Tasty Top Stories, Right Off the Grill
Posted by Doug Williams on December 29th, 2007
One of the saving graces of the leftover-filled dead week between Christmas and New Year’s Day are the year-end wrap-ups. No wrap-up story ever won a Pulitzer, but they’re interesting to read. So, to the pot-luck of lists and reprisals, I’m going to add my own.
This being a blog, and therefore collaborative, I’m eager to hear everyone else’s contributions to and opinions on the OpenSourceCU.com Top Credit Union Stories of 2007 (Now With Resolutions!). During this week of warmed-over dressing, think of this list as a sizzling sirloin steak, hot from the fire, ready for you to tuck into (for you vegetarians, think of it as whatever it is you tuck into that’s really satisfying…salad maybe? potatoes? tofu?)
My seven top credit union stories of 2007…bon appetit!
No. 7: The iPhone
It has its flaws. It’s wildly expensive. It’s great-grandfather was the Newton. But this zeitgeist-expanding gadget moves the bar for mobile computing and, ultimately, mobile banking services. It also allows for easy use of social media and opens the number of communication channels. Think about the annoyed member posting to a blog while in line to wait on a member service representative to fix a mistake another MSR made. If someone using a iPhone actually stands in lines waiting for MSR’s.
Resolution: It’s an antiquated attitude that technology and social media are just toys. I would love credit union staffers to open their minds to new technology and look at it from a perspective of early adopters and ask some simple questions: How is this used? How does this impact me? How could this impact my credit union?
Sub-Resolution: Personally, I need to avoid being a curmudgeon myself and open my own mind and ask similar questions. Keeping up with technology is hard, but invaluable.
No. 6: Gigi Hyland’s calling for a more consumer-centric approach to products.
Said Ms. Hyland in January: “The main themes of my remarks were to urge credit unions to continue to be consumer-centric in product and service delivery and to provide insight into the regulatory perspective on current issues, such as BSA and membership growth.”
Okay, this isn’t earth-shattering, and there are discussions like this all the time, but it’s validation from the top that CU’s need to approach their products and pricing the same way other companies do – with a focus on what the market demands.
Resolution: Credit Unions need to leverage that tax-exempt status to continue (or in some CU’s cases start to) offer cost-competitive pricing, provide dividends and serve immigrants and under-served communities. I’d also like to see credit unions trim their product offerings to better serve their membership and community. If you cannot profitably provide dozens of products and services, then take a good, hard look at your product mix and eliminate those that are underperforming or aren’t profitable. Don’t keep up with the Jones’s. Keep up with your field of membership.
On the surface, this is an oxymoronic request, but really, it’s about finding a niche and drilling down and serving it. Some CU’s can profitably operate wide. Most cannot and need to focus on their core membership, find what that it needs and really serving it in ways banks and other CU’s can’t.
No. 5: Hackers steal 45.7 million credit card numbers from TXJ Companies
The breach of security is the largest in history and reflects the importance of CU ID theft prevention policies. Given that credit unions have a 3.8 percent market share in revolving credit, the breach affected over 1.7 million credit union members. And that’s just credit cards. Debit cards, with fewer consumer protections, were likely part of that mix and even a small percentage would be thousands if not millions of debit card numbers.
Resolution: Credit Unions should treat debit card fraud the same way they treat credit card fraud. See top story No. 4 for support of this resolution. Members need to know all their transactions are secure, credit or debit. From my experience in credit union operations, I know this is expensive, but a credit union should act in the best interest of its members.
No. 4: CURIA momentum
At latest count, 141 members of the House of Representatives are signed on as co-sponsors of H.R. 1537. By raising the percentage of assets from 12-ish to 20 percent, this will allow CU’s to better serve under-served areas and small businesses, which in turn creates wealth in a community.
Resolution: Credit Unions need to mobilize staff and, in turn, membership to ensure members of Congress support H.R. 1537 and understand the difference and mission of credit unions. An adage of advertising says that when the marketing director of a company is tired of hearing his/her advertising message, it’s at that point that its impacting the consumer. Talk about it until you’re sick of it.
No. 3: Wings/Continental credit union flap
Resolution: Stop doing this.
No. 2: Zopa
Peer-to-peer lending could be a threat to credit unions, given credit unions’ philosophical mission. Instead, Zopa is partnering with credit unions, each improving each other’s credibility and reach. I’m excited about this partnership.
Resolution: Like the No. 7 resolution, credit union staff needs to be more plugged into technology and how it affects their products, services as well as how members use it. It’s a competitive advantage to embrace it and folly to ignore it.
No. 1: The housing bust
Although credit unions didn’t seriously contribute to the questionable practices that puts the country on the precipice of recession, every credit union every member will be affected. As much as credit unions need to compete, they also must council and advice as part of their financial services product mix.
Resolution: With a tax-exempt status, strong capitalization (in general) and sound, conservative policies and procedures, credit unions are primed to be part of the solution, right?
There you have it, my year-end list complete with a side of resolutions, served hot and fresh. Enjoy!
Your review of the top stories in CU land is excellent. It's my opinion that all employees and board members of credit unions should review this post. If they aren't familiar with any of the issues you've mentioned, they need to use your post as an outline for reading. You do a wonderful job of highlighting the influential issues for credit unions in the future.
One underlying theme of your list is the speed with which technology is changing. This fact reminds me of what I think is another big story for CU's in 2007. It's been the emphasis on marketing to Gen Y. Even a traditional organization like CUNA is highlighting the importance of engaging this segment of the population in a dialog about credit union membership. The YES Summit and the YES CU Community are both positive initiatives. The campaign that I think has been most innovative, though, is the Young and Free campaign developed by Tim McAlpine of Currency Marketing for Commonwealth Credit Union in Alberta. It utilizes You Tube, blogs, Facebook and other technology which is ubiquitous among young adults. I'll be interested to see if this multilayered use of technology will take off in credit union marketing and services in 2008.
Ginny,
I couldn't agree more with your suggestion that ALL credit unions review this list ASAP.
I did my own year-in-review list on my blog this week and social media made my list of Modern Marketing musts.
Here's what an anonymouse commenter said: "You sell social media stuff, so guess what, that is the only marketing that you think is effective. Get over yourself!"
Dear Anonymouse,
You don't BUY social media - you participate in it. And by blasting me on my blog - you ARE!!
I love it.
Fantastic list and I agree that this needs to be on all credit union board members and CEO’s must read list.
I am also curious to see how credit unions continue to respond to the lending strategies of payday lenders and how credit unions continue to combat this type of lending.
@Doug: Great list. It is well researched and well presented. The only thing I would add to the list is the continued merger mania as a top story of 2007. Is no one else concerned that another credit union gets gobbled up everyday?
And Doug, I am glad that you’ve stepped into Trey’s big shoes by posting regularly on OSCU. You bring a well-articulated point-of-view and aren’t afraid to discuss the elephants in the room. Keep up the good work in 2008.
@Denise. I read that anonymous comment on your blog and kudos to you for leaving it there. You wear your passion on your sleeve and aren’t afraid to sign your name to it.
@Ginny. Thanks so much for your support on the Young & Free initiative. You’re kind words all over the cu blog-o-sphere are much appreciated.
One of the big stories (for me) came just last week from the Dec. 24th CU Journal article titled CU THAT EXITED INDIRECT LENDING BUINESS SAYS IT HAS NO REGRETS. My personal kudos to CEO John Hirabayashi and the leadership at Community First Credit Union of Florida (100,000 + members) for being totally candid about their (now cancelled) Indirect Auto lending program. To quote Hirabayashi…“It was diverting resources from our relationships with our members. The loyalty wasn’t there. There were mixed messages about who we served. That loyalty is more important!”
This CEO told the truth and the truth is that credit unions practicing proactive Indirect Auto Lending can seldom dodge compromising their position as a true advocate for the members. Case in point; touting the convenience of the member being able to do everything at the dealership and passively ignoring the fact that the same member was charged DOUBLE for a car warranty they could have obtained at the credit union for almost HALF THAT PRICE. That is the reality of Indirect Auto Lending.
Great post and Ginny does make a good point about Young and Free Alberta campaign. That was one of my favorite CU stories to follow this year.
Great post, DW. I love your mentioning of the iPhone as a top story and the advice you gave of CUs grabbing a couple for R&D. At TDECU, our CEO just provided five management team members with iPhones (yes, I got a lucky Golden Ticket).
Interacting with our home banking and member-facing on the iPhone has given me some ideas of improvements needed already. Look out because Verizon’s new phone is one of the first among undoubtedly many others to come taking cues from the iPhone interface.
Roger,
I hadn’t heard about Community First in Florida dumping their indirect program.
I do think one of our greatest challenges today is not necessarily coming up with new and innovative ways of doing business – but rather having the guts to STOP doing something and focus on the credit union brand (what we are known for).
I echo the kudos to Hirabayashi.
Excellent list Doug, Technology is moving faster than ever. I’m a self proclaimed tech-nut and I have a lot of trouble keeping up with the way things are changing. The Internet is a new animal and there are so many opportunities to connect with the world outside of your companies domain name. Its changed from being someplace you set up a page and wait to a place where active discussion and content is a must. There are so many useful tools that I, and the rest of gens x and y, use without any thought daily. there’s going to be a lot of catching up to do next year.
@Roger Indirect lending has MSCU bleeding as well, but it accounts for such a large amount of our loan portfolio that we can’t afford to kill it.
Thanks Denise. It’s not a buzz subject like “connecting with young adults”, but it’s the kind or “core” issue that should be addressed. I know…I worked 3 years with an Indirect auto CUSO here(trying to be a CU “member” advocate) and I can tell you first hand. It is a farce to believe that you can balance two so totally opposite cultures as CUs and Dealers. Maybe it could be “perceived” as a WIN-WIN for the CUs & Dealer…but not for the member. Justification is a marvelous thing. It’s not about the most common reason given by CUs that are dropping their Indirect programs such as “the challenge of converting Indirect prospects to members” or even “the amount of delinquencies”, that is the core issue here. It’s about doing the RIGHT thing by the member…PERIOD!
Young and Free is a great campaign; I’d venture that it’s a benchmark example of effective use of social media that has long-term implications and immediate impact. I’m eager to hear the ROI over an extended period of time!
Indirect lending is a good example of growing for growth’s sake, which is a mistake. That’s why I’m an advocate of a niche approach for CU’s because more isn’t better. Better is better.
Thanks for the great responses!
Again thanks for all of the Young & Free Love! I am really cautious that we don’t want to blow Young & Free out of proportion in relation to all of the very important things that happened in CU land in 2007. And it certainly should not hijack this conversation about more important issues.
Believe me, the fact that it is mentioned along side the iPhone blows my mind.
The program has been very successful to date in terms of account openings, deposits in those new accounts, new member acquisition, web traffic, blog participation, general awareness and, especially, media attention.
As we are really only into the first phase of a multi-year strategy, it is premature to measure or disclose the actual ROI. What I can tell you is that is well beyond the set goals to date.
(One of those set goals was “Dear God, I hope someone applies.”)
Also, remember what you are seeing on the web is a small component of the whole initiative. There has been substantial energy in offline traditional media and public relations to launch the account and attract spokesperson applicants. Setting it against a social media backdrop has been the icing on the cake.
The media attention has been the most surprising to us. The boost to Common Wealth’s brand awareness is amazing. Never underestimate the power of partnering with a top-tier PR agency.
The table is set and now the real fun and success is (hopefully) yet to come. To me, if folks are talking about Young & Free on 2008 big things wrap-up blogs, then we have had success.
Tune in tomorrow. I have seen Larissa’s New Year’s video and it does not disappoint.
Thanks again.