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T H E ON LY A LL-DIGITA L ALL-B USINESS R ESOUR CE FOR CR ED IT UNIONS THE BEST OF ISSUE DECEMBER 2016 VOLUME 11 ISSUE 12 OUR FAVORITE THINGS The Best of 2016 Empower Your Credit Union with Enhanced Member Service Empowered C-Level Employees and Create Miracles In Your Community 500 PER YEAR WITH A 20% INTRODUCT ORY DISCOUNT Don t let this valuable offer pass you by. Jump on the CU BUSINESS Express to help your credit union GROW for your members employees and community. 1. Each member gets CU Business monthly eMagazines. 2. Individual articles are emailed to each member by job title. 3. Bonus New members also receive last 12 articles CFO Currency Lending Solutions Marketing Matters Branch BUSINESS etc...) 4. Each member has full access to CUB website and its 65 issue library. Sign Up Your Entire Crew for Team Builder Click Here To Register Your Crew A U G U S T 2 0THE 6 1 ONLY ALL-DIGITAL ALL-BUSINESSSRESOURCE FOR .CREDIT M C U B U I N E S S C O UNIONS Fill In The Blanks & Prosper CU Name Date Teambuilder Subscription Form 2107 TEAM BUILDER SUBSCRIPTION FORM How many team members This many and more ECUB MONTHLY CEO VELOCITY CFO CURRENCY CU TRAININGS CUB WEBSITE TECHNICALLY SPEAKING COMPLIANCE UPDATE LENDING SOLUTIONS MARKETING MATTERS BRANCH BUSINESS Name Title E-mail ID MEMBER BUSINESS LENDING C R E D I T U N I O N B U S I N E S S A U G U S T 2 0 1 6 C U B U S I N E S S . C O M ABOUT US THE ONLY ALL-DIGITAL ALL-BUSINESS RESOURCE FOR CREDIT UNIONS PUBLISHING TEAM Tim O Hara Editor & Publisher tim Patti Manzone Designer UP FRONT Tim O Hara BRANCH BUSINESS Meredith Deen PAYMENTS Bill Prichard MEMBER BUSINESS LENDING Corinne Kalsky RISK MANAGEMENT Rini Fredette BRANCH BUSINESS Kaitlin Morrison CFO CURRENCY Alec Hollis LENDING SOLUTIONS Bill Hulstrandt CU TRAINING Kenneth C. Bator CU DATA Steven D. Simpson CU WEB OPS Brewster Knowlton Ashok Kumar Associate Publisher ashok T HE ONLY AL L -DI GI TAL AL L -BUSI NE SS RE SOURCE FOR CRE DI T UNI ONS THE BEST OF ISSUE DECEMBER 2016 VOLUME 11 ISSUE 12 OUR FAVORITE THINGS The Best of 2016 SUBSCRIPTIONS Credit Union BUSINESS is published monthly (12 issues per year) by CU Business Magazine Inc. A one-year Digital membership is 75 yr An online membership form is available at register. TEAMBUILDER https teambuilder SALES AND ADVERTISING Tim O Hara Publisher tim or 561-282-6015 1 CONTACT INFORMATION Credit Union BUSINESS Magazine P.O. Box 2223 Palm Beach FL 33480 (561) 282-6015 (561) 588-7711 (fax) tim 4 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M TABLE OF CONTENTS DECEMBER 2016 VOLUME 11 ISSUETAB 12 THE ONLY ALL-DIGITAL ALL-BUSINESS RESOURCE FOR CREDIT UNIONS 6 8 10 17 19 23 UP FRONT A Tidal Wave of Success Tim O Hara BRANCH BUSINESS Meredith Deen 26 29 31 35 38 CFO CURRENCY Post-Election Stress in the Mortgage Market Alec Hollis LENDING SOLUTIONS Mobile Applications That Benefit the Branch MEMBER BUSINESS LENDING Corinne Kalsky PAYMENTS During the Holidays Credit Unions Give Back Holiday Survival Guide Bill Prichard Marketing To Your Pre-Retirement Age Members Bill Hulstrandt CU TRAINING Three Pivotal Services for Members Who Travel The Strategic Power of People Purpose and Performance Kenneth C. Bator CU DATA RISK MANAGEMENT Rini Fredette Enterprise Risk Management Adds Protection and Value for Company and Stakeholders BRANCH BUSINESS Kaitlin Morrison Seize the Opportunities Top 3 Challenges to Overcome for Advanced Analytics Success Steven D. Simpson CU WEB OPS Motivated Workplaces What s Keeping Your Credit Union from Being Data Driven Brewster Knowlton Two Branch Managers Offer Four Ideas for 2017 5 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M UP FRO NT BY TIM O HARA A Tidal Wave of Success A s I write this column for the final edition of CUB for 2016 today is the Friday morning after Thanksgiving and it occurs to me that I have much to be thankful for again this year. In addition to all of my many personal blessings of good health a wonderful growing family (my daughter Malachy is preparing to deliver her third child next February) and a consistent feeling of wellbeing our digital magazine is in the midst of enjoying a tidal wave of new subscribers thanks to our Team Builder group subscription program. In a nutshell Team Builder allows a credit union s top management to sign up and target its department heads line workers branch managers and executive assistants to receive job-helping articles directly to their email inboxes. We ll send them all the best practices information CUB publishes each month or just those columns that pertain to specific CU operations like Lending or Finance or Technology or Marketing or Compliance or Leadership or Training or Branching. CU BUSINESS is unique to the CU industry in publishing only success stories We bring you exclusively the information that will help your credit union prosper. And these columns are contributed by leading industry experts who know how to make a credit union grow like Emily Hollis of ALM First Investment Advisors in Dallas with CFO Currency and Rex Johnson the leader at Lending Solutions. Rex or one of his talented associates will show your lenders how it s done What s more Team Builder has no limit on the number of credit union employees who can benefit. If you have 80 branch managers for example we ll send the whole magazine or just the Branch BUSINESS column to each of them Another benefit of the Team Builder program is total and free access to our growing website www. 6 C R E D I T U N I O N B U S I N E S S with more than six years in back issues and hundreds of helpful articles covering every aspect of successful credit union operations. Treat every member of your team to the knowledge that can be found at the site. And a Google search bar to make research projects easy You may have noticed during the 12 years that we ve been publishing CU BUSINESS there has always been a full-page ad from the Children s Miracle Network in the magazine. We are delighted to help CMN by running this advertising free of charge. The dollar value of these pro-bono ads would be in the mid six figures. But what a worthwhile cause and what a great organization to support With the Team Builder program we ll expand on our support efforts to CMN by donating 10 percent of each credit union subscription to the Credit Unions for Kids campaign. And this pledge is open-ended which means the contributions will continue to flow year after year As we head into the holiday season I hope every credit union will join us by becoming a Team Builder subscriber Your team members will benefit as will your members with improved service and the communities you serve with your indirect donations to the Children s Miracle Network. Thanks for reading Tim 2 0 1 6 C U B U S I N E S S . C O M D E C E M B E R 250 000 Credit Union Employees 92 Million Members TAB 100 Million Miracles Since 1996 Credit Unions for Kids has raised more than 100 million for Children s Miracle Network Hospitals giving hope and healing to kids in your local community. YOUR FUNDRAISING DOLLARS IN ACTION MILLION 10 2 1 iMRI machine and surgical suite 1 Cardiac X-ray machine 1 Ultrasound machine 1 Bone marrow transplant 1 Fully-equipped Giraffe OmiBed incubator MILLION THOUSAND 270 THOUSAND 250 THOUSAND 100 BRA NC H BUSI NES S BY MEREDITH DEEN Mobile Applications That Benefit the Branch W Mobile banking solutions are continuously evolving. Already the technology can be integrated across a wide swath of credit union offerings. Discover how today s pre-packaged and custom mobile applications can be extended from the lobby to the teller line throughout the workforce and even outside the branch. ith mobile banking continuing to increase in popularity (53 percent of smartphone users utilized mobile banking in 2015 per a 2015 Federal Reserve report) many credit unions are successfully integrating mobile banking apps into their offerings. What most have not considered is how mobile banking can benefit branch operations as well. Some scenarios such as text messaging offers to accountholders in the vicinity (based on GPS data) are still in the future. However others are available today in the form of pre-packaged or custom technology solutions. Here are a few examples. In the Lobby Some lobby tracking solutions support the use of iPads and other mobile tablets for lobby sign-in replacing obsolete paper sign-in sheets and allowing collection of lobby visit data for further analysis. The best of these solutions also provide mobile (text or email) alerts to designated personnel when a customer signs in or when lobby-assist wait times exceed a designated threshold. On the Teller Line Solutions that analyze transaction data from the core processor to report on teller activities can provide key performance indicators (KPIs) about teller efficiency via mobile device to regional managers and other key management in advance of branch visits. 8 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M For the Workforce Branch scheduling software whether based on projected traffic (gleaned from branch activity data) or historical industry averages can incorporate a mobile interface that allows workers to view their work schedules on their mobile devices request time off for vacations and more. Branch Revenue Loss Mitigation Banks with business intelligence (BI) systems are able to aggregate and analyze data from mobile apps core processor feeds and other data streams that can determine not only what activities a branch member is performing but where and how often he or she is using other channels. This data could assist management in their decision process if closing an unprofitable location would be TURN ON YOUR COMPLIANCE OFFICER withTEAMBUILDER. 4 COMPLIANCE UPDATE teambuilder buy BRANCH BUSINESS TAB an acceptable option to the customers conducting business at that branch. Outside the Branch One of the most tantalizing ideas is for branch staff to literally take the branch to the member taking mobile tablet devices to creditunion-sponsored booths at community festivals and other events. With a tablet connected securely to the bank s system via WiFi representatives could sign up new customers process the first steps for loan applications and perform other transaction-based community outreach efforts. These types of activities really wow prospects and far exceed the free magnet with a brochure that many banks currently offer at these types of events. Appointment Scheduling Applications These automated solutions let members use nearly any Internetconnected device to schedule branch appointments through their institution s website or mobile app. This capability modernizes how consumers engage with branches optimizing the allocation of staff and resources while giving your brand a tech-savvy image. Meredith Deen is president of Alpharetta Ga.based Financial Management Solutions Inc. (FMSI) which provides financial institutions with business intelligence and performance management systems for efficient branch staff scheduling and lobby management. She can be reached at meredithd The Future Is Here Some of these scenarios may sound futuristic to banks not currently taking advantage of them but every single one of them is possible now. The key is to work with technology experts who know how to collect and analyze data especially with multiple data streams to discern actionable patterns and behaviors that can drive greater productivity and profitability. 9 C R E D I T U N I O N B U S II N E S S B U S N E S S DD EE CC EE M BB EE RR M 22 00 11 66 C U B U S I N E S S . C O M MEMBER BU SI N E S S L ENDING BY CORINNE KALSKY During the Holidays Credit Unions Give Back T Serving their community is a mission credit unions take seriously year round. In honor of the holiday season Credit Union BUSINESS showcases two of the CUs that have taken the people helping people mantra especially to heart and put their community-minded values into action. across 13 school districts in its New York market. These presentations range from teaching budgeting to high school students through a simulation called Mad City Money to sharing our insurance expertise with drivers education classes says Kim Depew marketing supervisor at CCU. We re not there to sell we re there to educate. CCU s financial education initiatives don t end with students. The credit union also hosts an annual home buying seminar each April. We bring in a panel of experts including an attorney a realtor a home inspector and a mortgage originator Depew says. The public members and non-members alike are invited to come listen and interact. Buying a home is such a huge decision in somebody s life and we want to help them as much as we can. he holiday season is often a time for reflection giving thanks and giving back. Credit unions with their cooperative mission of people helping people have a special relationship with the communities they serve. In this space we usually discuss best practices in credit union business lending and the challenges that executives face in achieving sustainable growth and reaching new markets. But this month we ll take a step back and share a few examples of how credit unions support the people organizations and unique needs of their communities. Preparing the Members of the Future Corning Credit Union (CCU) has a mission to improve financial literacy in the markets it serves. To this end CCU has opened two student-run branches in its New York market that serve the actual banking needs of students faculty and staff on campus. The program offers high school students the opportunity to develop the skills of responsibility professionalism and teamwork in an authentic real-world branch environment. CCU also facilitates numerous financial educational presentations throughout the region. In 2015 the credit union devoted 192 hours to conducting 124 educational sessions and programs in the community. Through these programs the CU directly reached 3 917 students 10 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M He says PSCU responses are lickety-split quick. Jeff Phillipich Chief Lending Officer Great River FCU She says PSCU is adamant about answering questions. Cathy Worth Card Services Manager TruStone Financial Let s Talk About Service. In 1977 five credit unions came together to form PSCU and service became the foundation on which our cooperative was built. Today our Member-Owners total 800 credit unions strong and we re proud to say we re focused on the meaning of exceptional service. We re asking the questions that empower your growth. And we re doing it all through real conversation. See what else our Member-Owners are saying at service. service 844.367.7728 MEMBER BUSINESS LENDING As a 1.3 billion cooperative with three distinct and geographically dispersed markets in New York North Carolina and Pennsylvania CCU serves a diverse membership in communities with very different social needs. This is one reason the credit union takes a multipronged approach to its community involvement and volunteering initiatives throughout the year. The CU hosts branch events during Old Home Week in its Greencastle Pa. market sponsors the Involvement Carnival in Wilmington N.C. and organizes an eagerly anticipated Senior Dance each year in Corning N.Y. Our senior citizens in our New York market look forward to this event every year Depew says. It is a free event with a maximum capacity of 250 and it fills up every year. Often seniors don t get to see their friends on a regular basis. They tell us this is the one time of year they can see people they went to high school with or used to work with. It s a good feeling to know that so many people appreciate that [reunion opportunity]. partners with other organizations in the community including the HEART Bridge program alliance to broaden its impact. The HEART program was established 13 years ago to teach trade skills to at-risk high schoolers in the Dubuque area. The MoneyMatch program in and of itself is meant to help individuals but we partner with other organizations to create a bigger impact says Michelle Becwar lead education impact architect for Dupaco. Within the HEART program we have had our first student take advantage of the MoneyMatch program this year. He was at risk of dropping out of school but he got involved with HEART. The program set him up with specific job training and we matched his funds. Now he s working and getting ready to go back to school in the spring. It s a great example of showing how not only the individual is impacted but the local economy as well. There is a shortage of trade workers in our area and this company gained a skilled employee out of the program. It s just a nice little circle. Supporting Hopes and Dreams Like CCU Dupaco Community Credit Union ( 1.3 billion Dubuque Iowa) is focused on giving back to the community. In 2015 Dupaco s employees volunteered over 7 000 hours with 300 charitable organizations and raised 191 000. Dupaco established the Dupaco MoneyMatch program in 2009 with the support and funding of both its own 501(c)3 non-profit foundation and the Dupaco R.W. Hoefer Foundation along with the Iowa Credit Union Foundation. The program helps low-income individuals and families establish an individual development account to save toward a specific assetbuilding goal such as starting a business purchasing a home or funding their education. Dupaco matches participants savings up to a certain amount if specific educational milestones are achieved. The MoneyMatch program served 40 active participants in 2016 up from 21 in 2015. Dupaco 12 C R E D I T U N I O N B U S I N E S S A Foundation of Giving A few years ago some employees involved in CCU s financial literacy initiatives recognized that the need in the community was much greater than what the credit union could support on its own. With CCU s blessing and support these employees started up the D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M MEMBER BUSINESS LENDING StraightTalk Association for Financial Empowerment (SAFE) a 501(c)3 organization dedicated to supporting financial education across all ages and demographics. SAFE often partners with other local non-profits to create a multiplier effect. We didn t want to reinvent the wheel because we recognized there was a ton of information and materials already available for consumers says Kansass Smith executive director of SAFE. We looked for a way to add value to financial literacy work in a way that wasn t already being done. We found within our local community that other nonprofits were offering great programming with a financial education component but often they didn t have the expertise or funding in house. That s where we can help. We review their curriculum consult with them on audience demographics and help them bridge that gap in a very specific way. We serve as guest speakers and provide small grants to fund participant incentives like gift cards for completing a series of workshops that can help with enrollment. A Time for Reflection Recognizing the heightened financial and emotional stress of the holiday season both Dupaco and CCU sponsor special community programs during this time of year. At Dupaco team members offer both their time and dollars to ensure holiday gift packages are delivered to families in need. The 1 Solution for Member Business Lending 14 C R E D I T U N I O N B U S II N E S S B U S N E S S DD EE CC EE M BB EE RR M 22 00 11 66 C U B U S I N E S S . C O M MEMBER BUSINESS LENDING Our employees are so passionate about giving back to people Dupaco s Becwar says. They organize and volunteer to shop and wrap the gifts and then [they] deliver them to families in the communities. In 2015 CCU sponsored a successful canned food drive encouraging members and the public at large to donate nonperishable items for the local food pantries. The credit union also supports the local Salvation Army s Angel Tree program. Members can select a tag from Christmas trees displayed in CCU s branches and purchase a gift for a needy child. This year CCU coordinated its first-ever coat drive. By partnering with a local dry cleaning business Crystal Cleaners and publicizing the initiative through social media and the credit union s website a total of 176 winter coats were collected dry-cleaned and delivered to the local senior center and three area elementary schools. In one instance we delivered the coats to the school nurse and she almost started crying Depew says. She said that just that morning a little girl had walked to school with no coat on in 30-degree temperatures. At the end of the day we re not interested in selling anything when we do this. We re just interested in supporting the community. That was such a special moment and it makes it all worth it. Corinne Kalsky is regional vice president of credit unions for nCino the worldwide leader in cloud banking. Through its flagship operating system nCino leverages the power of to provide credit unions and other financial institutions with superior transparency and clarity into their existing loan production pipelines portfolios and operating efficiencies across all business lines resulting in increased profitability productivity gains and regulatory compliance. For more information visit or connect with the company on LinkedIn and Twitter nCino. 15 C R E D I T U N I O N B U S II N E S S B U S N E S S DD EE CC EE M BB EE RR M 22 00 11 66 C U B U S I N E S S . C O M PAYMENTS BY BILL PRICHARD Holiday Survival Guide Three Pivotal Services for Members Who Travel F What does holiday travel have to do with credit unions The uptick in travel during the holiday season puts many a CU member far from home. How can CU s serve these members in spite of the miles between them These best practices help erase the distance. 1. Extend Call Center Hours Especially on Black Friday. According to Cline-Parton Black Friday is likely the busiest day of the year for a credit union call center as it is for the CO-OP Member Center. We experience a much higher volume of calls on Black Friday not only due to the purchasing patterns of members but also because many credit unions remain closed to extend the holiday for employees said Cline-Parton. Credit unions need to cover Black Friday well whether the added support comes from staffing up internally or tapping the resources of an external call center such as ours. She added that extended call center support is particularly important on Black Friday because it is a time when many members exceed their daily spending limits. When that is the case these members will want to talk with someone right away to resolve the issue she said. While Black Friday is typically the busiest shopping day of the year Cline-Parton notes that members will continue to travel and spend across geographies and time zones throughout the holiday season. Consider that a traveling member might be dealing with an unforeseen event such as a lost or stolen card she said. In these instances it 17 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M or millions of Americans the holiday season is the perfect time to travel. In fact USA Today reports that an estimated 100.5 million U.S. consumers traveled more than 50 miles from their homes last year between Dec. 23 and Jan. 3 according to the Automobile Club of America. And AAA predicts that this year s holiday travel season will top national records with an estimated 48.7 million Americans traveling during the 2016 Thanksgiving weekend alone. While holiday travel can be filled with excitement and festivities it also brings with it unique risks and inconveniences for consumers especially where their money is concerned. During the holidays many credit union members find themselves in faraway places at a time when they need their institution s products and services the most said Carol Cline-Parton vice president CO-OP Member Center a wholly-owned subsidiary of CO-OP Financial Services. This dynamic can place added demands on a credit union and especially on their call center. To serve members well wherever their holiday travels take them Cline-Parton advises credit unions to follow these best practices PAYMENTS is vitally important to be able to re-establish that card for the member right away. [It is critical] for dispute processing to be expedited as well so any missing funds are back in the member s account as quickly as possible. 2. Participate in Shared Branching. Shared branching provides an extra layer of service wherever your members may be nationwide as do surcharge-free ATMs. Members don t always anticipate their banking needs before they leave town said ClineParton. And when they are on the road they will want to quickly locate the closest ATM or shared branch for the same routine transactions they conduct at home. She reminds credit unions that CO-OP Shared Branch (5 400 locations) and CO-OP ATM (30 000 machines) span the USA making it convenient for members to withdraw cash complete deposits transfer funds check their balances and make loan payments when they are traveling. 3. Leverage Mobile Channels. For members who are away from home and especially during the holidays Cline-Parton Bill Prichard is emphasizes the importance of mobile access to senior manager cards and accounts. public relations The Sprig by CO-OP mobile banking app and corporate gives members visibility into multiple accounts communications without having to login to each account separately for CO-OP she said. This [functionality] can be tremendously Financial Services helpful to them in their efforts to monitor and ( manage holiday expenses without the conveniences org) a Rancho of home. Cucamonga She advises credit unions to take their mobile Californiastrategy one step further by providing self-service based provider authentication via mobile and online channels as of financial well. technology to If a member has forgotten an account password credit unions. Prichard can be reached at bill. he or she can be locked out of the account after prichard and (800) 782-9042 ext. 3450. 18 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M multiple login attempts she said. This [obstacle] can be particularly problematic for members when they travel. Credit unions absolutely need a system in place that automatically texts and emails password reset links to members so they can regain critical account access in a very timely manner. Cline-Parton adds that mobile can play a valuable role in detecting and mitigating card fraud as well. When fraud is suspected there is always a sense of urgency about the situation she said. Credit unions should use every channel available to them to connect with impacted members and automated calls and texts sometimes get through faster than emails. She continued Remind members to notify you of their travel plans in advance as well. This is so important to ensure both their account security and access to card products while away. And always remember that members have choices and that your credit union is competing in this industry with many other financial institutions large and small. Investing in the service resources you need during the pivotal holiday season will help strengthen member relationships throughout the new year and beyond. RISK MA NA G EMENT BY RINI FREDETTE Enterprise Risk Management Adds Protection and Value for Company and Stakeholders Is your credit union fully aware of its risk environment The more informed you are of potential risks within your CU the less likely you ll expose yourself to harm. An Enterprise Risk Management solution helps you cover all the bases. Read on for a rundown of ERM benefits to reap and pitfalls to avoid along the way. Benefits of a Strong ERM Function The proper implementation and application of ERM practices carry numerous benefits to multiple stakeholders in the organization including its client credit unions and their members. A company s strategic plan for example can introduce new elements of risk beyond those presented in the context of day-to-day tactical operations. ERM can identify potential risk in the strategic plan and can develop the appropriate mitigation processes to help maintain an acceptable level of risk exposure. It can also ensure the successful execution of the company s strategic objectives. Similarly an ERM discipline is critical to informing the decisions a company makes with respect to its investments in infrastructure and technology. A regimen of ERM oversight on mission-critical business plans and due diligence activities can be invaluable when evaluating the merits of particular investment ideas. Another benefit of a formal and highly visible ERM function is the heightened awareness it generates among employees about the role they individually play in defending the enterprise against risk. The combination of employee training on risks that are 19 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M specific to the business and proactive monitoring of the work environment by all staff for anomalies or suspicious behavior can lead to early detection and avoidance of risk. A broadly promoted See something say something campaign can empower an entire army of employees to take an active role in protecting the organization from potential harm. Credit union partners of an organization that is committed to a world-class ERM practice benefit from higher levels of security around the data they entrust to the organization. They also enjoy the increased focus the enterprise places on regulatory compliance that when missing can negatively impact the organization and its clients. RISK MANAGEMENT Factors that Drive Success in ERM Many risk management processes start by identifying and assessing risks. But companies may first want to begin by better understanding their risk appetite which is the aggregate amount of risk they are willing to accept in the execution of their business strategy. Think of appetite as the guardrails guiding a company along the road to achieving its objectives. Such guideposts are based on balanced risk taken in alignment with executive leadership s preferences. Companies can more effectively identify manage and monitor risks to their particular strategy when employees understand how their daily activities are related to and aligned with that appetite. The structure and strategy of your risk organization should take three lines of defense into account 1. Risk Owners Operational Management A significant risk component here is the technology and protocols in place to guard your company s (and your clients ) data from cyberattacks. Managing risk at the first line of defense requires a team of risk champions who are mid-level leaders and subject matter experts throughout an organization. Their areas of specialization include but are not limited to IT finance and accounting sales and account management operations product management and legal. 2. Risk Oversight Risk Management Compliance & Risk Committees A strong ERM team which often also includes functions such as fraud investigations business continuity vendor governance and regulatory compliance along with the executive leadership team and risk committees benefits the 20 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M RISK MANAGEMENT TAB company through its ability to leverage and share risk information. This open awareness and free exchange of knowledge among team members helps expose issues and vulnerabilities in processes. It also aids in identifying new potential and emerging risks across the entire taxonomy of corporate risk. Risk committees help ensure the proper risk governance framework is in place while also meeting regulatory guidance but there really is no one size fits all solution. Make sure to choose a suitable model of oversight that is appropriate for your company size and the types and magnitudes of risks involved. 3. Risk Assurance An internal audit function provides senior management with comprehensive risk assurance from an independent perspective. Internal audit provides assurance of the effectiveness of governance risk management and internal controls. an effective ERM program that is embraced by the organization takes time. Maturity doesn t happen as quickly as you think it should. 6. Striving for greatness too soon Developing Seven Common ERM Pitfalls to Avoid The CEB Risk Management Leadership Council is a valuable resource for fraud and risk managers in any organization and industry. The Council notes seven potential potholes to avoid when designing and executing your ERM plan 7. Failing to timely track actual risk events Timely tracking of actual risk events allows ERM to Compare the actual risk measures (e.g. impact probability velocity and preparedness responsiveness) to previous estimates of those measures and gather valuable insight from that analysis. Add value by informing management of the cause and effect of the risk event including a recommended solution for preventing reoccurrence. Provide current risk information to management improving the quality and speed of decisionmaking. Risk is a restless creature that never sleeps. In most any organization risk is an inescapable reality but it is one that can be most clearly understood and mitigated through careful planning and continual vigilance. As senior vice president and enterprise risk officer Rini Fredette provides the overall leadership vision and direction for assessing analyzing and holistically managing risk across PSCU s organization. Rini leads the company s initiatives to develop processes that effectively manage risk within PSCU s tolerance thresholds and that tightly align with PSCU s strategic objectives. Rini s primary responsibilities include enterprise risk management internal audit vendor management compliance governance business continuity & life safety and investigations & corporate fraud. 22 00 11 66 C U B U S I N E S S . C O M 2. Assuming support will trickle down Make sure to get buy-in from the business units. 3. Being too process oriented Be sure to communicate the value ERM has brought the organization to avoid the perception of just checking the box. 1. Misalignment with executives and the Board Ensure you are addressing the top concerns of the executive team and the Board. 4. Conflicting risk processes Leverage any effective risk processes that are already in place before implementing new or different ones that may create confusion in the organization. 5. Reporting too many risks It is impossible to consider each and every risk so focus your energy and resources on the most critical threats. 21 C R E D I T U N I O N B U S II N E S S B U S N E S S DD EE CC EE M BB EE RR M Don t let this valuable offer pass you by. Jump on the CU BUSINESS Express to help your credit union GROW for your members employees and community. 1. Each member gets CU Business monthly eMagazines. 2. Individual articles are emailed to each member by job title. 3. Bonus New members also receive last 12 articles CFO Currency Lending Solutions Marketing Matters Branch BUSINESS etc...) 4. Each member has full access to CUB website and its 65 issue library. Sign Up Your Entire Crew for Team Builder Click Here To Register Your Crew A U G U S T 2 0THE 6 1 ONLY ALL-DIGITAL ALL-BUSINESSSRESOURCE FOR .CREDIT M C U B U I N E S S C O UNIONS BRA NC H BUSI NES S BY KAITLIN MORRISON Motivated Workplaces Two Branch Managers Offer Four Ideas for 2017 E How can your credit union improve itself as a place of work for your dedicated employees in the upcoming year Branch Business sits down with two branch managers. Keep reading to discover insights into how this pair of stellar leaders motivates their teams and reaches their goals. displayed at every branch call attention to what great employees are doing. One of our core values is to have the Heart of a Servant .... These notes serve as a motivator along with a reminder about why we re here to serve the members and to serve each other. very branch wants to start the new year strong with a motivated productive team. Credit union branches around the nation are doing great work for their members by listening to their employees and becoming better workplaces. With a new year quickly approaching many managers began planning for January early on. Wondering what it takes to make a better workplace in 2017 we decided to ask two branch managers to share their insights with us. Read on to learn more about how these two star branch managers motivate their teams and reach their goals. New Year s Insight 1 Embrace your observational skills and invest time in understanding your workplace culture. Simple observation is the most effective way to read the culture of your branch said Koy Stone branch manager of SC Telco Federal Credit Union s Verdae Office in Greenville S.C. Numbers and reports do not show you everything. Instead Stone suggests observing employees as they interact with each other and with members. This way you can identify opportunities to improve and find outstanding employees who deserve your recognition. When you notice excellence recognize it. At SC Telco Federal Credit Union handwritten notes 23 C R E D I T U N I O N B U S I N E S S New Year s Insight 2 Promote a sense of ownership by always looking for responsibilities you can share with your staff. I do get my staff involved for the upcoming year s budget planning in the fall said Brittni Romero a branch manager at Guadalupe Credit Union in New Mexico. Once the management moves into the planning sessions and goals are established we discuss each goal in the branch. Whether the goals they discuss are recruiting new members or improving ROI the entire Guadalupe Credit Union team has an opportunity to provide suggestions and feedback that will shape the branch s strategies for the upcoming year. Getting employees involved is one way Romero promotes buy-in at her branch. Getting everyone s participation helps the entire team take ownership which in turn makes achieving those goals more realistic as we move into the new fiscal year. D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M BRANCH BUSINESS She also recommends building rapport with your team by showing them you care about their development and career growth with your credit union. Earning their trust encourages your team to share their ideas and it draws your attention to potential problems. Connecting with your team can be as simple as keeping open communication and regularly acknowledging how they contribute to your team s goals. knowing where your branch is currently winning (and struggling). No matter what (benchmark) you choose to measure your success the most important first step is determining where you currently measure up and then where you want to be. New Year s Insight 3 Let your members define success. Then allow this definition to shape tangible goals at your branch. Stone says tangible goals should always serve the needs of your membership rather than distract you from them. Quantitative goals such as acquiring new members or increasing loan volume at your branch are excellent ways to understand how you are serving your members. These numbers however have limitations. Qualitative information is also important. I believe member surveys provide one of the best indicators of my branch s success said Stone. As a member-driven and member-owned organization you should never forget to invite your members to define success at your credit union. You ultimately answer to your members so any service or product that fails to deliver for your members represents an opportunity to improve. While you do need to understand your members and set appropriate goals for your branch you should also know where you are and where you want to be. Having a conversation with your team to determine your goals goes hand in hand with New Year s Insight 4 Offer meaningful incentives in line with your employees motivations. Get to know what works well for your workplace culture so you don t crush it with the wrong incentives. Cash incentives and other tangible awards can be a great way to recognize your team for their hard work during the year but sometimes personal heart-felt recognition can be more meaningful. By understanding and shaping your branch s culture you can learn how to use incentives with your employees that are in line with the values you want to promote at your credit union. You can also find effective motivators for your branch. 24 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M BRANCH BUSINESS The important thing is to know what motivates your team and how they prefer to be recognized Stone says. At Stone s branch a New Year s event helps recognize the entire team s work while also symbolically beginning the year on a positive note. Incentives throughout the year can be very simple and inexpensive as long as they make work more interesting. I have discovered that any gesture to break up the monotony of the work week serves as an effective incentive for motivating a team. Romero says her branch uses a mix of different incentives but stresses the importance of personal acknowledgement. Cash incentives are a great motivational tool she says but branch managers need to avoid relying solely on cash to incentivize their team if their employees are actually looking to be recognized at work. Since recognition is such a powerful motivator for many people finding a way to integrate more personal recognition is often worthwhile for managers. Beyond simply letting your team know how well they are doing try to reward individual efforts to contribute to the group s goals. Even though we offer cash incentives for a lot of things personal acknowledgement goes further.... If it s a busy day I always tell them thank you for doing such an amazing job you all ROCK. They love being recognized and appreciated. TURN ON YOUR CFO and CEO 4 CFO After putting together the right team great managers are able to keep everyone motivated and productive. Creating a workplace where your whole team can truly thrive may help you reduce turnover increase productivity and ultimately provide members at your credit union with amazing service. Leading your team means modeling your credit union s workplace values. Your team members need a real picture of how they should be doing business. Of course without knowing what your organization s values actually are leadership can become a difficult gamble. I believe your branch s future is bright if you are willing to empower your team to follow your values and serve members first. To accomplish this aim you absolutely must choose a destination and make a plan. Great branch managers like Stone and Romero teach us that good leadership is really about living your organizational values placing people first and doing solid strategic planning for your branch s future. They both strive to model continuous improvement as a strategy and as a daily practice. Like them you can also build everyday excellence at your branch by focusing on your staff and allowing them to take on meaningful responsibility. With motivated employees you can lead your branch to be even better in the upcoming year. Take a small step forward by building a strong branch culture. In addition to covering Branch BUSINESS for CU Business Kaitlin is a freelance business writer based in Central Washington State. She is passionate about educating her readers and is a proud credit union member and supporter of credit unions. You can read more of her writing at Make 2017 the Best Year for Your Branch s Workplace Culture withTEAMBUILDER. CURRENCY 25 C R E D I T U N I O N B U S I N E S S teambuilder buy D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M CFO CURRENC Y BY ALEC HOLLIS Post-Election Stress in the Mortgage Market Post-election stress may be affecting more than just the public since the election the U.S. Treasury bond market has sold off sharply and the 10-year treasury interest rate has increased with it. As a result of increasing interest rates and a steeper yield curve one may notice mortgage loans and other mortgage-related assets have had much slower projected prepayment speeds and therefore increasing modeled durations. Such changes in the marketplace could have drastic impacts on modeled interest-rate risk results and thus may warrant a discussion of ALM metrics. O ver the last couple of years the U.S. Treasury bond market has experienced a rather interesting dynamic. The curve has flattened to multi-year lows not seen since it began steepening again from the financial crisis in 2007. Examining Figure 1 the curve flattened 190 basis points (bps) from its peak of 266 bps at the end of 2013 to 76 bps in Q2 of 2016. This has had a major impact on mortgage pricing as pricing reached all-time highs and effective durations fell to all-time lows. However the recent reversal of the flattening trend has mortgage durations back on the rise again. Figure 1 2-10 Year Treasury Rate Spread 10 Year History 26 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M CFO CURRENCY TAB The recent uptick in the level and slope of the term structure of interest rates has the general impact of extending durations on negatively convex assets which will impact the interest-rate risk of a balance sheet. The extent of the impact will depend on the balance sheet s convexity risk which can be quantified by examining the convexity of equity or the convexity gap. Most credit unions (and banks for that matter) tend to have negative convexity gaps because they have call options on the balance sheet. For mortgage assets the prepayment option is effectively a call option when interest rates fall the market value of the borrower s debt rises and therefore they prepay (i.e. call ) the note and refinance into a lower rate. In effect this means a shift up and or steepening generally leads to less refinance-ability of mortgage loans and thus an extension in the duration. While not every borrower is paying close attention to interest rates this general relationship is very strong and observable in the marketplace. This strong relationship leads to a strong relationship between net economic value (NEV) and the level slope of the yield curve. Changing interest rates leads to changing NEV ratios NEV sensitivities and NEV durations and convexities. Thus to assess the impact to an average institution ALM First has devised a model balance sheet which is intended to represent an average client s risk profile. The figure below shows the modeled NEV percent change on the left axis along with the 2-10 year treasury rate spread on the right axis. Figure 2 demonstrates a clear negative correlation and this result has been repeatedly confirmed by performing time series analysis on actual client results. Figure 2 Model Balance Sheet EV Sensitivity versus Treasury Curve Slope Thus the clear message is that a curve steepening may unlock NEV sensitivity through extending mortgage durations. This means interest-rate risk is likely to increase for a credit union running quarterly ALM reports and as discussed above the increase will depend on the convexity of the balance sheet. Referencing the model balance sheet the NEV percent change shifted from 2.45% to -4.40%. In the spirit of back-testing ALM First regularly compares the duration and prepayment speeds of mortgage loans to publicly available data. Included in the dataset are calculated empirical (realized) durations of traded mortgage pools reported dealer durations and projected prepayment speeds from dealers. As rates have risen and the curve steepened prices have fallen prepayment projections have slowed and duration estimates have been extended within our model. The same impact has been realized in empirical durations and reported dealer analytics. 27 C R E D I T U N I O N B U S II N E S S B U S N E S S DD EE CC EE M BB EE RR M 22 00 11 66 C U B U S I N E S S . C O M TAB CURRENCY CFO At ALM First we advise credit unions to focus on the ALM process instead of where interest rates are heading. This allows institutions to build an advantage in today s competitive environment. Fast and accurate modeling can enable credit unions to adjust and adapt more quickly to changing conditions and ultimately balance the ALM position more effectively over time. In turn a credit union can maintain its safety and soundness thus achieving superior risk-adjust financial performance. Alec Hollis joined ALM First Financial Advisors in 2012. As a Director for the ALM Strategy Group Mr. Hollis performs asset liability management strategy research for financial institutions. He also implements firm-wide ALM modeling procedures and assists in the execution of client balance sheet hedging programs. Alec has shared his areas of expertise on various topics of asset liability management and mortgage pipeline hedging at various ALM First educational events including webinars and the ALM First Financial Institute. He has also written numerous articles on these topics that have been published in publications such as CU Business and Western Banker Directors Digest. Mr. Hollis holds a bachelor s degree in finance from the University of Notre Dame as well as the Chartered Financial Analyst (CFA) designation. With 20 billion of investments under management ALM First is an SEC-registered investment advisor acting as an unbiased third party offering commission-free fee-based services to over 200 financial institutions across the country. Services include Asset Liability Management Investment Advisory Merger Valuations Hedging with Derivatives Loan Profitability Analysis ALM Validations Investment Portfolio Analysis MSR Valuations Training and Education and more... 800-752-4628 28 C R E D I T U N I O N B U S II N E S S B U S N E S S DD EE CC EE M BB EE RR M 22 00 11 66 C U B U S I N E S S . C O M L ENDING SOLU TIO NS BY BILL HULTSTRAND Marketing To Your Pre-Retirement Age Members If your credit union is like most CUs a high percentage of your members are nearing retirement. Turns out freeing themselves of debt weighs heavily on these individuals minds. Tailoring a debt consolidation loan strategy to them could therefore be your ticket to increased revenue and highly satisfied customers. The Situation Chances are your credit union has a pretty significant percentage of members who are between the ages of 50 and 65. In many cases we ve seen this number be upwards of 25 percent to 30 percent of total membership. What do all these members have in common They re gearing up for retirement. That means different things to different people. To some it means getting ready to live on a fixed income. To others it means wanting the financial freedom to purchase toys (RVs boats etc.). However one trend we at LSCI have identified as becoming more and more common among this age group regardless of income level is debt consolidation. As they prepare for their golden years members in this age group want to get their credit cards paid off so they can transition to retirement without any hiccups. Utilizing credit bureau data narrow the list to those members with significant credit card debt (over 5 000). Develop mail and email campaigns with a debt consolidation special that are directed specifically to these members. Allow for response via phone web or mail. Cross-sell additional products (auto refinance home equity retirement products etc.) when contact is made. Results Our Recommendation For credit unions this focus on credit cleanup is a prime opportunity to increase revenue while helping to serve your members. We recommend proactively marketing a debt consolidation loan to these members. Here s one way to do it Pull the list of members between the ages of 50 and 65 from your core platform. We ve seen several of our clients experience success with a program similar to the above. Not only does the credit union reap the reward of immediate revenue from the debt consolidation loans but it usually ends up earning significant income from cross-sales of other products too. What s more if you ve given them a good rate these members generally spread the word to their family and friends about the money they are saving and the great service they have received. The results can be exponential. The Challenge As you gear up for 2017 we encourage you to look for ways to serve all of your members. Not just Gen Y or Millennials or A paper or other segments. Find 29 2 0 1 6 C U B U S I N E S S . C O M C R E D I T U N I O N B U S I N E S S D E C E M B E R LENDING SOLUTIONS TAB creative ways to reach out to all the different parts of your member base and connect your products services to their unique needs. It takes a little bit of ingenuity and a lot of hard work on your part but the results can be very rewarding especially when you pair your bottom line goals with the realization of achieving the credit union mission of serving the underserved. Bill Hultstrand has worked in the credit union industry for 20 years. As director of business development for Lending Solutions Consulting he specializes in helping credit unions to enhance their marketing efforts both internally and externally to reach more of the underserved. He holds degrees in business administration and marketing from Judson University. 30 C R E D I T U N I O N B U S II N E S S B U S N E S S DD EE CC EE M BB EE RR M 22 00 11 66 C U B U S I N E S S . C O M CU TRA INING BY KENNETH C. BATOR The Strategic Power of People Purpose and Performance S Author to author two success experts and thought leaders compare and contrast their formulas for achieving business excellence. Read on for their tips on how to build culture engage employees retain members communicate your brand effectively drive intentional purpose and perform outstandingly in your credit union. their staff. How do you work on culture building with an executive who is interested in only the hard and fast ROI Sheri answered Because culture really does eat strategy for lunch. Research shows that culture has ince publishing my book The Formula for Business Success B C S one of my top five pastimes is meeting with fellow authors and thought leaders. No one other than another author can truly understand the trials and tribulations of writing an entire book word by word yourself. The stories of the writing journey are both humorous and painful as is my favorite one on how I accidentally erased an entire chapter I had just finished. That s a story for another day. The story for today is the incredibly enjoyable lunch meeting I had with Sheri Nasim author of Work On Purpose How to Connect Who You Are with What You Do and CEO of the Center for Executive Excellence Inc. Both of us have worked in the financial services industry for some time. Also her foundation of The Strategic Power of People Purpose and Performance has a number of similarities with my B C S Formula. So I couldn t wait to tap into her wisdom and perspective on leadership within credit unions today. The first question I posed to Sheri was on culture the C. I offered my opinion that fortunately the credit union industry has come a long way where there are more and more leaders stepping into the CEO role who truly understand the value of a strong culture. However there are still many who are great at numbers but not very skilled at cultivating a true passion among 31 C R E D I T U N I O N B U S I N E S S a dramatic impact on the bottom line. In their 1992 book Corporate Culture and Performance Harvard professors John P. Kotter and James L. Heskett established a direct link between a company s culture and key financial metrics. When they compared companies with strong cultures to those without they found an average of four times higher revenue growth and over 700 times higher growth in net income over a 10-year period. I nearly stood up in the restaurant and applauded Sheri s response. When facilitating strategic planning sessions for credit unions I often stress that net income is a more important metric than asset size or number of members. When people remind me that they run a not2 0 1 6 C U B U S I N E S S . C O M Sheri Nasim D E C E M B E R CU TRAINIING for-profit institution I retort that they are also not for loss. Sheri continued The best leaders know that financials are lagging historical indicators. They re fascinated by the leading measures they drill down to the root causes that impact the financials. If a person wants to lose weight stepping on the scale will give you a number. But that number is the aggregate of leading things you ve done since the last time you stepped on the scale. How many calories did you eat How much exercise did you get Those are the leading indicators that will impact the number on the scale. We then segued into the logical discussion on membership retention. After all it s nearly impossible to cultivate happy members when your credit union is inundated with unhappy employees. We know that loyalty equals retention stated Sheri. Loyalty is built when employees go out of their way to do more than transact with members. But why would employees go out of their way They do if they are highly engaged. Work that has meaning beyond a paycheck drives employee engagement. If they have clear line of sight about how their role fits into the organization s goals if they get to use their unique talents and strengths if they re part of a learning and growing organization and not a traditional institution that treats people like tools [all of these factors make for engaged workers]. Leaders who focus on only the numbers don t have engaged employees. They have coin-operated employees as well as an unsustainable business model. I loved Sheri s comments on clear line of sight. I often advocate that my clients engage in a process of what I call org-chart goal setting. In this process employees actually see from a visual perspective how their annual goals align with the objectives of their leaders and the entire organization. I also love Sheri s perspective that organizations need to make employees feel as though they are part of the unfolding story of the business. That speaks volumes with respect to creating a shared purpose. By their nature all credit unions almost always have a compelling history. I asked Sheri for her best suggestions on motivating credit union employees to embrace that history and making them a critical part of that continuing story Stories are compelling she responded. They create emotional connections and meaning. Humans have been telling stories around the fire and passing on stories of origin and of struggles and triumphs for as long as we ve had language. Stories help people connect to the why before the what and the how. What s wonderful about credit unions is that they get to impact their members most basic needs for safety and security [and] then help their members achieve long-term stability. These stories are being played out every day. Military families are getting loans to buy a bigger car to drive their newborn home from the hospital. Students open accounts and learn how to manage their money when they get their first job at age 16. Small business owners are getting credit to open a neighborhood coffee shop. These are lifechanging and community-building stories that credit union employees are part of. Stories are so easy to capture and have such a compelling impact on morale and engagement. Leaders who take the time to gather and share these stories put the humanity back in the business model. Staying with purpose and the why particularly as the foundation of a strong brand the B I mentioned that some of my credit union clients with a positive culture create an image that is little more than vanilla. Some of them even serve a very distinct field of membership. But you go to their website and you 32 2 0 1 6 C U B U S I N E S S . C O M C R E D I T U N I O N B U S I N E S S D E C E M B E R CU TRAINING could literally stamp a logo from a community bank 2 000 miles away onto it and nobody would know the difference. I asked Sheri for her thoughts on how to effectively communicate that purpose through your marketing communications. Stop focusing on Me Too branding and start focusing on your key differentiators. Her answer was as refreshing as jumping into a cold swimming pool on a 105-degree day Today s workforce and consumers don t want to buy what you do. They want to buy into what you do. Our research shows that 73 percent of Millennials believe [that] businesses can have a positive social impact on the world and they are optimistic about playing a role in that change. Ninety percent of U.S. consumers say they would switch brands to one associated with a cause given comparable price and quality. Sheri continued with a great credit union example. Last July the San Antonio Business Journal reported how a group of employees from Generations Federal Credit Union celebrated its 75th anniversary by committing random acts of kindness throughout the community. With just 5 000 they helped more than 150 people pay for gas groceries even water bills. One group of employees helped a wheelchair-bound woman with her purchase from the Goodwill Store. She was in town for surgery that she could barely afford and was trying to make ends meet as she waited in a nearby hotel. The woman burst into tears and the journal featured the story. From there GFCU members started sharing the story on social media with tweets like I LOVE my credit union and Proud of ya ll That kind of impact drives people toward you and away from banks that are in the headlines for a culture of cross-selling. After covering the People and Purpose components of Sheri s formula I also wanted to cover Performance. Performance is measured in many ways in the credit union industry. I can t have a meeting with a credit union client without talking about loan-to-share ratios membership growth or increases in non-interest 33 C R E D I T U N I O N B U S I N E S S income. So I asked Sheri about the best measurements that allow management to understand that creating a better connection of people with purpose is moving the needle in the right direction This gets back to the lagging versus leading indicator she responded. Let s take membership growth as an example. Three metrics that drive employee engagement and impact membership growth are Employee Retention Trust Index and Net Promoter Score. If you add these metrics to your performance review cycle you ll see that a focus on improving these things will have an impact on the top line metrics. This is what we call the balanced scorecard approach. The balanced scorecard model helps leaders do the drilling down from lagging to leading measures by setting goals for and reviewing performance of not just financials but member-centered goals internal improvement goals and employee engagement goals. D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M CU TABTRAINIING Sheri expounded on the balanced scorecard model. When managers gather to review performance with the balanced scorecard they re getting a more holistic picture of performance and early indicators of what may be happening in the organization that is impacting the financial goals. When measures start to trend toward underperformance improvement initiative teams get the assignment to drill into root causes and improve the measures within 90 days. At first people fear having their daily performance scrutinized and teams gathering around them to learn what s happening. But when we put cross-functional team members together to help someone look into root problems they often uncover blind spots that the employee wasn t seeing by looking at it the same way every day. When performance improves everyone feels a shared sense of responsibility and accountability. The balanced scorecard approach has the ability to create what I call an environment in which employees actually want to come to work and members want to keep coming back. People like working in an organization where they can creatively solve problems together Sheri added. That impacts Employee Retention. They like to work in teams that share information with transparency. That builds the Trust Index. Members like being taken care of by people who are problem solvers and transparent. That strengthens the Net Promoter Score. Focus on these [corporate goals] and you ll move the needle on membership growth. I finished our highly compelling conversation with one last but very important question. Whether it be in the credit union industry or any business leaders seem to have about five minutes to learn any concept including The Strategic Power of People Purpose and Performance. If there is one key point to this process you would like to share what would it be Success doesn t happen by luck Sheri said confidently. It s intentional. Successful organizations of the 21st century thrive in the why. They are driven by engaged people who know that their collective effort has meaning beyond a paycheck. A purposedriven organization like Southwest Airlines is one 34 C R E D I T U N I O N B U S II N E S S B U S N E S S of the greatest American success stories for turning intangibles into monetary value. For four decades Southwest has achieved unmatched annual profits in the airline industry even through economic crises and the aftermath of 9 11. Companies like Southwest don t put culture on the backburner. They double down on culture because they know that whether you measure it or not you have a culture. It may be empowering or toxic. Either way the results are showing up on your bottom line. A poignant answer by Sheri Nasim to wrap up an insightful discussion. That leaves one critical question for you Do you really know how the people and purpose of your credit union are guiding its performance Ken Bator is the author of The Formula for Business Success B C S and the founder of Bator Training & Consulting Inc. (BTC) Ken helps credit unions create environments where employees actually want to come to work and members want to keep coming back. BTC accomplishes this type of atmosphere through a combination of branding culture building and strategic planning. This is the unique B C S Formula created by Bator and featured in his latest book. Contact Ken directly at 714-681-2821 or kbator Ask about our new service the B C S Audit And learn more about BTC s presentation topics at www.btcinc. net. DD EE CC EE M BB EE RR M 22 00 11 66 C U B U S I N E S S . C O M C U DATA BY STEVEN D. SIMPSON Seize the Opportunities Top 3 Challenges to Overcome for Advanced Analytics Success The success of a credit union is increasingly becoming reliant on advanced analytics but many a CU executive remains in the dark about all the benefits such analytics can provide. These tips will help you overcome the challenges to reap all the rewards. A dvanced analytics is redefining the financial services industry and it is becoming a critical component in strategic planning business growth and member acquisition. But today many credit union executives are still unclear of all the benefits advanced analytics can deliver and how to successfully weave the strategy into the credit union s daily business operations. Some challenges and uncertainties include how to manage the data how to mitigate compliance and security risks and how to quantify the true ROI without flawed results. There are obvious obstacles and risks that can overshadow the tremendous benefits. Fortunately the answers and a clear roadmap already exist. Unlike mega banks that have a large budget to hire a chief data officer and an army of data scientists to build a data analytics program from the ground up many credit unions are seeking out innovative experts who have spent years researching developing testing and refining a data analytics product offering. Why Proven outside partners require a fraction of the time and budget of an in-house product. You receive the benefit of time-tested expertise customized dashboards and support throughout the program implementation. Those credit unions on the fence as to whether or not to move ahead with an advanced analytics product should take the time to research an innovator with years of experience. A provider that has already combined the software development and implementation acumen with powerful data analytics is a plus. Flawed data leads to faulty conclusions and misleading business outcomes. It s true that when it comes to analyzing big data if you do not understand the data and misinterpret it then you will risk getting flawed results. Also after collecting and cleansing the data some are left asking So now what do we do with it How do you overcome these challenges Seek a partner with a proven data engine that can do the heavy lifting to collect cleanse and compute your 35 Taking Action and Being Wary of Skewed Results C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M CU DATA data from core loan origination and other sources. One who offers a solution that provides actionable insight with sophisticated yet simple-to-understand dashboards is your best bet. By leveraging these dashboards users will quickly and easily be able to make data-driven decisions that deliver impactful results. This leaves little room for the misinterpretation of data. Initially there are dozens of intuitively logical actions the credit union should take to enhance revenue. Over time additional actions are statistically derived. These actions become recurring best practice by comparing action 1 to action 2 versus a control group. Soon the credit union should have a number of quantitatively proven best actions that deliver desired results. Taking Action on Data Management Challenges Infusing an advanced data analytics initiative into a credit union s overall business strategy may seem daunting so alongside a data analytics product ensure the partner provides a data scientist or data analyst to give support during and after the rollout of the product. A data scientist will analyze the data each day and train staff to uncover new opportunities reduce expenses enhance member services and create new revenue streams. This training ensures everyone involved in the process can interpret the data coming in and what the output translates to. Similar to how the world s largest financial institutions have been trained to turn mountains of information into quick insights seek a partner that can advise decision makers to take action on immediate opportunities track success and improve cross-sell opportunities that enhance the credit union s competitive advantage. Combating Technology and Security Risks Security and compliance are paramount to all credit unions and should take the highest priority for advanced analytics as well. Seek a partner that adheres to the most stringent data privacy and security requirements while still offering the speed convenience and accessibility of a cloud-based solution. Such a partner should provide powerful data masking and encryption and should be SSAE 16 certified. Make sure that the data analytics partner provides a program where all data is transmitted using Secure File Transfer Protocol ( SFTP ) and two security options that are based on the credit union s preferences. The first security option is a process that runs at the credit union before the data ever leaves the data center. All non-public information ( NPI ) is cleansed or masked using an algorithm unique to each institution. The second should run the same process at the provider s data center. Either way no NPI is stored within the private cloud-based solution. When lists including member information are necessary the 36 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M CU DATA process runs in reverse and the list should be placed on a server within the credit union s data center. The bottom line seek a partner that provides the peace of mind to analyze business data without ever compromising data security. Advanced Analytics The Key to Future Growth Today many credit unions are leading the way by embracing the power and potential benefits of implementing an advanced data analytics program. This deep understanding of member data is empowering credit unions to uncover vital knowledge and trends about their members wants needs and purchasing behavior. This critical information results in improved financial performance enhanced risk management and greater member services and relationships. Take the time now to invest in your credit union s future. Overcoming increased competition and tight margins comes in the form of a proven provider with timetested software and implementation expertise one that supports your goals and core values throughout the process so you can focus on what matters most building long-lasting member relationships. Steven D. Simpson is senior vice president for financial institution solutions at Saggezza a company in Chicago that offers analytic software. He can be reached at Steven.Simpson TURN ON YOUR COMPLIANCE OFFICER withTEAMBUILDER. 4 COMPLIANCE UPDATE U N I O N teambuilder buy 37 C R E D I T B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M CU WEB O P S BY BREWSTER KNOWLTON What s Keeping Your Credit Union from Being Data Driven L Is your credit union holding back on investing in data and analytics The reasons behind your CU s hesitation are likely unfounded. Credit Union BUSINESS sets the record straight on some of the misperceived challenges that are preventing credit unions from becoming datadriven successes. et s face it we live in a world where strong data and analytics competency is becoming a must have for successful companies. Despite the growing significance of analytics the majority of credit unions are not datadriven organizations. We ve uncovered a number of common reasons why investment in data and analytics has been pushed off or outright rejected. Despite these challenges most of the common reasons against data and analytics are driven by inaccuracies or misinformation. In this post we will address the common pushbacks against data and analytics projects and how to overcome those challenges. Becoming Data-Driven Costs Too Much Money. I ve heard too many times that it costs millions and millions of dollars to build a data warehouse. This is true ... if you are a larger company that is building a data warehouse from scratch. For most banks and credit unions this statement is a gross exaggeration. There are several organizations out there like OnApproach that have pre-built data warehouse platforms. These pre-built data warehouses save you a large amount of time effort and money. While some customization might be required to meet the specific 38 C R E D I T U N I O N B U S I N E S S D E C E M B E R 2 0 1 6 C U B U S I N E S S . C O M CU WEB OPS TAB needs of your credit union most of you should opt for a pre-built solution. These pre-built data warehouses typically cost much less money than building a warehouse yourself. The notion of data warehouses costing millions and millions of dollars simply isn t the case for most banks and credit unions. Data Warehouses Are WAY Too Big of a Project .... This statement is also true ... if you try to do everything at once. Data and analytics development should be an iterative process. If you tried to integrate all of your data sources into a data warehouse at once it would undoubtedly be an overwhelming project. In all likelihood building a data warehouse this way would fail. If however you take an iterative approach to developing your data and analytics platform these projects are much more manageable. Would you acquire four credit unions at the same time Of course not. Don t bite off more than you can chew. Build out your data warehouses iteratively and these projects won t be too overwhelming to handle. instinct to make business decisions might have worked 20 years ago but not today. The rise of non-traditional competitors like peer-to-peer lenders and 100 percent digital banks was made possible by analytics. To continue to compete against these new challengers use their playbook against them and leverage the power of analytics. Failing to incorporate analytics into your credit union s decision making (i.e. doing things the way you ve always done them ) will prove to be a poor decision. We Don t Have the Right Culture. There s Not Enough Time to Focus on Analytics. The average 1 billion credit union we work with has somewhere between 45 and 65 third-party applications or data sources. Because of how disparate the data has become we tend to uncover thousands and thousands of man-hours that could be automated with a better data and analytics platform. What could you do if we gave some of your staff half of their time back The logic that we don t have enough time to focus on analytics fails when you consider how much time you could get back by investing in analytics Most credit unions that are not data driven do not have a data-driven culture. This is expected right Yet how could your staff develop data-driven mentalities without having the necessary support for data and analytics to drive that cultural shift As part of any data and analytics initiative you should consider how you are going to develop and foster a data-driven culture. In previous posts we ve provided some helpful tips on preparing your employees to become data driven that you should consider. Once you begin developing your data and analytics program with the right action you will be able to create and foster a data-driven culture. Summary There are quite a few misconceptions out there that are holding your credit union from becoming data driven. Embrace the opportunity and realize that your credit union can absolutely become data driven. Brewster Knowlton is the Owner and Principal Consultant of The Knowlton Group a data and analytics consultancy with a focus on the financial industry. 39 22 00 11 66 C U B U S I N E S S . C O M The Way We ve Always Done It Works .... Continuing to do things the way they ve always been done is a recipe for failure. With how much has changed from even ten years ago failing to adapt nearly ensures your organization s demise. Using gut C R E D I T U N I O N B U S II N E S S B U S N E S S DD EE CC EE M BB EE RR M THEY SAY... TIME is We give you more of both. Cummins Allison branch automation technologies have helped thousands of FIs become more efficient. Our reliable cash coin check and ATM solutions move low-value deposit and cash handling transactions away from your tellers reducing operating costs and improving staff performance. Your branches are more productive and profitable and your customers get a better experience. Simple yet effective branch automation technologies from Cummins Allison add to your bottom line and allow your staff to focus on what matters most more meaningful engagement with customers. MONEY. automation GET MORE AT Editorial Calendar 2017 Editorial Closing Dates 30 Days Prior To Publishing Money January February March April May June July August September October November December Payments Credit Debit Cards Car Wars Auto Lending Mortgage Lending Mobile Banking Security Branch Business CUSOs Executive Hiring & Compensation Auto Lending & Lleasing 2 Mortgage Lending 2 Payments 2 Business Lending THE ONLY A LL-D I G I TA L A LL-B U SINE SS RE SOURCE F OR CRE DIT UNIONS