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Wednesday
Jul302014

Member Communication Success Guide

With clear messaging, CUs can guide members toward what they need.

By Sundeep Kapur

I still cringe about how my financial institution handled the Target card breach. My first card was cancelled, a new card suddenly showed up, and every time I called to ask for information, I was told something new and different! My financial institution could (and should) have explained the breach to me on one of my visits to its website.

What credit unions tell members via their websites is very important. More than 75 percent of online banking users visit their CU’s website more than a few times a month. CUs should take steps to highlight important news, make it easy to find information, and also serve up “relevant” advertising.

For efficiency and for effective communication, CUs need to organize and present information well not only via their websites, but across all channels. They also have to be careful not to barrage members with sales offers all the time, or members will simply stop paying attention to their messaging.

If you want to do a better job of coordinating your member communications, start with a member survey – do you know how often your members interact with you, what channels they leverage, and why they visit your branch?

Our members are in need of financial services and we are not the only provider. Collect some good data on your members and think about what messages they need and how to communicate them. Only then, will credit unions successfully guide members toward what they need.

Sundeep Kapur, digital strategies, Allied Solutions LLC, Plano, Texas, is an industry-recognized expert who has delivered keynotes, run panels, and delivered "relevant, inspirational, and outstanding" education for organizations around the world. He teaches yoga, cooking, and is a frequent speaker at financial services conferences.

Kapur will speak at the Oct. 7 CUES Carolinas Council meeting in Columbia, S.C. CUES Councils are local, grassroots organizations. Find out about the CUES Council near you

Kapur also will speak at CEO/Executive Team Network, slated for Nov. 2-5 in Amelia Island, Fla.

Wednesday
Jul232014

Brazilian Exec's Key Takeaways from CEO Institutes I and II

By Roberto Cesar Durscki

In 2013, I attended CEO Institute I at the University of Pennsylvania's Wharton School of Business. This year, I continued with CEO Institute II at Cornell's Johnson School. (That's me in the photo at the beautiful museum on the Cornell campus.)

For my worklife at Sicredi, the main credit union system in Brazil with over 100 CUs, 1,200 branches, 16,000 employees and $11 billion in assets, these two segments added value in two ways:

1. Improved my ability to systematize, and made the process of plannning and deciding tangible and simple to me and my managers. At Wharton we explored a lot about the process of scenario planning and at Cornell about decision-making frameworks. Bringing those together, we were able to establish some predefined process for the decision-making at Sicredi. That is helping us avoid intuitive and biased decisions, and the risk of ignoring key variables and impacts on crucial business decisions.

2. Bettered my influencing and negotiation skills, thanks to the Cornell program. At Sicredi, I migrated from a back-office area working on credit cards to a different business area focused on core banking. This change requires me to be a strong negotiator. At Cornell this spring, we learned that networking with others is about what we give, not what we take. This idea has made me think a lot about how to create networking opportunities by choosing what I can give away easily. The idea we discussed in the program about “the key to influence is listening” also struck me. Trying to rush a negotiation may backfire, since we need to listen and identify the needs of others before we attempt to influence them.

I’m certainly very anxious and optimistic about attending CEO Institute III at the University of Virginia's Darden School of Business next year. I believe I'm ready to complete the program by focusing on the soft skills emphasized at the Darden program, like people management and leadership. Those skills combined with what was already discussed in the first two segments will complete a deep rethinking about my management practices and certainly allow me to add more value to Sicredi and its members.

CUES member Roberto Cesar Durscki is core banking products superintendent at Sicredi, the main credit union system in Brazil with over 100 CUs, 1,200 branches, 16,000 employees and $11 billion in assets.

It's not too late to reserve a spot in the inaugural summer CEO Institute I, slated for this Aug. 17-22 at
The Wharton School, University of Pennsylvania, Philadelphia.

Read another CUES Skybox post featuring Durscki just before he started CEO Institute I.


Considering the initial objective of our conversation, to recollect the main learnings and value added from the two first Institutes to my worklife in Sicredi, I would say:

1 – I’m more able to systematize and make it tangible and simple to me and my managers the process of planning and deciding. In Wharton we explored a lot about the process of scenario planning and in Cornell about decision making and frameworks. Bringing those together we were able to establish some predefined process to the decision making in Sicredi. That is helping a lot to avoid intuitive and biased decisions and the risk of ignoring key variables and impacts on crucial business decisions.

2 – Negotiation Skills: In Cornell it was great to exercise in such a intensive matter the influence technices and negotiation skills. I migrated from a more backoffice are in Credit Cards to a more business area in core banking, and that is challenging me with the need of good negotiations. The classes are being very usefull, including in my personal life.

3 – And two other small insights from Kathleen O’Connor: “Networking is about what we give, not what we take”. That made me think a lot on how to create networking chosing what I can give away easily and that may help me to get important things from my colleagues. “The key to influenciate is to listen”, that also stroke me in the sense that urging to influenciate fast may be a backfire approach, since we need to listen and find the need of the other before we attempt to influenciate.

Monday
Jul212014

Photo Tour of the Gates Foundation Visitor Center

The Bill and Melinda Gates Foundation manages a $40 billion endowment. The foundation focuses on strategies where it can make the biggest impact to reduce inequities around the world in the areas of health, poverty and education, developing strategies to focus on each of these areas globally and in the U.S.

The foundation is focused on results and makes adjustments when a project isn’t working. 

The Gates Foundation Visitor Center in Seattle beautifully tells the story of the foundation’s work. Visit for just 30 minutes and you’ll leave with a clear understanding of the work being done.

What does all this have to do with credit unions? Well, each year at the CUES School of Strategic Marketing I, we go on a field trip to the Gates Foundation Visitor Center. Why should credit union marketers visit the Gates Foundation Visitor Center? Like the foundation, CU marketers need to be able to align their work to their credit unions’ overall strategic goals. They need to be able to adjust when things aren’t working. And they need to measure results against goals.

Plus, credit union marketers can find inspiration here at every turn.

Let’s explore through these pictures from the school’s trip last week.

The Foundation Family


These are some of the people working with and benefitting from the foundation. Could you showcase credit union members (a first time car buyer, new home owner, small business member) in a similar way?

 

Approach to Giving


Does your credit union have a strategy for charitable giving? Does it look like this?

 

Adjusting Strategy


How does your CU compare to this statement?

 

Access to Financial Services


One of the ways the Gates Foundation is working on poverty is by expanding access to financial services for the world’s poor. In many areas this means mobile technology. Does your credit union have a mobile strategy?

 

Working Together


Do these quotes remind you of the mission and purpose of credit unions?

 

Ingenuity


Does this quote apply to credit unions?

 

Change the World


 What can your credit union do to make an impact or improve your members and locality?

Wednesday
Jul162014

Supporting Retiring CU CEOs

By Lisa Hochgraf

Over the last few years, participants in CUES Net, the CUES members-only listerve for which I serve as staff guide, have congratulated a number of "Netters" on their retirements. In addition to sending along well wishes, the CUES Net community entertained dialog about such topics as what made good retirement gifts (and the tax implications of some options) and what moving companies to use.

On the occasion of his retirement in 2011, H.C. "Hank" Klein, retired CEO of now $957 million Arkansas Federal Credit Union, Little Rock, Ark., got inspired to share his experiences and insight about his retirement transition in several articles published by CUES.

For example, he recommended all retiring execs meet with a professional to examine their investment options in "What Now?" from CU Management magazine. In another CU Management article, he recommended using the time available in retirement to give back to your community. He also felt it was important for boards to know what a CEO is going through during the retirement transition, so he penned a case study of his experience, "Changing of the Guard," for CUES' Center for Credit Union Board Excellence website. (Not yet a member? Get a 30-day free trial so you can check out Hank's article.)

To my way of thinking, the Netters and Klein have set a good, cooperative example here. Talking about retirement and supporting our esteemed colleauges going through it seems to fit beautifully with the CU philosophy of people helping people.

Are you planning to retire? What questions do you have? What worries do you have? What suggestions do you have for others approaching this milestone? I invite you to use the comments section to have a dialog about this key issue.

Lisa Hochgraf is a CUES senior editor.

Leadership shadow is the larger ripple effect leaders have on those around them. "Leadership Brand and Shadow" is one of two new Blended Learning courses CUES is offering this September in partnership with Cornell University. Blended Learning minimizes travel while providing world-class education.

Photocredit: Dollarphotoclub.com/mstanley13

Monday
Jul142014

Does Your Loan Program Serve Your Members?

By Brett Christensen

Don't lose sight of members' perceptions.

Not surprisingly, a credit union loan program that effectively serves members is more likely to rate well on other lending metrics, such as loan-to-share ratio, loan growth, and delinquencies. But as you lead your people through the trenches of making loans every day, it's easy to lose sight of how members perceive your lending operation. When you're ready to take a pause and consider this key question, here are some food-for-thought questions you'll want to answer:

  • Are you offering the loans your members need? If you don’t have credit cards, mortgages or business loans, you are just inviting your member to go to a competitor. And the problem with sending them to a competitor is that they might find out they like it there and not come back.
  • What is your denial rate of consumer loans? I can make the case that this is the most important number to your members. They could care less about your return on assets, expense ratio, "misery index" (delinquency and loss ratios) or cost of funds. I think that if you are SEG-based, you should be looking at a consumer loan denial percentage of 10 percent to 15 percent and, if you are community based, you should be no higher than 20 percent to 25 percent. Please note that I am just fine with a 40 percent to 50 percent denial rate on indirect auto loans because it is inherently higher risk.
  • What percent of your consumer loans go out the door each month in C, D and E paper? Or asked another way, “Does your credit union love to make loans to all members or does it just love to make loans to members with good credit?” If your credit union has an average loan yield above 6.5 percent, it tells me that you have a large percentage of C, D and E paper consumer loans on your books and you do not hold a large percentage of your loan portfolio in mortgages. Ideally, I think you should target an average loan yield between 5.5 percent and 6.5 percent. You should have no problem turning a good bottom line with a loan yield in this range. The following loan portfolio composition by credit tier should give you an above-average loan yield: A+ and A paper: 55 percent; B paper: 20 percent; C paper: 15; and D and E paper: 10 percent.
  • Are your employees able to quote your low prices for GAP and extended warranty to your members? Encourage your employees to try to save your members significant money on the insurance products, even if your dealer partners shake their heads about it.
  • How quick and easy have you made the process of acquiring a loan? Good luck to you if you are still entrenched in the 1992 lending model of face-to-face loan interviews at a branch combined with a manual and paper-driven process. If you are not diligent, technology will leave you behind.

Make it a great year at your credit union by measuring your lending operation for success and then working on your areas for improvement.

Brett Christensen is the owner of CU Lending Advice, LLC.

Christensen will lead CUES School of Consumer Lending Sept. 15-16 and CUES Advanced School of Consumer Lending Sept. 17-18 in Denver.

This blog post is an excerpt from Christensen's article, "Measuring the Success of a Lending Operation" in the premium content section of the CU Lending Advice website.

Photocredit: Dollarphotoclub.com/corund

succeeding on this issue will bring success in the other metrics addressed in this

article. I think it is easy for senior management to lose sight of how a member

perceives your lending operation as you labor in the trenches each day. Here

are some food-for-thought questions to consider:

??Are you offering the loans your members need? If you don’t have credit

cards, mortgages or business loans (for those of you large enough to do

4

so), you are just inviting your member to go to a competitor. And the

problem with sending them to a competitor is that they might find out they

like it there and not come back.

??What is your denial rate of consumer loans? I can make the case that this

is the most important number in your building to your members. They

could care less about your ROA, expense ratio, Misery Index or cost of

funds.

I think that if you are still SEG based you should be looking at a

consumer-loan denial percentage of 10% to 15% and if you are

community based, you should be no higher than 20% to 25%. Please

note that I am just fine with a 40% to 50% denial rate on indirect auto

loans because it is inherently higher risk.

??What percent of your consumer loans go out the door each month in C, D

and E-paper? Or asked another way, “Does your credit union love to

make loans to all members or does it just love to make loans to members

with good credit?” I gave you my recommended percentages in the

Average Loan Yield section above.

??Here is a question for you indirect auto lending lovers to ponder. Are your

employees able to quote your low prices for GAP and extended warranty

to your members or are they forbidden to do so because you cannot risk

offending your dealer friends?

All I can say is, “Shem on you” if you do not allow your employees to try to

save your members significant money on the insurance products because

you don’t want to offend a scum-bag finance manager (shem is Irish for

shame).

??How quick and easy have you made the process of acquiring a loan?

Good luck to you if you are still entrenched in the 1992 lending model of

face-to-face loan interviews at a branch combined with a manual and

paper-driven process. If you are not diligent, technology will leave you

behind.