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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 COLLECTIONS ISSUE AUGUST 2017 VOLUME 12 ISSUE 8 LEADERSHIP FINANCE MARKETING LENDING COMPLIANCE BRANCHING TRAINING COLLECTIONS 3 ABOUT US THE ONLY ALL-DIGITAL ALL-BUSINESS RESOURCE FOR CREDIT UNIONS PUBLISHING TEAM Tim O Hara Editor & Publisher tim cubusiness.com Patti Manzone Designer UP FRONT Tim O Hara IN BRANCH PRODUCT SALES Nick Brown CU COLLECTIONS Mike Hale LENDING SOLUTIONS Rex Johnson BRANCH STRATEGIES Meredith Deen COLLECTIONS Steve Platt CFO CURRENCY Thomas Griswold PAYMENTS Bill Prichard MARKETING Dwayne Spradlin CU TRAINING Kenneth C. Bator MARKETING MATTERS Aaron Gregerson 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 www.cubusiness.com register. TEAMBUILDER https creditunionbusiness.com the-teambuilder SALES AND ADVERTISING Tim O Hara Publisher tim cubusiness.com 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 cubusiness.com 2 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 7 C U B U S I N E S S . C O M Ashok Kumar Associate Publisher ashok cubusiness.com TH E O NLY A L L - D I G I TA L A L L - B U S I NE S S R E S O U R C E F O R C R E D I T U NI O NS THE COLLECTIONS ISSUE AUGUST 2017 VOLUME 12 ISSUE 8 LEADERSHIP FINANCE MARKETING LENDING COMPLIANCE BRANCHING TRAINING COLLECTIONS TABLE OF CONTENTS AUGUST 2017 VOLUME 12 ISSUE 8 TAB THE ONLY ALL-DIGITAL ALL-BUSINESS RESOURCE FOR CREDIT UNIONS What does a 75 subscription buy High Quality monthly magazine. Website with 72 back issues 700 articles available On Demand RANC THE B IN H BUS RAIN ESS T SUE ING IS VOLUM JUNE 2014 6 9.95 E 9 ISSUE RESOURCE FOR CREDIT UNIONS THE ONLY ALL-DIGITAL ALL-BUSINESS THE MOBILE BANKING ISSUE 4 APRIL 2017 VOLUME 12 ISSUE Making Noise with a Silent Ad Campaign EVA LAMERE ALSO IN THIS ISSUE thE E-Comm ERCE ISSUE lending tools for a New generation of homeowner eMortgages by Keith Kelly may 2014 volUmE 9 ISSUE 5 9.95 Defining Accurate Base Pay Compensation and Its Importance for the CEO JERRY P. NELSON All The CU g) (CU Trainin Stars cy) Paul Nunn Hollis (CFO Curren liance Update) Emily More rson-Kapke (Comp Ande Jennifer (CU Mobile Mortgage) Keith Kelly s (CU CEO) James Collin (Lending Solutions) son Rex John k (CU Content) Laura Enoc Dios (CU Outreach) Miriam De by Roy W. Urrico Credit Unions Keepin g Up With Banks for Mobile Banking Services Products Per House hold What Does it Mean to Your Staff by Jack Kelly 6 8 13 16 18 21 23 UP FRONT Open for Business Tim O Hara IN BRANCH PRODUCT SALES Nick Brown 27 29 31 35 PAYMENTS s Collins by Jame Way The Best nches Bra to Build ock is to Kn wn Them Do Engaging Cardholders in the Age of Digital Payments by Laura Enock Nunn Jennifer Hollis Paul Emily Mor from left Rex Johnson Top row James Collins Miriam De Dios Middle row Laura Enock Bottom row Anderson -Kapke Keith Kelly ing The Chang siness Bu Face of Lending Bill Prichard How to Handle Sales Objections CU COLLECTIONS Mike Hales MARKETING A Crisis Is a Terrible Thing to Waste Dwayne Spradlin CU TRAINING Risk and Recovery The Evolving State of Credit Union Collections Kenneth C. Bator Experience Trumps Service LENDING SOLUTIONS Rex Johnson Turning a 700 Score into a 800 Score BRANCH STRATEGIES MARKETING MATTERS Aaron Gregerson Digital Is the New Traditional Plan the Work Work the Plan Meredith Deen How Technology Can Help Credit Unions Improve the Onboarding Process COLLECTIONS Customer Experience Steve Platt The Key to Debt Collection CFO CURRENCY 5 Reasons for Capital Stress Testing... Thomas Griswold Required or Not 5 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 7 C U B U S I N E S S . C O M UP FRO NT BY TIM O HARA I Open for Business sure hope you enjoy reading each edition of Credit Union BUSINESS digital magazine and that you find it both interesting and helpful in your work. That is why a bunch of us work very hard each month putting together a comprehensive group of articles that addresses different aspects of credit union operations. with the status quo. We are always on the lookout for additional best practice advice from both readers and industry vendors. Got an idea that will save time and money and bring greater member satisfaction Send it to me and I ll share it with our 10 000 CU executive readers And we re adding new and great information in just about every issue. Case in point we have been covering finance lending marketing compliance technology and leadership since we launched in 2005. Last year we added branching to the mix (and a brand new publication called Branch BUSINESS). Now in this issue we welcome Mike Hales a wellknown banking executive who currently serves as EVP of the fast-growing CUSO CU Revest. Mike will bring us a monthly column on the very timely topic of CU Collections While we are blessed with the wonderful business professionals who contribute to the excellent editorial content in CUB we re never completely satisfied 6 C R E D I T U N I O N B U S I N E S S And that goes for Branch BUSINESS information as well. It has a fast-growing audience of branching professionals who want to learn how to improve their branch performance. Branch BUSINESS is the perfect conduit for that. I hope to hear from you soon and often Thanks for reading Tim A U G U S T 2 0 1 7 C U B U S I N E S S . C O M IN BRA NC H PRODU C T S A L E S BY NICK BROWN How to Handle Sales Objections O What s all the recent fuss about sales objections The topic is a hot one right now so no better time than the present to raise awareness of such objections. These tips will help your credit union sales force improve the way they address no s with the aim of turning them into yeses. this a final no For many salespeople it may seem that way but for me it was simply a response to give myself more time to gather information before committing to buy. Most credit union sales objections are just this requests by members for one or more of the following More information A different solution or delivery method Better timing A greater connection to what s in it for them More value to justify the price Generally speaking sales objections are never a final No. In fact for high-performing salespeople objections are a pathway to a Yes. Star sellers use objections in their sales presentations to help them sell f late I have been answering a lot of questions about sales objections and how to overcome them. Not only this but it feels like there is a movement right now with sales gurus to address sales objections as well. I am not sure why maybe it s because there is an influx of new sales talent hitting the job market or maybe it s because it is the end of August and businesses are starting to feel the urgency of hitting their sales goals. Whatever the reason there is never a better time than today for your credit union sales force to become more aware of sales objections and improve how they are addressing them. Recently I was shopping for some new shoes to match a suit I had just purchased. As I walked into the one of the stores I was instantly greeted by a sales associate who asked Can I help you find something My immediate response as it is nearly 100 percent of the time in these situations was No thanks I m just looking. I know I am not the only one who responds this way but why do we do it Here is why. The question Can I help you find something is another way of asking What are you here to buy This is a final commitment a closing question in the sales process. Being asked this type of question upfront causes our brains to go to our defensive response of No. Was 8 C R E D I T U N I O N B U S I N E S S TURN ON YOUR TRAINERS 4 CU withTEAMBUILDER. TRAINING www.cubusiness.com teambuilder buy 2 0 1 7 C U B U S I N E S S . C O M A U G U S T IN BRANCH PRODUCT SALES more. What makes one salesperson more productive than another is not necessarily his or her ability to overcome objections. Rather it is knowing how to handle sales objections in a way that leads a member to decide to buy. Let me explain. When addressing sales objections there are really two options. The first option is to address them when they come up. For many sales teams this is the only option they feel they have and there is a lot of sales training out there focused specifically on overcoming objections when they arise. But waiting for the member to bring up a sales objection then protecting the sale with a clever response is a defensive approach. This first option rarely works. The reason is because of a psychological process called cognitive dissonance. Basically this means that once an individual has verbally stated an opinion or position he or she will look for evidence information and logic to support it. When a member is able to verbalize a sales objection it becomes difficult to overcome it as he or she seeks to be right. Option number two would then be the opposite an offensive approach wherein the sales agent addresses the objection before the member has a chance to verbalize it. We have often heard this adage in sports The best defense is a good offense. That s to say that as long as your team controls the ball the other team cannot score. In sales it works the same way. As long as your sales team controls the objections or rather addresses them first the member cannot verbalize them. But in this approach members objections are addressed and they receive the answers they need to make an educated decision to move forward. I had the recent opportunity to work with a credit union outbound sales team. The team was struggling with consistency in its production numbers and couldn t understand why. As I sat and listened to calls with one of the team s agents I noticed the approach she was taking was eliciting a common objection from the member Yeah if that s all I will save it s not really worth the work. I could sense her frustration as she told me that this is generally how her calls end. I suggested a slightly different approach. What if she were to address the member s objection upfront What if she told the member from the outset what the credit union is generally able to save the member and how that member will move forward after learning how simple the process is She gave me a sideways glance but agreed to give it a try. We practiced the scripting a few times and then she made the next contact. She used the scripting just how we had practiced but with a slight hint of skepticism. I 9 2 0 1 7 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 A U G U S T IN BRANCH PRODUCT SALES can still see her eyes widen though when the member said Yeah I can see this isn t a lot of savings but if it s that easy let s do it. The look of disbelief melted into excitement as she realized she now had a sale to close. Like in this example objection anticipation is not difficult to understand and apply. However many employees do need help and coaching from their leaders in order to improve. Often it s time spent shadowing live member interactions to observe what is being said how it s being said and what the placement of the information is. When objections do arise it means taking the time to discuss why they came up and how they can be addressed prior to the member raising them. Member sales objections can come in many forms and in many places but generally they will fall into one of five categories. Money Time Fit Complacency Trust Let s look at each one of these a bit closer Money This costs too much. Money objections happen when your member perceives the investment to obtain a product or service outweighs the value he or she will receive in return. This can apply when discussing products and services that are purchased money the member will make on investments or money the member will save by making a switch of some kind. If the investment outweighs the value the objection will arise. Money objections can be anticipated by preparing the member for the investment and giving examples of how the value exceeds that investment. As in our above example this was a money objection. The savings wasn t sufficient enough to get the member to refinance his or her loan. It just didn t make that much 10 C R E D I T U N I O N B U S I N E S S of a difference. However by showing the value the member would receive by refinancing and how little work he or she would need to invest it changed the member s perception and got him or her to commit. Another common money objection credit union loan officers receive is with payment protection products. Generally speaking they wait to sell these products until the very end when the member has selected a vehicle is comfortable with the payment and is ready to close. They then sell the benefits of the payment protection products and the increase in payment to add them on only to be told by the member No I don t need that. To anticipate this objection top-selling loan officers will first address the total cost of financing and will then add the cost of ancillary products into the payment at the beginning. They align the member s expectations with this payment throughout the application process. Then when it does come time to discuss payment protection the cost has already been factored in and the member can focus on the value. Time I just don t have time for this right now. Time objections and money objections can often seem very similar and that s because we view time as a scarce resource similar to money. We even sometimes describe the use of time as an investment cost and something we spend. And just like money objections time objections occur when salespeople do not show how the value received will far outweigh the time invested. A U G U S T 2 0 1 7 C U B U S I N E S S . C O M IN BRANCH PRODUCT SALES One way top-performing salespeople anticipate and overcome time objections is by first explaining the value the member will receive by moving forward and then asking permission for the member s time to take the next step. They approach each step in the sales process this way thereby effectively breaking down the full-time commitment into small blocks which pale in comparison to the overall value. This strategy allows the member to commit to the process and to the sale and when there is a time issue it can be easily accommodated. For example one common time objection arises when asking if a member would like to meet with an investment representative. These meetings typically last for 30 to 60 minutes which for some members is a big commitment during business hours and is generally seen as a huge obstacle. Top salespeople though will avoid asking for this commitment. Rather they will explain the value of meeting with an investment representative and ask for a 15-minute introductory meeting over the phone. need or has focused on the benefits of a product the member isn t interested in. For example an employee emphasizes the benefit of getting free checks on the Advantage Checking when the member has never written a check in his or her life. To anticipate and overcome a fit objection topperforming salespeople will spend most of their time asking questions to uncover the member s needs wants and dreams. This is often called interviewing the member. They then align the benefits of the products and services they want to sell specifically to the needs wants and dreams the member has. Complacency I think I will stick with what I have. Fit That doesn t seem to fit my needs. Fit objections typically arise when an employee has aligned the wrong product with the member s Complacency objections can be the most frustrating for your salespeople. The member can see the value and benefits of making a change but he or she is reluctant to do it. Typically speaking complacency objections are slightly more complicated to overcome as well because they are tied to one or more other common objections. This leaves salespeople scratching their heads. Complacency objections typically arise during complex product or service sales when the member may be overwhelmed with the information being given or may see it as risky. Also complacency objections are given when a member simply doesn t see the need to invest time or money into a given situation or when he or she is happy with what he or she currently has and is not experiencing any pain or need to change. Top salespeople will anticipate and overcome complacency objections by beginning with the pain or rather why the member needs to make a change. When they sense the member is feeling discomfort and a need to change they will offer a simple solution emphasizing the value this solution will deliver. Before asking for permission to move forward they ensure the member understands and will sometimes offer to send additional information. Only when the member is 11 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 7 C U B U S I N E S S . C O M IN BRANCH PRODUCT SALES TAB comfortable moving forward will they ask permission for time to take the next steps. Trust I am not interested. Trust objections generally arise when the member does not have confidence in the credit union the products and services or the employee helping him or her. When trust objections arise they can be extremely difficult to overcome because it is not easy to regain trust once it is lost. For this reason your credit union has likely invested heavily in creating trust with your membership. Top salespeople also focus a lot of attention on building trust with their members because they know trust objections are generally due to a lack of knowledge and preparation on their part. Members will know when your salespeople are not giving them correct information or are trying to push products on them that they don t need. Credit union leadership should provide competent product and service training operations training and also sales training to their salespeople to empower them to anticipate and overcome trust objections before such objections become an issue. First-level leaders should coach and shadow their employees to ensure they are communicating effectively with members and are sharing correct information. Also leaders must ensure they ve created an environment wherein employees feel supported when they don t have an answer or when a problem arises. Sales objections can become a real frustration for any salesperson sales team or organization. When not addressed and overcome properly they can hamper growth and narrow the sellable products and services to only those the member is asking for. With proper sales training coaching and real-world experience your credit unions sales force can become like those top salespeople who turn objections into sales strengths helping their members do what they love to do buy. Nick Brown Consulting established and founded by Nick Brown in 2015 is a credit union specific sales training group dedicated to bringing a proactive sales approach to every credit union. Nick Brown Consulting accomplishes this aim by providing sales consulting and training to enhance branch sales outbound sales and lending center sales. With an emphasis on lending and cross-sales Nick s goal is empowering credit unions to add value in the life of every member in every interaction. Engage Nick Brown directly at 801-860-5807 or nick nickbrownconsulting.com. Ask about his credit union specific workshops and online sales training featured at www.nickbrownconsulting. com. 12 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 AA U G U SS TT U G U 22 00 11 77 C U B U S I N E S S . C O M CU C O LLEC TION S BY MIKE HALES Risk and Recovery The Evolving State of Credit Union Collections T Is your credit union still reeling from the past decade s loan defaults If so abandonment and misappropriation are genuine concerns. Thinking of these losses and the faultless members behind them as assets can revolutionize your CU s collection efforts. he recent decade following the financial meltdown has produced the largest consumer loan losses in history. It is estimated that the credit union industry has written off more than 30 billion in unpaid personal auto HELOC credit card and other consumer credit due in most part to economic factors that were outside of the defaulting borrowers control. As the decade of losses draws to a close many of those borrowers have regained the capacity to repay their financial obligations yet most of the charge-offs remain unrecovered. Recoverable charged-off accounts are assets no different from computers that have been depreciated to zero value. However while computers and other depreciated assets are generally managed quite effectively by financial institutions in many cases charged-off debt is not. Seldom are charge-off portfolios reviewed by management supervisory committees or even examiners. As a result potentially recoverable charged-off accounts are vulnerable to abandonment and even misappropriation. It is not uncommon for collection departments to work delinquent and charged-off accounts internally for a period of time and then assign charge-offs to one or more third-party collection agency. Because 13 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 7 C U B U S I N E S S . C O M collection agencies have limited resources and serve multiple financial institution and non-financial institution clients the majority of assigned accounts eventually become ignored. They are then relegated to back-room filing cabinets where they collect dust until they become time-barred. Credit unions lose millions of dollars in recovery opportunities every month. In addition to lost opportunity compliance liability is escalating. There have been multiple cases where thirdparty collection agencies have violated established federal collection regulations and most recently the UDAAP provisions of Dodd-Frank. In these cases regulatory agencies have been quick to find credit union liability for the actions of their third-party collectors. CU COLLECTIONS Several of these examples will be explored in future editions of this column. Delinquencies and charge-offs are a natural byproduct of lending. While credit unions banks and fintech companies are focusing on developing new technologies to grow loans and deposits credit unions also need to focus on developing new methods of managing risk and recovering assets. Auto dialers and outdated collection software programs need to be replaced with compliant member-centric and often creative approaches to helping borrowers manage their financial obligations. Traditional collection methods are ripe for disruption. Disruption can come from outside expected channels. Take for example Jim Jannard serial entrepreneur and founder of both the sunglass company Oakley and the revolutionary industrial camera company RED. Jannard recently announced planned development of Hydrogen One an android cellphone that will revolutionize the user experience by implementing virtual reality and holographic images. Perhaps it is time for credit unions to revolutionize the debtor experience of repaying their delinquent and charged-off financial obligations. Assets are not limited to delinquent or charged-off loans members are also assets of the credit union. The difference between credit unions and other financial institutions is the unique member relationship. It is well documented that most credit defaults are caused by a financial crisis that is outside the control of the borrower. Many financial crises are temporary and once a borrower has worked through those difficulties and re-established his or her ability to repay he or she also has regained his or her qualifications for membership. Many credit unions have found that reinstating a prior-prime member has resulted in a valuable member relationship. Future editions of this column will challenge traditional thinking explore innovative delinquency management and charge-off recovery concepts discuss regulatory compliance issues and updates and provide bestpractice examples designed to help improve recovery of charged-off balances as well as requalified priorprime members. Mr. Hales is Executive Vice President of Servatus Corporation and Executive VicePresident and Director of Strategic Relationships with CU Revest LLC. A former bank president and a credit union industry veteran he is a recognized authority in CUSO design and development and collaborative business modeling. 14 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 7 C U B U S I N E S S . C O M THEY SAY... GOOD THING. We make it great. Cummins Allison self-service coin counters can transform the way your branch manages coin. Customers enjoy a quiet convenient and easy-to-use coin-redemption experience while you see tangible bottom-line benefits. With multiple machine choices and hands-free coin-management programs your staff can spend more time interacting with customers. Increase branch traffic enhance customer loyalty and improve teller line efficiencies. It s a small change that can make a big difference. Simple yet effective branch automation technologies from Cummins Allison build branch traffic and allow your staff to focus on what matters most more meaningful engagement with customers. CHANGE is a MAKE A CHANGE AT cumminsallison.com traffic L ENDING SOLU TIO NS BY REX JOHNSON M Turning a 700 Score into a 800 Score How can you use this information Knowing what it takes to score 800 plus will show you what s keeping your member in the 700 s. We should all want our members to get our very best rates and helping your members attain their best score will help them achieve this goal. After all isn t that what credit unions are all about Almost all of the major credit card providers are offering some type of credit monitoring or FICO score service nowadays. So members and the general population are more aware than ever about their score. However they still need someone like you to help guide them and truly understand their score. To enable credit unions to help their members we included many tools in our new manual. One of which is featured on the next page titled What Road to Choose . This document gives credit unions a quick cheat sheet when counseling their members. I hope you ll take a minute to check out this quick tool and if have any feedback we d love to hear from you. Drop us a note to UofL RexCUadvice.com. Even though times change credit unions will always be about helping people. Rex Johnson is the current CEO and Founder of Lending Solutions Consulting Inc. (LSCI) an organization dedicated to providing consulting expertise to credit unions. For more information regarding Rex s availability or any of LSCI s products services contact us at 877- 915-7675 or please visit us at www.rexcuadvice.com 16 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 7 C U B U S I N E S S . C O M y team of consultants and I work with hundreds of credit unions each year and we are constantly noticing new trends. In recent years we are seeing more and more credit unions proactively taking steps to help members improve their credit score. You say Rex that s not a new thing that s been going on for years. True but not at the level we re seeing it now. In the past we ve seen things like credit counseling credit-builder loans etc to help those with poor credit improve their scores. Now it seems like everyone wants to enhance their score even the 700 members. With more members interested in improving their score this is one of the things we teach credit unions at our University of Lending classes. When I re-wrote the manual for our classes this year we included an entire section on this important topic. I d like to share a few of the basics with you here today. So what does it take to move a 700 score into the 800 s Scores 800 or Higher What do they have in common 1. No public records 2. No bankruptcy in the last 10 years 3. No collection accounts 4. No charge offs 5. No current delinquency 6. No past delinquency 7. Credit history of seven years or more 8. Homeowners for seven years or more 9. Revolving debt (credit cards) 95% available 10. Inquiries are less than three over the last 12 months 11. Unsecured debt of 5000 or less 12. Oldest trade line is at least seven years old LENDING SOLUTIONS LENDING SOLUTIONS TAB 38 C R E D I T C R E D I T U N I O N U N I O N B U S I N E S S B U S I N E S S A 17 R I L P A U G U S T 2 0 1 7 2 0 1 7 C U B U S I N E S S . C O M C U B U S I N E S S . C O M BRA NC H ST RATEG I ES BY MEREDITH DEEN Plan the Work Work the Plan How Technology Can Help Credit Unions Improve the Onboarding Process The overwhelming benefits of onboarding for a credit union make the task a poor candidate for the backburner. Yet that s typically where it ends up among employees myriad other responsibilities. Keep reading for tips on how to overcome this missed opportunity by giving onboarding fuller attention. enerally speaking credit union employees today operate with the best intentions and strive to do their best for accountholders and in turn the credit union itself. This mindset extends to above and beyond tasks or those extra efforts that are not always possible during busy times in an employee s regular shift. Yet when these tasks are done and done well the credit union reaps significant benefits such as increased engagement retention and revenues. Onboarding is a perfect example. Most credit unions realize that new account onboarding is one of the most effective ways to create a positive member experience foster long-term loyalty and differentiate their institution. Yet like so many other strategies that we all know will pay off if we only had time onboarding often gets relegated to a secondary task for employees to do when if they have free time. More specifically many credit unions and other financial institutions ask employees to help onboarding (or various other accountholder services) whenever they re not busy. Yet this type of policy is simply too vague and doesn t do enough to hold employees accountable. If the old saying what gets measured gets managed is true onboarding usually falls into the opposite categories. Despite employees good intentions onboarding simply doesn t get the full attention that it should resulting in a huge missed opportunity for the credit union. G Why Focus on Onboarding It s clear that onboarding is still extremely important as evidenced by research showing that 59.6 percent of financial institutions (banks and credit unions) indicated that onboarding programs will be a more important strategy in the coming year. 1 The Financial Brand State of Marketing in Retail Banking February 2014 18 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 7 C U B U S I N E S S . C O M BRANCH STRATEGIES When done well onboarding successfully overcomes many common challenges most credit unions face. It also provides a number of significant benefits It creates a positive accountholder experience Onboarding helps to get new accountholders more engaged with the financial relationship early on which helps them feel more valued and appreciated. It promotes long-term loyalty and reduces attrition Engaging with accountholders as early in the process as possible is critical to increasing loyalty. Research shows that when credit unions implement an onboarding initiative attrition levels drop by one-third down to just 9.5 percent. It provides higher-quality interactions Millennials and other heavy digital users (of financial services products) still prefer to visit a credit union for advice on financial products or services. In turn these higher-quality interactions are more likely to lead to additional product sales and cross-selling opportunities. It increases share of wallet Each accountholder owns many different financial products but chances are only a few of them are with just one institution. Onboarding properly increases the likelihood of developing stronger relationships leading to more effective cross-selling efforts. It improves the value of the relationship When considered in total these benefits give credit unions everything they need to retain accountholders increase revenues and truly maximize the value of each opportunity. other valuable account services part of a daily weekly process. This is especially true if these initiatives are not currently employees responsibility or if employees are already busy in their existing role. One way to accomplish this objective is with employee scheduling technology. These powerful solutions start by giving credit unions the ability to forecast actual demand in terms of accountholder traffic teller lines or other important metrics. This capability helps supervisors create best-fit schedules to make sure they are staffed to provide ideal service during these busy times. Conversely employee scheduling technology lets credit unions anticipate and plan for slower times or downtime. It even enables supervisors to create schedules that let employees know when they should focus on onboarding activities. By making onboarding a real responsibility and by clearly communicating this expectation to employees as part of their schedules technology helps ensure these higher-value initiatives are actually done.Turn nice to do into done It s safe to say most credit unions are aware of onboarding and the many benefits it can provide. Yet many either don t have a disciplined approach to onboarding or rely on a system where employees TURN ON YOUR BRANCH SUPERVISORS & MANAGERS withTEAMBUILDER. Schedule for Success Clearly the benefits of onboarding are well documented and compelling. Yet many credit unions still struggle with how they can actually make onboarding and 2 3 4 BRANCH BUSINESS www.cubusiness.com teambuilder buy Harland Clarke Marketing Services The Three D s of Onboarding Success 2013 FMSI Millennials Relationship with the Branch 19 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 7 C U B U S I N E S S . C O M BRANCH STRATEGIES are encouraged but not required to onboard accountholders during slower times. Now employee scheduling solutions can help credit unions overcome these challenges and make onboarding part of a regular ongoing process. And when they do credit unions are poised to reap the related benefits better accountholder experiences improved retention and increased value of these relationships. Meredith Deen is Director Products and Services for FMSI A. Kronos Company which provides financial institutions with businesss intelligence and performance management systems for efficient branch staff and lobby management. She can be reached at meredithdeen kronos.com 20 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 7 C U B U S I N E S S . C O M COLLEC TI O NS BY STEVE PLATT Customer Experience The Key to Debt Collection If your credit union is still going about debt collection the oldfashioned way it s time to rethink your game plan. With charge-offs increasing rather than decreasing a customized strategy that takes your defaulting members individual circumstances into consideration may be a new better approach to delinquencies. he debt collection process for credit unions has been the same for years. When businesses or consumers can t repay a loan the creditor or collection agency aggressively contacts them via phone or mail to obtain repayment. As you can imagine this practice often results in a less than desirable experience for the member. But how successful has this process been overall According to the Federal Reserve consumers accounted for 29.3 billion in charged-off credit card debt in 2016 a 15 percent increase from the prior year. That means 15 percent more dollars lost. Absorbing credit losses at such a high rate can impact an organization s sustainability. Clearly the process could use some adjusting. Traditionally debt collection has been all about the money. The priority was ensuring that as much of the outstanding debt as possible was repaid. But collecting needs to be about more than that. It also should focus on the member and his or her individual situation. When it comes to debt collection credit unions can t treat each member the same way. They should know the difference between a member who has simply forgotten to make a payment and one who is dealing with financial hardship. You need to communicate with your members on a case-by-case basis depending on their unique circumstances. For example if a person is current on his or her mortgage payment but has slipped behind on his or her credit card payment that doesn t necessarily signify financial hardship. It s an opportunity to work with the member to manage the debt and get back to current. Mortgages are different from credit cards just as businesses are different from consumers. Credit unions need to tailor their approach to each product. Credit unions have always built their strategies around members and the collection process is another opportunity to reinforce this approach. The challenge is keeping members at the center while also managing against potential increases in delinquencies. This holistic approach may be slightly more complex but credit unions can use technology and analytics to simplify the process and bring about a more engaging experience for their members. T 21 C R E D I T U N II O N U N O N B U SS I I N EE SS SS B U N A U M A YS T 2 0 1 7 7 G U 2 0 1 C U B U S I N E S S . C O M COLLECTIONS TAB The Power of Data and Technology The sheer volume of available data is undeniable. Instead of using the same outdated collections approach which results in uncomfortable exchanges on the phone that don t ensure repayment why not leverage data to your advantage The data and technology exists to help you make more informed decisions such as What s the most effective communication channel to reach the defaulting member When should you contact him or her How often The best course of action could be high-touch outreach but sometimes doing nothing is the right approach. It all depends on the situation. Data and analytics can help uncover which members are most likely to pay on their own and those who may need a little more help so you can adjust your treatment strategy accordingly. Just as credit unions have done for years when you cater to the member there s a greater chance for a positive experience on both sides. The results less charge-off debt higher member satisfaction and a stronger member relationship. Consumers expect and deserve convenience. In the digital world credit unions have an opportunity to provide that expectation and then some. Imagine a member being able to negotiate and manage his or her past-due account virtually in the privacy of his or her own home when it s most convenient to set payment dates and terms. Luckily the technology exists to make this vision a reality. Members not money need to be at the heart of every debt collections strategy. Gone are the days of mass phone calls to debtors. That strategy made members unhappy and results for credit unions were less than optimal. Successful debt collection comes down to a basic philosophy Treat each member and his or her unique situation individually rather than as a portfolio profile. The creditors who live by that philosophy have an opportunity to reap the rewards on the back-end. Explore the Digital Age Consumers are constantly connected to information and in many cases they prefer to be connected through digital channels whether it s a desktop tablet or smartphone. Chances are at some point you ve banked and shopped online rather than heading into a bank or retail store. You probably even consume most of your news online instead of reading a newspaper. This is where credit unions need to live the digital world. As president of Experian s Decision Analytics and Data Quality Steve Platt is responsible for overseeing the North American Fraud and Identity Solutions Data Science Solutions and Data Quality businesses. Platt has an extensive background in software fraud and analytics and holds a Master of Business Administration from the University of Denver s Daniels College of Business and a Bachelor of Science in computer science from Portland State University. 22 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 AA U G U SS TT U G U 22 00 11 77 C U B U S I N E S S . C O M CFO CURRENC Y BY THOMAS GRISWOLD 5 Reasons for Capital Stress Testing ... Required or Not Does your credit union consider capital stress testing as a might consider rather than a must do That line of thinking could be undermining your CU s success. Discover why such testing is an important exercise for financial institutions of any size and how to conduct it to maximum effectiveness. Capital Analysis and Review (CCAR) rule which applies to bank-holding companies with assets of 50 billion or more. H ow can busy executives ensure the most effective use of their time By categorizing their priorities that s how. Most of us follow some form of this useful practice Make a list of projects and initiatives that we must do might consider doing and don t need to do. For many capital stress testing often falls into the second category. While the largest credit unions must regularly perform capital stress testing many that don t fall into that CU class wonder about the tradeoff between the time and value of this task. Financial regulators require capital stress testing for institutions with more than 10 billion in assets but we ve found it to be an important exercise for financial institutions of any size. Annual stress tests aim to ensure financial depositories have enough capital to withstand a severe economic downturn including the ability to quickly adjust their balance sheets. Why conduct stress tests Right now only a handful of credit unions meet the 10 billion threshold with another handful getting close. Perhaps many of those below that mark have breathed a sigh of relief that they don t have to expend the effort and expense of stress testing. Admittedly creating scenarios to adequately test and report capital adequacy adds to credit union CFOs already full plates. Still stress testing offers key insights about the credit union s financial position that exceed regulatory A Brief History Capital stress testing for larger institutions came out of the Dodd-Frank Wall Street Reform and Consumer Protection Act which resulted in the Dodd-Frank Act Stress Testing (DFAST) regulation. Hence the NCUA requires federally insured credit unions with 10 billion in assets to submit capital plans and perform capital stress tests. In concert with Dodd-Frank the Federal Reserve Board created the Comprehensive 23 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 7 C U B U S I N E S S . C O M CFO CURRENCY requirements making such analysis a good idea for all depositories. A comprehensive examination of the balance sheet and various potential risks forces the credit union to take a hard look at its current position and how that position might change under various scenarios. Here are some of the benefits derived from a detailed stress testing analysis Assurance that your credit union has adequate capital to survive a market downturn Verification of the adequacy of the allowance for loan and lease losses Ability to isolate possible future problems such as an over-concentration in a specific asset type Better decision-making as management and the board see the need to set risk-tolerance levels Improved capital and asset planning by verifying risk-reward assumptions How to Conduct Stress Tests Although establishing and executing a capital stress testing process takes time to establish credit unions can benefit by developing an organized approach that helps keep the program moving smoothly. Here are some points to consider 1. Data collection and organization Before the advent of capital stress testing requirements many depositories didn t keep the necessary 24 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 7 C U B U S I N E S S . C O M CFO CURRENCY TAB critical data on their loan originations often the biggest challenge to adequate testing. Results from an analysis will be far less meaningful if the appropriate data isn t available. As the IT expression goes garbage in garbage out. Creating and developing a process to collect and organize data is essential to evaluate your credit union s profitability value and overall balance sheet trends. Knowing that the input data is accurate allows management and the board to be confident in the results of analyses thereby permitting them to more effectively plan strategies for future success. 2. Scenarios Scenario simulations are a beneficial exercise for all institutions. As part of stress testing the Fed issues scenarios that incorporate a baseline status as well as those assuming adverse and severely adverse economic environments. The resulting analyses determine how well the depository will perform in the face of a deteriorating market. By definition risk involves unknown factors that can occur and affect the value of each product. Reviewing the portfolio under different scenarios allows financial managers to more accurately price and invest in risk ensuring the credit union is fairly compensated. For the best insight scenario testing should include more than balance sheet risk and valuation. Because liquid short-term liabilities fund longterm assets they carry both liquidity risk and the possibility that funding could quickly dry up. These tendencies make it imperative to perform periodic stress testing of liquidity funding. The testing scenarios should include local economic actions like increases in competition or a decrease in skilled workforce as well as global economic events like changes in market rates and other random risks like security breaches. 25 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 3. Loss and recovery assumptions A cornerstone of capital stress testing is determining the assumption of principal losses and severities. After the Fed issues economic changes that form the basis of testing scenarios the depository should make assumptions about the loan portfolio s default tendencies. To ensure assumptions are appropriately designed for the balance sheet delinquency and charge-off information should be captured across all collateral types. By understanding the depository s performance in a typical environment it will be easier to predict results under adverse market conditions. Also knowing the delinquency rate of various features of the portfolio helps estimate the recovery lag for the different collateral types. If a model assumes immediate recovery it won t show a true picture of the credit union s practices. Knowing the cost to foreclose on properties or repossess collateral is critical to making strategic decisions about riskbased pricing and product offerings. 4. Analyses Conducting regression analyses on performance and changes in macroeconomic variables will help credit unions understand their sensitivity to economic factors. To be most helpful these analyses should incorporate unique scenarios unrelated to market performance. That is because such scenarios wouldn t be included in the model projections. Develop scenarios to measure performance in case an inherent but unexpected risk were to occur. Further random probability simulators can project the probability of a natural disaster or other negative local event and how it would potentially affect operations. 5. Reporting One of the greatest values of capital stress testing comes from the information it provides to management and the board. To aid in strategic planning and auditing testing and capital planning methods should be transparent and well 22 00 11 77 C U B U S I N E S S . C O M AA U G U SS TT U G U CFO TAB CURRENCY documented for easy auditing. This approach should include highlighting key variables assumptions and the credit union s sensitivity to particular changes. Finally to maximize effectiveness credit-monitoring reports should be available during planning sessions liquidity discussions and profitability analyses. In recent testimony before the Senate Federal Reserve Chair Janet Yellen repeatedly stated that community banks and credit unions should be given regulatory relief. One suggestion was to simplify capital requirements including stress testing. These comments may gladden the hearts of some depositories but the value stress testing brings shouldn t be lost to credit union decision makers. Such testing is a highly beneficial practice for all institutions. Incorporating the necessary data gathering and reporting into existing analytical procedures provides critical information. Developing customized stress testing procedures that match a credit union s level of complexity and recognizing the risks a CU faces can help management and the board more effectively plan for future success required or not. Thomas Griswold joined ALM First Financial Advisors in 2013. As a Director Strategic Solutions Group Mr. Griswold performs merger and acquisition analyses and ALM model validations. He also assists with interest rate hedging strategies and values loan pools to guide trading decisions. Mr. Griswold has given multiple presentations on balance sheet hedging capital stress testing and similar topics. Recently written articles include topics ranging from enterprise risk management to preparing for FASB s CECL ruling. 26 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 AA U G U SS TT U G U 22 00 11 77 C U B U S I N E S S . C O M CU PAYMENTS BY BILL PRICHARD Engaging Cardholders in the Age of Digital Payments It s no longer a question of if your members will embrace digital payments but when they will. Is your credit union doing everything it can to ensure your credit union s cards stay top of mind in this contactless payment world Here s what you may be missing. ccording to statista.com mobile payment revenue will top 1 trillion in 2019 up from 450 billion in 2015. By the end of 2017 more than 50 million U.S. smartphone owners will have accessed NFC technology or another contactless payment platform. And in 2018 users of the technology will spend more than 1 900 during the calendar year tapping their smartphones at checkout. Clearly advances in mobile and digital tech are redefining payments. And the way members use your cards may never be the same. As a credit union you simply need to make the leap into digital payments with the right strategy and then keep pace with the technology said Jennifer Kerry vice president credit card services for CO-OP Financial Services (www.co-opfs.org). This is an unforgiving market and in order for your cards to stay top of phone and top of mind you must make every digital payment as seamless as possible for members. Here is what your credit union needs to know A establish their card as the default payment option across merchant apps and websites she said. Consumers typically only replace their default cards if there is an issue which means if your card is not loaded into a member s Starbucks app you may never help buy that member a cup of coffee again. 2. Future Payments Will Be Increasingly Automated. According to Nathan Rogers senior manager product marketing for CO-OP emerging in-store payment technologies are making it even more important for your cards to be on file. Imagine your members walking into an Amazon Go store selecting their goods and leaving without visiting a cashier or interacting with a TURN ON YOUR LENDING DEPARTMENT withTEAMBUILDER. 1. To Members Card on File Means Set It and Forget It. Kerry emphasized that online and mobile commerce is on the rise and that this tendency has implications for payments. Credit unions should incentivize members to 27 C R E D I T U N I O N B U S I N E S S 4 LENDING SOLUTIONS C U B U S I N E S S . C O M www.cubusiness.com teambuilder buy 2 0 1 7 A U G U S T CU TABPAYMENTS terminal and without giving one thought as to which card they placed on file he said. That is where payments are headed. 3. Digital Wallets Are Going Mainstream. Rogers adds that now is the time to get involved with members and help them set up a digital wallet or two with your card. Apple Pay is making strides with consumers paving the way for more widespread use of digital wallets he said. As with merchantspecific apps once a preferred card is loaded into Apple Pay it is likely to remain on top of the phone indefinitely. In fact research by Auriemma Consulting reveals that more than 70 percent of Apple Samsung and Android Pay users report that they do not regularly change their default card. 4. Fraud Will Damage Your Card Program and So Will False Positives. Kerry noted that striking the right balance between member security and convenience is also key to success. Investing in advanced data analytics solutions and other fraud detection tools can ensure the highest level of fraud protection she said. Consider also though that 40 percent of those who experience false declines abandon the declined card altogether. So while you want to take all measures needed to prevent fraud you also want members to have as much access to their accounts as possible. For a mildly suspicious transaction she advises credit unions to consider approving it initially and then following up with an instant text message and email to the member to verify the payment s legitimacy. 5. There Is No Substitute for a Superior Card Program. In this winner takes all environment you need to make sure your card program handily beats the competition said Kerry. This means offering a first-class rewards card and a lowrate option and taking the time and initiative to proactively manage credit limits so your cardholders can continue to freely transact. She continued Remember that your service levels can make or break cardholder relationships as well. Invest in call center services to provide telephone support to members 24 7. And train your branch employees in all the new technologies your members are embracing. Just being there and available to assist members can turn their questions and issues into positive touchpoints that elevate both your cards and your brand in their eyes. Bill Prichard is senior manager public relations and corporate communications for CO-OP Financial Services (www.co-opfs.org) based in Rancho Cucamonga California a payments and financial technology company serving credit unions. 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 AA U G U SS TT U G U 22 00 11 77 C U B U S I N E S S . C O M MA RK ETI NG BY DWAYNE SPRADLIN A Crisis Is a Terrible Thing to Waste If a lack of innovation isn t already hurting your credit union it won t be long before it is. In fact remaining technologically complacent is arguably the greatest risk CUs face. Here s how to remodel your whole business approach to thrive in today s culturally shifting financial institution environment. s someone who understands the importance of credit unions to localities across the country I m concerned by the proverbial writing on the wall. In the last several years technological innovations and cultural shifts have changed consumer expectations in nearly every industry including banking. Yet while everyone from retailers to airlines have changed the way they do business credit unions have been slow to adapt if they ve tried to adapt at all. That failure to change or to change quickly enough is the biggest risk facing credit unions today. If your institution isn t innovating it s in trouble. A recent study found that while 75 percent of consumers still rely on a traditional financial institution for most of their banking needs four in 10 say they re increasingly less dependent on their bank and more excited about what alternative companies the Venmos and the Kickstarters of the world can provide. Many credit unions have attempted to attract and retain customers by adding basic technology features. But mobile banking and robo-tellers aren t enough to set you apart from the big banks that already offer those same services. In fact just one-third of consumers say they perceive product differentiation among financial services providers today. A digital banking presence isn t a game changer at this point it s merely table stakes. A What s really needed is a wholesale remodeling of the way credit unions do business a complete rethinking of the value proposition and customer relationship. What does that look like These three steps are key 1. Adopt a member-centric approach. According to a FICO study nearly half of all banking consumers 46 percent say they don t receive relevant marketing materials from their financial institutions and 40 percent have never received a personalized offer. But today s members expect relevancy immediacy and instant access tailored messaging that reaches them at the right time on the right device. For credit unions this means adopting a multi-channel marketing approach. It means using a mix of emails text messages mobile app notifications and website promotions to not only communicate with customers TURN ON YOUR MARKETERS MATTERS withTEAMBUILDER. 4 MARKETING www.cubusiness.com teambuilder buy 29 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 7 C U B U S I N E S S . C O M MARKETING TAB but also monitor responses and behaviors using that data to continuously improve future efforts. 2. Accentuate your differences. Credit unions are different because they re local and that s a powerful advantage. According to a recent study 57 percent of consumers would prefer to bank with a locally owned and operated institution. Credit unions must ask themselves then How can we reimagine the member experience through a local lens Credit unions like Missoula Federal Credit Union and UMassFive College Federal Credit Union have done this reimagining by launching partnerships with small businesses in their communities to offer rewards to members who already patronize their favorite local businesses. 3. Focus on revenue. Adding digital tools and platforms can make sense but only if that technology also drives revenue. Credit unions must evaluate programs through a critical lens Do they enhance both the member experience and the bottom line Can they satisfy members through gamification while also being used as an effective tool for incentivizing behaviors that reduce costs like the adoption of e-statements or drive revenue like taking out a loan These changes are important not just for the health of your business but for the health of your local economy as well. Failure to adapt could hurt not only your institution but also your members and the communities you share. That s powerful incentive to take a hard look at your business and change. Dwayne Spradlin is the CEO of Buzz Points Inc. an incentive-based customer engagement and revenuegenerating platform made famous by its buy local spend local rewards for community financial institutions (CFIs). The company is based in Austin Texas. 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 AA U G U SS TT U G U 22 00 11 77 C U B U S I N E S S . C O M CU TRA INING BY KEN BATOR Experience Trumps Service An insider s glance into the recent Southern California Credit Union Alliance conference reveals an important takeaway for credit unions. Providing good service to your members is an expectation not a differentiator. These days it s the experience you provide to your members that truly sets your CU apart. all been trying to do that for at least the past 20 years. Nevertheless the Southern California Credit Union Alliance chose the phrase as their theme for their recent 2017 conference and they truly hit that mark with their lineup of speakers. From Jim Abbott talking about overcoming the adversity of being born without a right hand to pitch a no-hitter for the New York Yankees to Brandon Michaels the CEO of Mazuma Credit Union whom I have previously profiled in this magazine explaining why creating a passionate following is more important than asset size every session gave attendees clear ideas on how to adapt. However I would have to say my favorite presentation was led by Dave DeFazio Partner for StrategyCorps. In true Jerry Maguire You had me at hello fashion he had me with his first slide labeled Experience Trumps Service. I told Dave just before my interview with him that I was going to steal that line. Those three words encapsulate what I have been saying for years. That it s not just about providing good service. Good service maybe even great service is ubiquitous today. Every consumer expects flawless service whether he s applying for a loan or ordering a cheeseburger. Even the best of service results in a meets expectations interaction in the minds of most members. But a true experience exceeds expectations. As Dave quoted Warren Tomlin recognized as one of Adapting to a Changing World. I think we have Marketing Magazine s 100 Thought Leaders and serving as IBM Global Chief Innovation Officer A person s last experience is their new expectation. Why does experience trump service When we focus on providing an experience rather than a level of service we begin to achieve consistency which is the very foundation for building a truly differentiating brand. When we tell frontline staff You will provide exceptional service to our members without any explanation of what exceptional service looks like we leave that directive open to interpretation for each employee. To Julie it may mean greeting every member with a smile and a How can I help you today To Danny it may mean snapping to attention and in his quirky way saying What ya need my friend To Mary it may mean that since this individual isn t a TURN ON YOUR TRAINERS 4 CU withTEAMBUILDER. TRAINING C U B U S I N E S S . C O M www.cubusiness.com teambuilder buy 31 2 0 1 7 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 CU TRAINING member yet I don t have to give her exceptional service or I can arbitrarily ignore the non-member to take care of the long-time member despite their places in line. And Johnny in IT may figure that the exceptional service directive doesn t even apply to him since he works with employees only most of whom he treats with disdain. In the scenario above there are four different experiences of exceptional service. That isn t an experience at all. It s just a mess in spite of the good intentions from management with their You will provide exceptional service to our members directive. While I passionately believe if done properly any credit union can provide both a consistent and exceptional member experience through their employees many consumers today would rather transact banking business through an app than through a human being. That is why providing service through technology is so attractive. During Dave s presentation Adapting to Change in a Mobile World he provided multiple live examples of a customer experience through technology. The other night he ordered his favorite coffee from Starbucks and made a mobile payment to his buddy for beers both completely hands free with his Amazon Alexa. His Alexa even showed him a little quirky attitude later in the session. Of course technology is great when it works. Dave even quipped that when he does his presentations he is often at the mercy of the WiFi connection available 32 C R E D I T U N I O N B U S I N E S S at the venue. However when technology does work consistently in the way your business and those you serve want it to it usually does provide an experience that trumps old-fashioned polite service. During my interview with Dave we discussed the phrase Experience Trumps Service. Sometimes it s a little controversial he laughed. People hear that I m saying bad words about service. That s not what we re saying. Service is still important. I would add that an experience is an extension of service. Consistent service leads to an experience which leads to a consumer expectation which can be a sustainable advantage for your business. (Watch the entire interview at https www.youtube.com watch v xJHWwMeuKus.) Dave gave a great example of an experience creating an expectation. I m an Amazon junky he admitted. I order on Amazon all of the time. Now that has set an expectation about how I think online ordering and retailing should work. So if I find my way somehow to another site to buy a product and I m ordering it online if someone wants to charge me a shipping fee I m like What s going on here Where s the two-day shipping (Amazon) has changed the way that I think ordering in an online environment or a mobile environment should work. We quickly shifted to discussing what that means in the banking world. If we re thinking about the experience of banking we need to start thinking about not just what other banks and credit unions are doing. It s that Amazon is rewiring my brain to change the way I think about how things work in general. So when I say Experience Trumps Service it s that our brains and expectations in a mobile world are changing by the minute practically. It reminded me of one of my clients Cincinnati Ohio Police Federal Credit Union (COPFCU) whom I profiled previously in this series. The CU s brand principle is Banking on a First Name Basis. It s truly a brand principle and not just a tagline because the credit union lives that phrase every day. It has built 2 0 1 7 C U B U S I N E S S . C O M A U G U S T CU TRAINING wonderful first-name relationships with the majority of its members. However during one meeting last year a very smart twentysomething professional wisely challenged me on the fact that the credit union needed to embrace more technological channels to serve the membership and not just hold on to the face-to-face Banking on a First Name Basis ways. I remember that conversation vividly as I sincerely love it when young professionals challenge the status quo in a thought-provoking way. My response to him was that he and I weren t as far apart in our thoughts as he may think. The question isn t an either or challenge. In other words it s not do we hold on to the Banking on a First Name Basis culture and philosophy OR do we embrace a technological way of interacting with our members. The real question is How do we create a Banking on a First Name Basis experience through technology in a way our members truly want it The way that our relationships connect with our members is changing Dave responded. We have to find (new) ways of connecting with people when they are outside the four walls of our branches. He portended that credit unions need to think about how 33 C R E D I T U N I O N B U S I N E S S we can engage members beyond the typical boundaries of banking. Here are three ways we may begin doing just that 1) Gain an awareness of all of the things that are happening in the mobile world. Dave quipped If you were going to build a branch in France you would want to learn a little French. If you believe that Millennials and just as important now Gen Z as well as mobile technology are going to be important to the future of our business then we need to learn that language too. As I would say we can t just ignore the trends in business shrug our shoulders and say Well all of our board members are retired and only use flip phones. We need to continually ask What is an experience in today s world That doesn t mean we all need to become technology experts but it does mean we need to be more curious about what apps the folks [we] serve enjoy and why. It also means trying different apps [ourselves] to learn how they operate. 2) Look to see what the next big thing may be. The trend is going away from clicks and typing A U G U S T 2 0 1 7 C U B U S I N E S S . C O M CU TABTRAINING alleviate some of those fears is the understanding that to adapt and to change are two different acts. To change according to the dictionary is to exchange for something else. Change then by definition becomes an either or way of thinking. However to adapt is to make suitable to requirements or conditions to adjust or modify. So the challenge isn t how your credit union will change its culture and manner of engaging members in a mobile world. The real challenge instead is how will your credit union modify its way of interacting with those you serve within the existing brand and culture to provide them with the banking experience they desire to voice technology. Hands-free is creating an experience where consumers are simply having a conversation with their device. It makes the userface more familiar to people and creates an easier way to get things done. So if you are updating your technology channels look to adopt the next big thing rather than the technology that is near obsolescence. Think a move or two ahead. 3) Align your company mission with your mobile mission. You don t necessarily need to change the entire way you do business but you do need to find ways to do business your way through new channels. And as Dave suggested Let your members in on the mission. Much like I suggest letting employees in on the plan ask members how they want to do business. You may not be able to afford the exact technology you would ultimately like. However maybe you can utilize what is available to you such as having a video call via Skype rather than a phone call with a member or leaving a video message instead of a voicemail thereby making the interaction more personal. Adapting to a Changing World can certainly be a frightening endeavor for many people. What may 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 AA U G U SS TT U G U 22 00 11 77 C U B U S I N E S S . C O M 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 aim 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. To have BTC facilitate your next strategic planning retreat contact Ken directly at 714-681-2821 or kbator btcinc.net. Learn more about BTC s training and strategic planning sessions at www.btcinc.net or www.speakermatch.com profile kenbator . MA RK ETI NG MATTERS BY AARON GREGERSON Digital Is the New Traditional W Developing campaign and media strategies can be confusing for credit unions. Where do you get started Smart CUs begin with digital. Keep reading for why modern digital is fast becoming today s traditional approach. These tips will help you harness the ever-changing digital world to your CU s advantage. hen it comes time for a credit union to begin thinking about building a marketing campaign strategy whether that campaign be brand focused product focused or for general awareness the best place to start is with their current digital presence. From there the CU can get a good feel for where it currently stands with the use of digital channels and develop a campaign strategy that is appropriate. Why is starting with digital the smart move for the development of a credit union s media strategies Digital is the new traditional. When it comes to digital marketing the creation of a successful strategy depends on understanding your goals and focusing your efforts. This is not at all unlike the focus needed for traditional media. The difference comes when you begin to treat digital as one big bucket rather than separating out where to spend the time and money for the most effectiveness. Today s digital world is changing so quickly so effortlessly that what s here today can literally be gone tomorrow. Of all the ways members can encounter you digital advertising channels have the ability to be the most ubiquitous and complex. As long as you understand your audience and how members are connecting with your credit union brand you can successfully navigate the digital marketing waters. Doing Your Research Knowing where you re going and what you want to accomplish is the first part of any strategy. Starting with digital channels will help you hone the strategy for the rest of the campaign. It will also enable you to select tactics and channels that will better accomplish those goals. The beauty of digital is being able to use data gathered through various forms of research to make informed decisions on where to spend your hard-earned marketing and media budgets. Measure your digital strategy s reach and potential using the following methods Geo Targeting Narrow down who has a chance of being exposed to your credit union s brand by TURN ON YOUR MARKETERS MATTERS withTEAMBUILDER. 4 MARKETING www.cubusiness.com teambuilder buy 35 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 7 C U B U S I N E S S . C O M MARKETING MATTERS selecting the specific cities ZIP codes or counties your credit union serves. Demographic Targeting As a credit union it may be the right move to pick your audience based on any number of demographic characteristics especially if you still serve large SEG groups in your field of membership. Demographic targeting will make sure you get the right people s eyes on your ads. Interest-Based Targeting Another plus for digital advertising is the ability to target based on interests and behavior. Advertising platforms both search and social do a great job of accumulating data on their users to target advertisements better. This in turn means that let s say for instance if your credit union primarily serves a religious SEG interest-based targeting will help you focus your ads. Keyword Planner This tool gives you a better idea of what your members are searching for and how best to reach them based on your campaign goals and strategy. Find all of the highest-ranked search combinations and appropriately link those keywords to your ads. Should We Go Digital For a lot of credit unions that s the golden question. In an industry that is not known for making rapid changes to keep up with the latest trends many are still trying to effectively tackle the digital marketing space. Biting off more than you can chew with digital can turn out to be overwhelming and thereby cause you to have to walk back your strategy a bit. Because unlike traditional advertising digital requires regular attention and maintenance even after campaign launch. Experienced marketers will tell you that nine times out of 10 their recommendation is to take things off the wish list and take a step back rather than add things to it. Sometimes this tendency has to do with budget. Sometimes it has to do with wanting so much exposure 36 C R E D I T U N I O N B U S I N E S S over various digital channels. And that s where you have to design a strategy that makes sense. Here s what to consider 1. Bandwidth Consider how much time will need to go into the maintenance of your digital marketing strategy. Then look at your current staffing situation and plan accordingly. 2. Resources Much like your bandwidth you also need to consider your credit union s resources. Do you have players on your team who understand how to implement and monitor a digital campaign Think about that and where the gaps are. Then fill them accordingly. 3. Budget Digital is a unique animal when it comes to budget. It provides a lot of flexibility compared to traditional channels. The only thing that isn t unique is that digital marketing doesn t come cheap. You can be efficient with dollars but to be effective digital marketing will be a significant line item in the budget. 4. Target Understanding the most efficient and effective way to reach your target is imperative. Many times this approach is a three-dimensional one even being different target to target. 5. Cultural Fit Making sure your approach matches your credit union s culture will make the transition into digital marketing easier. At a minimum ensure you have the highest level of support within your organization. Going Digital Making the decision to think digital first and go all in is exciting There are just a few more things your credit union will want to consider before taking the next step in your existing digital strategy or making the big leap to go digital. 1. Don t just buy airtime. Approach digital through the same lens you would traditional media. The audience and approach have to make sense for 2 0 1 7 C U B U S I N E S S . C O M A U G U S T MARKETING MATTERS TAB your strategy. There are plenty of digital agencies out there that that will help you purchase ads if that s what your credit union needs. Just make sure the strategy lines up. 2. Make this an extension of your brand. Just because digital offers a lot of new opportunities and channels doesn t mean it should change who your credit union is. Continue to follow your brand voice. 3. Start small. This advice goes back to bandwidth at your credit union. Start with one or two platforms and add more channels as you go along. 4. Don t expect overnight results. Digital is fast. Lightning quick. Especially when compared to traditional channels. But remember your credit union s digital strategy didn t come together overnight and neither will results. It will take time to see the impact and measure ROI. Approaching digital marketing with the mindset that digital is now traditional will certainly make your credit union reevaluate its media budgets and approach to campaign collateral. But this approach also has the benefit of providing a much better user experience for your members. That is because your credit union will now have to think digital first. Moreover digital can provide your credit union with a clear and measurable path to calculating marketing ROI driving value for management and the board. Aaron Gregerson is the vice president of client management for MarketMatch a full-service marketing consulting firm that provides energizing expertise ideas and strategic marketing thinking for credit unions. Aaron brings over 12 years of financial marketing and business development experience to the industry. Aaron focuses on digital marketing strategic planning and promotion branding and market segmentation with his clients to help grow credit unions in meaningful ways. 38 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 AA U G U SS TT U G U 22 00 11 77 C U B U S I N E S S . C O M A cold-pressed dilemma. A hot date for dinner. Every transaction has a story. Sometimes small decisions have the biggest impact. That s why PSCU offers a robust suite of card programs that address your members needs at every step of their day. 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