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Filene Study Offers New Tool To Improve Deposits

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MADISON, Wis. (4/12/13)--A new report from the Filene Research Institute uses a new tool to investigate how credit union managers can account for their members' use of competing financial institutions in translating high member-satisfaction levels into improved share of wallet.

"The traditional approach for identifying opportunities can be thought of as trying to find the answer to, 'What can we do to make you happier?'" wrote the report's author Lerzan Aksoy, associate professor of marketing at Fordham University. "Managers also need to understand exactly why [members] use each of the brands that they do.

"[Members] have legitimate reasons for using multiple brands in a category. Therefore, efforts designed to improve share of wallet that do not address precisely why your [members] also use your competitors are doomed."

Satisfaction and net promoter scores (NPS) explain less than 10% of the variation in members' share of deposits, according to the report, "Linking Member Satisfaction to Share of Deposits: Applying the Wallet Allocation Rule in Credit Unions."

This in large part explains why, although credit unions hold the highest satisfaction levels for any industry tracked by the American Customer Satisfaction Index, the share of deposits held by credit unions lags that of their bank competitors, the report said.

The key distinction of this approach is that instead of relying on the absolute satisfaction score or NPS, the Wallet Allocation Rule focuses on two critical factors in linking these metrics to share of deposits:

  • The relative rank that this score represents compared with the other financial institutions that members also use; and
  • The number of different financial institutions that members use.
Using the rule, managers cannot evaluate their credit unions without taking the competition into account.

Getting credit union members to move their deposits from banks will require directly addressing the reasons they use other financial institutions, Aksoy said.

Of those members who use more than one financial institution, each has on average about $25,414 in deposits going to competing institutions, the report said.

Ohio League Applauds Removal Of Sales Tax Expansion From Bill

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COLUMBUS, Ohio (4/12/13)--The Ohio House Finance and Appropriations Committee this week released a substitute budget bill that removed the state sales tax overhaul proposed by Gov. John Kasich.

"We are glad they realized the burden that expanding the sales tax would not only put on credit unions, but on others in the state as well," said John Kozlowski, general counsel for the Ohio Credit Union League, told News Now Thursday.

Kasich's biennium budget would have expanded the products and services subject to sales tax and lowered the overall sales tax rate to 5% from 5.5% (Toledo Blade April 10.)

Sub Bill 59 would kill the plan to expand the sales tax base to professional services and would keep state sales tax rate at 5.5%. The tax proposal still includes an "immediate and permanent" 7% income tax reduction.

Under the tax expansion proposed by the governor, all credit unions that provide or charge fees for services would have been required to collect and remit sales taxes for some services they provide to members.  These include "bank service fees," debt counseling, investment services, and sale of amusement park tickets and entertainment books.  Credit unions would also have been considered "vendors" and would have been required to obtain a vendor's license, plus collect and remit sales taxes to the state for these services. 

"They are still not done in the tax area," John Kozlowski said of the state lawmakers. "We still have to be vigilant as we go forward."

The Ohio House is expected to vote on a final bill next week, Kozlowski said.  The Senate begins hearings next week, with a vote to follow, possibly in two weeks, he added.

Credit Union Reality Check Explores Competitive Collaboration

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ATLANTIC CITY. N.J. (4/12/13)--"Competitive collaboration" is the next generation growth strategy for credit unions, Lisa Renner, co-founder and managing principal of the Renner Group, told participants at the Credit Union Reality Check conference Tuesday in Atlantic City.

Credit unions must identify their challenges and seek out other like-minded organizations, speaker Lisa Renner, co-founder and managing principal of the Renner Group, told participants at the New Jersey Credit Union League's Credit Union Reality Check conference Tuesday in Atlantic City. (Photo provided by News Jersey Credit Union League)
The conference, held Monday through Wednesday in Atlantic City, is designed take attendees out of their comfort zones--in pursuit of inspiration and insight (The Daily Exchange April 9).

Paul Gentile, Credit Union National Association executive vice president of strategic communications and engagement, served as master of ceremonies for the conference. "The great thing about Reality Check is that it is built on interaction among attendees and they are interacting about bold and critical issues facing credit unions," said Gentile.

Credit unions must identify their challenges and find others who share those issues, Renner said. Each organization must understand what assets it brings to the table, ask the right questions, and don't let the "buts" get in the way.

Building trust between partners takes time--it doesn't happen overnight, Renner said. It starts by finding like-minded partners.

The conference's first speaker, Max Wolff, chief economist and senior analyst of GreenCrest Capital, opened the conference with a presentation on the proliferation of mobile technology in the financial industry. The future market leaders will be nimble, mobile, partners in the cloud that use big data and innovate to succeed, Wolff said.

In another session, Tom Farin, president, Farin and Associates, gave a step-by-step process to apply pricing techniques. He suggested showed examples of pricing models as a way of evaluating the profitability of cash flows and adjusting risks and costs.

Al Brantley, a consumer compliance policy and outreach officer in the Office of Consumer Protection at the National Credit Union Association, provided a compliance overview. He discussed new rules, developments within the Consumer Financial Protection Bureau and reducing the regulatory burden on credit unions.

In his session, attorney Jonathan Bowman challenged participants to use the information shared during the conference to develop solutions to the challenges their organization are facing. Splitting the crowd up in groups, Bowman asked each group to come up with tangible takeaways from the conference. Among the suggestions groups came up with were growth strategies and ideas to increase productivity.

This is the fourth year of Credit Union Reality Check. Use the link to learn more.

Texas CU Foundation Initiative Helps Families Save

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FARMERS BRANCH, Texas (4/12/13)--The Texas Credit Union Foundation--with the participation of two Texas credit unions--is helping the state's families build a more solid financial foundation through the Opportunity Savings Project.

Opportunity Texas is a joint initiative of the Center for Public Policy Priorities and RAISE Texas. Through the initiative, two tax-time savings programs are available, including the Opportunity Savings Project--operated in partnership with TCUF (LoneStar Leaguer April 11).

"The goal of this initiative is simply to encourage better savings habits," said Staci Zale, TCUF associate director. "By getting into the habit of saving a little bit each month, consumers will be in a better financial position to manage unexpected expenses."

Raise Texas and Opportunity Texas gave a $10,000 grant to the Opportunity Savings Project and TCUF matched that grant, bringing the total to $20,000, Zale said. TCUF is working with Border FCU in Del Rio and Coastal Community CU in Galveston on the project. Both credit unions participate in the Internal Revenue Service's (IRS) Volunteer Income Tax Assistance (VITA) program.

TCUF is offering a matched savings account to filers at VITA sites operated by Border FCU and Coastal Community CU. Filers at the credit unions' VITA sites are encouraged to open and deposit a portion of their refund into their credit union savings account and build savings in the account over a one-year period. Just for signing up, filers receive between a $25-50 gift card.

Next January, if the participant has a higher balance in their account than their initial deposit, participants will receive a 1:1 match on their net savings, up to $100, TCUF said.

The VITA program offers free tax help to low- to moderate-income individuals who cannot prepare their own tax returns. There are 514 VITA sites in Texas, according to the IRS. The agency is continuing to expand its partnerships with nonprofit and community organizations performing tax preparation services for low-income and elderly taxpayers.

The project is similar to an individual development account, in which an individual of modest means would set a savings goal that would be matched if they met their goal. The project is reportedly one of the largest active savings projects in Texas this tax season, TCUF said.

Southeastern CU League Shares Expertise With Costa Rican Fellows

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BIRMINGHAM, Ala., and TALAHASSEE, Fla. (4/12/13)--The League of Southeastern Credit Unions and Affiliates will be hosting emerging leaders from Costa Rica during the next month.

The participants are part of the U.S. Department of State's Professional Fellows Program, which brings worldwide emerging leaders to the U.S. for intensive fellowships to broaden their professional expertise.

"We've hosted Costa Rican credit unions in the past and we've also had our credit unions go to Costa Rica," said LSCU President/CEO Patrick La Pine. "However, this program will begin to give these Costa Rican credit union leaders real experiences in U.S. credit unions. The experiences will be invaluable as future credit union leaders."

Southeastern credit unions will host eight credit union leaders from Costa Rica. The program participants have been placed in credit unions in Huntsville and Tuscaloosa in Alabama, and Orlando, Tampa, Panama City and Miami in Florida. One Fellow will spend time with LSCU before heading to South Florida to complete her time in the program. LSCU has had an international partnership with Costa Rica, through the World Council of Credit Unions, since 2005.

The program supports international cooperation and builds networks of people and organizations working on critical issues worldwide. The LSCU program facilitates idea exchanges, promotes foreign-language skill development, enhances cultural diversity and improves problem-solving skills as they relate to credit union development and management. Also, the program focuses on helping credit unions find new ways to attract younger members.

At the conclusion of their fellowships, participants will gather in Washington, D.C., to take part in the Professional Fellows Congress, May 8-10. The Congress provides a forum for participants to discuss best practices with other young leaders in their profession, and to develop concrete projects and networks that they can implement upon their return home.

LSCU is one of 17 U.S.-based non-profit organizations and universities chosen to host foreign professionals. From 2011 through 2013, participants from more than 50 countries and territories worldwide will take part in the program.

CUANY Lending School Hosts Virgin Island Professionals

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ALBANY, N.Y. (4/12/13)--The Credit Union Association of New York's 2013 Lending School demonstrated the cooperative nature of the credit union movement, with three attendees travelling from the U.S. Virgin Islands to Albany, N.Y. to participate in the event.

From left, Kerri Bess of Mid-Island FCU, Richard Schrader of Frederiksted FCU and Barbara McIntosh, also from Mid-Island FCU, travelled from the U.S. Virgin Islands to Albany, N.Y., to participate in the Credit Union Association of New York's 2013 Lending School. (Photo provided by Credit Union Association of New York)
Virgin Island credit union professionals Kerri Bess and Barbara McIntosh of Mid-Island FCU, St. Croix, V.I,  and Richard Schrader of Frederiksted (V.I) FCU, joined credit union representatives from throughout New York to gain a better understanding of the lending market.

"This session reassured me that we're going in the right direction, but there are also better ways we can approach things," said Bess. "In the Virgin Islands, we don't have that formal training. When we go back, we'll be right on top of those loans and go above and beyond to make sure our members get the loans they deserve."

Mid-Island FCU and Frederiksted FCU, along with other credit unions in the U.S. Virgin Islands and Puerto Rico--are partners with CUANY in the World Council of Credit Unions' International Partnerships Program.

Led by instructor Brett Christensen and presenters Jim Holt of CU Student Choice and Bob Nealon of CU Direct, the workshop focused on numerous aspects of credit union lending, including opportunities in private student lending, insights on auto lending trends and best practices, loan interview and sales skills, and the macro-economic lending environment.

Ark CU League Members Vote 'Yes' to Cornerstone

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LITTLE ROCK, Ark.(4/12/13)--Arkansas Credit Union League member credit unions unanimously voted Thursday in favor of a single cooperative organization--the Cornerstone Credit Union League. The league will represent the interests of member credit unions in Arkansas, Oklahoma and Texas, according to the Texas Credit Union League.

Arkansas credit union delegates cast their votes during their Annual Meeting and Convention in Hot Springs, Ark.

"A unanimous vote sends a strong message--our credit unions are progressive and forward-thinking," said Reta Kahley, ACUL president/CEO. "Our credit unions appreciate the tremendous amount of effort and research that has gone into this, and they trust that collaboratively we will build an even stronger organization that they will find tremendous value in."

If member delegates from all three states approve, the Cornerstone Credit Union League will become official July 1.

Texas credit unions approved the consolidation April 3. If Oklahoma credit unions vote yes in May, an initial board of directors will assume positions on the consolidated league with three directors from Arkansas, three directors from Oklahoma, and 12 directors from Texas.

"This is an exciting time for credit unions in Arkansas, Oklahoma and Texas," said ACUL Board Chair Dwayne Ashcraft. "We are embarking on a future that will offer tremendous opportunities for our movement, and, perhaps most importantly, for the millions of consumers who trust our credit unions for their financial service needs."  

For a directory of the initial board of directors, use the link.

Virginia CUs Launch Statewide Awareness Campaign

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LYNCHBURG, Va. (4/12/13)--Virginia credit unions have launched a statewide awareness campaign to educate consumers about the many benefits of banking at not-for-profit credit unions. The campaign is being coordinated by the Virginia Credit Union League.

Click to view larger imageA statewide awareness campaign coordinated by the Virginia Credit Union League seeks to educate consumers about the benefits of banking at credit unions. Research shows consumers feel they are taking a "hit" from the economy and are suffering the impact of higher prices and rising fees. The creative team took the idea of feeling hit to a literal level and designed a video to reflect this feeling, featuring a George Washington character who represents money, physically taunting the main character. (Photo provided by the Virginia Credit Union League)
"This is a bold, innovative strategy for credit unions in Virginia," said Rick Pillow, president of the Virginia league. "We tend to be more conservative in our advertising approach, but this campaign has more edge and seeks to leverage the might of social media. I am proud of our credit unions for respecting the consumer research and for their commitment to this non-traditional campaign." 

This social media campaign targets consumers ages 18 to 35, providing information about the direct benefits of credit unions and encouraging consumers to join one to fulfill their financial needs.

Consumer research was conducted to determine the strategy and message of the campaign.  Research shows consumers feel they are taking a "hit" from the economy and are suffering the impact of higher prices and rising fees. The creative team took the idea of feeling hit to a literal level and designed a video to reflect that feeling. The video features a George Washington character, who represents money, physically taunting the main character.

The humorous video showcases the direct benefits of credit unions, including that credit unions offer better rates and have fewer and less-costly fees. 

Funding for the awareness campaign came from financial contributions of 50 Virginia-based credit unions, the league and several sponsors. The campaign will not rely on costly, traditional advertising such as television and radio, instead seeking to leverage the power of social media. The benefits of a social media campaign include the ability to reach a large number of people on a smaller budget and unmatched measurement and tracking capabilities, said the Virginia league. 

The video directs consumers to a newly launched website where they can learn about the benefits of credit unions, as well as search for a credit union they may be able to join. Use the link to the website and video.

All Virginia credit unions will benefit from the collaborative campaign, and credit unions providing financial support receive special recognition on the website through banner advertisements and the credit union search feature, said the Virginia league.