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iPad tablets bring challenge to online banking

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NEW YORK (12/5/11)--Just as banks and credit unions have begun proudly touting their new mobile banking services for devices such as smartphones, the iPad and other tablets have arrived, presenting an entirely new challenge for online banking.

Credit unions will need to keep abreast of the new devices, which are a cross between smartphones and computers, because large banks are already moving in to offer tablet-specific applications, and the iPads are among the biggest selling items among holiday shoppers.

Eight percent of consumers had tablets before the holiday season began. Black Friday sales of Apple's iPads beat forecasts, with Apple selling 70% more units than last year. Research firm Jeffries predicted  that sales may nearly double in the fiscal year that began in September.  The firm estimated Apple could sell 65.4 million iPads, almost twice as many as it sold in the 2011 fiscal year (E-Commerce Times.com Nov. 30)..

That means there will be a whole lot of demand for banking services to fit the devices.

So far, about 30% of the nation's largest banks offer a tablet-specific application--and that's just for iPad users, Mary Monahan, head of mobile devices research at Javelin Research & Strategies, told Reuters (Nov. 23).  None of the banks surveyed have a specific app for iPad's Android-based competitors such as Kindle Fire--yet.

The lack of services for these devices can add up to frustration for the tech-savvy  consumer who wants to be cool while banking on the go. And that's the challenge for credit unions: How to serve this market while keeping personal financial information secure and while serving members engaged in all the other mobile and online channels of service delivery.

A designer of mobile banking programs, Clairmail, noted that the devices aren't smartphone banking and they aren't a shrunken version of online banking, said Reuters.

They will present some security challenges for sensitive information. Apple has provided device and data protection such as passcode policies, encryption, and remote wipe/local wipe functions to remove data and deactivate the iPad if its lost or stolen.  It also supports security technologies and protocols to enable a secure connection for remote users, but, according to an article in the March/April 2010 Colorado Banker and CoNetrix.com in November, training users never to connect to unknown or ad-hoc networks will be a challenge.

The biggest vulnerability, said the article, is the browser-based vulnerabilities. Financial institutions will need to consider the risks involved and adjust their policies, controls and user training.

Financial institutions need to serve this space because it's going to revolutionize banking the same way the smartphone did, said Monahan in the Reuters article. "The banks have to be ready for this."  She noted that software developers hired by financial institutions are under pressure to quickly get their clients into the tablet marketplace.

New Balance Transfer Day focuses on credit cards

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CHICAGO (12/5/11)--Bank Transfer Day proved so successful that it has spawned a number of other special dates devoted to moving money around in the nation's financial system. Among them: Balance Transfer Day, earmarked for Dec. 11 and targeting credit card accounts.

Balance Transfer Day calls for consumers to apply en masse for low-interest credit cards on Sunday to send another message capitalizing on anti-big bank sentiment. It aims to get credit card holders to transfer their outstanding debts from high-interest-rate credit cards to cards with 0% interest and zero-balance transfer fees issued by credit unions and small community banks, said The Street.com (Nov. 30) and Huffington Post (Dec. 2).

Balance Transfer Day is not associated with Bank Transfer Day or its founder, Kristen Christian, whose Facebook page became a major national social media event when it swelled with thousands of supporters after she designated Nov. 5 as Bank Transfer Day.  Although that event was not sponsored or run by credit unions, credit unions became the beneficiaries of the anti-bank sentiment when nearly 700,000 people switched accounts to credit unions in the weeks leading up to Nov. 5.  The Street.com article quoted the Credit Union National Association's statistics on the sudden growth about the impact.

The people behind the Dec. 11 event, Music for Change, worked on a financial literacy campaign with the Occupy movement last summer to educate people about how banks and credit card providers attract consumers with introductory 0% interest rates that end several months later and switch to much higher rates.

Balance Transfer Day, however, has a much larger hurdle than pulling deposits from an account: credit ratings. Zero-percent rates are used to attract consumers with high credit scores. Not every consumer has the credit rating to obtain a lower rate on their credit cards, said the Huffington Post. CardRatings.com noted that consumers with a FICO score lower than 700 are unlikely to qualify for the promotional deals.

In addition, another campaign called "Move Our Money" is made up of churches, community organizations and labor unions that say they want to remove $1 billion from big banks and put them into local credit unions and banks, said TheStreet.com.

Compliance must be constant Klewin writes in iCU Magi

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MADISON, Wis. (12/5/11)--Regulatory compliance requires constant vigilance, and Equal Credit Opportunity Act (ECOA) laws provide a perfect example, Bill Klewin, CUNA Mutual Group's director of regulatory compliance, advises in an online Credit Union Magazine article .

ECOA prohibits financial institutions from discriminating against loan applicants based on race, color, religion, national origin, gender, marital status, age, income derived from any public assistance program, or their exercise of any right under the Consumer Credit Protection Act.

Klewin provides the example of a lawsuit filed by the U. S. Justice Department against Nixon (Texas) State Bank, which gave its loan officers broad discretion in making loan decisions.

"The bank did not require a written application or credit report, use a uniform pricing system such as a matrix or rate sheet, or document the reasons for loan denials," Klewin wrote.  

The Justice Department civil suit alleged a pattern of discrimination against Hispanic loan applicants that required them to pay consistently higher rates than other borrowers.

Nixon State Bank eventually settled the suit with the Justice Department. Although the bank doesn't acknowledge any wrongdoing, it agreed to train its loan officers on fair lending practices, revise its loan-pricing policies, create a fund to compensate victims of discrimination and submit regular compliance reports to the department for the next four years.

"Credit unions aren't immune to these kinds of action," Klewin wrote. "It's imperative that credit union executives review their processes, compensation plans, pricing matrices, loan officer pricing-discretion guidelines, and any other process that may result in a review and a referral to the Department of Justice."

IWSJI Banks try to convince customers not to leave

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NEW YORK (12/5/11)--Some consumers who are tired of rising fees and stringent lending requirements at big banks are running into obstacles as they try to pull out their funds and put their money into credit unions and smaller community banks, The Wall Street Journal said Friday.

Customers are encountering roadblocks that include stall tactics--such as having to talk to a personal banker before closing accounts; unexpected closing fees; and awkward conversations with bank personnel trying to convince them to stay, the Journal said.

The Journal also related the story of how Diana Starr, a resident of Lomita, Calif., who was leaving Chase Bank and moving her money to California CU, was charged an $8 fee for withdrawing $5,000 from her account because she wanted her funds in the form of a cashier's check. That's one of the reasons she left the bank, Starr said.

Even though large banks have retracted their plans to charge customers a monthly fee for using debit cards--the lightning rod of recent anger toward big banks this year--many customers still are upset. Now banks have to determine how to retain customers, while they are raising fees to mitigate increased costs of new federal regulations, the Journal said.

The article mentioned Bank Transfer Day Nov. 5, and that the Credit Union National Association estimates about 700,000 consumers joined credit unions between Sept. 29 and the first week of November.

To read the article, use the link.

YoungFree other programs tap into whats big with youth

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MADISON, Wis. (12/5/11)--Credit unions are using creativity and the power of the electronic media to capture the imagination of Gen Y.

Reaching out to the Gen Y market, Missouri's Vantage CU treated two young members and their guests to a midnight showing of the movie, "Breaking Dawn," the fourth in the Twilight series. From left are Vantage CU member and ticket winner Ashley Hancock, Vantage CU's Young & Free St. Louis spokester Jenn Cloud, Ashley's guest, and Vantage CU member and ticket winner Chelsea Robinson. (Photo provided by Vantage CU)
After about six months of operation, Young & Free Maine has begun to achieve results in the marketing of the free4ME checking, according to the Maine Credit Union League (Weekly Update Nov. 25).

Young & Free is a spokester recruitment program, launched in 2007 by Currency Marketing, a credit union marketing company in Chilliwack, Canada. Young & Free provides the tools to engage the youth market, using a combination of social media and contests to find a young, media-savvy credit union spokesperson. To connect with younger consumers, credit unions that participate in the campaign are also urged to create price-sensitive products, such as free checking accounts with low or no fees. Several state leagues are promoting the program as well.

Seth Poplaski, Maine's spokester, has made 45 spokesperson appearances and attended 30 media events, using a Young & Free-branded Chevy Cruz to travel the state.

Maine credit unions have seen an 8.2% increase in membership of 18-25 year olds from September 2010 to September 2011, with the majority joining between April and September of this year, the first six months of Young & Free in the state.

With 22 credit unions reporting--56% of which offer free4Me checking--the Maine league has tracked 1,707 new checking accounts as of Sept. 30.

The Maine Young & Free Website has attracted 30,000 visitors.

In Missouri, Vantage CU cashed in on the popularity of the Twilight series by treating two young members and their guests to a midnight showing of the movie, "Breaking Dawn," the fourth in the series, Nov. 18. For a chance to win the premiere tickets, Vantage CU's Young & Free St. Louis spokester, Jenn Cloud, encouraged fans to go to the Young & Free St. Louis website and answer Twilight trivia questions.

Cloud met the two winners and their guests at a local theater to take their places in line for the midnight showing. She treated other waiting moviegoers to Young & Free bracelets, lip balm and cell-phone screen cleaners.

The Association of Vermont Credit Unions employed its Economy of Me program to help students better understand and manage their money. Project Manager Colin Ryan presented back to back assemblies for students of Winookski High School in November.

Local CBS affiliate WCAX was on hand to film Ryan's presentation in preparation for an upcoming appearance on the station's late afternoon news show, "The: 30."  Ryan used the opportunity to raise awareness about Economy Of Me and highlight what Vermont credit unions are doing to educate young people.

New value in an old product Christmas club accounts

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MADISON, Wis. (12/5/11)--Some credit unions are finding new value in an old product idea--Christmas club accounts.

Several Jacksonville, Fla., credit unions, including Jax FCU, 121 Financial CU and First Florida CU, have had Christmas club accounts for the past several decades (Jacksonville Business Journal November).

Christmas club accounts are one of the key services of the credit union industry going back 60 years, Brent Lister, First Florida president/CEO, told the Journal.

"It's one of the best moves consumers can make when they think about budgeting for the holidays," Mike Schenk, vice president of economics and statistics with the Credit Union National Association (CUNA), told CreditCards.com (Dec. 1). While CUNA doesn't have statistics on how many credit union members joined holiday clubs, more than 80% of credit union members nationwide have access to those accounts, he added.

However, to avoid overspending, consumers should think before they act and create a budget, sketching out how much they want to spend on each gift recipient before they open a Christmas Club account, Schenk added.

It also is important to be aware of the details on how Christmas club money can be disbursed, Schenk told the publication. As an example, Schenk said he failed to read the fine print on one of his Christmas club accounts, and didn't realize that the money earmarked for holiday gifts was deposited into his checking account in November. Therefore, he inadvertently used those funds to cover other expenses.

United Community CU in Galena Park, Texas, has offered a Christmas club account for years, said the Texas Credit Union League (LoneStar Leaguer Nov. 29).

The account features:

  • No minimum opening balance;
  • No minimum balance to maintain;
  • No monthly service charge; and
  • A favorable interest rate that allows members to earn the same rate of interest as the credit union's primary savings account.
In 2011, United Community opened nearly 100 Christmas club accounts with an average balance of $1,490 per account, said the Texas league.

Facial recognition tools fight fraud present privacy issues

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MECHANICSBURG, Pa. (12/5/11)--Facial recognition technology is gaining wider acceptance in the financial services industry. Members 1st CU, Mechanicsburg, Pa., is among the financial institutions using the technology to combat fraud.

Members 1st CU recently employed facial recognition to identify someone who entered a branch and used a fictitious driver's license, Chip McBreen, Members 1st's head of fraud and prevention security, told Reuters (Nov. 21).

Facial recognition technology has made strides across industries. It helps casinos identify cheaters and retailers to capture demographic information from shoppers. It's also used on Facebook to identify potential abuse.

In addition to asking members and customers for their facial images, financial institutions capture images from ATMs and teller windows to create searchable databases of recognition information. When a string of suspicious activities is reported, a financial institution can connect images to potentially fraudulent transactions.

However, there are privacy concerns about how facial recognition can be misused. Consumers who wish to minimize the data they offer publicly may be reluctant to provide facial images to their financial institutions that are connected to their name. Having a member/customer's picture is not essential to performing transactions at a financial institution, said Paul Stephens, director of policy and advocacy for the Policy Rights Clearinghouse.

To read the full article, use the link.

CU System briefs (12/02/2011)

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  • RALEIGH, N.C. (12/5/11)--The North Carolina Credit Union League announced Friday that Pam Melton has joined the league as director of political affairs (Weekly Update Dec. 2).  Melton joined the league from CenturyLink in Raleigh.  She brings more than 16 years of governmental affairs experience to her position, including experience in the key roles of political action committee (PAC) fundraising and grassroots advocacy, including management of a 32-state PAC. Part of her responsibilities will be to form strategy for engaging credit unions and their advocates in various aspects of the political process and in helping strengthen relationships with elected officials and candidates on the state and federal level …
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Robin Hood hackers video threatens funds withdrawals

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AUSTIN, Texas (12/2/11)--Credit unions should be alert to a YouTube video deemed a manifesto by two groups of hackers that claims to steal credit card numbers from major banks for donations to charities, protest groups and people "cheated" by the financial system.

The video--a manifesto of Anonymous and TeaMp0isoN (Team Poison), two groups of hackers that have claimed responsibility for high profile cyberattacks--opens with scenes from a 1991 Kevin Costner movie, "Robin Hood: Princes of Thieves," in which Robin Hood vows to take from the rich and give to the poor. It then switches to a digitized voice that reads the manifesto set to ominous operatic music.

The video claims the groups have already breached Chase, Bank of America and Citibank, taken card numbers and donated thousands of dollars to protests, the homeless and charities. It adds banks will be forced to reimburse consumers whose cards were used.

However, according to CreditCards.com (Nov. 30), the claims have not been substantiated by the banks and it is unclear whether the hackers succeeded or whether they are engaging in "bluster designed to frighten consumers away from big banks."

The video notes that people are taking their money out of big banks and urges viewers to "move their accounts to secure credit unions--before it's too late."

Editor's note: Credit unions receiving questions from consumers about the attacks should reassure them that credit unions believe it would be a bad idea to follow the hackers' instructions, that the attacks are unsubstantiated, and that they do not condone the actions urged by the groups. The Credit Union National Association and America's credit unions do not encourage or condone removing funds from financial institutions to bolster illegal activities by hackers.