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Va. league, World Council delegates visit Estonia CUs

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LYNCHBURG, Va. (7/15/14)--A delegation of credit union representatives from Virginia spent a week in Estonia recently as part of the Virginia Credit Union League's partnership with the Estonian Union of Credit Cooperatives.
 
Rick Pillow, league president/CEO, led the delegation, which celebrated the launch of a software platform for clearing transactions and providing access for Estonia's small, but growing system of credit cooperatives to the central banking system in Eastern Europe. This has been the signature project of the partnership between credit unions in Virginia, credit cooperatives in Estonia and the World Council of Credit Unions.
 
During a visit to Estonia, representatives from the Virginia Credit Union League attended an Estonian Union of Credit Cooperatives board meeting. (Virginia Credit Union League Photo)
 
The project was spearheaded by Baltic Shared Services, a company formed in 2010 to establish the clearing system. With such access, Estonia's credit cooperatives are better positioned to offer ATM and card services, and eventually expand into online banking. The Virginia league's service corporation is a majority stockholder in Baltic Shared Services.
 
"As cooperatives, we see it as our duty to ensure the credit union movement grows and prospers, and Virginia's credit union system is proud to partner with the World Council of Credit Unions in helping reestablish cooperative financial institutions in Estonia," said Pillow.
 
The delegation, which included representatives from $1.3 billion-asset BayPort CU, Newport News; $2.6 billion-asset Northwest FCU, Herndon; and $676 million-asset University of Virginia Community CU, Charlottesville, also participated in a regional credit union meeting in Tallinn, Estonia, that drew representatives from Lithuania, Latvia, Poland, Moldova and Macedonia. Key topics during the two-day conference included the regulatory environment for Eastern European credit unions, shared branching and payment systems.
 
"The Estonian movement is at something of a crossroads," said Victor Corro, vice president of the World Council's Worldwide Foundation for Credit Unions. "The platform is in place to link Estonia's credit cooperatives to the central banking system, and now it's a matter of marketing that platform to the credit cooperatives. This represents their best chance at moving beyond the 'pencil and paper' way of running a credit cooperative and toward the services most likely to attract Estonia's tech-savvy population, including online banking and card services."

Corro said this also could lead to increased consumer deposits at Estonia's credit cooperatives, in turn, spurring lending and economic growth.
 
While in Estonia, the delegation also visited the Jarva-Jaani Credit Cooperative, which was celebrating its 15th anniversary, and which has the distinction of having tested Baltic Shared Service's transaction clearing platform and being the first to adopt the system.
 
A nation of 1.3 million people, Estonia had a thriving system of credit cooperatives prior to the Soviet occupation of 1940. At its height in 1939, the Estonian movement boasted 184 financial cooperatives and had a 52% market share. Credit cooperatives were again legalized once Estonia regained independence in 1991 after the collapse of the USSR. The first new Estonian credit cooperative was formed that same year.

Leading, lagging indicators can help optimize metrics, says CUNA Council white paper

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MADISON, Wis. (7/15/14)--A new white paper from the CUNA Operations, Sales and Service Council explores the need for credit unions to establish metrics to meet growth and service goals.
 
Credit unions must decide which types of performance evaluation tools are most useful to their operations: financial benchmarks, efficiency ratings, branch performance assessments, member satisfaction rankings, call center metrics, transaction rates in key services such as payments, and trends and new approaches in frontline service.
 
Three case studies are offered to provide real-life examples of how credit unions measure and continually improve their operations, sales and service delivery.
 
One case study explores how $12 billion-asset BECU, Tukwila, Wash., seeks actionable data to improve member services.
 
The Net Promoter Score is a key member satisfaction metric at BECU to the point that the metric "is baked into our strategic objectives as part of our long-term plans," said Shane Morris, senior member loyalty manager.
 
Most recently, BECU has used the results of these surveys to make specific improvements in new member enrollment. The credit union's service model is unusual in that most of its facilities do not offer teller services--members who need to make a deposit or withdrawal are directed to ATMs, its two financial centers with teller counters or shared branches operated by other credit unions.
 
BECU's frontline employees now offer an explanation of how members can find the services they need in BECU's network of branches, ATMs, online and mobile services, shared branches, and kiosks at 7-Eleven stores. Staff can even "show and tell" the service options with a "placemat" available on every desk. For members who enroll online, BECU rescheduled its outbound call to welcome then on Day 2 instead of on Day 7.
 
To download the white paper, use the link.

NFCC survey: Servicemembers could be at risk of fin. abuse

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WASHINGTON (7/15/14)--It might pain citizens to learn that those who put their lives on the line for this country, specifically people serving in the U.S. military, often grapple with various types of financial strife.

A recent survey by the National Foundation for Credit Counseling (NFCC) found that 77% of servicemembers worry about their finances; 55% do not feel at all, or only somewhat, prepared to handle a financial emergency; and 60% had sought out nontraditional lenders to meet financial obligations on at least one occasion.  

"No one should be victimized by financial abuse, particularly (those in) the military," said Gail Cunningham, spokeswoman for the NFCC, which announced it is celebrating Military Consumer Protection Day Wednesday.

"One way to avoid financial abuse is through financial education, as an educated consumer is always a better consumer--one more-equipped to identify fraud or deception and make wise financial decisions," Cunningham added.

To bolster financial literacy within the military community, the NFCC offers the "Sharpen Your Financial Focus" program, which includes "Hands on Banking for Military" materials developed for active and veteran military members that address the unique financial challenges they often face.

"Stressful situations can result in poor choices, with decisions often made out of desperation," Cunningham said. "To avoid this, servicemembers should take advantage of the opportunity to improve their financial skills, thus putting themselves in a better position to face any unplanned financial circumstance that comes their way."

Motley Fool explores value of CU credit builder loans

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ALEXANDRIA, Va. (7/15/14)--For as little as $50, consumers and credit union members can now purchase a better credit score, thanks to credit-building loan products that are becoming increasingly more popular at smaller financial institutions.

The personal investment website The Motley Fool posted an exploration of the loan product Sunday.

As explained by the site, credit-builder loans carry low-interest rates and are structured to help borrowers cultivate stronger credit history.

Consumers take out small dollar loans, between $500 and $2,500 for example, and the funds are then placed in a savings account or certificate of deposit.

The consumer then pays off the loan over the next six to 18 months in full, at which point the entire amount is given to the borrower, all for the cost of a few dollars in interest.

For the consumer, the process results in a head start on a savings goal, in addition to an improved credit score. But the financial institution benefits as well.

"Credit-builder loans are a (small) goldmine for banks," The Motley Fool article's author Jordan Wathen said. "The loans carry absolutely no risk for (credit unions), since the loan proceeds are not disbursed to the customer until the loan is paid off."

When deciding whether to utilize the credit-building loan product, Wathen has several suggestions:
  • Take out a credit-building loan in the smallest amount possible, and borrow from a local credit union, which offer the lowest-cost loans. This option can help repair credit at the lowest cost; and
     
  • Consider alternatives such as a no-fee credit card that can also help build credit.

CU System briefs (07/15/2014)

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  • SAN ANTONIO (7/15/14)-- Steve Hennigan, president/CEO of the San Antonio FCU, with $2.8 billion in assets, has been selected to join the Federal Reserve Bank of Dallas' Community Depository Institutions Advisory Council ( San Antonio Business Journal July 11). The council was formed as part of an initiative by the Dallas Fed to enhance communication and feedback with community bankers. The council provides senior Dallas Fed officials with grassroots information on a variety of topics, including economic and banking conditions, regulatory policies and payments issues. The council is composed of 12 representatives from financial institutions of various sizes in Texas, northern Louisiana and southern New Mexico ...
     
  • FARMERS BRANCH, Texas (7/15/14)-- People's Trust FCU in Houston, with $478 million in assets, has become the 28th credit union to earn the Cornerstone Credit Union League's Juntos Avanzamos designation ( Leaguer July 14). Juntos Avanzamos means "Together We Advance," and this designation is awarded by Cornerstone to credit unions in the region that have successfully completed a rigorous application process that confirms they have the capacity, commitment, and compassion to serve the financial needs of Hispanic families. People's Trust CU has five branches, serving those who live, work, worship or attend school in Houston. Of its 89 employees, 38 are Hispanic and 26 are bilingual. Over the past year, People's Trust FCU CEO Angela McCathran said the credit union has worked extremely hard to earn the Juntos Avanzamos designation. "Being able to fly the Juntos Avanzamos flag will show not only our members, but the general population, just how committed we are to serving the Hispanic community," she said ...
     
  • HARRISBURG, Pa. (7/15/14)-- The Pennsylvania Credit Union Association's membership ratified a bylaw amendment that extends eligibility for Association director terms to four terms of three years each from three terms. Current directors, who have reached 12 years of service by June 1, will not be eligible for this additional term ( Life is a Highway June 14) ...

Pew Trusts urges CFPB to ensure safety of prepaid cards

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PHILADELPHIA (7/15/14)--Based on reports it released earlier this year, the Pew Charitable Trusts has urged the Consumer Financial Protection Bureau the (CFPB) to ensure prepaid cards include certain prescribed features to serve as viable alternatives to checking accounts.
 
The features include:
  • No overdraft or linked lines of credit. Pew's survey research shows that consumers are using general purpose reloadable (GPR) prepaid cards to control their spending, ensure that they will not overdraw their accounts and avoid high fees. More than two-thirds (68%) of regular GPR prepaid card users would rather have transactions declined at the point of sale than have the transactions go through and pay overdraft fees.
  • Access to transaction history and limitations on liability. Prepaid cardholders should be protected against liability for unauthorized transactions that occur when a card is lost or stolen or a charge is incorrectly applied, just as users of debit cards linked to a checking account (a requirement known as Regulation E) are, Pew said. Yet, only 38% of cards provide all of these protections for unauthorized transactions.
  • Uniform, concise, and easy-to-read information about terms, conditions and fees. Consumers seeking to purchase prepaid cards should have access to all the important information necessary to make an educated choice before purchasing a card, whether in a store or online, Pew advised the CFPB. A concise and uniform disclosure document that summarizes fees and other important terms would allow consumers to comparison shop and make an informed purchase rather than the "trial and error" process of finding out about a fee or term after using a card.
  • Federal insurance against all losses up to $250,000. Prepaid cards function exactly like checking accounts in most respects and are used similarly by many consumers, Pew said. Federal deposit insurance rules allow card issuers to use pass-through insurance that fully protects consumers by ensuring that deposits to their cards can be reimbursed if the company becomes insolvent. Most card companies have taken full advantage of this and disclose that they have deposited consumer funds in Federal Deposit Insurance Corp.-insured accounts.
  • No predispute binding arbitration clauses. This type of clause prevents cardholders from challenging unfair and deceptive practices or other legal violations in court, impairing individual rights and potentially allowing abuses to spread without legal or public scrutiny.  Such requirements are increasingly common in financial agreements. Of the 66 cards studied, 51 (77%) have contractual clauses that require cardholders to submit to mandatory binding arbitration. Fifty of the 66 cards (76%) also disclose that cardholders are not permitted to participate in class action litigation involving that card.