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T H E ON LY A LL-DIGITA L ALL-B USINESS R ESOUR CE FOR CR ED IT UNIONS T H E S T R AT E G I C P L A N N I N G I S S U E New family of Financial Business Media Debuts 2018 Good things coming SEPTEMBER 2017 VOLUME 12 ISSUE 9 You want to do the best for your members -- deliver the most value and create a first-rate experience for them. We get it. We ve served thousands of credit unions over 140 years so we understand your needs and the challenges you face. We are committed to your success -- and to helping you serve your members at the highest level. Working with Harland Clarke you can do more. harlandclarke.com get 2017 Harland Clarke Corp. All rights reserved. Do more with Harland Clarke. Harland Clarke is proud to be the exclusive sponsor of International Credit Union Day TABLE OF CONTENTS SEPTEMBER 2017 VOLUME 12 ISSUE 9 TAB THE ONLY ALL-DIGITAL ALL-BUSINESS RESOURCE FOR CREDIT UNIONS What does a 75 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 11 16 18 22 UP FRONT Title here Tim O Hara CU TRAINING 26 30 34 COLLECTIONS s Collins by Jame Way The Best nches Bra to Build ock is to Kn wn Them Do Crossing the Bridge from Financial Crisis to Financial Recovery 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 Mike Hales A Dual Purpose for Strategic Planning Kenneth C. Bator MBA MARKETING ANALYTICS IN BRANCH PRODUCT SALES Nick Brown How The 7 Habits Can Make Your Sales Teams Highly Effective COMPLIANCE John Gregoire New Tools to Keep Pace with Evolving Member Needs Matthew Lord BRANCH STRATEGIES Marketing Analytics Strong Board CEO Relationships Keys to Credit Union Success Delivering on the credit union promise of personalized service Meredith Deen BRANCH BUSINESS Branch by Branch Golden 1 Credit Union s Financial Wellness Center Kaitlin Morrison CFO CURRENCY Financial Ed M&A Considerations for Today s Credit Unions Brandon Pelletiere Is Merging a Good Option 5 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 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 cubusiness.com Patti Manzone Designer Ashok Kumar Associate Publisher ashok cubusiness.com THE ONLY ALL-DI GI TAL ALL-BUSI NE SS RE SOURCE F OR CRE DI T UNI ONS T H E S T R AT E G I C P L A N N I N G I S S U E New family of Financial Business Media Debuts 2018 Good things coming SEPTEMBER 2017 VOLUME 12 ISSUE 9 UP FRONT Tim O Hara CU TRAINING Kenneth C. Bator MARKETING Matthew Lord BRANCH STRATEGIES Meredith Deen BRANCH BUSINESS Kailtlin Morrison CFO CURRENCY Brandon Pelletiere COLLECTIONS Mike Hales IN BRANCH PRODUCT SALES Nick Brown COMPLIANCE John Gregoire 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 6 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M UP FRO NT BY TIM O HARA Good Things Coming in 2018 Dear Readers Welcome to the Planning for 2018 special issue I am very happy to report that we ve been planning for 2018 for a couple of years now and following a three-year and multiprong effort will be launching not one but two new digital magazines during 2018 to join our 12-year-old CU BUSINESS magazine in an effort to perfectly round-out our mission to bring the best information to the retail financial services trade publishing sector. Way back in June (time flies when you re having fun ) we created a monthly stand-alone Branch BUSINESS eNewsletter for the 5 000 or so branch managers member service reps tellers and other in-branch employees that have been CUB readers for several years. Actually a focused column called Branch BUSINESS was established three years ago and in anticipation of Branch BUSINESS we even hooked up with a very talented freelance writer named Kaitlin Morrison who has been contributing excellent content for branch readers. Kaitlin will be very busy gathering insights into running successful branches. Credit Union BUSINESS Magazine Inc. from Vol 1 Issue 1 published on July 15 2005 has consistently operated with a single focus To help credit union executives successfully run their CUs period As always thanks for reading Sincerely We ve been strictly BUSINESS with no mention of association politics gossip or any topic other than BUSINESS. We re very proud of our niche because it is helpful to our constituents. And we ll continue on that mission as we launch a very similar content related title next March to be called simply Bank BUSINESS. During 2018 and beyond we will continue to rely on the expertise of our excellent editorial contributors whom I call the CUB All Stars. And we ll also be on the lookout for new contributors who know a thing about Leadership and Finance and Lending and Marketing and Compliance and Training and Branching and Collections and all of the other functions that go into running a successful retail financial BUSINESS Tim 7 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M CU TRA INING BY KENNETH C. BATOR MBA A Dual Purpose for Strategic Planning W Although it might have snuck up on you it s that time of the year again strategic planning time. Don t miss this opportunity to both properly direct your team and engage your employees at a higher level. These tips will help you accomplish these two outcomes at the same time. e re past the unofficial end of summer Labor Day Weekend. This time of the year also marks the beginning of two more important seasons football season and strategic planning season. Now is without a doubt my favorite time of the year. Not only do I get to watch my sport of choice but I also have the opportunity to engage in one of my favorite consulting practices which is helping my clients develop their strategic plans for the coming year. Not everyone shares my enthusiasm for strategic planning or even football for that matter. Just ask my ex-wife about football that is. Regardless of how you feel about developing a strategy there is a dual opportunity opening up. First you can set the proper direction for your team and second you can engage your employees at a higher level at the same time. Here are a few tips to accomplish both. good about engaging the frontlines but not always the back office. Remember that professionals in IT HR Accounting and the like are serving members too internal members. They are hearing the problems their fellow staff members are having with systems and processes every day. These are issues that need to be understood going into the strategic planning process. As said many times before happy employees happy members. By leveraging the pre-planning process before a strategic retreat as an employee engagement activity for example management may discover some fairly easy and inexpensive fixes to some nagging organizational problems. New employees in particular can offer keen insight bringing a fresh perspective to your credit TURN ON YOUR Engage the whole team. While decisions ultimately come from the top there is much value in gaining buy-in from staff on your strategy. Ask them what opportunities are available for your business. They probably know more about your members than management does. When I suggest engaging the entire team in the process I do mean every single person in the organizational chart. Many times executives are very 8 C R E D I T U N I O N B U S I N E S S 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 S E P T E M B E R 250 000 Credit Union Employees 92 Million Members 100 Million Miracles Since 1996 Credit Unions for Kids has raised more than 100 million for Children s Miracle Network Hospitals giving hope and healing to kids in your local community. YOUR FUNDRAISING DOLLARS IN ACTION MILLION 10 2 1 iMRI machine and surgical suite 1 Cardiac X-ray machine 1 Ultrasound machine 1 Bone marrow transplant 1 Fully-equipped Giraffe OmiBed incubator MILLION THOUSAND 270 THOUSAND 250 THOUSAND 100 TABTRAINING CU union. For example a new service representative may be able to suggest a streamlined process from his prior employer for taking care of a common member issue. Like most great organizations when you add a valuable new team member like a wide receiver if he has a favorite route he runs very well it would be wise to include it in the playbook. Play to your strengths. Many times I see credit unions complete a SWOT short for strengths weaknesses opportunities and threats analysis and concentrate more on how they can alleviate their weaknesses rather than how they can take better advantage of their strengths. If your business is good at member service discuss how it can provide an excellent member experience. Too many times I have been facilitating strategic planning sessions where board and management alike begin to fall into the black hole of We can t do that. I think I would be the richest credit union consultant around if I had a dollar for every We-can t phrase I have heard in my 15 years of facilitating strategic planning sessions. In those cases I always ask Well what can we do Many times by concentrating on what we can do we find that we can be the best in our market in a certain aspect of our service experience over any other competitor. Concentrating on business services for example when it s far from a core competency may just shift attention from what is most important to your brand. This is where gaining an understanding from all of our team players can be highly valuable. Similarly it doesn t make much sense to develop an elaborate running game when your offensive coordinator will be the first to tell you that your offensive line is below standard. 10 C R E D I T U N I O N B U S I N E S S Sometimes it s better to keep it simple. Implementation and execution are the keys to any strategic plan or playbook. When it comes to my clients I would rather see a plan written on a napkin that is executed to perfection by each position in the org. chart than a well-written 150-page strategic plan that sits on the shelf and no one understands. It s not about how big the binder is. It s about what is actually going to get done. That s why it can be so valuable to engage your employees before you head to the strategic planning meeting. By taking into account everyone s input you create buy-in from most if not all of the team. That makes implementation of the plan that much easier. Keeping things simple is especially true if there has recently been a high level of turnover at your credit union or you just went through a significant merger. S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M CU TRAINING TAB produce twice the results. It s hard for the coach to complain about an audible when it puts six points on the board. If approached properly the strategic planning process can help your team create enthusiasm among everyone. Most important don t forget to have some fun during the strategy process as well as during its implementation. Just as many of us enjoy watching football on the weekends let s bring that same passion to our credit union during the week. Here s to both your strategy and to a great football season When a team has a rookie quarterback sometimes a few simple plays you know he will execute at a high level can work well even though the defense knows what s coming. Allow for deviation from the plan. In business and in football sometimes the best plays come from unexpected opportunities. Just because it wasn t accounted for in the original plan just as a quarterback scrambles for a touchdown during a broken play if your credit union has the resources to take advantage of an opportunity that is aligned with your brand and culture it would be wise to take advantage of it. This is why employee engagement is a 365 24 7 activity. Just as it s important to ask for input at the beginning of strategic planning it s critical to ask for feedback during and after the implementation process. Teach your team members the critical role they play in not only carrying out the strategy but also enhancing the brand and the culture. Challenge them to determine goals for their position and growth. You may find something has changed in your environment that makes the execution of an original objective ill-advised. Or you may find from your staff that one small inexpensive tweak to the strategy may 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 . 11 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M MA RK ETI NG AN A LYTIC S BY MATTHEW LORD Marketing Analytics New Tools to Keep Pace with Evolving Member Needs How do you stay member-centric in the digital multi-touchpoint environment of the modern credit union Marketing analytics tools can help. Discover how a data-driven approach to marketing can help your CU improve strategic planning effectiveness spur campaign performance growth and catapult return on investment all at the same time. ultivating an analytical marketing mindset and understanding what tools you need to put it to work can propel your credit union s marketing efforts to new levels of success and member-centricity in today s digital multi-touchpoint environment. Think of analytics tools as your marketing team s triple-threat players able to improve strategic planning effectiveness growth campaign performance and return on investment. How do they do it By giving credit unions vital insights into the thoughts and actions that influence their members loyalty satisfaction and purchase behavior. credit union can benefit from understanding how an analytics-based data-driven approach to marketing can grow profitability and maximize its marketing dollars. C Same Marketing Goal Different Approach By understanding the data-driven mindset and the basics of analytics tools credit unions can update the way they address that most time-honored of marketing objectives delivering the right offers to the right members at the right times through the channels of Taking a Data-Driven Marketing Approach Here at PSCU s Advisors Plus Marketing Services we live and breathe analytics in the course of designing implementing and tracking the more than 400 credit union marketing campaigns we run each year. From pre-planning to campaign execution to post-campaign analysis our proprietary analytics tools help our clients grow their card portfolios while minimizing risk. But while our marketing experts are highly trained to handle every detail of structuring and executing a broad range of campaigns we firmly believe that every 12 C R E D I T U N I O N B U S I N E S S TURN ON YOUR MARKETERS MATTERS withTEAMBUILDER. 4 MARKETING www.cubusiness.com teambuilder buy 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R MARKETING ANALYTICS TAB their choice to reflect the realities of today s digital mobile world. Think of the challenge this way No matter how large your credit union membership has grown over the years there was a time when your organization was small enough that knowing which products and services your members wanted was easy. You just asked them. Then you listened to what they told you and responded by custom-crafting a solution such as a loan or a CD to meet their precise needs. Analytics Is the New Listening Fast-forward to the present where everything from membership and geographic growth to the Internet and mobile devices has upended the process of reaching out to your members to ask them directly what products or services they need. No longer can you know everything about your members lifestyles preferences and needs just by chatting with them at the teller window. Those knowledge gaps mean that your old listening methods must evolve to keep in touch with your members. That is because technology has changed those conversations from in person to virtual. And analytics tools are what let your credit union tune into your members needs today. a far more effective efficient and even empathetic marketer in the long run. In fact the deep insights that analytics tools bring to modern digital marketing often surprise credit unions that still think of marketing as more art than science. As Adele Sweetwood SVP at SAS the world s leading analytics company memorably noted in her 2016 book The Analytical Marketer the introduction of analytics has taken marketing from Mad Men to Math Men and Women. From Mad Men to Math Men Now analytics may not seem as warm and fuzzy or as member-centric as telephone surveys or focus groups and those market research methods still have their place. But nothing beats analytics not only for sheer scope but also for gaining a window into how your members actually behave. It stands a world above simply relying on their reports of what they say or think they do. Learning how to use analytics to mine your members data for insights into their actions and transactions or reasons for inaction will make you 13 C R E D I T U N I O N B U S I N E S S So what should credit unions know about marketing analytics that will help them transition from old-school marketers to today s math men and women Here are three ways that analytics can up your marketing game 1. Analytics is a mindset not a fixed set of tools. It is vital to think of analytics as the dynamic ever-evolving product of an analytical mindset rather than a static set of tools and techniques. Analytics fall into three broad categories descriptive predictive and prescriptive with new metrics being developed every day. And remember that cutting-edge analytics are still often used in conjunction with more Three Things to Know About Marketing Analytics S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M MARKETING ANALYTICS TAB familiar methods like demographic segmentation and competitive analyses. But far more important than knowing specific techniques is developing an enthusiasm for using quantitative methods to tune into what your member data can teach you about product and solution needs. For example when Advisors Plus first pilot tested its checking account acquisition campaign offering analytics revealed three distinct groups of people responding those who opted in to the account offer itself those who opted in to the checking offer and also purchased additional products like CDs and auto loans and those who did not open checking accounts but did purchase other products even mortgages in some cases. Tracking those unexpected response trends has helped Advisors Plus refine our subsequent campaigns to develop more targeted offers create even more effective direct mail pieces and keep campaigns open longer to take advantage of different phases of respondent participation. Our analytics yielded tremendous insights into which demographic and behavioral groups chose which types of rewards. This was information that our client credit unions could apply in real time to customize their offering web pages further and could continue to apply to targeting and delivering better offers in the future. 3. Put analytics to work to gain insights into your members purchase journeys. The catalyst for your credit union s growth whether in membership accounts balances or products is your members decision to buy a financial services solution from your credit union rather than a competitor. Analytics can help you predict track shape and enhance those member purchase journeys. What s more analytics can catapult your credit union into the enviable position of letting your members behavior trigger your tailored marketing efforts rather than the opposite blindly hoping that your marketing will somehow break through the clutter to trigger purchase behavior. 2. Analytics can transform how you measure performance. Legendary management guru Peter Drucker once observed If you can t measure it you can t improve it. Marketing analytics let you be objective in creating campaign performance projections setting ROI goals and later determining which factors did or did not contribute to meeting them. However the true beauty of marketing analytics lies in the fact that the learning from one campaign can be applied to future campaigns to make them even more responsive and successful. For example Advisors Plus recently introduced an online credit card upgrade offer portal that lets a credit union s members accept their Charting a Marketing Course with Analytics upgrade offers online and choose between cash back Our digital multi-channel marketing world is putting and points to customize their rewards. your members in the driver s seat to a greater extent 14 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 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 MARKETING ANALYTICS TAB than ever before. Using analytics as your GPS your credit union can chart a marketing course that will allow you to outmaneuver the competition while enhancing member loyalty. Matthew Lord is the consulting manager of Advisors Plus Consulting. Advisors Plus was established in 2004 as the consulting arm of PSCU. Together PSCU and Advisors Plus s products financial services solutions and service model collectively support over 850 owner credit unions representing more than 20 million credit debit prepaid online bill payment and mobile accounts protect over two billion transactions annually from fraud and optimize credit union performance and growth. Matthew has spent more than 16 years at PSCU helping credit unions design and implement targeted marketing campaigns to grow their credit card portfolios. 16 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M BRA NC H ST RATEG I ES BY MEREDITH DEEN Branch by Branch Delivering on the credit union promise of personalized service As the saying goes the more things change the more they stay the same. And that s no truer than it is with the credit union mantra of putting members first. Keep reading for ways to combine the personalized attention members still crave with their more modern financial institution expectations. redit unions have built their collective brand promise on providing personalized member service. But putting members first looks a lot different now than it did back in past decades when tellers could greet by name all the people who walked through the front door. Members today expect more than a familiar face from their financial services providers. They require a wider range of products and services a full array of delivery channel options and account access whenever and wherever they want it. At the same time they continue to appreciate good old-fashioned personal service. This is especially true of consumers who have specifically chosen to remain with or move their business to a financial institution that claims to be different from its competitors. If a credit union promises to put members first the frontline service it provides should clearly demonstrate that commitment. How can credit unions deliver on the expectations of members to provide this combination of modernday banking and individualized attention to their financial needs Several timeless aspects of one-to-one personal service combined with technological tools for branch management can help zero in on the types of transactions and guidance members are seeking so 17 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M C the financial professionals staffing each branch can anticipate and deliver on those needs. Each member is different and so is each branch. Branches tend to reflect the character of their surroundings and in general the types of members who choose those locations. A branch in a neighborhood populated primarily with families with young children serves different needs than a branch with a prime spot in a business park. And neither serves the same type of members as the office within walking distance of residential developments that cater to active seniors. A demographic survey can sketch in the outlines of the types of services a branch can expect to be in demand in its market area. Using data from the core BRANCH STRATEGIES TAB processing system and lobby tracker software can supply more detailed information about members requests for service. That way frontline employees can be trained and scheduled to be on hand and they can be fully prepared to deliver the services members expect when they walk through the door. There s nothing like being greeted by name. Members want to be treated like people not account numbers. Lobby tracking software invites members to sign in and state their business. Access to this information upfront facilitates queuing and gives financial professionals the information they need to greet members promptly and personally. No one wants to stand in line too long. And on the flip side overscheduling staff results in employees standing around idly when branch usage is low and drives up costs for credit unions and their members. By monitoring branch traffic credit unions can more effectively schedule full- and part-time employees to be on hand during periods of peak demand. The 2017 FMSI Teller Line Study which analyzed patterns in more than 16 million branch transactions at banks and credit unions across the country found that mornings are generally less busy than lunch hours and afternoons. Credit unions can combine core processing data with information from lobby tracker software to conduct individual branch analyses of types and volumes of transactions. In so doing they can better align scheduling with members banking habits. Busy people enjoy this welcome I ve got everything ready for you. For the most part the technology supports discussed thus far to improve branch service delivery operate in the background but one new automated tool is designed to connect directly with members. Appointment scheduling software appeals to busy people ensuring that their time spent in the branch will be quick and productive no waiting when they arrive and any preparation such as having the right forms and documents lined up completed in advance. Appointment apps also supply useful data for 18 C R E D I T U N I O N B U S I N E S S branch managers to track what types of transactions and guidance members are seeking. Service delivery is not just about service. A key aspect of the members-first promise is that credit unions exist to provide value to their member-owners not profits to shareholders. That return to members is conveyed in the best possible loan and deposit rates and low or no fees. Staff scheduling software can help credit unions reduce idle time among branch employees and identify blocks of time where secondary duties such as outbound sales calls can be assigned with the aim of enhancing revenue production. The teller line study quantifies the impact of smarter scheduling and other strategies to improve branch efficiency on teller productivity and labor costs. According to that analysis tellers working for FMSI s top 10 clients based on productivity measurements handled an average 20.3 transactions per hour compared to the 15.6 average for all credit unions included in the study. Labor costs per transaction for top performers averaged 94 cents compared to 1.16 for all credit unions. Understanding members and their banking preferences what brings them to a branch and when and where they prefer to conduct these transactions can help credit unions personalize member interactions reduce wait time and schedule staff more efficiently. While technology has upped the ante on how members define high-quality service it can also help deliver on those expectations branch by branch. Meredith Deen is director products and services for FMSI A. Kronos Company which provides financial institutions with business intelligence and performance management systems for efficient branch staff scheduling and lobby management. She can be reached at meredithdeen kronos.com. 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R BRA NC H BUSI NES S BY KAITLIN MORRISON Financial Ed Golden 1 Credit Union s Financial Wellness Center With a growing need for solid financial education credit unions are helping their members learn more about finances. Many people want to improve their financial health become debt-free or save for retirement but feel ill-equipped to start without additional resources. Golden 1 Credit Union s answer to this problem is a comprehensive multi-format online portal offering financial education. We think this illustrates the Credit Union difference which is really important to us said Erica Taylor the Vice President of Communications and Community Relations at Golden 1 CU. For this Branch BUSINESS we decided to ask Golden 1 about their experience providing financial education for their members. They shared with us about their journey from the early days of financial classes to today s multi-media online and in-person education. Credit unions branches that want to reach their members with better educational offerings can learn a lot from Golden 1 s experiences. The result is a new portal that goes beyond in-person seminars but also does not neglect the importance of in-person financial education. Based on their experience we have three key ideas for any credit union that wants to make a difference in their community through financial education. Financial Ed Tip 1 Provide something for every financial stage and need but try not to get lost in targeting only one demographic. At the branch level this also means providing great service to every member and knowing how to recommend education that fits their goals regardless of age. Beyond Seminars Golden 1 Credit Union is one of the biggest credit unions in the United States. Founded in 1933 Golden 1 now serves over 800 000 members in California. With a large membership the credit union consistently works to stay in touch with what their members need and tries hard to understand how these needs change. When they noticed changes in their members educational needs they began to change formats and add new material. They revamped their education in response to surveys and conversations with members. 19 C R E D I T U N I O N B U S I N E S S TURN ON YOUR BRANCH SUPERVISORS & MANAGERS withTEAMBUILDER. 4 BRANCH BUSINESS www.cubusiness.com teambuilder buy 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R BRANCH BUSINESS With many industries targeting Millennials it may seem appealing to focus on their needs and exclude others Taylor noted. Instead it is important to remember the broad range of financial stages and needs within your membership and offer tools and materials that appeal to a diverse range of ages credit histories and goals. In our research we discovered that the need for education is universal. Whether you are just getting started or ready to retire you may need financial education resources to help you reach your goals. Based on that we are absolutely trying to target all demographics. For instance Millennials are an important demographic for many credit unions but you would be wise to see financial education as an opportunity to reach your community. Financial education should serve everyone and whenever possible recognize the diversity of your community by presenting different topics formats and ideas. At your branch support these efforts by Recognizing that every generation uses the Internet social media and online education. According to the Pew Research Center 34% of people ages 65 and older were using at least one social media site in 2016. Every generation is interested in online tools including online education. Making an effort to personally connect through in-person education. According to a 2015 Matersight survey half of Millennials said they prefer in-person conversations over digital interaction and when asked about workplace communication this figure jumps to 85 percent. In fact only one percent said they preferred social media for customer service questions so branches are still very relevant for the Millennial generation. Educational resources at the branch may still be of interest. C R E D I T U N I O N B U S I N E S S Financial Ed Tip 2 Get buy-in at the branch level by 1) Giving associates financial Ed tools THEY can benefit from 2) boosting your communication 3) helping them recommend resources to members. Besides word-of-mouth you can use other branch-level outreach to communicate about your new educational program. Having the support of your entire team is important when you launch a new financial education program as it is with every other aspect of your operations. Taylor says it s the strong communication and coherence of Golden 1 s team that allows them to really promote their financial education portal. These tools are for them too We want this portal to be something our team members can really benefit from and use to learn more about their own financial health Taylor said. Communication and trust are a priority too so our team knows what resources are available and how to recommend them. Aside from making suggestions to branch visitors team members also use other methods to promote Golden 1 s educational efforts. At their branches this credit union has systems to promote the portal digitally to members. You can also use social media email lists and signage to let your members know. You may want to create a special event for the program s launch with a simple refreshments table in your branch lobby stocked with brochures about how to sign up and a plate of cookies or a candy bowl to draw attention. 20 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R BRANCH BUSINESS TAB Have fun with promoting your webinars classes or podcasts. Financial Ed Tip 3 Experiment with different formats class types and topics based on community requests and feedback. Be open to change and provide different types of education. Add variety and interest by having online and offline programs. Every format we use today is in some sense the same. We still use in-person classes webinars and videos. The different formats make it more convenient accessible and useful to more people. And not just members but the entire community Taylor added. Having podcasts videos online interactive labs inperson seminars timed for a noon lunch hour and webinars is helping Golden 1 provide the resources that their community needs. The online portal is even open to the public so as many people as possible can use it. To Taylor this illustrates the unique contributions credit unions make to their communities. This is part of the credit union difference. It really is she said. Their community-oriented goals inspired them to make their financial education open and accessible. And they are not finished. Golden 1 plans to continue looking for new ways to deliver educational content and new topics to cover. At the branch level implementing this tip may mean giving branches flexibility to customize their own class offerings or find their own ways to promote the resources. Branch teams can also watch for programs that may need what Taylor calls a deeper dive. Team members can ask the community to share feedback and highlight resources that need to be revised be rewritten to be more in-depth or need some other specific change. questions have topics they wish they understood or want to reach a specific financial goal. From there consider some of your options for creating educational programs At the branch. You can hold on-site seminars hold a conference call and invite members to submit questions in advance and listen-in for answers or advice publish educational blog posts etc. Online. Your branch or credit union can develop a website full of multimedia-rich resources. This can be something done in-house or you can hire assistance to design your own programs and systems. You can also subscribe to a service that offers financial education materials. In a partnership. If you feel comfortable endorsing another institution or a business they may partner with you to provide classes and seminars. As an alternative you could connect with a local nonprofit and invite special speakers to create lunch hour seminars on financial topics. A local college or university s finance or accounting department may also be willing to help you provide a class or resource to the community. Creating a Winning Educational Program To create your own financial education program begin by finding out what your members and team want. Ask them what they hope to accomplish financially and find out what their goals are. Find out if they have financial 21 C R E D I T U N I O N B U S I N E S S Kaitlin Morrison S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M CFO C U RRENCY BY BRANDON PELLETIER Is Merging a Good Option M&A Considerations for Today s Credit Unions How can your credit union compete in today s current climate where consumers are increasingly open to non-traditional financial providers like big retail and fintech You ve got to be strategic and mergers are a strategy to consider. See what considerations are a crucial part of the deal and what benefits can be derived. A t the risk of stating the obvious it is tough to be a credit union or community bank in today s market. Not only do these institutions continue to face traditional competition from big banks but they must also contend with big retail and fintech. In fact a survey last year by Fujitsu found that nearly 20 percent of consumers would buy financial services from companies like Amazon Facebook or Google a number that is likely to grow. Many medium- and larger-sized credit unions ( 500 million in assets) are pursuing strategic mergers to gain a competitive edge. While credit union mergers have trended down in recent years (among credit unions 44 were approved by the NCUA in first quarter 2017 compared with 54 for the same period a year ago) we may be seeing an uptick. The NCUA approved 49 mergers in the second quarter and in our own merger work at ALM First an interest in merging appears to be increasing. Credit union mergers are likely to grow for several reasons. First in contrast to the coasts the middle part of the country has a large concentration of smaller financial institutions. Many of these FIs are in a good target range ( 100 million in assets) making this region ripe for mergers. Second the long22 C R E D I T U N I O N B U S I N E S S anticipated repeal of key parts of the Dodd-Frank Act would remove some of the more challenging barriers to mergers. Finally many community credit unions see value in merging as their long-serving CEOs begin to retire believing that a larger institution may offer more and better services to their members. Benefits of a Strategic Merger Is merging-in smaller credit unions a good idea Often the answer is yes if the merger is well-planned and there is a good fit. Consider these benefits TURN ON YOUR CFO and CEO 4 CFO withTEAMBUILDER. CURRENCY www.cubusiness.com teambuilder buy 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R CFO CURRENCY TAB Merger considerations The acquiring credit union can gain market power and remain a relevant competitor. The acquiring credit union can expand geographically increasing its branches and growing market share without investing in costly brick and mortar. Merging provides external growth ensuring a more diverse membership which may be less risky than organic growth. Members of the target credit union can benefit from a broader array of products and services more branches and often better service. A strategic merger can bring greater back-office efficiencies and thus better member return. should know what their severance package will include. Governance ALM First has witnessed mergers fall apart at the last minute because of issues surrounding board representation of the new entity. There is no standard formula to determine the appropriate number of board seats that should be offered to the target. For example if the transaction is a merger of equals then 50 percent of the board seats could be given to the target while the other 50 percent are reserved for the surviving institution. ALM First recommends that regardless of the decision the discussion should occur early in the process. Commitments Both parties must keep their word and be open. The target credit union needs to share information about operations trouble spots and unwritten agreements. Due diligence may not reveal issues such as problem employees high turnover or the stability of the new member franchise. In turn the acquiring credit union shouldn t make commitments it won t keep. Member expectations Don t promise new members that they will still be served by familiar staff members if that isn t likely. Also make sure they understand the continuing credit union s policies on rates and fees as well as daily operations. Will the loan approval process be different What about funds availability Promote positive changes such as additional services or faster loan processing only if they will continue. 2. Integration Merging systems and operations is challenging. Before the final decision the acquiring credit union must fully understand the costs it will incur as well as the time it will take to integrate systems workflows and staff. 23 When ALM First helps a financial institution through a merger we emphasize that combining two institutions takes time often up to a year to complete and even more if there are system incompatibilities a clash of cultures or disagreements among merger partners. To avoid these problems planning should take place as soon as possible after the decision is made giving careful thought to three key factors negotiation integration and culture. 1. Negotiation With appropriate planning a merger can be a positive event for both parties. But before the ink is dry make sure to consider these key factors Employees Mergers are stressful making it vital to provide employees with as much information as possible and giving them frequent updates. Employees from both the target and acquiring credit unions need to know about changes to their salaries and benefits how their responsibilities may change to whom they will report and whether their job is safe. Those asked to stay through the process should receive retention bonuses as a positive incentive and those who will be let go C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M CFO TAB CURRENCY Finance and accounting Merger accounting is complex and it is important to be thorough. FASB requires that merging institutions use the acquisition method of accounting which includes identifying the fair value of the new organization as well as measuring and recognizing the assets (and liabilities) being assumed. The acquiring credit union also must set a level for goodwill evaluating it for impairment at regular intervals. When deciding to merge the credit union should engage valuation experts who understand the requirements for these mergers. For example while it is important to assess the merging credit union s value this cannot be done until after regulatory approval. A financial partner with expertise in valuation methods knows the rules and is practiced at determining adjustments to projected loan losses. Auditors also should be engaged early on to ensure valuation methods meet appropriate accounting standards. Particularly with complex mergers auditors can offer guidance on the level of analysis needed. They can also help with amortization schedules. Using financial and auditing experts also increases the confidence of management the board and regulators. Systems and infrastructure Ideally merging credit unions use the same core processor but that isn t likely. As such know when the current system agreement expires and what the early termination fees will be. The same is true for other long-term contracts and commitments such as the CRM platform or building and equipment leases. In addition decide whether the target credit union s branches will complement those of the acquirer and help expand the branch footprint. Also how does branch traffic compare with mobile online access Products and services Consider whether the credit unions products and services will complement each other. For example will merging provide an opportunity to expand into small business loans Is there an SBA lending platform not offered by the acquiring credit union What types of convenience services does each credit union offer Are mobile and online delivery channels compatible 3. Culture A key reason some mergers do not succeed is because the CEOs do not see eye to eye. If one is committed to a members first strategy while the other is all about the bottom line a good merger isn t likely. Both credit unions should share a common approach in managing member and employee expectations. Values and philosophy It is vital for the new entity to operate under one culture whether it follows the acquiring credit union s philosophy adopts the target s values or blends the two. Look at where there are compatibilities and inconsistencies in areas like staff training employee development and advancement or incentives. Get a beat on employees level of trust and respect for management. What about work environment Is one fairly relaxed while the other is more formal Member relations Consider each credit union s attitude toward its members. Does one think of members as owners while the other views them as customers How important is credit union philosophy Finally review board relations. Is one credit union s board more active and the other passive about decision-making 24 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M CFO CURRENCY TAB Mergers are time-consuming and complex but the benefits often outweigh these issues especially if the outcome means staying competitive and growing market share. By strategically planning mergers many problems can be avoided or minimized. The result will be a stronger institution that can grow and thrive while helping members improve their financial quality of life for years to come. Brandon Pelletier is director Strategic Solutions Group for ALM First Financial Advisors. He oversees merger and acquisitions and CECL valuations as well as assisting with Dodd-Frank Capital Stress Testing and values loan pools to guide trading decisions. He can be reached at bpelletier almfirst.com. 25 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M COLLEC TI O NS BY MIKE HALES Crossing the Bridge from Financial Crisis to Financial Recovery I Financial distress is a daily challenge for millions of American consumers. Millions of adults have non-mortgage debt reported past due and they need to pay well over a thousand dollars on average to become current on that debt. n addition to creating difficulties today delinquent debt can lower credit scores and result in serious future consequences. Credit report information is used to determine eligibility for jobs access to rental housing and mortgages insurance premiums and access to (and the price of) credit in general. Many of these consumers were once Prime credit union members. Many Americans are still recovering from financial crisis brought on by the Great Depression while others have fully recovered. While reasons or events causing financial crisis vary widely recovery is not necessarily dependent on the cause but on available opportunities for rehabilitation and the time it takes to rebuild. The irony is that in millions of cases borrowers recover their capacity to repay long after their accounts have been charged off but are still within state and federal collection statutes of limitations. It is estimated that 20 billion in unrecovered charge offs owed to credit unions is legally collectable. Additionally many of those borrowers have worked through their financial crisis recovered their life style and are willing and able to repay their obligation. Many of those prior prime members would qualify for reinstatement of credit union privileges once they repay their obligation but they re too embarrassed to reach out. There are multiple stages of credit decline and recovery and they are easily illustrated by the Debtor Fiscal Lifecycle. 26 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M OLLECTIONS The FIRST STAGE of the Debtor Fiscal Lifecycle is the Decline in Credit Quality. Bad things happen to good people and past due credit can be the result of a medical emergency divorce death in the family loss of employment or other negative live event. Regardless of the cause in many cases the snowballing downward spiral results from the use of other available credit to make past due payments. It doesn t take long before past due debt becomes debt in collections. It is estimated that 35 percent of people with credit files have debt in collections reported in those files. Debt in collections can remain in a credit report for up to seven years. The downward spiral of credit quality is generally exacerbated by robbing Peter to pay Paul using what available credit might still exist to pay current past due payments. The downward spiral can sometimes last several months or even years. The SECOND STAGE of the Debtor Fiscal Lifecycle is the Hiding Period. Prior prime members who are relentlessly hounded by collectors generally 27 C R E D I T U N I O N B U S I N E S S seek refuge underground. They go into hiding and fall off the grid in order to avoid repossession garnishment and other forms of collection activity. This stage may also last from several months to several years. In time collection agencies simply stop working the accounts and begin to focus on the low hanging fruit of newly assigned charge off loan portfolios. This practice has resulted in tens of billions of dollars in stranded credit union capital. The THIRD STAGE of the Debtor Fiscal Lifecycle is the Re-establish Period. This stage generally falls between 3.5 and 6.9 years after the effects of the negative life event that initially sparked the downward credit spiral have diminished or disappeared completely. The prior prime member is moving around and beginning to resurface. The major medical emergency has passed. The divorce is final. The mortgage is current. The new career is promising and feels secure. The prior prime member is tired of having to frequent payday lenders and pay check 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R COLLECTIONS cashing store fees. He or she still feels a connection to the credit union but is too embarrassed to ask for help. There s a deficiency balance owing to the credit union on the car they had to repossess four years ago and it is still on the prior prime member s credit report. Ironically it is during the re-establishment stage of the Debtor Fiscal Lifecycle the time that the prior prime member may be capable and highly motivated to repay the debt and have the charge off record removed from his or her credit file that collection agencies have long abandoned the account. This is also the time when the credit union industry suffered historic losses that credit unions and their collection agencies are not attempting to recover. This is the prime recovery period. To add urgency the issue most consumer debt falls out of the federal reporting statute in seven years and disappears from consumer credit files in which case much of the incentive for the member to repay will be lost. Banking on the Bond Charged Off Assets Include Members There is little doubt that recovering abandoned charge off balances is found money and a valuable source of needed capital. But what about recovering members Many prior prime credit union members who have fallen on hard should be given the opportunity to prove themselves once again worthy of the benefits of membership. This isn t to suggest that all charged off borrowers should be given a second chance far from it. But those who once were prime borrowers good depositors and responsible members should be considered for reinstatement if their prior charged off obligation to the credit union is repaid in full and all other current qualifications for membership have been satisfied. There exists an intangible and immeasurable bond between a member and his or her credit union and it 28 C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M COLLECTIONS TAB continues to exist between a prior prime credit union member and his or her former credit union a bond that does not exist between commercial banks and their customers. That bond is forged at the time of initial membership strengthened over years of member service and challenged but seldom broken at the time of credit or negative share balance charge off and membership suspension or termination. Many credit unions view the free recovery of a prior prime member as vastly superior to the costly acquisition of a new unproven member. Some have said that the recovery of members is more important than the recovery of capital. It is safe to say that every recovered member re-entered his or her credit union with a renewed even stronger sense of loyalty. The bond between credit union and member is once again complete. The Debtor Fiscal Lifecycle is a path traveled by former members who have lost their credit union privileges because of financial problems leading to charged off debt or a negative share account balance. The Lifecycle can be both frightening and rewarding and it is not an easy journey. There is no standard time period for completion of the Lifecycle. The downhill credit spiral may be either swift or protracted. The hiding period may last from a few months to several years. The re-establish period also takes time and generally requires professional assistance. Most banks have no interest in providing a second chance to charged-off customers who are trying to fight their way back from payday lenders buy herefinance here auto dealers and check cashing stores. Collection agencies are programmed to recover the low hanging fruit of accounts that are newly assigned to them. Their modus operandi is to attempt to extract money from debtors during the Stage 1 Credit Slide and Stage 2 Hiding Period. After several months or a few years the accounts are abandoned and collect dust in the collection agencies file rooms. They do not have the time or the resources that will tell them when 29 C R E D I T U N I O N B U S I N E S S a debtor enters the prime collection opportunity within Stage 3 the Re-establish Period or the tools necessary to help with a successful recovery. The path through the Debtor Fiscal Lifecycle from financial distress to financial recovery is available to most credit union members. There is no prescription for the length of time the journey will take nor is there any guarantee that a prior prime credit union member will or even should be reinstated. But many former prior prime credit union members who have suffered financially and emotionally since the Great Recession are once again credit union members in good standing. These reestablished recovered prior prime members have repaid their prior obligation to the credit union in full. They meet or exceed their credit union s current membership requirements and bring with them a loyalty factor that far exceeds any newly acquired member for which the credit union invested significant acquisition dollars. Upon completion of the Debtor Fiscal Lifecycle the bond between the member and the credit union has been reinforced and is stronger than the original. Mr. Hales is Executive Vice President and Director of Strategic Relationships with CU Revest LLC a multiple credit union owned Asset Management CUSO which has restored millions in abandoned capital and recovered thousands of priorprime members for their credit union clients. S E P T E M B E R 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 The 7 Habits Can Make Your Sales Teams Highly Effective I Recently my parents gave me a few boxes of memories I apparently still had stored in their basement. As I looked through the boxes remembering all the great times and experiences I came across my very first copy of Stephen R Covey s The 7 Habits of Highly Effective People . their relationship with and the value they receive from the credit union. I used the word detrimental because reactive selling often leaves the member vulnerable to situations they did not anticipate which they now must resolve. For example overdrawing their checking account without overdraft protection properly set up. Totaling their car without GAP insurance. Suffering a loss of income without debt protection on their loans. All products and service the member decided not to take because they were not properly explained and offered. To be highly effective credit unions must foster a proactive sales environment where representatives understand their responsibility to ensure the member s complete satisfaction. In fact they recognize their ronically just days before this I had started reading the book again. I asked myself is this just a coincidence or something more It had been a number of years since reading the book and not surprisingly this time as I read the messages seamed to apply more to credit unions sales and service than to me personally. Each habit I went through I said to myself Wow this applies so well to what credit unions should be doing for their membership and their teams . With that in mind I am excited to share some of my brief thoughts on how The 7 Habits can be applied to your credit union sales efforts. Habit 1 Be Proactive In The 7 Habits the first principle of effectiveness Covey teaches is being proactive rather than reactive. As explained this means taking responsibility and ownership rather than avoiding it through blame and excuse. It is in recognizing the ability we have to influence and shape our outcomes. When a consumer engages the credit union for a new product or service a reactive representative would see the member as the expert knowing what they want and more detrimentally what they don t want. I find that many credit union sales representatives operate from a reactive position allowing the member to define 30 C R E D I T U N I O N B U S I N E S S TURN ON YOUR MARKETERS MATTERS withTEAMBUILDER. 4 MARKETING www.cubusiness.com teambuilder buy 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R IN BRANCH PRODUCT SALES TAB members are depending on it. The representative takes ownership of the member s financial needs and chose behaviors which empower the member to succeed. And they recognize that they share the responsibility for the member s future financial situation. With this in mind they work within their Circle of Influence to deliver what the member truly needs. Habit 3 Put First Things First Habit 2 Begin with the End in Mind Before credit union sales representatives can be effective they must first understand what they are working to accomplish. Every credit union has a mission and a vision they are working towards. If that mission and vision is for example to be their member s primary choice for financial products and services employees need to understand what that means and what it looks like. More than this they must clearly understand their role in the process and receive proper training to accomplish it. Representatives that are equipped to start each member interaction with the end in mind understand the products and services they are working with. They have been trained on the features and how they benefit the member and give them an advantage in their financial lives. They know how all of the products and services offered by the credit union fit together to fill the individual and unique needs of their members. And lastly they have a vision of what a primary financial relationship requires and can see the path to build those relationships with every member interaction. 31 C R E D I T U N I O N B U S I N E S S Covey explains that habit 3 is about focusing on your highest priorities and those activities which provide the most worth. For a credit union sales representative their highest priority should be on the member and helping them achieve their financial goals. Too often though we find our sales representatives bogged down with paper work title tracking loan audits and other busy work. Clearly these are essential functions of the credit union and cannot be ignored but are they the highest priority of the sales representative If possible credit unions should look to assign these critical and necessary functions to a processing or support team. There are two main benefits in doing this. First this frees up time for the sales representatives to focus on engaging members and building those primary financial relationships. And second it empowers the credit union to higher employees with the strengths most suited for the position resulting in higher levels of effectiveness. Habit 4 Think Win-Win Too often sales programs can get out of alignment reaching for the goal at the expense of the consumer. This was no better exemplified than in the Wells Fargo Sales Scandal which came to light one year ago this month. Credit union sales representatives should be trained that sales success is defined by the value they provide to their members and not necessarily the sales numbers they reach. 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R IN BRANCH PRODUCT SALES In a credit union sales setting the title of this habit could more appropriately be named Win-Win-Win where the goal is to provide value to the member the credit union and the employee in each interaction. Sales efforts should be monitored and training and coaching should always focus on this value adding approach. Any time one side becomes out of balance it should be corrected quickly. Habit 5 Seek First to Understand Then to Be Understood With this habit Covey explains that far too often our agenda and our selfish need to be understood trumps the needs of others around us. When we do stop talking and start listening it is with the intent to reply not to understand. For many credit union sales representatives their first response when a member askes for a new product or service or when they have a problem with their account is to immediately start offering solutions assuming they know exactly what the member needs. However this is not effective at building primary financial relationships and providing value. Because value is largely subjective to the member to be highly effective employees must be trained and coached to ask questions which identify the member s true needs wants and financial dreams and uncovers the motivation behind those needs before offering product solutions. One essential place to do this is in the member interview the critical discussion which should happen when a member or potential member first engages a credit union employee to open a new account product or services. When credit union sales representatives have the motivation to first understand their results will change in every member interaction. Think of sales objections. How would the outcome change if the sale representative listed to learn what the member was asking for with an objection rather than simply trying to resolve the objection Or when a member C R E D I T U N I O N B U S I N E S S is dissatisfied has a problem with their account and submits a complaint Rather than listening to defend they listen with empathy to understand and then to help even if helping means admitting they or the credit union have made a mistake. Habit 6 Synergize Synergize simply means to capture the creative power of cooperation in the highest form known as teamwork. We have already discussed the power that synergizing with the member can bring in providing exceptional value in the member relationship. But synergies must be developed beyond the member relationship they must be developed within the organization as well. Your credit union operates multiple sales teams such as the call center online and phone lending center mortgage department investment team insurance agency business development team indirect lending SBA department and the many branch sales teams. And to support each of these sales teams are the back office departments. Many times these various sales teams and departments work in silos. A member applies for a mortgage and leaves with just a mortgage. A member needs insurance on a car they just purchased and leaves with just an auto policy. A new business has approached the credit union for checking and cash 32 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R IN BRANCH PRODUCT SALES TAB management and the new business members leave with just a business account. Little to no cross department sales referrals occur. Building synergies within the credit union and especially between the various sales teams creates value in the member s relationships which is greater than what each individual team can provide on their own. For this reason sales representatives should be cross trained on all products and services regardless if they directly sell them to the membership. They should be encouraged to analyze identify and refer these products when found because when all departments work as one team synergistically the value provided to the member is greatly multiplied. person. An individual who will be a first mover and lead a transition from what s always been into what needs to be. This transition person can be a senior leader or even a sales representative. No doubt though that they will be a leader. Now the question for you is who will this transition person be Habit 7 Sharpen the Saw We all know that the most valuable asset to a credit union its employees. Credit unions must invest in their employees in order to create highly effective sales teams. In The 7 Habits Covey suggests that we as individuals must be balanced not only investing in our professional abilities but also our physical social mental and spiritual health. Likewise credit union sales representatives must be balanced with training coaching leadership and recognition to keep them renewed and engaged. The responsibility for Sharpening The Saw is not only the organizations but also the representatives. They should be encouraged to pursue their education participate in continued learning and preparing themselves to accomplish new levels of success. Sharpening The Saw should be a lifestyle rather than an activity. In closing credit unions exist to serve their members financial needs. Having sales representatives who are highly effective is critical to reaching this goal and providing exceptional value to their members. If these habits do not yet exist in your credit union Covey has a suggestion for this as well. One of the last thoughts in The 7 Habits is the need for a transition 33 C R E D I T U N I O N B U S I N E S S 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. S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M COMP LIA NC E BY JOHN GREGOIRE Strong Board CEO Relationships Keys to Credit Union Success Without a great leader your credit union is doomed to ungreatness. And a CU s Board members are instrumental players in ensuring outstanding leadership. With a focus on CEO evaluation this first in a three-part series reveals proven methods that will help you and your Board build a stellar leadership team. hat is the difference between credit unions that succeed tremendously and those that merely exist The answer in all cases is leadership. Think of credit unions that have weathered financial storms change of sponsor employment disruptions. Once you have that list you will find one common denominator a strong CEO and an informed engaged Board of Directors. Hiring and inspiring a great CEO is job number one for any Board. Interestingly there is an appalling lack of training on this important subject for credit union Board members. This article is the first of a three-part series dedicated to strengthening credit unions through proven methods of building great leadership teams. We believe that a Board s ability to recruit retain and inspire great CEOs is the most important contribution it can make to its credit union. The series will focus on three key issues CEO evaluation CEO compensation and CEO succession plan recruiting. their performance. In some cases there is a reasonable scorecard with very quantifiable measures. In nearly all cases however the more subjective issues such as Board relations community impact and leadership are left largely to conjecture. Experts in the field have concluded that Organizational performance will over time deteriorate without clear communication between the Board and the CEO on these (see above) issues. So how do Boards ensure that this gap is corrected in their credit union The first article in our series will detail methods to make certain that your organization excels in this key skill. Most if not all Boards understand that their only employee is the CEO. It is through the CEO that all credit union operations are delegated. This may seem W TURN ON YOUR COMPLIANCE The CEO Evaluation OFFICER withTEAMBUILDER. In our experience the CEO evaluation is a consistently weak part of the credit union Board CEO relationship. CEOs we have interviewed have told us candidly but unfortunately often anonymously that they lack a clear understanding of their Board s perspective of C R E D I T U N I O N B U S I N E S S 4 COMPLIANCE UPDATE www.cubusiness.com teambuilder buy 34 2 0 1 7 C U B U S I N E S S . C O M S E P T E M B E R COMPLIANCE like a basic and simple proposition however there are libraries full of books on the art of delegation. The extent of delegation and performance is most clearly described in the CEO evaluation review. Ask any HR expert and they will say that one of their biggest challenges is the performance review. Many in management consider this task a necessary evil and a departure from their daily tasks. This is true even where the distinction between responsibility and performance is clear such as the CFO evaluating the Accounting Manager. Imagine how much more complex and therefore difficult it is for seven or nine individuals with varying backgrounds which are normally inconsistent with running a notfor-profit financial institution to provide clear perspective on the performance of a CEO. In order to accurately grade a CEO s performance the Board members must have a strong understanding of the organizational focus and strategies. They must also have a firm grasp of the credit union s performance against peers to provide perspective on how well the credit union is actually performing. Many Boards assess performance primarily against budget. Without a peer comparison most Boards are unlikely to have the experience necessary to determine whether the budget was overly conservative or represented a real C R E D I T U N I O N B U S I N E S S S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M COMPLIANCE organizational stretch to achieve. For example one organizational target may be ROA. The goal may have been set at 0.75. The credit union may have achieved a 0.54 result which would appear to be sub-standard performance. As the recent recession demonstrated however the economic environment may change quickly largely impacting the credit union s ability to reach previously set goals. In this example the peer performance may have averaged 0.24 ROA. This would be an indication that the credit union significantly outperformed its peers. Achieving a 0.54 ROA probably required management decisions and performance that would be bonus worthy. Contrarily the economy may have been booming. Peers may have performed at an average 0.89 ROA. In this case the credit union seems to have underperformed its peers. It would be incumbent on the CEO to provide rationale for the 0.54 performance. This is where strategies specific to a credit union may come in to play. For example if you decided to engage on an aggressive building project hire additional staff in advance of a new strategy or put away additional capital to buffer the impact of a significant SEG or sponsor s potential decline the 0.54 performance is clearly appropriate. The same dynamics apply to most credit union metrics. That is why Board orientation and training should include a clear understanding of the organization s primary strategy and performance metrics. Beyond quantifiable organizational performance metrics the CEO should be evaluated on Board relations as well as leadership and external relations with the credit union s membership and community and with the credit union community including regulators. This assessment is usually more subjective and even more difficult for Board members. There are a number of methods to provide substance to this task. We will cover those options in our next article. 36 C R E D I T U N I O N B U S I N E S S John P. Gregoire is a partner in Koker Nelson and Gregoire (KNG) a consulting firm dedicated to executive compensation succession planning and performance management in credit unions. With more than forty years of experience in the financial services industry and having held senior management positions in state and national trade associations and credit unions his is a broadbased perspective reaching to board governance team leadership CEO appraisal score carding succession planning mergers and the alignment between executive compensation and organizational strategy. John also founded the ProCon Group Ltd. now in its twentieth year of serving a client base comprising over forty percent of credit unions with a billion dollars or more in assets. A founding member of the Filene Research Institute he was instrumental in the development and publishing of the report on Board Responsibilities and Work Styles in Effective Credit Unions. He has authored a variety of articles on strategy the balanced scorecard and governance. John earned his master s degree in management from the Claremont Graduate School Peter B. Drucker School of Management Program working directly with Drucker on topics of executive management. He is a former board membe of the National Credit Union Foundation. You can reach John at 608-239-3449 or John.Gregoire kngco.com S E P T E M B E R 2 0 1 7 C U B U S I N E S S . C O M Empower Your Credit Union with Enhanced Member Service Empowered C-Level Employees and Create Miracles In Your Community 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. As the nation s leading CUSO we provide feature-rich Visa and Mastercard programs that attract members and help you earn their loyalty. Life doesn t stop. Neither do we. That s our story of service. pscu.com credit 844.367.7728 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 & Leasing 2 Mortgage Lending 2 Payments 2 Business Lending THE ONLY A LL-D I G I TA L A LL-B U S I NE SS RE SOURCE F OR CRE DIT UNIONS