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ThE MObilE bAnking iSSUE April 2014 VOlUME 9 iSSUE 4 9.95 Capitalizing on Mobile Millennials and Payment Cards Roy W. Urrico CFPB Mortgage Rules Three Keys To Successful Implementation Jason Skemp Nurturing Mobile Channels at 3Rivers Federal Credit Union for Critical Growth Opportunities Laura Enock WE RE A LITTLE EXCITED We get it. Life insurance is not a fun topic of discussion but when it comes to protecting our financial institution clients we are downright thrilled By partnering with SWBC Life Insurance Company you can provide your members and borrowers with the life insurance that they need while also managing risk. Call us today at 866-632-7340 to learn how SWBC Life insurance Company can help you implement a turn-key payment protection and individual insurance program for your financial institution. Our passion and enthusiasm is unmatched CREDIT LIFE & DISABILITY TERM LIFE INSURANCE UNIVERSAL LIFE WHOLE LIFE DEBT CANCELLATION 2014. SWBC. All rights reserved. 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All products may not be available in all states. 1361-5431 1 14 COnTEnTS Credit Union BUsiness April 2014 V O l U M E 9 i S S U E 4 4 6 8 PUBlISheR S POv Tim O Hara CU COMMeNT James Collins CU TeChNOlOGy Why i still Love the Branch The History of Mobile Banking Timeline Biometric Authentication Heading for Payments space Financial institutions Advised To Monitor Authentication innovation Nicole Reyes TMG Senior Fraud Prevention Analyst 28 30 COMPlIaNCe UPdaTe CFPB Mortgage Rules Three Keys To successful implementation Jason Skemp leNdING lINe There is a Flashing Light in the Collections Department and it s Called the CFPB Karin Brown-Purtell CLE First Party Debt Collection 34 38 40 CU MaRKeTING Tackling the Member experience Challenge in Mergers or Acquisitions Neil Hartman and Kyle Hutchins CU SPOTlITe 12 CU CONTeNT nurturing Mobile Channels at 3Rivers Federal Credit Union for Critical Growth Opportunities Laura Enock CFO CURReNCy Kevin Kirksey Harnessing the Power of Gen Y at Hanscom FCU Sharon Sweda CROSSwORd 15 18 22 25 supervisory Utility of Risk Based Capital BRaNChING OUT Get it for the entire executive team register Capitalizing on Mobile Millennials and Payment Cards Roy W. Urrico aT C level The Mistake Marc A. Bringman CU TRaINING Paul Nunn Classroom Training is not enough April 2014 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 Ashok Kumar Circulation Director ThE MOBIlE BaNKINg ISSUE aprIl 2014 VOlUME 9 ISSUE 4 9.95 capitalizing on mobile millennials and payment cards roy W. Urrico cfpb mortgage rules three keys to successful implementation Jason skemp Staff Writers James Collins CU Comment Laura Enock CU Content Paul Nunn CU Training Sharon Sweda CU SpotLite Roy W. Urricho Branching Out nurturing mobile channels at 3rivers federal credit union for critical growth opportunities Laura enock 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. Contributors Karin Brown-Purtell Neil Hartman and Kyle Hutchins Kevin Kirksey Nicole Reyes Jason Skemp Sales and Advertising Bernie Fitzgerald Advertising executive Bernie or 561-282-6015 1 Greg Halpern Advertising services Manager Greg or 561-282-6015 4 Contact information Credit Union BUsiness Magazine P.O. Box 2223 Palm Beach FL 33480 (561) 282-6015 (561) 588-7711 (fax) tim 2 Credit Union bUSinESS April 2014 FROM tiM Publisher s POV Why i still Love the Branch Over the past couple of months i ve been following some internet credit union forums--notably via Linkedin--that have been spreading gloom and doom predictions of the eventual and inevitable demise of the CU branch. some participants have even suggested that the CU branch would go the way of the Blockbuster Retail store nowhere. They have suggested that brick and mortar branch operations are expensive redundant and of little use to members. But i have my doubts. Will smart phones ever entirely replace branch operations Will credit unions inevitably become more like this branchless Fi My wife and i used a local community bank before moving to Tropical. Although it was much closer to home the service was cold and impersonal and the constant barrage of extra charges and fees were slaughtering us. Prior to moving back to Florida in 1989 we lived in new York City where we had been what i like to call Citibank victims. i remember almost dreading payday. each week i would have to endure the same ritual stand in a very long line for nearly an hour waiting to deposit my check then be ignored and finally sneered at by some really tough tellers. seinfeld s soup nazi character had nothing on those caged tellers. They didn t like their work or their customers and were not the least bit afraid to show it. The first time i walked into the TFCU West Palm Beach branch i felt like i had entered some special place. i was welcomed. employees were all smiling real smiles and seemed to want nothing more from me other than to be able to cheerfully assist me any way they could. i quickly got to know both tellers and MsRs. so we turned to Tropical to finance a garage full of automobiles school tuitions for the kids and a home mortgage. TFCU has been our only Fi for nearly 25 years. Following the 2008 financial crisis when the mortgage backed securities scandal wreaked havoc on almost every sector of the economy TFCU was badly shaken and cutback employee hours in its branch operations. some veteran tellers were forced to cut back to part time positions. But my branch continued to remain open and gradually regained its full complement of employees. A few months ago a new branch manager was appointed. Her name is Rosemary Aguilar and she has an extensive banking resume. in a very short time Rosemary has managed to improve nearly every aspect of TFCU s West Palm Beach branch. And i hope she and it will be there for many years to come. i rely on them both Thanks for reading We aRe a bRanch-FRee bank. ally doesn t have expensive physical locations which makes it easier for us to offer competitive rates no hidden fees 24 7 live customer care no atM fees at any atM nationwide. You can bank by phone chat or mobile device. no minimum balance to open an account With online transfers or free postage-paid envelopes Pay your bills at home or on the go. i certainly hope not i love my branch. it is convenient friendly and has always been there to provide the help and support i need. Plus they know my name and face because i get to deal with real people who are an important part of the community where i live and work we re neighbors. As i ve mentioned in this space several times i ve been a proud member of Tropical Financial Credit Union (TFCU) in Pembroke Pines FL since 1990. That s the year i started CU Times magazine and the same time former TFCU CeO Greg Blount invited the entire cast and crew of my fledgling operation to become a seG and new members of Tropical. All eight of us instantly pounced on the opportunity 4 Credit Union bUSinESS April 2014 CU COMMEnT The history of Mobile Banking Timeline By James Collins A Brief History 1947 AT&T creates the Mobile Telephone service allowing customers to make calls using a simple 79-pound device. Teen1997 Because nokia thought it asinine to press the 1 key agers were not impressed it could not take selfies. three times to type the letter C they introduced the first mobile 1965 After more than 18 years of work by hundreds of MBA phone with a keyboard. nokia also installed the first set of apps marketing geniuses AT&T renamed their device the improved on a phone--all of which were entirely forgettable except for Mobile Telephone service . Limited to just 40 000 subscribers the game snake a game where you move a snake around the the system was prone to long wait times and poor service--but screen chasing food until you run the snake into its tail. it eats itself and ends the game. This was the precursor to a credit that was AT&T s corporate motto so nobody noticed. union dealing with the nCUA. 1973 Motorola creates the first portable device. Weighing in at just two pounds it was extremely light compared to previous 1999 While waiting for Y2K (and the end of civilization as we models and was customizable Users could select from a variety know it) and bored with the horrible star Wars episode 1 We of colors. Of course color choice depended on what can of needed More Money designers in europe created the first mobile banking application. This also happened to be the same spray paint you had lying around. time that text messaging was released on a more or less large 1979 1G service was introduced in Japan. Using regular ra- scale to masses of teenagers who had been waiting for a better dio waves it was susceptible to snooping by future nsA manag- way to not communicate with adults. ers as well as certain high school nerds. 2008 Apple opened its App store allowing access to special1983 Motorola releases Dynatac 8000X the first commercially ized apps from a variety of financial institutions with uncensored available cell phone. At a cost of nearly 4 000 plus service fees commentary on each courtesy of the masses. it was comparably priced to say the next iPhone. 2009 not to be outdone Android created its own app store. 1991 2G service was introduced to users worldwide with Due to variations in Android devices applications had to support much fanfare. ironically the first cellular contract was also in- such operating systems as ice Cream sandwich Jelly Bean troduced with equal fanfare from lawyers worldwide. and Donut leading one to believe that Google is powered by a 1992 The first text was sent via sMs. it was supposed to read group of potentially diabetic sugar addicts. Also in 2009 UsAA Merry Christmas but the early version of auto spell rearranged 6 Credit Union bUSinESS April 2014 the letters and it read Harry is not with us . This was rather a shock to the recipient ironically named Harry. CU COMMEnT HTML5 Many developers are loath to create apps for iOs and the various android operating systems since it has become an enormous logistical challenge to enhance and deploy both. HTML5 a newer way of coding for both mobile and desktop web devices seems to have the potential for breaking the development logjam by reducing deployment time to near zero. Payments Using mobile phones to pay at point of sale has been the focus of several large consortiums including Google Visa MasterCard and many cellular companies. But since they re as comfortable working together as liberal democrats are attending an nRA rally progress has been slow. Mobile banking for all of its warts is here to stay. While some have predicted that this is the channel that will secure the demise of brick and mortar commerce once and for all i think that is unlikely Members look to mobile as just another--albeit very convenient--channel. James Collins is CEO of O Bee Credit Union based in Tumwater Washington and can be reached at jcollins Mobile banking for all of its warts is here to stay. While some have predicted that this is the channel that will secure the demise of brick and mortar commerce once and for all i think that is unlikely Members look to mobile as just another-- albeit very convenient--channel. a large bank catering to the military introduced mobile remote deposit capture which allowed teenagers to deposit grandma s check and spend it within minutes. By 2013 the largest banks also offered this service. 2013 Like slugs stampeding through peanut butter the FFieC begins creating mobile banking guidelines for financial institutions which means that they are only 14 years behind in case you re counting. security concerns are given top priority along with making sure that the hundred or so people still using Motorola s Dynatac 8000X from 1983 are not left out in the cold . BECOME A CREDIT UNION BUSINESS MEMBER AND WE LL 3-YEAR SEND YOU A FREE KINDLE Sign up for a 3 year DIGITAL subscription What s next so here we are 2014 and the big question is what s next i mean of course besides whatever is coming from the FFieC which will be out of date even before it is written. Here s my list and CUB will give you a Kindle Reader to enjoy every issue 69 The LendIng ISSUe november 2013 voLUme 8 ISSUe 11 9.95 x 3 207 The Basics of Managing Interest Rate Risk and the Concept of Duration A Mid-Sized Credit Union Spreads Its Wings Mobile apps with even more features Think of your mobile app as the ultimate shrunken 1970 s bank branch. All you need now is a slot for cash and you re done. What other lobby-type things will it have Security is paramount if you think that your vendor wrote their app you are most likely wrong. Many use white label apps from third parties and rebrand them. And where were those made nobody knows. April 2014 Also available in print 89 x3 267 SIGN UP AT how Congressional Federal migrated From Using a mortgage Less than 6 ounces CUSo to offering Fits Full-service Lending in your pocket Holds over 1 000 books Downloads books in 60 seconds with built-in Wi-Fi New darker hand-tuned fonts for easier reading Credit Union bUSinESS 7 CU TEChnOlOgy Biometric authentication heading for Payments Space Financial institutions Advised To Monitor Authentication innovation By Nicole Reyes TMG Senior Fraud Prevention Analyst In fall 2013 Apple impressed the mainstream consumer world by equipping its latest smartphone device the iPhone 5s with fingerprint identification. For financial institution (FI) leaders charged with staying abreast of changing consumer expectations authentication methods will be an important area of innovation to watch and the iPhone s fingerprint scanning technology has provided a good test of the market. re consumers ready for biometrics in a recent survey nearly half of respondents indicated they are comfortable with the idea of using biometrics such as fingerprint palm or iris scanners as authentication methods.1 indeed many iPhone 5s users have welcomed the innovation largely because it has made life just a little bit easier for them. While those of us in the security profession would like to think the increased safekeeping of personal data and information intrigued iPhone fans we know that most people are as excited about its speed and simplicity as they are about its security. A recent survey for example found only 28 percent of respondents are very concerned with the privacy and security of their phones or mobile devices.2 And there are many early adopters who are attracted to anything new or interesting simply because it s new and interesting. These are the individuals with enough influence 1 2 A 8 n. the identification of humans by their characteristics or traits used as a form of identification and access control. to elevate an innovation from cult trend to mainstream market position. They are the leading-edge consumers who will become increasingly important for Fis as many of them represent the future of financial institution consumers. An alternative to the iPhone s traditional Pin access touch iD enables fingerprint scanning with a microscopic camera capable of capturing and comparing high-resolution images to save profiles. Unlike other fingerprint scanning devices the iPhone 5s identifies and saves the fingertip print which is more Biometric payments trump social smartphone and contactless tech for security-conscious shoppers WorldPay June 13 2013 iPhone Fingerprint Survey Over Half Interested in New Feature AYTM September 18 2013 Credit Union bUSinESS April 2014 CU TEChnOlOgy difficult to lift and fake as a means of unauthorized entry into a device. information is transmitted via mobile devices consumers and Fis must find more secure ways to handle personally identifiable information and financial transactions no matter where they originate.4 enter biometrics which provides an elevated level of security using technology that works across a variety of platforms and devices. This is important since more and more consumers rely on an increasingly diverse range of convenient tools to work live and play. in the financial world biometric security is still in its infancy and proponents are working hard to prove that it can be an important and relevant tool in mitigating fraud losses. These supporters believe that biometric security is the way of the future because it relies on the presence of the individual Fraudsters cannot enter secure devices or accounts without the necessary biometric profile. Of course in some extreme circumstances reliance on the presence of a biometric profile can lead to other types of criminal activity among those hoping to gain access to secure systems.5 Are Consumers Ready for Biometrics Biometric technology may be burdened by a bit of a creepy factor as consumers worry about organizations storing and sharing their most personal and private information namely the makeup of their bodies. The same survey that polled consumers about the iPhone asked about this concern and 51 percent said they would be worried about giving a mobile device or company access to their fingerprints. Of course it is one thing to check a box on a survey and quite another to resist the siren call of ease and convenience. Consumers worldwide are demonstrating comfort with sharing personal and account information with a variety of partners. Take Disney Park visitors for example who wear their Radio Frequency identification (RFiD) bracelets for days on end. These bracelets act as park tickets room keys attraction passes and even as credit cards. They also allow Disney (and the third parties they do business with) to track their customer s every move and transaction while visiting.3 Guests are also able to use their Disney RFiD bracelets to stay up-to-date on their account balance throughout their Disney experience. This convenience from a multi- purpose smart device is ideal for consumers looking to speed up transactions whether that means passing through a turnstile or buying a pair of mouse ears. Biometrics for Payment and Other Transaction Biometric technology such as fingerprint scanning is not a new method for entry into secure systems and as an example is already used by several different laptop brands. Many of these devices are equipped with the hardware and software that enable fingerprint scans to be used for online password authorization. The iPhone 5s does not currently allow a fingerprint profile to be used as online password authentication or to authorize payments through third-party sites. However certain Apple applications such as the App store iBooks store and iTunes store can verify payment transactions with fingerprint profiles.6 And fingerprint scanning is not the only biometric method potentially headed for payment authorization. Other types of biometric capabilities such as facial recognition have already permeated society in numerous ways--from security cameras charged with identifying cheating gamblers to social media sites that encourage users to identify friends in photos. it s not that much of a stretch to imagine facial recognition being used in payment scenarios. in fact a Finnish company Uniqul has Biometrics Across Platforms Fraud is an ever-present and increasingly important concern in the world of payments and the desktop computer is far from being the only digital gateway available to cunning fraudsters. Relentless and resourceful cyber criminals make it necessary for consumers--and the Fis who protect them--to participate in the development and improvement of security measures. This requires innovation and diligence over multiple platforms and devices as the consumer has gone mobile so too have fraud attempts. in 2011 more than 60 percent of mobile device users were not using a Pin to secure access. As more sensitive 3 4 At Disney Parks a Bracelet Meant to Build Loyalty (and Sales) The New York Times January 7 2013 Mobile Tech Security and Biometrics Sector Stock Snapshot AAPL NXTD September 16 2013 5 Malaysia car thieves steal finger BBC News March 31 2005 6 iPhone 5s Fingerprint Scanner 9 Security Facts September 11 2013 April 2014 Credit Union bUSinESS 9 CU TEChnOlOgy patented and tested a payment system let allows consumers to pay their bills and make purchases using only their faces.7 Other corners of the payments sector are also turning to biometric security as a tool for mitigating ongoing and increasing fraud trends. The ATM is one channel faced with rampant fraud abuse and in critical need of a new technology solution capable of preventing criminals from attacking the often-isolated machines. in Japan ATMs have been equipped with vein-profile scanning in response to the country s high rate of ATM fraud. As light is emitted from the scanning device an image of the vein placement in a cardholder s hand is captured and compared to the stored profile on his or her bankcard. Just as in the iPhone 5s the ATM s biometric profile is stored on the card s internal computer chip rather than in a distant computer database.8 nXT-iD inc. is a U.s. company that is leveraging the growing mobile commerce market to develop its biometric security software. Launched in August 2013 the company s facematchTM product utilizes cameras already present in mobile devices to recognize and identify users for access to the device and for authorization of secure transactions which may someday include payments. The ATM is one channel faced with rampant fraud abuse and in critical need of a new technology solution capable of preventing criminals from attacking the often-isolated machines. in Japan ATMs have been equipped with vein-profile scanning in response to the country s high rate of ATM fraud. even far-fetched--solutions are finding their way into the mainstream with increasing speed and often without the help or even support of traditional financial industry players. Whether or not we are ready whether or not we understand it many early-adopter consumers are already intrigued by the promise of biometric security solutions. For financial institutions the question becomes Will our customers lead us or will we lead our customers Nicole Reyes is a Senior Fraud Prevention Analyst for the Members Group (TMG). In this role Nicole researches and analyzes current fraud trends and actively manages the fraud-prevention strategies for TMG s financial institution clients. She is also an important part of TMG s fraud detection and prevention product implementation tam. Nicole s passion is to help credit unions and community banks mitigate their fraud losses by utilizing proactive and innovative methods. Nicole has been with TMG since 2007 and has more than 13 years of card industry experience. She can be reached at nicole The Future of Biometrics Techies and industry experts alike say biometrics in the payments space is not just a passing fad and insist that biometric authentication offers long-term and reliable solutions to all transactional industries. And as more and more biometricenabled products enter the mainstream marketplace consumers are beginning to take notice. As with any technological innovation however developers must prove the tool is not only valuable but also simple. in other words while consumers may like the idea of security they love the idea of simplicity. Processors acquirers merchants and Fis who are now confronting the country s migration to eMV cards would be wise to closely monitor how biometric security solutions develop. Mobile commerce will change dramatically as the development of mobile device biometric security capability increases. The last ten years have already shown futuristic--and sometimes 7 8 Finnish Company Develops Facial Recognition Payment System Mashable July 25 2013 The Biometric Wallet IEEE Spectrum May 30 2012 10 Credit Union bUSinESS April 2014 800.268.1884 CU COnTEnT nurturing Mobile Channels at 3rivers Federal Credit Union for Critical growth Opportunities hile mobile banking is a relatively new service many credit unions offer it and know that doing so gives them a competitive edge. Credit Union Business spoke with Melissa shaw Marketing Communications Manager at Fort Wayne indiana based 3Rivers Federal Credit Union. 3Rivers FCU was the first credit union in the United states to offer Mobile Bill Pay using Picture Pay technology. While mobile applications vary in how much they can do the 3Rivers Mobile App allows members to view their accounts transfer funds search transactions find surchargefree ATMs or branches and deposit checks by taking a photo that appears in the member s account in real-time. in July of 2013 3Rivers expanded its mobile banking capabilities by launching Mobile Bill Pay. it utilizes Picture Pay technology which allows users to quickly snap a photo of a bill then enter a payment date and amount to easily transmit payment to their payee. Additional user features include expedited payment options that allow users to store payees for quick future Melissa Shaw Marketing Communications Manager at Fort Wayne Indiana based reference. We also 3Rivers Federal Credit Union W By Laura Enock host a mobile version of our website where members can manage their accounts and even apply for a loan shaw says. Although we will have a more responsive website design in the near future that will bring a much tighter integration. When completed the site will appear very much the same whether it s viewed on a desktop laptop tablet or mobile phone. Both the 3Rivers Mobile Banking app and the Mobile Bill Pay app are available for download from the Apple App store and Google Play. Having a robust mobile platform provides substantial benefits to 3Rivers members. A full-featured mobile solution allows members to manage their money matters wherever they are and whenever they want says shaw. increasingly people are going mobile. it is crucial that 3Rivers not only stays current but also tries to be as forward thinking as possible in developing our mobile platform. The more effectively our members can 12 Credit Union bUSinESS April 2014 CU COnTEnT securely access their account information and manage their money the more engaged they become with our credit union. 3Rivers began offering mobile banking services in March 2010. Within one year 2.75 percent of their members were actively using it and 7.50 percent of online banking members were users. Within two years usage grew to 6.20 percent of members and 14.60 percent of online banking users. That s when 3Rivers migrated to a new enhanced platform with additional features and more stability. Today 16.27 percent of our members use mobile banking says shaw and 38.29 percent of our online banking members use it. shaw also points out that 3Rivers members appreciate that their local credit union offers reliable mobile banking solutions that are competitive and comparable to those offered by larger financial institutions. We are committed to investing in technology to meet our member s financial needs and we continually strive to find the best solutions to fulfill the need for mobile banking on the go. Currently 3Rivers uses DnAMobile from Fiserv which was acquired when Fiserv purchased Open solutions and partners with Allied Payments and Malauzai software inc. for Mobile Bill Pay banking solutions. in this time of instant everything keeping up with member expectations for accessibility and service is critical and offering mobile banking is a must. 3Rivers has always been conscious of the important role that technology plays in the lives of its members and strives to stay ahead of the curve by delivering technology that 3Rivers members rightfully expect and that enhances the member experience. We knew we had to be there but the technology also had to be secure and easy to use shaw says. The end member experience is always at the forefront of our technological decisions. shaw further explains We know that our investments have been worthwhile and that we are delivering the services that our members desire and need since more and more 3Rivers members have begun using our mobile capabilities. As 3Rivers has discovered throughout their foray into the ever-changing world of mobile banking technology you can never really afford to sit back and say That s it we re done. it s not a set it and forget it sort of thing shaw says. The technology is constantly evolving and the demand is growing at a much faster pace than any of our other delivery channels ever 3rivers began offering mobile banking services in March 2010. Within one year 2.75 percent of their members were actively using it and 7.50 percent of online banking members were users. Within two years usage grew to 6.20 percent of members and 14.60 percent of online banking users. has--including online banking. Members want ease reliability security tight integration and service stability. Your vendors need to be committed partners and place as much priority on its development as your credit union does. shaw also points out that although the use of mobile banking is on the rise that doesn t necessarily mean members will change how they use a credit union s other channels. it becomes another layer of access for our members she explains. even as mobile banking becomes heavily utilized it does not mean that members will stop using other channels that are available. The final lesson that shaw offers has to do with adoption rates. You have to take more than the build it and they will come approach she says. You still have to tell members about mobile banking apps and even help them install and learn how to use them. Remember the early days of online banking when many credit unions hosted workshops to teach members what we now consider basic computer skills so they would be comfortable banking online even though there are many more members with mobile devices today than had computers back then there are still many users who need help and we their trusted financial partner should be delighted to provide it. April 2014 Credit Union bUSinESS 13 CU COnTEnT Whether your credit union is considering or already offers mobile banking shaw offers this advice Do your vendor homework and due diligence to make sure they will be around for the long haul she says. Also make sure they integrate well with your core system and will provide more than the standard template that they may sell to hundreds or even thousands of other credit unions. Having a mobile app is one thing but having a mobile application that is functional and easy to use is critical for achieving successful member adoption and satisfaction. As one last piece of advice shaw suggests credit unions consider the ramifications of having a significant portion of their members suddenly stop visiting their websites. Because they can now get their account information through your mobile banking platform she explains they will go to your website to look at their account information far less often. While they will still use that channel they will use it less frequently. That means you ve lost an opportunity to engage with your members and make them aware of some of the other products and services you offer or tie directly into your current marketing campaigns. To resolve this shaw suggests you consider using other ways to engage your heavy mobile users such as Facebook and Twitter. For those who want to learn more about the mobile banking solutions at 3Rivers visit their website at access mobile.html. Laura Enock is Founder and Publisher of a credit union-specific content service. Join hundreds of credit unions getting FREE monthly content Email her at laura or visit To achieve that goal 3Rivers uses a variety of media to market the mobile solutions that 3Rivers offers members and non-members alike. We have a robust page on our website that details our mobile offerings and we use in-branch media such as television monitors videos literature pop-up banners and estatements. externally the credit union talks about mobile capabilities whenever possible on its television radio outdoor and online advertising. We even place mobile-sized display ads promoting our mobile offerings on highly visible local news apps adds shaw. Letting people know that CU mobile apps can do everything that the big bank apps can is critical for growing and retaining membership and should be an integral part of your external marketing efforts. CEO SUBSCRIPTION WITH BEnEFITS Benefit your CFO COO CMO CCO CLO CIO HRD With FREE Monthly E-Newsletters Subscribe NOW register April 2014 14 Credit Union bUSinESS CFO CUrrEnCy Supervisory Utility of Risk Based Capital T By Kevin Kirksey he nCUA has issued a notice of proposed ruling on risk-based capital (RBC) as a continued effort to orchestrate heightened safety and soundness parameters for the credit union industry. in response to Government Accountability Office mandates the nCUA galvanized an improved scrutiny of systemic capital threats. now it welcomes feedback from the credit union population. The proposed RBC framework introduced by the nCUA Board on January 23 revises the insufficient one-sizefits-all capital regulations for federally insured credit unions with more than 50 million in assets. it also attempts to partially correlate with the Basel iii capital adequacy standards adopted by the Federal Reserve (Fed) Federal Deposit insurance Corporation (FDiC) and Comptroller of the Currency (OCC). But the critically important RBC proposal lacks some congruency with the Basel Accords and could lead to a misrepresentation of risk across the credit union spectrum. While the stability of depository systems relies profoundly on capital cushions it is imperative to measure capital prudently. Doing so will both prevent institutional failures and allow credit unions the flexibility to enhance earnings while strategically managing risk so that they may continue to offer superior products to their members. The Basel Committee on Banking supervision (BCBs) rightfully developed the Third Basel Accord in response to the global financial crises of the late 2000s with the intention of reforming bank capital requirements. specifically the BCBs suggested that banks increase Tier 1 capital from four percent to six percent of risk-weighted assets which the Fed committed to begin adopting in 2011 and complying by 2015. Moreover the BCBs augmented capital standards with a 2.5 percent mandatory capital conservation buffer and a discretionary counter-cycle buffer that would allow banking regulators to impose an additional 2.5 percent capital obligation during periods of credit expansion. The U.s. banking community intends to gradually phase in the conservation buffer beginning in 2016 with full espousal expected by 2019. Under the current proposal the nCUA is authorized to necessitate even more capital on a subjective case-by-case basis which mirrors the motivation behind the counter-cyclical buffer. Given the prescribed timelines for the U.s. banking arena affected credit unions should be afforded substantially longer than 18 months prior to being subject to more punitive capital guidelines. in order to reallocate balance sheet composition effectively to conform to the new more stringent capital policies institutions could have double that amount of time. While the justification is reasonable for requiring covered credit unions to hold more capital than their banking counterparts due to banks ability to raise secondary capital the proposed capital computation deductions and risk weightings for credit April 2014 Credit Union bUSinESS 15 CFO CUrrEnCy non-agency ABs products of equal term but revenue-backed municipal debt should require more capital than general obligation municipal debt given all else is equal. Comparable banking conventions also do not prescribe as many risk-weight classes. Transitioning from investment to loan risk weightings provides rationale challenges. For example long-duration mortgage investments have higher risk weightings than similar duration mortgage loans. Furthermore quantifying residential mortgage and member-business-loan (MBL) exposures largely based on concentration constraints feigns risk to capital and ultimately disincentivizes potentially profitable lending segments. The nCUA s proposal is actually light on delinquent modified (unless via the U.s. Treasury s Home Affordable Mortgage Program) and non-accrual first-lien residential mortgage loans a 150 percent capital requirement like Basel iii is more appropriate. High-quality first-lien residential mortgage loans (prime credit low LTV) however should not be charged more than 50 percent risk weighting regardless of concentration which is consistent with Basel iii. similarly high-quality MBLs (high DsCR low LTV) should not require more than 100 percent risk weighting irrespective of their percent of total assets. even though it is paramount to monitor concentration risks capital penalties should not be assessed that could limit a credit union s ability to pay dividends and offer value-added services to members. According to the proposal larger credit unions would unfairly encumber more regulation that could create a diametric opposition within the industry. since federally insured credit unions under 50 million in assets would not be reviewed immediately under the upgraded capital requirements it would be likely that a plethora of credit unions would breach the 50 million threshold and potentially reconsider growth in order to avoid the more rigorous capital resolutions. Conversely some credit unions could purposefully shrink their balance sheet in order to fall below the asset barrier or further consolidate through mergers. Large credit unions may even consider charter conversions so that they could benefit from less abrasive capital requirements. Additionally whereas credit unions were customarily agnostic to return on equity (ROe) considerations credit Transitioning from investment to loan risk weightings provides rationale challenges. For example long-duration mortgage investments have higher risk weightings than similar duration mortgage loans. Furthermore quantifying residential mortgage and member-business-loan (Mbl) exposures largely based on concentration constraints feigns risk to capital and ultimately disincentivizes potentially profitable lending segments. unions should be calibrated to assess residual unhedgeable risks. Credit unions with more than 250 million in assets now have the tools with interest rate derivatives to hedge asset types that the ruling severely punishes. Deducting goodwill in the calculation is palatable and in concert with Basel iii however excluding accumulated-other-comprehensive-income (AOCi) items could be unrealistic. Despite bank regulators allowing a one-time opt out for standard banks to continue excluding AOCi due to the metric s potential volatility AOCi could reveal exposures like underperforming pensions. With respect to investment risk weights credit unions are capable of mitigating interest rate risk with both on and off-balance sheet instruments. Concordantly risk weights for investments should not be based on remaining terms but instead satisfactorily capture credit exposures congruent with Basel iii. For example agency and supranational debentures should not require more capital than 16 Credit Union bUSinESS April 2014 cFO CUrrEnCy currEncy CFO The outputs are calculated figures not assumptions. The unions will now be forced to evaluate ROe implications with inputs allow the user to model cash flows with an end maturity each balance-sheet decision like banks which could be costly and decay rates that are similar to amortizations. for smaller institutions that may not have systems in place. Dividend and discount rates allow for the present value Those increased costs translate into less competitive loan and calculations (premiums) in each modeled interest rate scenario. share products which is unreasonable since there is nothing effective duration calculations can then mathematically be fundamentally different about a credit union offering a mortgage compared to that of the institution s assets. in this case effective loan to a member and a bank offering a mortgage loan to a duration is calculated by merely backing into the price change customer. formula. For example if the liability present value is 100 in the The nCUA has committed to modernizing their oversight of base 101 in the up 100to ensure industry-wide stability. Although risk to capital in order basis point scenario and 99 in the down 100 basis point scenario the effective duration is one percent the RBC ratios are intended as simplistic broad appraisals (i.e. risk they will never replace the perpetual need for robust of (101-99) 200). risk modeling and mitigation planning. While the regulators sensitivity Analysis trip-wire architecture for examining have constructed noble The regulator strongly suggests sensitivity iii--thereas a means capital exposures--analogous to Basel analyses are areas to quantify the effects of changing assumptions. sensitivity analyses are essential because the core share evaluation may have significant implication on the ALM conclusion. The for improvement. The proposed rule will have ramifications for assumptions used should be changed in progressive intervals loan and share growth so it would be wise for stakeholders to and the output should be recalculated to determine the impact explore the proposal and opine in writing to the nCUA by the of a different assumption. May 28 deadline for public comments. Kevin Kirksey has been with ALM First Financial Advisors non-maturing deposits can be viewed as a franchise value for more than five years and currently serves as strategic or benefits generated from loyalty of the membership when solutions group manager. His responsibilities include deposits are retained when dividend rates are low in a higher overseeing merger valuations ALM model validations market environment. And vice versa and he participates many hedging strategy relationships A financial institution that offers a non-maturity dividend also serves as the chief in general product development. He rate higher than market to attract hot money will decrease the economic value of its compliance officer for the firm. Previously Mr. Kirksey liabilities. is imperative to mortgage accounts for more worked onitGoldman Sachs model thesetrading desk awhere accurate depiction interest rate and he analyzed wholeofloan trades risk. securitizations and performed mortgage valuations for various capital raises Emily Mor IPOs. mergers andHollis CFA is a partner with ALM First Financial Advisors LLC. Conclusion April 2014 January 2014 Credit Union bUSinESS credit union BuSInESS 17 13 brAnChing OUT Capitalizing on Mobile Millennials and Payment Cards B By Roy W. Urrico efore too long there will be five billion people worldwide connected through smart devices (phones and tablets). This is part of a tremendous opportunity for credit unions looking to expand products and services through mobile banking Millennials and payment cards. The underpinnings of this digital shift are two-fold consumer appetite...for things ubiquitously available as well as the speed and dynamism of technology explained Mike Kelly President & CeO of PsCU in his presentation at the Association for Financial Technology spring Meeting in san Antonio TX. PsCU--a 400 million business owned by nearly 700 member credit unions that provides credit debit prepaid online bill pay mobile and online banking to 16 million accounts at more than 1 500 financial institutions--tries to bring the marketplace to credit unions and help credit unions reach their members. Kelly points out that there are three issues facing credit unions head on compliance developing mobile platforms and catering to the Millennials. Mike Kelly President & CEO of PSCU Regulatory Burden The regulatory burden is real and catastrophic. Credit unions now carry a much heavier regulatory and risk management load than even a year ago. That s according to the results of the latest Regulatory & Risk Management indicator by Wolters Kluwer Financial services. Rising pressures expressed by financial institutions in all compliance and risk management factor categories drove the increased score. Last quarter alone there were some 65 regulatory changes across 5 000 pages. Also weighing heavily on the minds of respondents was the more than 8 billion in new regulatory fines and settlements at the federal level in the last three months of 2013. Mobile Platforms Regulations aside branch managers still need to cater to their members. Kelly identifies credit unions underdeveloped and non-compelling mobile platforms at as one of the industry s April 2014 18 Credit Union bUSinESS THE POWER OF KASASA Uncover the power of our Success Formula visit BTAN How Co-opetition Can Drive Your Revenue And Growth brAnChing OUT bigger challenges. While a mobile platform lends itself to creativity what we can do with mobile still needs defining. nobody has figured out payments yet nobody said Kelly. We have all seen the statistics and read the headlines According to Pew Research in 2012 55 percent of cell owners say they use their phone to go online up from 31 percent in 2011. Among those who go online with their phones 31 percent say they do most of their online browsing on their phone rather than a computer or other device. This figure jumps to 45 percent among Millennials. More than 75 percent of Millennials have their mobile devices glued to their palm while in stores as a trusted personal shopping assistant and 73 percent of Millennials are already transacting directly on their mobile devices. These are the kinds of members that credit unions need to attract. Brands and retailers (and yes credit unions need to think like retailers) alike must identify mobile screens as a harmonizing channel to instruct and recruit new business in both digital and physical retail environments. You need mobile platforms compelling to a younger generation. You need to be interactive and interesting. Credit Unions which were built on service now needs to leverage this service model to fit into the mobile environment ( wherever you are it is ) or get leveled. Credit unions should consider mobile and social media as a way to engage members. if you do not have a really compelling social strategy that overlays the existing free and widely available infrastructure that is social are missing an opportunity suggested Kelly. He added Get in early and have a conversation with your members. Learn what works learn about your members. Think of social media as free infrastructure and capacity and change your paradigm. Use social media to engage members and push them to your physical outlets. U.s. Chamber of Commerce Foundation calls Millennials the most studied generation to date but Most consistent is that this generation is technically savvy almost as if it has a digital sixth sense. A wired connected world is all that Millennials have ever known. That is why it would be a precarious approach for a credit union to design a mobile experience that mimics their in-branch experience. Kelly believes the challenge for brick and mortars is to create a more interesting in-branch experience that will attract Millennials more accustomed to the mobile experience. says Kelly What if i tether you to your mobile device as you pull into the parking when you walk in the door (or get serviced in the drive-thru) i know you and i know how many accounts you have.... That technology has already arrived but we have not yet put all the pieces together. Remember the generational shift has arrived as well and it requires a shift of resources. We don t think this is a bet-the-farm strategy. You ve got all kinds of channels add them up who s in the branch who s online who s on the phone what does it cost to serve.... Money is rooted in trust. People are always going to need someone to hold their money and move it around...and as a consumer there are now more ways to move it Kelly reminds us. But where Millennials choose to put their money remains in doubt. When scratch polled 10 000 Millennials to find out which industries were most primed for disruption banks made up four of their top 10 most hated brands yet Millennials increasingly viewed these financial institutions as irrelevant. The three-year study from scratch an in-house unit of Viacom that consults with brands found that a third of Millennials believed they ll be able to live a bank-free existence in the future. in the age of simple square and Bitcoin these Millennials overwhelmingly believed that the way they access money and pay for things will be completely different in just five years. Another study released by online financial services provider Think Finance reveals that nearly all (92 percent) of Millennials say they now use a bank but nearly half (45 percent) have supplemented banking services with an alternative financial product or service (e.g. prepaid debit card money transfer service check cashing pawn shop payday loan etc.) within the past year. Asked why they turn to alternative financial services Millennials who have used them say the products are more April 2014 Millennials The digital shift we are working on really puts the spotlight on the generational shift specifically in credit unions offered Kelly. Millennials (aka Generation Y)--the generation of people born from 1980 to 1999--view financial services differently than the Boomers and Gen Xers that preceded them. Millennials are a huge group with a specific way of doing things. And there are plenty of them 80 million plus (the largest cohort size in history) carrying with them purchasing power of over 1.3 trillion. The 20 Credit Union bUSinESS brAnChing OUT convenient (42 percent) have lower or more predictable fees (31 percent) and have products that generally better meet their needs (30 percent). More than half of Millennials indicate that they prefer to manage their banking needs on their financial institution s Web site (56 percent). Additionally 29 percent report that they use a mobile app to help manage their money. and netspend have sold millions of prepaid cards to consumers. Millennials and Credit Unions Credit Unions have more in common with Millennials than you may think. Millennials prefer businesses that are involved in social issues within the community--the same fundamental foundation as credit unions. Credit unions are a service business.... We should be able to serve better and more profoundly in the digital world than we ever could in the analog world explained Kelly. Millennials still want a branch they just want it twice a year boomers want it twelve times a year. so how do you shift your resources How should you allocate your budget dollars Today s branch footprint is much smaller involves fewer people and costs less to run. it doesn t have a super expensive computer or a mainframe instead there are iPads. Maybe that means that you take five percent of your operating budget and start talking to those Millennials in a new and interesting way said Kelly in his presentation. 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 or email him at roy Payment Cards Kelly pointed out that credit unions should not overlook the potential for payment cards Although 82 percent of global payment is still paper tender (cash or checks) your best opportunity as a credit union is converting cash and checks [to cards] their penetration rates are good and there is a lot of upside. statistics bear this out. Almost half of all consumers with both credit and debit cards have reported a shift in payment habits over the last few years with an ever-increasing number moving toward debit card use. According to the data provided by the Oliver Wyman surveys of consumer preferences over 26 percent of consumers that have both types of cards increased their reliance on debit cards while 23 percent are using more credit cards. Over 89 percent of the consumers that have shifted to debit card use cite that their choice was informed by the need to become more financially responsible. The use of debit cards has increased over the last years with 77 percent of consumers reported having a debit card and 67 percent acknowledge using it for at least one transaction monthly. Debit cards are especially appealing to the younger demographic with 55 percent of total heavy debit card users (person who conducts more than 75 percent of their monthly transactions using a debit card) being under 45 years old while only 12 percent are 65 or older. Prepaid cards are a relatively new product that is showing increasing staying power. According to a report issued by Mercator Advisory Group in 2013 the use of prepaid cards in the U.s. was on the rise. Fifty-three percent of consumers surveyed bought a prepaid card in the preceding year a strong increase from the 47 percent registered in the 2012 survey. For an increasing number of Americans prepaid cards are already a familiar product. Currently 41 states and the District of Columbia use prepaid cards to distribute unemployment benefits. several states also use prepaid cards for tax refunds. Moreover in recent years both traditional brick-and-mortar banks and alternative prepaid card providers such as GreenDot CEO SUBSCRIPTION WITH BEnEFITS Benefit your CFO COO CMO CCO CLO CIO HRD With FREE Monthly E-Newsletters Subscribe NOW register Credit Union bUSinESS 21 April 2014 AT C lEVEl The Mistake hen a failed recovery effort lands a young team leader outside the general manager s office all he can do is sweat bullets and contemplate a jobless future. The dreaded talk with his superior however will reveal an important lesson one that extends out of the workplace and into real life. not every disaster is what it seems. Harry sat quietly outside the general manager s office. Although he had met the GM he had never been invited to his office. even though he was wearing his best suit Harry knew he looked terrible. Failure and a lack of sleep tend to foster an especially haggard appearance. He hadn t slept the previous night at all and for the last several weeks he had been lucky to get two hours a night. Harry was about to pay for a mistake. several weeks earlier one of his team leads discovered a devastating problem with their billing system that serviced millions of credit card accounts. Harry remembered the meeting well. The news had been so disturbing that he grew increasingly ill as the technician explained the problem. The technician summarized with these words Harry this has been happening for the last six months and it continues to happen with lightening speed even as we speak. The system had been under billing accounts for at least six months. Harry remembered thinking that his first thought was an odd one He just had to say at lightening speed didn t he Harry led the recovery team and members expressed many concerns at the first team meeting. The fix would be easy but recovering the unbilled revenue looked to be very complex. The difficult task required examining every account to determine if the account had been affected and if so calculating an adjustment amount for each of the previous six months. Furthermore every W By Marc A. Bringman customer would need to be notified and that effort would create a customer relation s nightmare. The team s first thought was to write off the money as a quick and efficient way to recovery however senior management immediately nixed the idea--it was just too big a loss. Recovering the money became the goal. The most senior technicians were very concerned about the complexity of the recovery process and warned anyone who would listen that they were engaged in very risky activity. On top of it all management demanded immediate 24 7 action until the problem was resolved. Many of Harry s recovery team were worried about keeping their jobs--a thought that had also crossed Harry s mind at least twice an hour every day and more frequently at night amidst the few dreams he had. For the next 21 days the team worked 70-hour weeks preparing modified software that calculated the adjustment amount notified each customer and created the necessary reports. Although Harry and his team were exhausted they were sure they had an effective routine in place. Testing looked good and on the following Monday they went live. The production changes ran fine and the first bills showed the expected adjustment. Customer bill inserts and letters 22 Credit Union bUSinESS April 2014 AT C lEVEl proceeded on schedule. Then almost five weeks later elsie showed up at Harry s office. Harry i ve got a problem. elsie s eyes spoke volumes and warned Harry that she had bad news. What s up Harry asked hoping that a perky greeting might soften the coming blow. it didn t work Harry. Her eyes glistened with a toxic mix of anger fear and anxiety. What didn t work Harry asked continuing to play dumb while hoping for the best. The adjustment process we used was faulty. We did not test it through the thirty-day cycle. Harry we are billing the wrong amounts And she added sternly while nervously clicking her ballpoint We re dead Technicians have a unique way of stating the obvious. show me Harry demanded in a last-ditch effort to prolong the inevitable. Perhaps he could find a mistake in the analysis setting everyone free with a deep breath and a close call. Denial had set in. This can t be he told himself. The two examined the results and sure enough elsie was right. The initial team Harry s team of the best tech minds had simply misunderstood the extent of the problem and therefore had designed a faulty fix. Later Harry would describe the incident like waking up from a nightmare only to find out it was real. i have to get this to neil right now. Meanwhile get the tech team together for me OK Thanks elsie. Harry left for the division manager s office. neil developed the same ashen look on his face once he heard the news and both managers concluded that elsie was right--they were dead. everal things happened over the next few weeks. neil was fired along with the programmer who had made the initial error. surprisingly Harry was suspended for only one week. The worst thing was that the new management had apparently been told to clean up and clean out the mess. everyone was under suspicion and the place was crawling with 22-year-old consultants. now sitting outside the general manager s office on his first day back after suspension Harry was quite certain the GM had asked to see him only to tie-up a loose end and send him home for good. Harry he s ready to see you. Harry got up thanked the receptionist and entered George Bear s office. The team s first thought was to write off the money as a quick and efficient way to recovery however senior management immediately nixed the idea-- it was just too big a loss. recovering the money became the goal. Harry how are you George was a big man. His size and title combined to fill the room. Already beaten Harry responded not so well sir. Really Why not The GM knew why but asked anyway. To be truthful Mr. Bear i figure you are about to let me go. is that so The GM asked as he looked curiously at Harry. What do you think should happen Harry considered the question and concluded that he didn t deserve this one. He just wanted to get it over with. Well i m about the only one in the chain of command that s left he replied. That s true and to be honest after a net eighteen-milliondollar loss the prevailing sentiment was to clean out the entire house but we ve since decided on a different course of action. George wasn t looking for credit but he did want to set the stage for a new beginning. Really stunned Harry needed an explanation a reason. survivor guilt gnawed at his soul. Why me it was my group that started this and it was my team that blew the recovery. That s true Harry but a little research and common sense shows that the problem actually rests with upper management. George let that confession sink in before he continued. it s not appropriate for me to comment on other employees but i will tell you that the recovery effort and the subsequent fiasco rest squarely on management s shoulders. s April 2014 Credit Union bUSinESS 23 AT C lEVEl i spoke with my boss Janet this morning. she understands and supports the actions i plan to take. One of those actions is that i want you to head up the committee that reviews the problem. i m going to give you some powerful resources from several key areas of the business. i want you to find out if i am right and develop some recommendations so that we never do this again. Can you do that Will you listen to our findings i promise you that we will and by the way Harry there s one more reason i m keeping you around. George showed no expression. What s that Do you have any kids Odd question Harry thought. Yes i do an 18-month-old girl. Do you ever look at her and wonder what her future will be and how you will influence her so that the result is success We would be wise to look at our employees that way too. Mistakes will be made but if you keep an eye on the future and what that can look like you ll do well as a manager. Here take this with you. George handed Harry a card that he took from his wallet. The worn card simply read Already sitting on the edge of the overstuffed plush chair Harry leaned forward clearly suggesting both interest and a desire for more information. He chose to let his body language speak for him and remained silent. i find there s a difference between a mistake and negligence and Harry i perceive you to be a victim of circumstance. Although somewhat relieved Harry s curiosity remained. But Mr. Bear i m part of management. George studied the survivor carefully sensing this young manger s internal struggle. Of course you are but you re not a policy maker. i expect you to follow policy not create it. i see this as an environmental issue and in a hostile environment our best employees failed. For example after the initial discovery people worked an excessive amount of hours to find and execute a solution. The recovery was far more complex than the initial problem and yet we managers thought it best to assign the recovery to a group of people who were exhausted and at the same time worried abut their livelihood. You can t do that. The fact that this happened raises a question. Do you know what it is As he asked George leaned back in his chair curious to hear Harry s answer. How Harry answered hoping not to reveal any additional weaknesses. That s right How on earth could my managers create an environment wherein employees are so obviously set up to fail i m part of this too. it s part of my job to make sure that employees can operate effectively. i failed in this and so did my staff. Treat people as if they were what they ought to be and you will help them become what they are capable of being. --Johann Wolfgang von Goethe Marc A. Bringman was the Editor of Credit Union BUSINESS from 2006 to 2011. 24 Credit Union bUSinESS April 2014 CU TrAining Classroom Training is Not enough pproximately 70 percent of all classroom training is ineffective and as a seasoned corporate trainer and instructional designer i too must plead guilty of having led my fair share of uninspired classes. Don t get me wrong i have conducted some great training classes. How do i know this Because i spent time after each session reading my evaluation forms or as trainers like to call them smile sheets. Why do we call them smile sheets Because they often include comments like Best training i ever attended. Wow Paul kept us engaged. i never fell asleep once. And yes we smile when we read the comments. As much as i enjoyed reading the best evaluations they weren t very helpful because they didn t really measure how effective the training actually was. sure i kept the participants entertained. i delivered perfectly timed anecdotes jokes and stories and remember witnessing a lot of aha moments throughout my sessions. i was good at engaging my audience and planning activities that allowed them to practice the skills i d taught them. so what s the problem Once participants leave the training room they get back to their branch or office and are often greeted with Yeah that s what they teach in training but here s how it s done in the real world. no we can t implement that. We re too busy and short-handed. Having an effective support system in place when employees return to their jobs is the biggest contributing factor to successful training. Any time a credit union asks me to train staff in member service for example i strongly recommend that management A By Paul Nunn go through the training program first. Why Because training is most when effective when employees who have completed the program return to the workplace with a support system in place. Their manager should already practice what the employee has just been taught and say Let s go over what you learned in training and build on that. Good training is like good parenting People--and children are people too--learn from those who are in control. Managers like parents model behavior. You ve heard the adage do as i say not as i do and perhaps even used the expression on occasion. But you shouldn t it is not a lesson you want to teach staff. You and your management team should model appropriate behavior for every employee. sending an employee to training does not guarantee learning. i ve had many managers say to me Paul i m sending sally back through training. she just doesn t get it. Training alone is not going to fix sally. Her manager the instructor the culture of the credit union and sally will fix sally. As with most April 2014 Credit Union bUSinESS 25 CU TrAining important things in life it takes a village. Here are some tips for helping your employees improve their learning experience Go through the class first--it will help you get an idea of what the employee is being taught. Offer to contribute to the class--from a trainer s viewpoint i love having subject matter experts share their knowledge. Model the way--demonstrate the skills and behaviors that are being taught in training. Realize your role--training is a small part of learning. On the job training mentoring and support from the manager is the real key to learning. Repeat after me training is a process not an event. Being sent to training never fixed anything. Having a culture of learning accountability and support fixes everything. Happy learning Paul is an award-winning trainer from Houston Texas. Since 1992 he has worn many hats teller trainer instructional designer and training manager. In 2005 he was the recipient of the Training Professional of the Year award by CUNA and Affiliates. Currently Paul and his wife Iris help train organizations with their company Nunn Training and Development ( Paul lives in Spring Texas with his beautiful wife and their two children Emily and PJ and can be reached at info nunntraining. com. 26 Credit Union bUSinESS April 2014 Ready for more value from your ATM provider Open your doors to a new ATM provider For decades Cummins Allison has helped you make the most of your branch resources. Now we re excited to offer a complete line of highly reliable secure full-function ATMs to fit any branch configuration from drive-up to walk-up. And best of all our ATMs are backed by the responsive dependable local service you need and have come to expect. So open your doors and give us a try. When you re ready to replace add to or expand your ATM network let s talk. Visit letstalk 2014 Cummins Allison Inc. All rights reserved. COMpliAnCE UpDATE CFPB Mortgage Rules Three Keys To Successful Implementation i By Jason Skemp t is hard to believe that the year is already a few months old when it seems like just last week we were preparing for the effective date of the new mortgage rules. That date has definitely come and gone and most of the credit unions i ve talked to recently are still trying to implement the new changes. The question i hear most often is We should be good to go once we get everything implemented internally right While the implementation process can be a struggle to get through-- and it will feel good to get it over with--your compliance work does not end there. Like almost everything in life the devil is in the details so it s imperative that you have established a solid well planned foundation before you begin navigating through the current rules and move closer to implementing the Truth in Lending Act (TiLA) and Real estate settlement Procedures Act (ResPA) disclosure rules. The August 1 2015 deadline will be here before we know it Building A solid Foundation Your credit union should execute a strategy that will help confirm that the new rules have been properly implemented and that your staff knows and follows them. This plan should cover each of the new rules and include a review of specific items over the next couple of years. spending more time early in the beginning stages of implementation will help establish a mortgage loan program with a rock-solid foundation that will last well into the future. i recommend you focus on three critical areas over the next two to two and a half years to help you achieve that goal. Policies Procedures Oh My The first building block for laying a successful foundation is a thorough review of all of your credit union s policies and procedures making sure each properly accommodate the new mortgage rules. These policies for example should cover the new Ability-to-Repay and Qualified Mortgage rules the loan originator compensation rules and the new servicing rules. You should conduct your policy and procedure review within the first few months of a rule s effective date. 28 Credit Union bUSinESS April 2014 COMpliAnCE UpDATE The Consumer Financial Protection Bureau (CFPB) has created a helpful chart containing the rules as well as a small entity compliance guide. if you aren t already using this resource i recommend you begin utilizing it immediately as it contains information germane to all of the rules that have been released. You can find the chart and guide on the CFPB website http regulatory-implementation Although the final rule was improved by eliminating the socalled all-in APR requiring credit unions to adapt machinereadable record keeping there is still a great deal of work ahead in terms of readying policies procedures and forms as well as teaching staff to learn all of the new requirements. Credit unions will also need to work closely with their vendor partners to ensure that all third parties are prepared to be fully compliant by August 1 2015. Whether an internal audit is performed or an outside firm is contracted this review should also include a test of mortgage files to make sure that the new TiLA-ResPA disclosures forms have been used and are filled in properly. even though these rules are not effective until August 2015 a complete mortgage file review is a key to ensuring successful implementation and feeling confident in your credit union s compliance. Hard At Work Policies And Procedures Once your credit union has reviewed and implemented all of your policies and procedures you ll need to make sure that you ve educated your staff on the new mortgage rules and that they are following your policies and procedures. A review of your mortgage files is the best way to test staff knowledge and new mortgage rule compliance and should ensure that proper underwriting is being done proper disclosures are being given and policies and procedures are being followed. This review should be conducted after you have had an opportunity to close a number of files. Credit unions will most likely have files to review as early as March or April of this year. You should plan on completing this review sometime within the next eight months as examiners are to likely begin reviewing files later this year or early next year. Remember examiners will be looking for evidence that the credit unions they visit have made a good-faith effort to comply with all of the new rules and regulations. Credit unions should be prepared to provide examiners with excellent documentation demonstrating that all aspects of the new regulations have been addressed whether via training new written policies and procedures and or proof of an internal audit. Conclusion Whether you ve started implementation or don t know where to begin creating a compliance management plan that includes these three elements is key to helping assure that your credit union will be compliant with the new mortgage rules. Jason Skemp is director of compliance solutions for PolicyWorks. Jason works extensively with individual credit unions by reviewing policies procedures documents and operations related to loans and deposit accounts and advising them as to changes to achieve compliance with federal regulations. As a national leader in credit union compliance solutions PolicyWorks is known for having the vision and expertise necessary to assist with the most challenging compliance issues. For more information visit The services provided by PolicyWorks should not be construed as legal services legal advice or in any way establishing an attorney-client relationship. Don t Forget The Disclosures Your last area of focus should be preparing for the upcoming TiLA-ResPA disclosure rules. The effective date for those rules lies just ahead on the horizon and it s not too early to start planning how you intend to bring your credit union into compliance. The final rule consisting of a whopping 1 888 pages of documentation requires credit unions to use new disclosure forms comply with the new timeline requirements that mandate when forms are to be given to members and work within new limitations anytime a final deal changes from the original loan estimate terms. April 2014 Credit Union bUSinESS 29 lEnDing linE First Party debt Collection There is a Flashing light in the Collections Department and it s Called the CFpb By Karin Brown-Purtell CLE Look up and look around first party debt collectors there s a flashing light in the collections department and it s called the CFPB Be prepared Changes are coming and you re probably not going to like them ebt collection affects a significant number of consumers. in november 2013 the Consumer Financial Protection Bureau (CFPB) took the first steps toward considering consumer protection rules for the debt collection industry through the issuance of an AnPR (Advanced notification of Pending Regulations). Final ruling guidelines are expected by the end of the year. Passed in 1977 the Fair Debt Collection Practices Act (FDCPA) was intended to eliminate abusive recovery practices arising from the collection of consumer debts. The CFPB was established in 2010 by way of the Dodd Frank Wall street Reform and Consumer Protection Act with a mandate to identify dangerous and unfair financial practices to educate consumers about these practices and to regulate the financial institutions that perpetuate them1. Under the Dodd-Frank Act the CFPB is the first Federal agency to acquire the authority to issue regulatory changes for debt collection industry under this statute2. D 1 2 Why now simply put the CFPB felt that many consumers might be subject to debt collection efforts that raise consumer protection concerns. The debt collection industry remains the top source of consumer complaints for the FTC3. The CFPB has handled approximately 30 300 debt collection complaints since it began accepting disputes in July 2013. Despite being the newest type of consumer complaint accepted by the CFPB complaints about debt collection practices now rank second only to complaints about mortgages in average monthly complaint volume4. These complaints include both first party and third party collections. Table 1 shows the types of debt collection complaints the CFPB has received5. http reports usf debt-collectors-debt-complaints http reports annual-report-on-the-fair-debt-collection-practices-act 3 http reports annual-report-on-the-fair-debt-collection-practices-act 4 http reports usf debt-collectors-debt-complaints 5 http reports annual-report-on-the-fair-debt-collection-practices-act 30 Credit Union bUSinESS April 2014 lEnDing linE TAblE 1 TypES OF COnSUMEr COMplAinTS As indicated on line 2 of Table 1 complaints about collectors communication tactics are the second most common complaint type. The majority of those complaints are about improper telephone calls and most have to do with frequent or repeated calls with consumers often complaining about being called with respect to someone else s debt. Many consumers have complained to the CFPB when the collector continues to call even after the consumer has repeatedly told the collector that the alleged debtor cannot be contacted at the dialed number. Consumers have also filed complaints about debt collectors calling their places of employment or making contact with third parties such as relatives or neighbors. Other complaints relate to reports of collectors threatening to take legal action. The FTC acknowledges that not all of the consumers complaints necessarily comprise legal violation of the FDCPA . Collection Practices Act (FDCPA) enforcement until recently which somewhat insulated loan originators lenders and first party collectors from FDCPA liability. Unfortunately this is likely to change in the not too distant future. Here s the smoking gun On July 10 2013 the CFPB issued a guidance bulletin stating that despite the fact that the FDCPA expressly excludes parties collecting their own debts the CFPB asserted that by virtue of the 2010 amendment to FDCPA 1692 it had the power to define unfair or deceptive practices. Therefore the Bureau intends to begin applying the FDCPA provisions even to businesses collecting their own debts. The bureau believes it is important to examine whether rules are warranted that cover consumer credit transaction complaints that arise out of the conduct of creditors collecting in their own names and on their own debts. experience suggests that first party collectors might represent a significant concern in their own right and it is believed that the CFPB will seek to harmonize any rules it develops for both first and third party collectors. A final ruling is expected before the end of the year. What Do i need to Do as a First Party Collector Be proactive and start preparing now CFPBs Bulletin 2013-07 expressly states that it will include companies who collect their own debts (including their service providers) in its enforcement monitoring. The Bureau provided a bulletin that included a list of practices it would enforce against first party collectors 1. Collecting or assessing a debt and or any additional amounts in connection with a debt (including interest fees and charges) not expressly authorized by the agreement creating the debt or permitted by law. Why Do i Care increasing regulation is one of the biggest changes affecting the debt collection industry. For the most part creditors collecting their own debt -- referred to as first party collectors--are exempt from the FDCPA but the FDCPA prohibits deceptive unfair and abusive practices by third-party collectors. The CFPB rarely ventured into Fair Debt http reports annual-report-on-the-fair-debt-collection-practices-act http reports federal-trade-commission-enforcement-fair-debt-collection-practices-act-thirtieth-annual 8 http publications articles i 810&NH 9 http www. f 201307_cfpb_bulletin_unfair-deceptive-abusive-practices.pdf 6 7 April 2014 Credit Union bUSinESS 31 lEnDing linE 2. Failing to post payments timely or properly or to credit a consumer s account with payments that the consumer submitted on time and then charging late fees to that consumer. 3. Taking possession of property without the legal right to do so. 4. Revealing the consumer s debt without the consumer s consent to the consumer s employer and or co-workers. 5. Falsely representing the character amount or legal status of the debt. 6. Misrepresenting that a debt collection communication is from an attorney. 7. Misrepresenting that a communication is from a government source or that the source of the communication is affiliated with the government. 8. Misrepresenting whether information about a payment or non-payment would be furnished to a credit-reporting agency. 9. Misrepresenting to consumers that their debts would be waived or forgiven if they accepted a settlement offer when the company does not in fact forgive or waive the debt. 10.Threatening any action that is not intended or the covered person or service provider does not have the authorization to pursue including false threats of lawsuits arrest prosecution or imprisonment for nonpayment of a debt. These technologies have created new opportunities for both the consumer and debt collector to communicate with each other that unfortunately challenge and blur existing regulations. Debt collectors use of social media to communicate with consumers raises concerns about deception in collecting under the DoddFrank Act s prohibition on deceptive acts and practices. This is a key area of concern for the CFPB since many of the debt collection complaints concern improper phone calls. Again to avoid costly mistakes it is imperative that debt collection professionals have a clear understanding of the changes in the law and how they apply to your organization. According to the CFPBs Annual Fair Debt Collection Practices Act Report the majority of complaints about communication tactics are about frequent or repeated calls (55%). Typically credit union collectors do not believe that they engage in this type of risk behavior. However from informal observation in-house collectors tend to be unclear about what is the exact number of contact attempts they can make at either the borrowers home work or cell numbers. Additionally in-house collectors may make numerous attempts to contact a reference or relative s number when trying to speak with past due members. This can result in complaints to the CFPB. Targeting debt collectors that engage in deceptive unfair or abusive conduct continues to be one the CFPBs highest priorities. The Bureau has observed that debt collectors often make representation to consumers about the effects of paying debts on credit reports credit scores or creditworthiness11. Credit union collectors are no different and frequently have these conversations with their members. The Bureau is concerned that in certain situations these representations may be deceptive under the FDCPA The Dodd-Frank Act or both.12 Update Policies and Training To avoid costly mistakes it is imperative that debt collection professionals have a clear understanding of the changes in the law and how they apply to your organization. Although most credit union collectors do not partake in the above-mentioned behaviors credit unions will need to update their collection policies and internal training programs to include these legal compliance components. Consumer Communication The FDCPA included consumer contact made via the telephone and postal mail but it did not anticipate contact being made through the internet smart phones auto-dialers fax machines or social media. 10 11 Relationships With Third Party Providers i.e. The Repossessors The CFPB has begun examining the financial institutions that it regulates and one of the areas that is being closely scrutinized is an institution s relationships with third-party service providers including repossession companies. And why did you think that the CFPB would leave them alone http www. f 201307_cfpb_bulletin_unfair-deceptive-abusive-practices.pdf http reports annual-report-on-the-fair-debt-collection-practices-act 12 http reports annual-report-on-the-fair-debt-collection-practices-act 32 Credit Union bUSinESS April 2014 lEnDing linE Financial institutions must be able to provide documentation of the compliance and consumer protection procedures being implemented by their third party service providers. The CFPB stated in its bulletin 2012-03 that it expects nonbanks and banks to oversee their business relationships with their service providers in a manner that ensures compliance with federal consumer financial law. in other words that twenty-year relationship you ve had with your repossession agent will no longer be enough Although final regulations are not out it is believed that it will include 1. The responsibility of the financial institution to ensure third party activity is conducted in a safe and sound manner and that both the credit union and the vendor are in compliance with applicable laws. 2. The financial institution will need to determine if the proposed third party relationship is consistent with the financial institution s strategic planning and overall business strategy. 3. The financial institution will need to identify performance criteria internal controls and reporting guidelines for their third party vendors. 4. The financial institution will need to actively oversee the work of the repossession agent. 5. The financial institution must be able to demonstrate that it did its due diligence and looked into all aspects of a third party s business when selecting a repossession company. Credit unions should look very closely at its repossession agent s business including its financial condition relevant experience knowledge of applicable laws and regulations reputation effectiveness of its operations and controls management of information systems and knowledge of consumer protection laws. 6. Credit unions will need to know the qualifications of the recovery agents representing them in the field. In turn repossession agents will need to 7. Comply with the new CFPB guidelines. 8. Have written compliance procedures and practices in place including recurring training for field agents. 9. Be able to demonstrate that documented compliance is occurring by agents in the field and 10.Be able to show not just tell the credit union that it complies with all applicable consumer protection laws Karin Brown-Purtell CLE is a Collections Consultant with Lending Solutions Consulting Inc. April 2014 Credit Union bUSinESS 33 CU MArkETing Tackling the Member experience Challenge in Mergers or acquisitions C By Neil Hartman and Kyle Hutchins which contributes to making small and mid-market credit unions attractive targets for continued merger activity. With so much riding on a successful outcome credit unions need to reevaluate their approach to managing member experience during the merger process and pay more attention to member needs as they rebuild service lines in the newly combined institution. ustomer experience is king in every industry and financial services are no exception. Today s savvy consumers are accustomed to stellar online and offline customer experiences from the brands they care about. For credit unions the quality of member experience has become a competitive differentiating factor that directly impacts their ability to attract and retain members. But all too often credit unions struggle to maintain positive member experience levels while in the midst of a merger or acquisition. Why Because in addition to regulations that restrict access to data until the merger is complete (e.g. Legal Day One ) credit unions frequently rely on member experience initiatives that are internally focused causing blind spots during new asset acquisition that restrict their ability to connect with high-value members. Mergers and acquisitions aren t going away. DoddFrank Know Your Customer (KYC) and other regulation has dramatically raised the cost of operating a financial institution Losing sight of Member experience in the M&A shuffle According to data from the national Credit Union Administration the credit union industry has already seen a steady rate of consolidation in 2014 with 29 credit union mergers recorded through February. While this might seem like a slow start it is brisk enough to predict that the year will end with a rate equal or close to the 243 credit union mergers seen in 2013. in the financial sector steady M&A mean even more credit unions will struggle to maintain a positive member experience during the integration process. And when it comes to this particular M&A pain point size doesn t matter. Both very 34 Credit Union bUSinESS April 2014 CU MArkETing prohibits credit unions from seeing a significant portion of their member base and makes it virtually impossible to identify and prioritize the members that need to be targeted with member loyalty and retention strategies. Further complications arise when merged entities fail to properly plan for the consolidation and management of member information. in many cases the end result is a member experience that is fragmented disjointed and frustrating for consumers. But despite the challenges it s possible for credit unions to successfully overcome the legal and organizational obstacles typically associated with enhancing the member experience during M&A activities. With the support of a third-party assessor merging credit unions gain the ability to properly examine both sets of data prior to the completion of the merger. Given the pace of M&A activities third-party assessment is becoming commonplace especially now that credit unions are becoming increasingly sensitive about the quality of the member experience during and after the merger. in addition to giving integrating credit unions an awareness of both sets of member data third-party assessors provide recommendations that can be instrumental in helping the combined entity better address the needs of specific subsets of members post-transaction. increased visibility to data and thorough member analyses can significantly improve a credit union s ability to maintain member experience levels across the entire M&A lifecycle. large and very small credit unions--the types of credit unions commonly engaged in merger and acquisition activities--have a tendency to lose sight of the member experience in the midst of a transition. While small credit unions are forced to dedicate focus and resources to monitoring the merger or acquisition process large credit unions--frequently serial strategic acquirers--struggle to manage the enormous volume of new members assets. Both large and small CUs are often overwhelmed to the point where member experience deteriorates and all but disappears from the organizational radar. no credit union can afford to lose sight of how important the member experience is to a CU s health and success yet it is often ignored during organizational upheaval. Keeping your focus on the simple goal of getting the member experience right will quickly elevate the profile of your credit union in the minds of consumers and market influencers. A Different Approach to the Member experience increased visibility to data and thorough member analyses can significantly improve a credit union s ability to maintain member experience levels across the entire M&A lifecycle. But the delivery of better member experiences doesn t end there-- in many cases credit unions also need to re-evaluate their entire approach to managing member experience. Too often merged or merging credit unions fail to effectively leverage member data and attempt to match existing products or product lines to all members resulting in a forced sale scenario. Although this approach makes sense internally it inevitably leads to a poor overall member experience and limits a credit union s ability to compete in today s marketplace. Applying data in a way that aligns members with products and services that actually meet their needs rather than attempting to pigeon-hole consumers into a specific set of products is a better approach across the board. Credit Union bUSinESS 35 Hobbled from the start Although there are a number of reasons why credit unions constantly struggle to maintain the member experience during mergers and acquisitions it s important to realize that for the most part the cards are stacked against credit unions from the beginning of the process. since credit unions are only allowed to share member data through restrictive means until after legal close it is extremely difficult to perform proper member segmentation and prioritization--key ingredients in the development of impressive member experiences. A failure to adequately analyze incoming audiences April 2014 CU MArkETing There is a growing awareness in financial circles that mergers and acquisitions cannot be allowed to derail the member experience. For example Gallup research has found that mobile banking is generating added value for traditional banking routines like ATM and branch banking--not replacing them. so instead of forcing members to choose a single method credit unions can focus on increasing exposure to a variety of mediums and engagement opportunities. By highlighting opportunities to use all available platforms credit unions not only achieve more effective matches but also strengthen member relationships by creating a vastly improved experience. As consumer technologies continue to evolve even more member-facing opportunities will emerge enabling credit unions and financial institutions to offer enhanced interactions that involve mobile banking social media and other widely accessible technology tools. Credit unions that proactively pursue consumer-based insights that incorporate these mediums will undoubtedly lead the way in providing consistently impressive member experiences. institutions aren t limited to developing member experiences within the confines of business transactions. More than ever before credit unions have the opportunity to cultivate useful and engaging opportunities that span the entire member relationship--the kinds of opportunities that delight consumers improve loyalty and deliver real competitive advantage. 36 Credit Union bUSinESS M&A Activity Doesn t Have to Derail the Member experience There is a growing awareness in financial circles that mergers and acquisitions cannot be allowed to derail the member experience. Member experience is too valuable and too big of a differentiator to be lost in the shuffle of M&A activities or trampled by legal obstacles. But to get there credit unions need to address the issue early in the process and follow through on their actions. specifically institutions need to prepare to handle new members long before a merger s completion. is it one more thing to worry about sure. But the member experience is a determining factor in the combined organization s ability to build loyalty and attract high-value members--and credit unions that ignore it may find that they are unable to meet post-merger targets because they aren t meeting consumer expectations. Likewise credit unions need to shift their member experience approach away from a channel focus and toward an end user-centric focus. By constantly devising new ways to cater to members with enhanced interactions that align with their actual needs and preferences credit unions can create stronger and more rewarding relationships. Managing the member experience in the midst of a merger isn t easy. But when it s done properly a merger or acquisition combined with a consistently good member experience can deliver an effective one-two punch that substantially boosts the institutions profitability and financial outlook. Neil Hartman is a director and leads the Midwest Banking Practice at management and technology consulting firm West Monroe Partners. Kyle Hutchins is the firm s Customer Experience Practice lead. April 2014 vISIT The MaRKeTPlaCe PaGe aT www.CUBUSINeSS.COM MARkETPLACE Card Processing Payment Solutions 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 CU SpOTliTE harnessing the Power of Gen y at hanscom FCU By Sharon Sweda hat group of people is 70 million strong challenges the status quo is pampered high maintenance and unlike any generation before its time While the description may not ring bells for anyone who has not had the challenge of working or living with a member of this group the words may ring loud and true for anyone who has worked with or managed members of Gen Y also known as Millennials. Gen Y is the not-yet-30-something generation roughly born between 1982 and 2004 that has an entirely different set of motivators and values than the generations they follow and have the ability to make even fast moving Gen X-ers appear sluggish. The Gen Y group is technologically advanced has plenty of self-esteem and no interest in placing a higher priority on career over self. The entire group psyche drastically contradicts that of the Boomer philosophy and is slowly evolving as the white elephant in the corporate environment. The team at Hanscom Federal Credit Union which is headquartered on Hanscom Air Force Base in Boston Massachusetts recognized this generational personality shift several years ago and decided to engage a strategy that would position Hanscom as a Gen Y friendly and deserving financial institution. While many businesses have decided to meet the no-nonsense group head on Hanscom FCU has taken a more aggressive approach by inviting Gen Y s to join them when they launched a Gen Y Advisory Board. Hanscom s traditional advisory panel was comprised of multi-generational members but the new board was restricted to Gen Y s only. The Gen Y Advisory Group provides us with feedback and W input based upon their observations of our operation explains David sprague President and CeO of the 60-year-old credit union. They serve as a focus group that is willing to give advice from their unique perspective. sometimes it can be difficult to hear objective criticism but we know that we will be able to improve our operation if we take the time and are willing to listen. Credit unions share a desire to attract younger members across the country and increasingly are looking for ways to expand their membership. However many are implementing strategies that have been created by board members who are removed by two or three generations and have had no hands-on Gen Y experience. 38 Credit Union bUSinESS April 2014 CU SpOTliTE initially the handpicked [Hanscom] group was formed to provide general feedback. But surprisingly the group has subsequently divided itself itself into smaller committees to specialize on specific areas such as media web and educational services. They are investing energy and initiative to advance Hanscom s appeal to all its members sprague added. The Gen Y group consists of a random sampling of young adults who were either recommended by staff or original advisory board members. They also consulted the base commander of Hanscom Air Force Base to solicit other candidates who could offer specific skills. The actual plan was conceived a couple of years ago when we decided that it would be prudent to initiate efforts to reduce our average member age reports sprague. We have more than 52 000 members and 16 branch offices most of which evolved through various mergers with other credit unions. We will be celebrating the anniversary of our 60th annual meeting in May of this year. Both general and specific improvements have taken place at Hanscom since the interjection of the input harvested from the Gen Y Advisory Board. sprague says that some of their ideas were very logical suggestions that had escaped recognition in past. The group offers effective ideas constructive criticism and ideas for implementation from a youthful point of view. Our general intent was not specifically aimed at growth concludes the President and CeO nevertheless we experienced new growth as a natural outcome of giving people what they want. 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. COMPLIANCE IS OUR POLICY PolicyWorks is a national leader in credit union compliance solutions. Our team of experienced professionals offer a wide array of compliance services. We re your partner to make compliance easy. Visit us online to learn more April 2014 Credit Union bUSinESS 39 CrOSSWOrD April Crossword Puzzle Qualify to win an iPad Mini on May 1st 1 3 4 2 5 6 7 8 9 10 ACROSS 4 Experience technology that s built with _ _ _ _ _ _ _ (Page 5) 5 Ready for more value from your _ _ _ provider (Page 27) 8 Harnessing the Power of _ _ _ _ (Front Cover) 9 Generate fee income one _ _ _ _ _ at a time (Back Cover) 10 Supervisory Utility of _ _ _ _____________ (page 15) DOWN 1 Life Insurance is not a fun _ _ _ _ _ (Inside Front Cover) 2 The power of _ _ _ _ _ _ (Page 19) 3 Become a 3-year CUB Member and we ll send you a _ _ _ _ _ _ _ _ _ _ (Page 7) 6 Putting you and your members _ _ _ _ _ (Page 11) 7 Advisors _ _ _ _ (page 3) To qualify 1. 2. 3. 4. 40 Credit Union bUSinESS Read credit Union business. answer the questions. to enter register on Qualify to Win an i-Pad Mini. April 2014