brought interest rates down to practically zero 4. They injected a trillion dollars into the financial system The Fed received worldwide support from Tokyo to Frankfurt to London in their push to make more currency available and soon presses were working overtime money was being printed everywhere. Their economy-building plan was based on a simple theory We stimulate the economy anytime we spend money and that means more jobs are created whenever Americans accelerate spending. In fact consumer spending accounts for anywhere between 40-70 percent of GDP depending on how it s measured. That s a lot of stimulus. The low end of the percentile only includes money actually spent by consumers and omits large non-direct expenditures such as healthcare. Both numbers include domestic and imported goods and while the net affect to the US economy of money spent on imported goods is less than that of domestic goods all consumer spending helps create jobs We buy 8 Credit union BusINEss August 2013 LENDINg LINE Think about how subprime loans can help your profit margins and your underserved members. The Big Players in subprime Loans Santander Capital One Finance Ally Financial These companies are making huge profits in subprime lending by taking on a lot of risk packaging these loans and selling them to investors. The Federal government has invested billions of dollars in Ally Financial formerly called General Motors Acceptance Corporation (GMAC) which means credit unions must now compete with the U.S. government. I believe that the NCUA is getting the message It started being heard at the top and is slowly trickling down to examiners. Do I have evidence that this is the case You bet. Heather Anderson recently wrote an article for Credit Union Times titled NCUA Examiners Look at the Bigger Picture . Anderson says The NCUA has instructed its examiners in its Examination Guide to step back from examination details and key ratios and start thinking about the big picture. Examiners are supposed to assess management s ability to correctly identify and manage risk. A quote in this article from Timothy Segerson Deputy Director of the Office of Examinations told Credit Union Enterprise Risk Management trainees during a lunch on October 1 2012 at the Hilton Hotel the following Credit unions that don t take risk earn less income which makes them a risk to the share insurance fund. Wow I think he gets it and I couldn t agree with him more. We will show you how to take more risk and make more money to return to your members. It is time to start doing what we are supposed to be doing serving the underserved. You cannot continue to try making money for your shareholders with a portfolio that shows Investment earnings of 1% Earnings of just 1.95%-2.95% from new car loans to your best members You are a bigger risk to the NCUSIF (Share Insurance Fund) if this is your strategy. In closing we will discuss how credit unions can start earning more money by taking more risk focused on car loans in upcoming issues. You are going to like what you hear so stay tuned. A. Rex Johnson is the Founder Owner of Lending Solutions Consulting Inc. (LSCI Credit union BusINEss 9 August 2013 MarkEtINg MattErs 10 keys to success with CrM get Results with cRM at your financial institution By Tony Rizzo I There isn t a single credit union in the world that wants to spend money for something and get nothing in return. s there a positive return (ROI) on Customer Relationship Management (CRM) When your CRM goals implementation training and measurements are aligned CRM s promised benefits become real. How do you utilize CRM the right way By knowing and mastering the ten key elements to CRM success. Start by examining three areas in your CRM evolution 1) Have you drawn up realistic measurable CRM goals 2) Has your CRM implementation been effectively planned and executed 3) Are you able to measure CRM success and have you planned for future needs Keys 1-4 Know Your CRM Goals Before You evaluate CRM software To get what you want from CRM you must clarify your objectives. Imagine that you installed CRM software received appropriate training implemented it in your CU and now one year later you are looking back to review your success. What would that success look like Do you know how you would build on your initial success in the second and third years in order to support your strategic plan Many financial institutions are excited about CRM but are unable to articulate what it is they hope to gain by making the investment in staff time and money that CRM systems require. Don t let your CU be that institution. Before you start evaluating CRM software solutions you must establish CRM objectives. Pull together senior management to 10 Credit union BusINEss discuss your organization s sales and service challenges. Many but not all of those challenges will be obvious but consider and rank as many as you can. Then get your management team to agree on two or three specific goals that you think a CRM system can help solve. Resist the temptation to try and take on all of the sales and service challenges at once. Instead target a few key measurable goals. Your first CRM goals should be specific and achievable and you should introduce both CRM technology and objectives in a planned rollout organized by branch line of business or purpose-driven tasks. A limited rollout will give you time to work out any kinks before introducing the system to everyone in your CU. It also helps increase buy-in because you include select members for the beta phase which ensures a smoother rollout to a wider audience. August 2013 MarkEtINg MattErs Key 1 identify Worthwhile CRM Goals You might be wondering what goals are appropriate for a CRM. The following list includes the most common and successful CRM objectives but several of them either cannot be precisely measured or leave only anecdotal evidence of value. We believe that measuring successful CRM implementation requires proof and proof requires definable results. At its core CRM is all about serving members better. Members reward your institution by bringing a larger percentage of their business when you do a better job of helping them. Here is the list of the most common CRM goals Which of your processes will have to change once your CRM software is employed Will your staff throw up roadblocks Talk through the details with your staff to gain their buy-in upfront. Doing this hard work before you evaluate software enables you to ask each vendor specific questions and assures you that you ll get exactly what you need for the CRM success you want Here is a list of some common CRM implementation roadblocks Worthwhile CRM Goals Client retention Cross-Selling referral tracking On-boarding Key Account Management Direct Marketing Follow-up incentive Administration Member Experience tracking Stay away from generic goals such as grow profitability. CRM success lies in specifics how you plan to achieve each objective. As you identify your institution s specific CRM goals examine an outline of each one. Get your team s input and discuss the expected benefits versus what you re doing now. And don t forget to anticipate some detours along the way. Likely roadblocks Resistant Staff Fear of Change Job Security Unclear or Vague Objectives Training that doesn t fit Goals Poor Client Data Product Flaws Features Functionality Missing or Difficult Primitive Sales Service Culture Key 4 identify Long-Term CRM Objectives Establishing basic CRM goals helps to ensure that you ll achieve overall success with CRM. But always keep in mind that CRM is much more than a one-time event it is an ongoing journey made possible by planning. Your next move is pushing your organization toward higher CRM ideals. Start with managing and measuring the impact of automating referrals sales and incentives. Once you ve built that foundation your team can really get to work with these great follow-up goals Key 2 Monetize the Benefits of Your CRM Goals Before choosing a CRM vendor find out exactly how their CRM product will help you. Ask what specific results you can expect Will it help you sell two more products a month Crank up referrals two times above current levels Save time and money costs by eliminating outdated processes You must monetize your expected goals and objectives in order to determine and format the CRM benefits to your institution. Key 3 Know and Plan for CRM Roadblocks What challenges come when you apply CRM to your current environment How will CRM automation improve your processes Common Long-Term CRM Objectives Contact Management built-in Surveys Custom Client profiles Goal and incentive Management Sales Coaching and tracking Each goal you achieve leads to a future goal but what will this CRM future look like for you Planning future goals helps your CRM vendor position you to meet those goals in the years ahead. To ensure you buy the right CRM solution for your credit union you must 1) Know and fully understand your goals 2) Predict how these goals will impact your organization financially 3) Handle implementation challenges you may face with data or staff 4) Project and articulate a 3-5 year vision for the perfect CRM culture Credit union BusINEss 11 August 2013 MarkEtINg MattErs If you do the hard work before you explore CRM software options your evaluation process will be dramatically easier... because you ll know exactly what you need to achieve success with CRM. key stakeholders. Your vendor can custom design and build a system that will satisfy the needs and objectives of your CU only through this collaboration. Be sure to pay careful attention to the custom process-based set-up elements within the CRM solution and your MCIF-driven data mapping requirements. Don t Undervalue Training and implementation It often seems as if very few organizations value how important CRM software training is to successful implementation. While vendors provide these services in varying degrees technology training and implementation management are usually assumed but rarely discussed in detail. The real key to CRM application success often stems from getting rigorous training along with an implementation strategy that has been designed to fit your specific needs. Executing CRM strategy without vendor support is much more difficult than you may think especially with your first exposure. Launching a new product or opening a new branch seems easier when it s something you have done before. But few credit union leaders have experience implementing a CRM application successfully. Lean on your CRM vendor to outline their role in coaching you to CRM success. These discussions should include detailing both short-term and long-term partnership along with identifying milestones for measuring success. Training and implementation are responsible for every CRM success and failure so make sure you prioritize both with your executive team. Whenever these processes become disjointed-- whether responsibilities are handed off of the executive team or whenever there s no back and forth communication--they fall off the priority radar. Keep all levels of your organization engaged and make sure that you maintain top-down support and bottom-up reporting whenever you implement a CRM initiative. This strategy helps maintain enthusiasm and keeps momentum moving forward while simultaneously managing expectations and calming fears. It helps everyone track progress while knowing what comes next. Key5 CRM Consultation & Confirmation 1) Hold 1-on-1 and group discussions with leaders and key stakeholders 2) Identify confirm your institution s objectives 3) Review and make recommendations regarding sales and service operations 4) Design a CRM customization plan 5) Establish a timeline and assign tasks Key 6 CRM Customization & implementation 1) Build your CRM system according to the customization plan 2) Populate with enhanced household data from MCIF system 3) Identify client intelligence within MCIF to align sales & marketing 4) Establish user security rights including rights for affiliates 5) Refine tools to enhance sales and service efforts 6) Prepare system for training and rollout Key 7 Baseline Review Benchmarking and CRM Kickoff 1) Conduct a baseline review of your institution s present-state analysis and competitive position. Include recommendations for future strategies and tactics using business intelligence and software tools. 2) Identify and establish benchmarks to measure CRM progress and success 3) Present a kick-off overview designed to signal a clear beginning of CRM implementation and to motivate your entire organization Keys 5-10 steps to implementation & Training success Your vendor should provide a rollout plan that outlines how they will customize their CRM solution to fit your needs. Successful CRM implementation and training depends on having a rollout plan that s been developed in conjunction with your 12 Credit union BusINEss Key 8 Training & Rollout 1) Conduct onsite training for in-house trainers and August 2013 MarkEtINg MattErs administrators using your institution s data on your customized system 2) Train the practitioners of CRM on software to fit the objectives of the organization 3) Include senior executive management in training (general or detailed as required) 4) Document and present timeline for initial phase and pre-approved future phases By effectively integrating a CRM system into your institution s sales and service processes you can dramatically lessen resistance from your staff so desired outcomes can be realized faster. So what is more important...the software or implementing the CRM solution to meet your objectives Key 9 Measure Your success Many organizations follow the mantra if it wasn t measured it never happened. In our view this is a truth in every CRMenabled financial institution. What should you measure How do you decide Think about measuring your progress even before you start by focusing on monetized CRM goals and objectives. Through each phase of your CRM strategy (goal-setting vendor reviewing training and implementing) evaluate and determine what will be measured to validate success. 1) Set goals with quantifiable results on the sales and or service level 2) Determine what metrics you need to measure results 3) Ensure you have the business intelligence to execute your strategy 4) Evaluate software tools to see if reporting and measurement capabilities meet your requirements 5) Incorporate measurement what-if scenarios and contingency plans in your implementation plan and allow for ongoing strategic course correction 6) Align sales marketing and service plans to support strategic vision 7) Train effectively and assign responsibility for gathering data performing analysis and reporting results at both executive and enterprise levels 8) Execute phased-in rollout evaluate effectiveness and make any necessary adjustments to customized system before enterprise-wide rollout August 2013 Credit union BusINEss 13 MarkEtINg MattErs 9) Measure results and compare to goals quarterly 10) Keep stakeholders engaged throughout process 11) Report progress toward immediate goals update timeline for next phase(s). You must be able to measure the success of your CRM initiative because your management team expects CRM to have tangible and measurable benefits. Knowing how your institution will prove benefits is essential. Key 10 Plan for Future needs Go back to the beginning Imagine that you installed CRM software received appropriate training implemented it in your CU and now one year later you are looking back to review your success. What would that success look like Do you know how you would build on your initial success in the second and third years in order to support your strategic plan This is Key 10. For some institutions the benefits gained from their initial rollout of CRM technology is achievement enough. For others it is just the beginning. Your future will be brighter with firmly established and measurable CRM success. Again as you begin your CRM process you need to establish future benefits and goals realizing that by utilizing technology your goals may change. Be flexible as you do reality-checks on your progress and don t be afraid to make needed course corrections based on new facts or objectives. Having flexibility built into your plan and software is important to build on your successes and react to changing environments. For some institutions the benefits gained from their initial rollout of CrM technology is achievement enough. For others it is just the beginning. Your future will be brighter with firmly established and measurable CrM success. before you invest in CRM technology four involve training and implementation and two relate to measuring success and preparing for future benefits. CRM success is not an accident it is and should be purposeful. However you will need experienced counsel to maximize your CRM benefits and a successful rollout. Many of the institutions that failed with CRM skipped the planning and implementation steps I ve outlined here. CRM software is an automation tool that benefits users and credit unions but it is not a silver bullet and it doesn t work like a toaster it is not plug and play. Let me say it one more time In order to get the CRM results you want you have to know what results you want. If yours is the institution that sets a clear CRM vision charts a course for measurable success and one that positions itself to take advantage of change as it occurs CRM will benefit you even more in the future. 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. CRM success by the numbers Here are the 10 keys to success 1. identify Worthwhile CrM Goals 2. Monetize the benefits of Your CrM Goals 3. Anticipate and plan for CrM roadblocks 4. identify Long-term CrM Objectives 5. CrM Consultation & Confirmation 6. CrM Customization & implementation 7. baseline review benchmarking and CrM Kickoff 8. training & rollout 9. Measure Your Success 10. plan for Future needs Of the 10 keys to CRM success four require your attention 14 Credit union BusINEss August 2013 Cu CONtENt e-security at Credit unions today E By Laura Enock compliant with BSA and FFIEC guidelines to monitor our members account activity costs time and money which is especially difficult during this time of shrinking income due to diminishing loan demand. As a compliance officer in a small credit union I am responsible for reviewing and performing tasks that are related to BSA and Security issues. Other concerns at Care Point CU include staying on top of risk alerts generated by Verafin and Guardian Analytics for Money Laundering and Home Banking activity as well as their growing reliance on third party vendors to stay compliant in these areas. Bob Carlisle Senior Vice President of Security at Navy Federal Credit Union says The security of Navy Federal s members is of the utmost importance to us. We re always cognizant and prepared to handle threats to our systems. We do this by having a dedicated e-security team that closely monitors our systems and follows the issues that other financial institutions and companies have experienced. The Distributed Denial of Service (DDoS) attacks are an issue that all financial institutions are watching and continuously preparing to defend against. -security varies from one credit union to another. The largest credit unions may be more prepared for potential issues because of their larger budgets and more manpower but they re also more likely to be targeted because of their higher profile and larger member base. To get a good picture of what s happening at credit unions today Credit Union Business asked five credit unions to weigh in with their concerns and how they are managing them. Here s what we learned. Current Concerns Cedar Point Federal Credit Union in Lexington Park MD takes security very seriously and is confident that their systems are secure. In fact they regularly hire an outside company to try hacking into their computers looking for security problems. Lisa Shender Marketing Director at Cedar Point FCU says their biggest e-security concern is also the weakest link a member s computer. Members create potential security issues that the CU simply can t control whenever they include their account number full name mother s maiden name social security number etc. in emails. The CU will remove the sensitive account information should that email need forwarding to another MSR in an effort to lessen any potential security breach. Because member awareness is Cedar Point FCU s biggest concern every member contact form on Cedar Point FCU s website includes the following warning Email is not a secure means of transmitting data. Please do not provide any sensitive personal information (i.e. SSN Date of Birth account number). For Lynette Franklin Compliance Officer at CarePoint Federal Credit Union in Anaheim CA the biggest concern is offering members products while keeping their funds and personal information safe. We offer Home Banking online account opening ATM Debit cards and ACH processing as an RDFI. Staying Actual security issues Overall very few specific security issues came up in my conversations with credit unions probably a result of their excellent upfront protection and member education. While some credit unions mentioned phishing attempts members--not credit unions--were the primary targets and credit unions have done an outstanding job educating members about the problem. As Carlisle puts it When dealing with any security issue Navy Federal s objective is to make sure our members personal information is safe and to eliminate any threat as soon as possible. It s crucial to be transparent with our members and use our communication channels--especially social media--to keep them informed at all times. We ve been fortunate in not Credit union BusINEss 15 August 2013 Cu CONtENt having had any serious security issues in the past and are working diligently to prevent them from occurring in the future. Who is responsible for e-security At many credit unions security is managed in-house using third parties to perform vulnerability testing security audits assessments etc. At School District 3 Federal Credit Union in Colorado Springs CO an outside vender submits regular reports that update the credit union on the status of scams. Our IT person is mostly responsible for our e-security and we consult with him whenever we have any questions or concerns says Theresa Schutts Vice President of Operations at SD3FCU. We have recently added a mobile application to our available products. Lisa Shender at Cedar Point FCU has a security specialist who works with members and is also involved with in-house security. Much of his energy is spent explaining to members why they shouldn t wire money or deposit checks they get she reported. Shender has also written an article for the credit union s newsletter on healthcare scams something members need to be especially vigilant against because of the changes brought about by the upcoming Affordable Care Act. Lynette Franklin at CarePoint CU uses a third party company for IT and server security and backups. Franklin subscribes to for the latest information as well as reviewing their bond insurance company s risk alerts. The credit union s CEO interfaces with the outsourced IT company for issues relating to security for their network and servers. Navy Federal Credit Union has an experienced internal team that works 24 7 to protect members personal information as well as the credit union s internal data. We are confident in our claims that our online banking products are safe and secure and always reassure our members of that. mail. It s hard to convince some folks that mailboxes are targets for thieves too We are confident in our claims that our online banking products are safe and secure and always reassure our members of that. I am proud to say that so far we have successfully signed up over 50% of our accounts for web statements and online banking. Shender echoes that sentiment and adds that overall members have shown they are security conscious although sometimes it s the other way around members get annoyed with their credit union. Members want e-services but the credit union trying to protect its members is unable to provide them using the member s preferred channel. For example members cannot change an email address by email. This is done to protect the security of the account of course but members don t always see it that way and need reminding that it is done for their own protection. Resources Navy Federal considers that protecting member information is part of their job and that includes educating members on what steps they can take to keep their information safe and secure. The credit union website offers tips and advice for members. The new and convenient banking technologies available in the industry today are popular with consumers says Carlisle. As with any new technology consumers want to know that their information is safe. CarePoint purchased their ATM Debit monitoring enhancement from Verafin and a subscription to a Home Banking monitoring program that reviews typical and out of locale use. We have enhanced our network and server security to prevent intrusions into our network. In other words we ve had to spend Member Concerns Navy Federal pays attention to all member concerns they hear about from their branches and on social media. We address these concerns immediately and reassure members that our security teams are working 24 7 to protect their information says Carlisle. Theresa Schutts at SD3FCU says that a few members have expressed concerns about online banking adding that These members don t think any type of online financial business is safe and choose to continue receiving paper statements in the 16 Credit union BusINEss August 2013 Cu CONtENt money to keep our data secure and man-hours on evaluating the alerts generated by the monitoring programs we ve purchased more time and more money. We are small and don t have the resources to add staff so we must increase everyone s work load and try our best to work smarter. The Cedar Point FCU website has an entire section dedicated to security. They have an identity theft program along with lots of information to help members understand security concerns and risks. We re here for our members to serve them and protect them says Shender. We always talk to new hires about this. We tell our employees to learn everything they can because their job is to educate members not to sell to them or badger them. someone who identified himself as a computer technician and claimed he could update the member s computer. While this particular member didn t fall for the scam it s easy to see how unsuspecting consumers might give the telephone technician access to their personal computers. Best Practices Shender makes it clear that there are some things her credit union will not do. For example if a member is locked out of an account and needs to have both their user ID and password reset they will not be granted full access over the telephone. However the credit union will reset a password if the member knows the answers to security questions. Other best practices include in-house education for employees and member education. Cedar Point CU has video screens in a few lobbies that are visible to members while they wait on teller lines. Some of the video segments discuss online security and ATM card security-sensible security measures. At SD3FCU Schutts says that all employees are instructed never to open attachments from emails with unknown senders. All software must be approved before it is installed on company computers and employees always log off websites and shut down computers at the end of the day. Of course we have firewalls and web filtering devices installed to protect our computers which are always being updated with the latest firmware versions. E-Security concerns continue to evolve and grow as criminals get smarter and more sophisticated technology becomes available. As long as your credit union is aware of the current issues has a plan in place for tackling them and keeps both staff and members informed you ll be able to benefit from the conveniences of today s technology without getting burned. Laura Enock Managing Editor of Credit Union Toolbox and founder of provides credit unions nationwide with content for their websites newsletters email marketing and social media communications. Enock moderates the popular CreditUnionToolbox webinars on best practices and provides individual credit unions with social media marketing and PR support on a consulting basis. Contact her at laura or follow her on Twitter CUtoolbox. Changes Credit unions have seen several recent changes. Federal examiner regulatory oversight is increasing and there are more and more niche products available which makes balancing real need against budget both challenging and important. E-security has become more complex and played a larger role over the past few years says Carlisle at Navy Federal Credit Union. Consumer behaviors and preferences have led to several banking innovations that weren t readily available years ago. This includes services like online mobile and tablet banking. Financial institutions have beefed up their e-security measures to make sure these new systems are fully-protected and credit unions are prepared to defend against security attacks. At CarePoint Franklin has seen changes regarding backing up data to the cloud monitoring requirements by FFIEC and DDOS attacks. There is an increased potential that a member device is infected with a virus or Trojan virus that can compromise their financial accounts and personal information she says. Safeguarding against that potential means that we must spend more time and more money at a time when our budgets are already stretched to the limit. It is getting more and more difficult to be small. Theresa Schutts has seen password requirements increase (some to extreme levels) and often a second type of device-- such as a token or key card--is needed to access sites necessary for conducting credit union business on a daily basis. Shender says security needs to get tighter every year because cyber criminals are everywhere. She recently heard about a new scam whereby a member received a phone call from 18 Credit union BusINEss August 2013 CFO CurrENCY credit unions and student loan investments lthough credit unions may issue student loans to their members NCUA regulation is somewhat confusing on whether or not credit unions can invest in securities that are backed by student loans. To ensure permissibility the focus should be on the issuer not necessarily on the loans that are backing the security or the security s structure. In other words if the issuer is permissible the security is permissible irrespective of whether the underlying loans are student loans or whether the structure is an asset-backed security (ABS) . It took a little digging for us to figure this out and after dialogue with the NCUA we were able to solidify an opinion. So let me explain. According to section 703.14(e) of the NCUA regulations federally chartered credit unions may purchase and hold a municipal security as defined in section 107(7)(K) of the Act only if it conducts and documents an analysis that reasonably concludes the security is at least investment grade. The Federal credit union must also limit its aggregate municipal securities holdings to no more than 75 percent of the Federal credit union s net worth and limit its holdings of municipal securities issued by any single issuer to no more than 25 percent of the Federal credit union s net worth. Section 107(7)(K) of the Federal Credit Union Act permits credit unions to invest their funds in obligations of or issued by any State or political subdivision thereof (including any agency corporation or instrumentality of a State or political subdivision) except that no credit union may invest more than 10 per centum of its unimpaired capital and surplus in the 1 2 A By Emily Mor Hollis CFA Partner obligations of any one issuer (exclusive of general obligations of the issuer). Broadly speaking there are three loan programs available to students Federal Direct Student Loan Program (FDLP) Federal Family Education Loan Program (FFELP) Private Loan Program (also known as alternative loans) The FDLP and FFELP programs are government guaranteed with very little credit risk. Unfortunately the government guarantee is 95 percent to 98 percent of the loan. If they were 100 percent guaranteed and the guarantee of the loans flowed to the investors then the investment would be permissible under Section 107(7)(B) in obligations of the United States of America or securities fully guaranteed as to principal and interest thereby. student Loan securities in the Form of Municipal Bonds Student loan municipal revenue bonds finance the educational loans taken by college students. They are a special type of municipal bond distinguished by guaranteed repayment solely from revenues from a specified revenue-generating entity in this case student loans. The bonds are secured by and payable solely from the income generated by the student loans the amounts on deposit in certain funds maintained under the Indenture and certain other rights and assets including the trust estate. Asset-backed securities are not explicitly authorized in the NCUA regulations. In the FDLP program students borrow directly from the Department of Education (ED) and the federal government funds these loans on its own balance sheet. 3 The FFELP loan program uses financial intermediaries (such as Chase Sallie Mae or Student Loan Corp.) to originate and service government-guaranteed loans. 4 Private student loans are credit-underwritten loans made by banks and financial institutions. Unlike FFELP loans the government does not guarantee private student loans and holders of the loan are exposed to credit risk. August 2013 Credit union BusINEss 19 CFO CurrENCY The value and income payments of an ABS are derived from and collateralized by a specified pool of underlying assets. ABS collateralized by student loans or SLABS (student loan asset-backed securities) comprise one of the four core asset classes (along with home-equity loans auto loans and credit card receivables) financed through assetbacked securitizations. Through securitization a SLABS issuer can pool its own previously originated loans loans it purchased from other originators or a combination of the two. While most SLABS collateral consists of FFELP loans the collateral could also be made up of private loans or a mixture of the two. So even if the underlying security is made up of a mixture of private and government guaranteed loans and even if the security s structure is one of an asset-backed security as long as the issuer is permissible the security is permissible. standing view is that the FCU Act grants the NCUA Board the authority to regulate corporate credit unions as it seems appropriate including the authority to permit activities that the FCU Act does not authorize for natural person credit unions. 12 U.S.C. 1766(a). Under this authority the NCUA Board issues the corporate credit union regulation that specifically authorizes corporate credit unions to invest in asset-backed securities. 12 C.F.R. 704.5(c)(5). So even if the underlying security is made up solely of government guaranteed student loans that are not 100 percent guaranteed and if the security s structure is one of an ABS but the issuer is not permissible then the security is not permissible. example of Permissible securities Again the focus is not the structure but the issuer. As an example BRAZOS issues ABS backed by student loans. The prospectus states that the issuer Brazos Higher Education Authority Inc. is a Texas non-profit corporation located in Waco Texas. Even though the security is an ABS it is permissible. The Pennsylvania Higher Education Assistance Agency (PHEAA) is another example where the issuer is permissible and therefore an ABS backed by them would be permissible. But be careful the most recent PHEAA offering lists PHEAA as a sponsor not the issuer. The issuer is the PHEAA student loan trust 2013-2. So this might be impermissible we are not sure . Currently most student loans are issued through an assetbacked structure. Prior to 2008 when municipal agencies issued revenue bonds they were usually in the form of auction rate securities or SLARS (student loan auction rate securities). These notes are often issued in 7-day 14-day or 28-day periods. At the end of each period a Dutch auction is held to determine the rate for the next period. If new investors cannot be found the auction is said to have failed and existing note holders retain their securities usually with a step-up in the coupon. In March 2008 as the credit crisis froze much of the capital markets auctions failed at record levels. This left many auction rate securities at their maximum rates which compensated the investors for their illiquidity. However receiving a high rate for a security that is backed by loans that are 98 percent guaranteed by the government is not necessarily a bad thing. student Loan securities in the form of AssetBacked securities Now this is where it gets confusing. It has never made sense that federally chartered credit unions cannot buy ABS when most are backed by consumer loans which is what credit unions do best. In April 1999 the NCUA responded to Navy Federal when it requested through the pilot program to add ABS as collateral for tri-party repurchase agreements. The legal response is fairly clear. Navy FCU argued that ABS are not referenced in the Act and that therefore the lack of any specific authority in the Act for ABS should not prevent them from being regarded as permissible investments. The NCUA response said that The Act does not expressly authorize FCU investment in asset-backed securities is incidental to an FCU s exercise of its express authorities. The Agency went on to state It is a basic principal of statutory construction that where a statute specified certain authority authority not specified is intended to be excluded. We note that the Act provides specific statutory authority for a federal credit union to invest in mortgage-backed securities but there is no specific corresponding statutory authority for federal credit unions to invest in asset-backed securities. 12 U.S.C. 1757(15)(B). In its request Navy FCU contends that ABS are permissible for corporate credit unions. The NCUA responds Our long 20 Credit union BusINEss August 2013 CFO CurrENCY Today Sallie Mae is the largest lender and servicer of student loans in the United States. The company is both the largest originator and holder of U.S. FFELP loans and it makes private student loans as well. Unfortunately Sallie Mae is not a municipality and only issues through the ABS market so these securities are not permissible. So any Sallie Mae security issued in the form of an ABS even if backed by government guaranteed student loans that are not 100% guaranteed is not allowed. subsidies from the federal government. These subsidies were used to maintain interest rates at the federally mandated levels pay down fees associated with the loans and cover expenses associated with collection and defaults. The government also guaranteed a large portion of the loans insuring private lenders against default. If a parent or student defaults the government reimbursed the private lender for its losses. In contrast under the FDLP program the government lends directly to students using federal funds provided to it by the US Treasury. To date FDLP loans have not been used in ABS deals which have hurt the supply of loans to new issuance. To conclude some securities that are backed by student loans are permissible. At ALM First we are concerned about examiner opinions and interpretations and because of this uncertainty we are cautious. What we are certain of however is that credit union choices in the student loan sector are slim. As loan supply decreases spreads are tightening and yields are low. Emily Mor Hollis CFA is a partner with ALM First Financial Advisors LLC. The Future of student Loan issuance On 24 April 2009 President Barack Obama called for an end to the FFELP program calling it a wasteful and inefficient system of taxpayers . . . paying banks a premium to act as middlemen--a premium that costs the American people billions of dollars each year . . . a premium we cannot afford. Through FFELP private lenders made federally guaranteed student loans to parents and students. Commercial lenders like Sallie Mae would finance loans under the FFELP but received 5 ALM First has requested a legal opinion from the NCUA on this matter. August 2013 Credit union BusINEss 21 Cu rEguLatION from a to Regulation Z Breaking Down the New Mortgage rules hen the Consumer Financial Protection Bureau (CFPB) issued nine rules in ten days in January of this year those of us in the regulatory business knew that keeping it all straight would be nothing less than chaotic. Indeed the more we learned about the rules the more confusing they became. It might be difficult for any credit union to move forward implementing its compliance strategy without the benefit of a layman s breakdown of the new information. Credit union leaders who are charged with understanding the scope of some of the new rules amending Regulation Z as well as the exemptions for the rules that may apply to their cooperative can use what follows as a starting point in their review. It s important to understand how Regulation Z defines a dwelling before you begin studying the specific provisions of each rule. The new rules define a dwelling as a residential structure that contains one to four units whether or not that structure is attached to real property. The term includes an individual condominium unit cooperative unit mobile home and trailer if it is used as a residence. The Official Staff Interpretations go on to indicate that a vacation home or second home may be a dwelling unless the rule specifies a principal dwelling. Let s begin our breakdown with one rule that has a very broad scope and that will impact many credit unions The Ability to Repay Qualified Mortgage rule. W By Andrea Stritzke Ability to Repay Qualified Mortgage The ability to repay rule (also known as the qualified mortgage or QM rule) requires lenders to determine that a consumer has the ability to repay a covered transaction at the time of consummation. The rule applies to closed-end consumer loans secured by a dwelling. However the following transactions are excluded from the rule 22 Credit union BusINEss Timeshares Reverse mortgages Temporary or bridge loans with terms of 12 months or less The construction phase of a construction-to-permanent loan Because the rule applies to closed-end loans it excludes openend home equity lines of credit. Additionally the rule applies to consumer loans (personal family or household purpose) so it excludes business loans or investment loans. The rule does not specify that it applies to a principal residence so it may apply to a first lien or subordinate lien loan secured by a dwelling which may include a mobile home boat recreational vehicle condominium or vacation home if used as a residence (and is not a business or investment-purpose loan). Higher-priced mortgages are a bit more complicated with two additional rules applying. August 2013 THAT S THE A WE DO WHAT LLIED ADVAN t is] TAGE. IT TAKES. [Whatever i 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 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 Cu rEguLatION escrow and Appraisal Rules for Higher-Priced Mortgages The escrow rule under Regulation Z covers a higher-priced mortgage loan secured by a first lien on a principal dwelling and extends the required escrow period for these transactions. A higher-priced mortgage is a closed-end consumer credit transaction secured by a consumer s principal dwelling where the annual percentage rate (APR) exceeds the average prime offer rate (APOR) by 1.5 percentage points for a first lien 2.5 percentage points for a first lien jumbo mortgage and 3.5 percentage points for a subordinate lien. However the escrow rule does not apply to subordinate lien mortgages. The following transactions are excluded from the rule Reverse mortgages Temporary or bridge loans with terms of 12 months or less The construction phase of a construction-to-permanent loan Because the rule only covers closed-end loans open-end home equity lines of credit are excluded from the rule. A dwelling may include condominiums manufactured homes boats or trailers if used as a principal dwelling. The rule also provides an exception for some creditors specifically those that meet all of the requirements below 24 Credit union BusINEss Have an asset size of less than 2 billion Make more than 50 percent of their first lien covered transactions in a rural or underserved area Originated 500 or fewer first lien covered transactions in the preceding calendar year Do not currently escrow for any mortgages The appraisal rule provides that a higher-priced mortgage loan may not be extended without obtaining a written appraisal of the property to be mortgaged. The rule also prohibits extending a higher-priced mortgage loan to finance the acquisition of the consumer s principal dwelling without obtaining two written appraisals in certain cases specifically when the property has been flipped within a certain amount of time. A higher-priced mortgage loan has the same definition in the appraisal rule as in the escrow rule. However the appraisal rule does have different exceptions than the escrow rule. It excludes the following Reverse mortgages Temporary or bridge loans with terms of 12 months or less The construction phase of a construction-to-permanent loan Qualified mortgages Transactions secured by new manufactured homes Transactions secured by mobile homes boats or trailers August 2013 Cu rEguLatION than 36 months after the member becomes obligated on the loan or account opening or prepayment penalties that can exceed in total more than 2 percent of the amount prepaid. The following transactions are exempt from the high-cost mortgage provisions Reverse mortgages The construction phase of a construction-to-permanent loan Transactions originated by a Housing Finance Agency where the Housing Finance Agency is the creditor for the transactions Transactions originated pursuant to the United States Department of Agriculture s Rural Development Section 502 Direct Loan Program. It is important to note that high-cost mortgages have not historically included open-end loans. However the amendments to the rule now include open-end consumer credit transactions secured by a principal dwelling that meet the definition of a highcost mortgage. This section of the rule does not have its own definition of dwelling and thus relies on the general Regulation Z definition of dwelling which may include a condominium unit cooperative unit mobile home or trailer if it is used as a principal residence. Knowing the scope of the rules can help credit unions begin to identify what products are offered and how these rules may impact those products. Once a credit union has determined which rules apply to which products it is time to dig deeper into the rules and begin drafting a plan for implementation as there will be many other things to consider in the coming months. And these are only some of the rules issued by the CFPB. Andrea Stritzke is Vice President of Regulatory Compliance at PolicyWorks. PolicyWorks is an Iowa-based firm known for providing solutions to credit unions regulatory compliance needs and influencing critical public policy issues through our government affairs services. Our firm is committed to being a valued dependable business partner to our clients. knowing the scope of the rules can help credit unions begin to identify what products are offered and how these rules may impact those products. The last rule we will cover here and issued by the CFPB that amends Regulation Z is the high-cost mortgage rule. High-Cost Mortgage Rules The high-cost mortgage rule amends the definition of a high-cost mortgage and provides additional restrictions and consumer protections related to them. A high-cost mortgage is any consumer credit transaction that is secured by the consumer s principal dwelling in which (1) The annual percentage rate applicable to the transaction exceeds the average prime offer rate by more than 6.5 percentage points for a first-lien transaction 8.5 percentage points for a first-lien transaction if the dwelling is personal property and the loan amount is less than 50 000 8.5 percentage points for a subordinate-lien transaction. (2) The transaction s total points and fees will exceed 5 percent of the total loan amount for a transaction with a loan amount of 20 000 or more or The lesser of 8 percent of the total loan amount or 1 000 for a transaction with a loan amount of less than 20 000. (3) Under the terms of the loan contract or open-end credit agreement the creditor can charge a prepayment penalty more August 2013 Credit union BusINEss 25 Cu traININg training to keep top talent I By Ken Gonyer received almost a dozen email job change announcements from CU professionals working in marketing training compliance business development and human resources since late last year. In every case the employee had been with one credit union for at least five years before signing on with a new employer. t s been four long years since the recession officially ended and although the stock market has rebounded the job market is still recovering. As job prospects improve human resource experts report that highly skilled workers in many industries are beginning to search for new employment opportunities. Credit union leaders need to be aware of this trend determine its cause and understand the high potential cost of employee turnover in key positions. It s not too late for your credit union to make the necessary changes to keep its top talent from leaving over the next few years of economic growth and one area you should closely examine is training. Upgrades in three areas of training can significantly improve employee retention. What Drives Top Talent Away Employers tend to assume that the majority of good employees who change companies do so because they can make more money somewhere else but according to research from PriceWaterhouseCoopers compensation is just one of the top five major factors employees consider when making job-change decisions. During client employee exit interviews PriceWaterhouseCoopers asked more than 19 000 associates their reasons for leaving. They cited a desire to grow finding more meaningful work and wanting more skilled and supportive managers along with wanting more money as the chief causes. A 2012 study published in the Harvard Business Review reflected similar issues for top management employees. The study found that a large gap exists between employee career-development expectations and what they believe they re actually getting from employers. It identified several major areas of employee discontent including training professional growth and support from their direct supervisor and senior management. According to the study 75% of these managers were actively sending out resumes or working with recruiters to look for better situations. The emerging Trend In a recent interview with the Washington Post Paul Villella of the staffing firm HireStrategy said that after years of working with mostly unemployed or underemployed workers he began to see a big shift in late 2012. That s when he started getting calls from fully employed people at good companies making good money doing good things who were ready to make a change. Villella said it had been over five years since he d seen such a high volume of calls like these. The Society for Human Resource Management (SHRM) also recognized this trend and noted that during the recession employed workers tended to stay put even when work conditions were less than ideal. Based on the results of their annual survey from 2012 however SHRM researchers are now predicting that businesses will experience an exodus of good employees over the next few years. The survey found that worker job satisfaction dropped significantly in 2012 from a 2009 peak and employers can expect employee turnover to quickly return to pre-recession levels because employment opportunities are improving. I ve recently seen evidence of this shift within my nationwide network of colleagues in the credit union industry and have The Potential Cost Losing a key employee has a powerful affect on an organization. According to a study by the American Management Association four out of five CEOs view employee retention as a serious issue in achieving organizational success. A recent report from the global HR consulting firm Towers Watson finds that turnover costs for a typical position run between 48 and 61 percent of the employee s annual wage. This means that annual costs for an organization with 200 26 Credit union BusINEss August 2013 Cu traININg employees an average salary of 50 000 and a 15% turnover rate would run between 720 000 and 920 000. This staggering sum of money is estimated to include lost productivity costs and expenses associated with temporary help recruiting hiring and the orientation and training of new employees. Perhaps as importantly you also lose the knowledge skills and contacts along with any investment you ve made in their training any time a good employee leaves your credit union. most talented employees. The reason development is worth the expense is because the best employees are engaged employees and there is a strong relationship between employee engagement and effective professional development. Charette also believes providing training opportunities can change the culture of a company as well as improve retention. The best talent will insist on a job that is more than a job he said. They will require competitive compensation an opportunity to creatively exercise their gifts and talents as well as the sense that there are opportunities for future growth. I think training and employee development help establish the kind of organizational culture that reinforces those goals. Regarding who should receive more opportunities for growth Charette again pointed to high performers. I think the focus should be again on motivating and engaging the best employees. Those employees provide the most return on training and development investment. Charette suggests that the best training options should be experiential and closely relate to whatever personal skills the trainee most needs to improve in order to succeed--effective communication handling difficult conversations persuasiveness etc.--as well as training that focuses on professional growth and advancement. Charette encourages executives to ask the following questions as they plan for improved learning and growth opportunities What do your high-talent employees need to know and understand to advance in your organization What training path can your organization provide to help your best employees gain the knowledge and skills needed for advancement What engaging opportunities (projects assignments or responsibilities) can you integrate into your best performers current positions as they prepare to move up in your organization Three Training Upgrades to improve Retention You can help lower the risk of losing great staff members by making three key improvements in your credit union s training program. Give your top talent a variety of opportunities to learn and grow Provide management skills training to supervisory staff at all levels Create a great onboarding program that establishes solid relationships Growth Opportunities In a recent Wall Street Journal article Dr. John Kimberly of the University of Pennsylvania s Wharton School of Business shared research showing that top performers most want to grow in ways that improve their marketable skills. While it may seem counterproductive to help employees improve how they appear to potential new employers research shows that these growth opportunities actually increase employee loyalty. Executives tend to stay longest with those companies that offer the greatest opportunities to enhance their employability Kimberly writes. On balance a company will keep more talent by helping its executives grow than it would by denying them these opportunities. And as a bonus its executives will be more valuable to the company itself. To understand the impact training has on retention I interviewed training consultant Dr. Brian Charette of James Madison University. He explained that offering employees opportunities for training and development are major factors in a company s ability to keep good employees. Charette said that research is showing that training and development isn t just beneficial for keeping employees but is particularly important in keeping the Training for Managers The adage that people don t leave companies they leave bosses is supported by good data. A Workforce Magazine article about how to keep the best and brightest employees reported that poor management was cited as the most common reason for leaving in 20 000 interviews with departing workers. A 2012 August 2013 Credit union BusINEss 27 Cu traININg report from the American Society for Training and Development (ASTD) on trends in employee engagement and retention revealed that over half of the 430 organizations surveyed ranked improved company leadership would have the largest impact on employee engagement and retention. Formal management training is a solid way to begin addressing the problem. Surveys indicate that most managers enter their jobs without specific training in management or supervision. The ASTD report encourages companies to develop their leaders by allocating training resources to provide managers with the behavioral skills they need to manage teams and achieve business goals. In an HR Morning article entitled 7 Ways Managers Drive High Performers Away author Sam Narisi cites some common managerial behavior issues that training can fix. Among these are the following Unresponsiveness Micromanaging Poor delegation skills Unclear expectations Improper change management Poor people skills boarding process that helps new hires quickly become clear about expectations comfortable in their abilities and more productive faster. It also shows new employees that the credit union is committed to professional development up front which helps build mutual commitment between the organization and the new employee. Great onboarding supports more than new employee engagement it also builds company pride invigorates a sense of loyalty. Furniture maker Martin & MacArthur for example places new hires in a three-month development program that educates them in the company s product line. It also introduces new staff to a broad group of employees including furniture craftsmen who host seminars for retail store employees. CEO Michael Tam says that employees gain an incredible sense of pride in being part of the Martin & MacArthur team because of this program Your Retention strategy How can you implement a training strategy that will keep top talent Here are some questions to ask in order to get started 1. Are your best employees satisfied with their growth and learning opportunities If their expectations aren t being met find out what areas of professional development they most need and want and develop plans to provide more opportunities in those areas. 2. How would your top employees rate the quality of leadership they receive from their supervising manager and senior management If it s not top notch what skills do your managers need to learn How will they be trained 3. How well does your new hire orientation process address employee retention What one specific change in the process would make the most positive difference to the next new staff member Make sure every level of supervisor gets the training they need to avoid those behaviors and become capable leaders. Spending the time and resources to train supervisors in management and leadership skills will help your credit union keep high performers instead of chasing them away. Orientation and Onboarding Efforts to keep your best employees should start as soon as they join your staff. Research has shown that the first ten days of an employee s tenure are the most important in establishing a solid foundation for a successful company employee relationship. According to the talent management group Retensa this is the time when impressions are set habits are learned relationships formed and perceptions of roles within the company are established. Studies by the Aberdeen Group indicate that 86% of newly hired employees make their decision whether to stay at a company within their first 180 days. This is why it makes sense for credit unions to develop a well-structured orientation and on28 Credit union BusINEss Ken Gonyer is a member of the executive team at Park View Federal Credit Union in Harrisonburg VA overseeing member care. He is a member of the International Association of Coaching (IAC). Contact him at August 2013 LEaDErshIP universally Desirable and undesirable Leadership attributes culture and leadership By Dr. Sandra L. Torres G lobalization s precipitate onslaught has forced many organizations to rethink their leadership strategies and has fostered increased cultural interdependence. This is particularly true in the business sector where many who work in the international arena have had to adapt quickly to the challenges of globalization. One example is how companies interact with employees and customers from different cultures. The effects of globalization are by no means exclusively international however. Economic political social and technical changes are leadership challenges whenever business caters to a culturally diverse customer base or workforce whether in a multinational or domestic setting. Some of the questions confronting today s leaders include Do we need to design multicultural organizations to serve a culturally diverse population How do we manage organizations with culturally diverse employees And most importantly how do we identify and select leaders to oversee these organizations different ideas about what they want from their leaders and knowing what these differences are can help leaders adapt their style in order to become more effective in a variety of different cultural settings. Cultural Bias There is a tendency for individuals to place their own group (ethnic racial or cultural) above that of all other groups. This is universal and each of us is ethnocentric to some degree. The perception that one s own culture is better or more natural than others can be a major obstacle to effective leadership and prevents people from understanding or respecting other cultures. Bias is usually based on disregarded faulty or unsubstantiated data and usually involves inflexible changeresistant generalizations. Biased leaders are mostly self-oriented and never other-oriented often generate hyper-negativity and occasionally hostility to the organization preventing both leader and organization from reaching their full potential. What is Meant By Culturally Diverse First what is culture The simplest way to define culture is to say that it is a set of learned beliefs values rules norms symbols and traditions that are common to a group of people. These people also share qualities of a group that make them unique in having a shared way of life and similar customs. The term culturally diverse acknowledges the existence of different cultures or ethnicities within a group organization or geopolitical entity. Those who manage or lead organizations of culturally diverse employees or serve a culturally diverse customer base must adapt a multicultural approach or take more than one culture into account. Learning about other cultures helps leaders confront their own cultural biases and preferences. Different cultures have Becoming Culturally Competent Many studies have defined several core competencies that leaders should possess in order to lead in multi-cultural environments. Here is a list of five Credit union BusINEss 29 August 2013 LEaDErshIP 1. An understanding of global business political and cultural environments 2. A knowledge of the perspectives tastes trends and technologies of many cultures 3. The ability to work simultaneously with people from many backgrounds and cultures 4. The ability to adapt to living and communicating in divergent cultures 5. A willingness to relate to people from other cultures from a position of equality rather than superiority. Multi-culture savvy leaders are not only better at managing their staff but can also lend their knowledge and expertise to business projects such as building culturally sensitive web sites designing new employee bring you programs conducting orientation ed message will orientation success in employee motivation as programs in handling culturally diverse customer well as in building a positive productive workplace.populations and For many culturallyemployee team effectiveness. of their improving leaders sensitive appreciation is part DNA To interact with can be a scarce commodity. in fact many but for others it influence and lead individuals whose cultural contexts offering leadership development training to organizations arediffer from their own leaders must improve lEADErSHiP ensure that leaders develop skills in this area. Take this Thankstheir cross-cultural competency when the exception and use evgiving season to make your workplace operating and leading in multi-cultural to ery opportunity organizations and environments. This is not an easy task but one that will bring great rewards in terms of demonstrate your leadership skills and business success. gratitude to your It team. has been written that culture is situated somewhere between human nature and individual personality. Culture is learned behavior it is not inherited or genetic. Leaders should Author speaker embraceleadership cross-cultural literacy It is no longer a and develop and choice but a responsibility. consultant Miami-based Dr. Dr. Sandra researchedisleadership practices around the world. Torres has L. Torres an author speaker and leadership consultant. 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For more information contact her at drsandi 30 Credit union BusINEss Credit Union 21 BUSiNESS Cu CasE stuDY successfully Implementing a New appraisal Management system I By Clint Cornett Appraisal is governed by regulations including Title XI of the Financial Institutions Reform Recovery and Enforcement Act (FIRREA) of 1989 that came into existence after the Savings and Loan Crisis and the Dodd-Frank Wall Street Reform and Consumer Protection Act that was enacted following the Subprime Mortgage Crisis. On top of the impact of the DoddFrank Act mandates for the independence of appraisers were made part of the Housing and Economic Recovery Act (HERA) of 2008. FIRREA established federal oversight of the individual state systems for the licensing and certification of real estate appraisers. Dodd-Frank moved some of the regulation responsibility for residential mortgages to the newly created Consumer Financial Protection Bureau (CFPB) and set additional requirements for residential property appraisals and the professional practice of appraisal. It also stipulated appraiser independence professional education standards establishment of reasonable and customary fees for appraisal services and the building of walls within financial institutions to separate the loan originators from those who select the appraisers. Taken together all of these requirements have forced financial institutions to create new organizational structures and develop new tools in order to implement mandates and maintain compliance. mplementing any vital new process system or technology provides an opportunity to significantly improve business efficiency productivity as well as other strategic outcomes. However any such implementation can also create challenges and may adversely affect business performance. A successful new technology implementation in particular requires a well-conceived and executed process that includes The appropriate definition of the problem Clear support from top management Assembly of a technology selection and implementation team Establishment of a comprehensive plan A clear plan for communication Vendor management and support This article is designed to identify a specific framework for implementing an appraisal management technology solution including real world commentary from a credit union that has just reached the one-year anniversary of its project s implementation. Background In 2009 the Home Valuation Code of Conduct (HVCC) ushered in a cavalcade of new regulations regarding the origination of residential mortgage loans and the appraisal process. Among these new mandates were broad changes to the manner in which residential appraisals were to be ordered performed and managed. HVCC--now the Dodd-Frank Act--took the existing appraisal process and virtually overnight imposed new standards and compliance requirements on it. Moreover the legislation applied a strict audit protocol and levied significant fines on any lender who failed to comply with the new standards. Current property appraisal regulations are based on bills enacted in the aftermath of two financial crises that negatively impacted both the mortgage industry and real estate values. The Players Coastal Federal Credit Union (Coastal) in Raleigh North Carolina is a member-owned not-for-profit financial cooperative. The credit union has 194 673 members 2.1 billion in assets 431 employees and 15 branch locations. It is classified as a multicommon bond credit union. The Credit Union opened in 1967 as the IBM Employees Credit Union but converted to its current name classification in 1999. Coastal is ranked in the top 45 of all U.S. credit unions based upon rankings for both asset size and membership. It is a rapidly expanding organization that has seen its membership Credit union BusINEss 31 August 2013 Cu CasE stuDY grow steadily over the past few years. Coastal is considered an innovative organization and was an early adopter of video-banking technology and a recent adopter of mobile check deposit. It recently added a new credit card marketed under the name Big Ticket Card which provides six months of interest-free financing on purchases of 600 or more. ValuTrac Software Inc. (ValuTrac) is a Texas-based software solutions provider to the appraisal management and mortgage lending industries. The Company offers the most flexible scalable and customizable appraisal management solution on the market for both residential and commercial appraisal management and is being used by appraisal management companies banks credit unions and mortgage lenders. ValuTrac s solutions help mitigate risk and control costs related to the appraisal process as well as significantly improve accounting processes appraiser vendor management and Dodd-Frank Act regulatory compliance Interagency Guidelines Fannie Mae Appraiser Independence Requirements and FHA Appraisal Requirements. With well over 3 000 businesses relying on ValuTrac for appraisal management ValuTrac is experiencing rapid growth and is expecting to double its client-base during 2013. and Omissions Coverage. They ordered appraisal orders and reviews through a mailbox. According to Ms. Babwah We would pick up completed appraisals from the queue and print out the entire list of appraisals attach a checklist and ferry it between departments. It was a very clunky and inefficient process. Although it worked for a while it became increasingly more difficult to use as the volume of loans increased. The Process Ms. Babwah reports to Carlton Howard Vice President of Risk Management who leads the entire enterprise-wide compliance and quality control team for the institution including fraud and anti-money laundering bank secrecy regulatory compliance vendor due-diligence legal affairs and quality control functions for consumer mortgage and commercial lending products. Ms. Babwah explained that top management empowered her to assemble a group of key personnel from mortgage areas within the credit union to evaluate potential appraisal management technology solutions. Ms. Babwah explained This decision was going to affect a lot of people throughout the credit union. We made sure all voices were represented in the process but the final decision was left to those with the broadest perspective. During the final selection process Coastal considered one additional technology solution system. It was quickly eliminated however because of cost and because it didn t offer a dual residential and commercial transaction platform. The Problem Coastal needed to find a way to quickly and affordably implement a compliant appraisal management system. Based on advice from the National Credit Union Association (NCUA) and direction from the highest level of management Arlene Babwah Manager of Risk was tasked to find and implement a solution. The NCUA put out guidance about separating the production side of the house from the quality control and appraisal-ordering functions to avoid a conflict of interest. We needed a repository-- or database--to hold that type of information that could easily facilitate the back and forth between our quality control and mortgage production departments that comes with the ordering of appraisals. We also do small commercial lending and needed a solution that could manage appraisals for both residential and commercial properties in a cost effective manner. We chose ValuTrac as a solution commented Ms. Babwah. In the past Coastal managed their appraisal ordering and quality control functions by using Microsoft Excel to track appraiser contact information credentials licenses and Errors The solution Coastal implemented the ValuTrac Pro residential appraisal management software including the ValuTrac Pro Plus solution for commercial appraisal management in June 2012--just over one year ago. According to Babwah The implementation process was seamless. We worked through a single point of contact and scheduled each user to a training webinar with no more than ten participants at each session. We got everyone through training in less than ten days. Due their having different functions and permissions we customized our training sessions to accommodate each group s needs. Coastal took advantage of ValuTrac s customization options. First ValuTrac Coastalized as Ms. Babwah put it several of the emails and forms that are part of Coastal s 32 Credit union BusINEss August 2013 Cu CasE stuDY system. In addition ValuTrac added a status field to indicate whether or not a copy of the appraisal had been sent to the specific member. As Ms. Babwah said While we were very happy to learn that we can customize the technology as needed in the future we found that it worked very well for our purposes right out of the box. The Results After only one year of having ValuTrac software in place the results have exceeded Coastal s expectations. According to Ms. Babwah We needed to quickly and cost-effectively become compliant with regulatory obligations. ValuTrac s technology allowed us to achieve that plus a great deal more. Yes we are compliant. Yes the cost-structure is very very competitive. But beyond that we are more productive and efficient how we management the appraisal process. We are better prepared for higher loan volumes and for responding to any management or auditor request for information. problem requiring attention executive support teamwork precise planning clear and constant communication and vendor support are all essential components for meeting the exacting demands of such a critical technology implementation project. If you follow this framework when implementing an appraisal management software system at your CU you can achieve success as well. Clint Cornett is the founder and CEO of ValuTrac Software Inc. a leading software solutions provider to the appraisal management and mortgage lending industry. ValuTrac Software is a fully customizable appraisal management solution for residential and commercial appraisal management. To contact Clint please email ccornett CEO SubSCriptiOn WiTH BeneFiTs Benefit your CFO COO CMO CCO CLO CIO HRD With FRee Monthly E-Newsletters Conclusion Implementing a new technology solution of any kind requires a great deal of effort in order to be successful. Appraisal management systems are more complicated because you must remain compliant before during and after the project implementation process. Having a clear definition of the Subscribe NOW register Credit union BusINEss 33 August 2013 tEChNICaLLY sPEakINg e-signatures helps Credit unions Extend reach and Expedite Loan Process By Roy W. Urrico improving the consumer experience may be the most used mantra in today s financial services lexicon but cost savings efficiencies and regulatory compliance need to be closely aligned with it in order for any new process to work. Teachers Credit Union ( 630-million in assets) based in Hamilton Ontario Canada achieved all of the above when it implemented Silanis service e-SignLiveTM in order to provide online members the capability to electronically sign for short-term loans. Teachers Credit Union has seven locations predominately covering the Hamilton-Niagara area in Southern Ontario a call center and a virtual branch. With online banking extending the financial institution s reach the credit union needed to provide members with a more expedient process to secure loans. Our virtual channel is predominantly lending products says Kathy Clark vice president of sales service and operations with Teachers Credit Union. It did not make it convenient for our members to deal with us. We had to look for a way to bridge that gap and make the member experience better. the transaction took place in the right sequence. When Teachers launched its virtual product in late 2010 it found that people were willing to borrow online and that those most likely to use the virtual channel lived in areas with no access to a credit union bricks and mortar branch. Kathy Clark vice president of sales However Clark admits it was not service and operations with Teachers convenient for members to close Credit Union their loans. Securing signatures for loan documents imposed an additional cost on the financial institution as well as time and inconvenience to the member. Gathering signatures usually involved making a trip to a physical location or using faxing and email with the member going to a notary to get documents signed and then mailing them back to the credit union. So there was a delay between the member signing and funding of the loan. There had to be some electronic signing mechanism in order for us to be successful with loan documents explains Clark adding there were cost savings but it was more about the customer experience. So in January 2013 Teachers launched Silanis e-SignLive a SaaS (software as a service) offering that allows financial institutions to electronically prepare and securely sign documents over the Web. Clark says it was quite simple to get up and running We did go through a process where our legal team did due diligence should we have to take our documentation to court because there aren t many financial institutions using e-signatures in Canada. We are the first credit union in Canada using it to fund loans. e-signatures at Teachers An electronic signature or e-signature allows a person to electronically attach a signature or its equivalent to an electronic document. In many countries including the United States Canada the European Union and Australia electronic signatures have the same legal consequences as the more traditional forms of executing documents. The laws in North America especially the e-sign law are technology neutral...they don t talk about how to do something they talk about the outcome explains Tommy Petrogiannis CEO and co-founder Silanis Technology. What this means is that the party needs to understand what they were getting into--did they know what they were agreeing to--and can an organization reasonably demonstrate what the party saw and that 34 Credit union BusINEss August 2013 tEChNICaLLY sPEakINg How Does e-signLive Work Teachers loan origination system which does all the documentation and adjudication takes the loan origination via their call center or online. Then they load the documents into the e-signature platform. From there e-SignLive shepherds the entire process including sending an email to each signer authenticating the signers tracking progress providing a status notification and delivering the final securely signed documents. Teachers Credit Union calls the member to review key pieces of loan documentation. To secure the e-signature Teachers uses click to sign. Members open up the email click on the link to access the documents hosted on e-SignLive and click on the indicated areas (using virtual Sign Here stickers) as confirmation of signing. The member then clicks and accepts in the required places. Once it is completed it goes back to financial institution. The signee get a copy of the signed documentation and the credit union keeps a copy for its records and then proceeds with the loan process. The e-signature solution also captures the entire signing process including every Web page and action that a consumer takes. And to ensure the identity of the signer the credit union verifies this when a copy of the member s identification arrives along with a check for the member s share. From a regulatory perspective we wanted it to stand up in court should we ever need to collect on a loan document continued Clark. The members were thrilled it is so easy that they can do it right from home points out Clark It made it so much easier. It made it easier for staff as well. Silanis e-SignLive permits financial institutions to electronically prepare and securely sign documents over the Web. They can upload documents define who signs each document and where they sign it and select the secure authentication method. Our mandate was to bring to credit unions...all the functionality that the larger financial institutions have enjoyed (through an enterprise solution)...and deliver it at a faction of the cost says Tommy Petrogiannis. The e-SignLive process creates an enforceable transaction explains Petrogiannis plus it allows credit unions to move beyond face-to-face physical in-branch transactions to that transformational customer experience that they are now demanding when members are not able to come to the branch to complete a transaction. They can sign in real-time at the speed of the Internet using multiple methods--it is not one sign fits all. Individuals can satisfy the e-signature laws requirement using about a dozen different acceptable e-signature capturing methodologies including email secret question and answer SMS passcodes biometric signatures and third-party authentication services. When an organization uses an on-premise solution like e-Sign Enterprise they can start to use tablets and smartphones for handwritten signature capture. Silanis CEO and Co-Founder Tommy Petrogiannis Growing straight Through Financial institutions can get started right away with the SaaS based e-SignLive. The first step usually frees members from visiting a financial institution to sign documents. The next stage is to integrate it as part of the straight through processing (STP). This enables the entire process to be conducted electronically without the need for re-keying or manual intervention. The E-signatures piece was the last to complete STP--with systems already in place that could create and archive content and with business workflow engines in the middle. Where it all fell apart suggests Petrogiannis was when paper needed a signature. Then the process stepped out of an electronically controlled and monitored world and into a user-driven paper-based world with no control and no visibility. E-signatures connect the front office and back office for the first time and create a straight through process. Because you re not dealing with paper you are not dealing with errors because the workflow rules are controlling it and ensure against a bad transaction. So you get the cost-cutting and cost-saving on one end and on the other end you are accelerating the revenue cycle because you are closing business faster adds Petrogiannis. From a compliance or legal standpoint it drops the cost of demonstrating compliance Before institutions had to provide signed paperwork and prove that documentation was presented in the right order. With the Silanis solution you can pull up that information play rewind and push play to demonstrate how that transaction went down. Cost savings and a Better Customer experience We really see this as a benefit for us having changed our bond to be a provincially focused credit union to [be able to] reach out August 2013 Credit union BusINEss 35 tEChNICaLLY sPEakINg to people that are not local to our bricks and mortars. explains Clark. This allows the credit union to compete with larger financial institutions by offering a higher level of service which is important to retaining existing and attracting new members. Looking ahead Our plan is to open this up to how we capture the signatures says Clark. They are also considering looking at it as part of the credit union s brokerage channel to complete mortgages. The credit union thinks it might fit into physical locations as well. Just because they are close to a branch does not mean it is convenient...I believe there will come a time when it is the normal way of communicating with members when it is not convenient to come in suggests Clark. It provides one more opportunity to provide additional service for members. 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 What is an electronic signature An electronic signature or e-signature allows a person to electronically attach a signature or its equivalent to an electronic document. In many countries including the United States Canada the European Union and Australia electronic signatures (when recognized under the law of each authority) have the same legal consequences as the more traditional forms of executing of documents. The laws in North America especially the e-sign law are technology neutral...they don t talk about how to do something they talk about the outcome explains Tommy Petrogiannis CEO and co-founder Silanis Technology. What this means is that the party needs to understand what they were getting into -- did they know what they were agreeing to -- and can an organization demonstrate reasonably what they saw and the actions they took in the right sequence. E-signatures are really a legal concept digital signatures and biometric signatures are really how to do that. Canadian Law The Personal Information Protection and Electronic Documents Act (PIPEDA) - Canadian law distinguishes between the generic electronic signature and the secure electronic signature . Federal secure electronic signature regulations says that a secure electronic signature is a digital signature created and verified in a specific manner. Canada s Evidence Act contains evidentiary presumptions about both the integrity and validity of e-documents with attached secure e-signatures and of the authenticity of the secure e-signatures themselves About silanis Founded in 1992 Silanis e-Sign Enterprise and e-SignLive solutions are in use by thousands of organizations including four of the top 10 North American banks eight of the top 15 insurance companies and the entire U.S. Army. Silanis focuses on compliance-driven and regulated industries with financial services insurance company s right in its wheelhouse. As a company 75 percent of our revenue comes from insurance companies but we are now seeing financial institution which are more conservative by nature their regulated and careful adopting it at the same rate of insurance companies a few years ago says Tommy Petrogiannis CEO and co-founder Silanis Technology. According to Gartner e-signature adoption has grown 48 percent in the last 18 months. However it took awhile for the financial institutions to get their business heads around it. The E-Sign Act was signed in 2000 but it did not start to be employed significantly in financial services until about seven years later according to Petrogiannis. The recession slowed adoption but it came back with a vengeance post-recession mostly driven by financial institutions. Silanis business grew over 115 percent year over year predominately driven by financial institutions has not stopped according to the CEO. 36 Credit union BusINEss U.s. Law The Electronic Signatures in Global and National Commerce Act enacted June 30 2000 is a United States federal law passed by the U.S. Congress to facilitate the use of electronic records and electronic signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically. Although every state has at least one law pertaining to electronic signatures it is the federal law that lays out the guidelines for interstate commerce. The general intent of the ESIGN Act is spelled out in the very first section(101.a) that a contract or signature may not be denied legal effect validity or enforceability solely because it is in electronic form . This statement provides that electronic signatures and records are just as good as their paper equivalents and therefore subject to the same legal scrutiny of authenticity that applies to paper documents. The Uniform Electronic Transactions Act (UETA) is one of the several United States Uniform Acts proposed by the National Conference of Commissioners on Uniform State Laws (NCCUSL). Since then 47 States the District of Columbia Puerto Rico and the U.S. Virgin Islands have adopted it into their own laws. Its overarching purpose is to bring into line the differing State laws over such areas as retention of paper records (checks in particular) and the validity of electronic signatures thereby supporting the validity of electronic contracts as a viable medium of agreement. August 2013 250 000 Credit Union Employees 92 Million Members 100 Million Miracles Since 1996 Credit Unions for Kids has raised more than 100 million for Children s Miracle Network Hospitals giving hope and healing to kids in your local community. YOUR FUNDRAISING DOLLARS IN ACTION MILLION 10 2 1 iMRI machine and surgical suite 1 Cardiac X-ray machine 1 Ultrasound machine 1 Bone marrow transplant 1 Fully-equipped Giraffe OmiBed incubator MILLION THOUSAND 270 THOUSAND 250 THOUSAND 100 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 branch info 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 Online 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 sPOtLIght Big Dividend returns from american airlines credit union I By sharon sweda nternet access and sophisticated websites are commonplace in today s financial service industry. Most banks and credit unions provide mobile access designed to facilitate the management of shareholder accounts and mobile apps continue to gain popularity. It is now estimated that most households have at least one family member who manages monthly obligations via an online resource. Therefore it should come as no surprise to any CU that technology infrastructure development and security is one of the most critical areas in which to invest time and resources. Creating an interactive website is not enough. Failing to upgrade and enhance your technology s mobility options can cost you valuable business and institutions that choose to coast quickly end up drifting downstream. American Airlines Credit Union has been serving local members since 1936. That was when a group of airline employees decided to create a financial services resource that would enable its participants to assist each other and their families. Since then AACU has added branches in major cities and airports throughout the United States and offers ATM access throughout the world. The original small group has evolved into a 240 000 member credit union with over 5.6 billion in assets. The American Airline name is best known for its commercial aviation and travel business. Although the employee credit union shares the American Airlines name it is owned by its members not its namesake. But both companies share an emphasis on technology. In the early summer of 2013 AACU undertook the daunting task of upgrading its core operating system. The project s goal was to increase efficiency and speed which would allow them to serve members better and faster. In addition to being more efficient the new system provides a better customer experience Once members have completed a couple of initial security log-in requirements they have easy access to all the features that the new core system provides. 40 Credit union BusINEss Member satisfaction with mobile services is important in today s real-time environment but mobile applications cannot supplant the main reason AACU has been successfully serving members for all these years. They continue to offer financial security and banking options of course but AACU also distributed ten million dollars in bonus dividends and offered a quarter percent discount on loan products in 2012. Surely this means they have met and exceeded member expectations Membership rewards are based upon the number of products and the amount of interest paid by the member and is distributed annually. For members who are starting or running their own business AACU provides great start-up calculators that act as silent advisors to the preliminary decision making process. Members can access tools that will guide them through start-up costs rent vs. lease option comparisons articles & resources business forms and even a calculator that will project the value of a current business. Anyone seeking personal guidance is encouraged to contact a Business Services Representative for live assistance. American Airlines Credit Union has plenty to offer but like all employee credit unions membership is restricted. Access is limited to those who work with or for the airlines or in any airport capacity--baggage maintenance custodial food services etc--as well as to employee families. Their robust member activity enables AACU to offer lower rates and higher dividends. True to the dream of the founding members who partnered 1936 the institution is helping to secure and manage financial growth for its members who dedicate their lives and earn their living in the airline industry. Sharon Sweda is a freelance writer who has worked in the real estate and finance industries for the past 28 years. Contact Sharon at SharonSweda to SpotLite your CU. August 2013