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Study: Big Banks Could Lose $92B In Deposits In 2014

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WILTON, Conn. (7/22/13)--Twenty-six percent of customers at the nation's top 10 national retail banks expressed frustrations about their primary bank in a new study that projects the banks will lose $92 billion in deposits next year while consumers transfer their accounts to credit unions and community banks.
 
Nearly two-thirds (63%) of consumers surveyed said they believe banks merely claim to have consumer interests at heart when in fact they only care about the bank's interest.
 
The study means that credit unions still have plenty of opportunity to pick up more membership--as they did when customers' dissatisfaction with bank fees in 2011 led to Bank Transfer Day, with consumers transferring their accounts to credit unions and community banks, said the Credit Union National Association.
 
Credit unions picked up more than 2.2 million members in 2011 and 2012. CUNA's and the state leagues' Unite for Good campaign is working toward the vision in which "Americans choose credit unions as their best financial partner."
 
The study, by Wilton, Conn.-based cg42, cited broken promises, being nickeled and dimed, and getting hit with unexpected overdraft charges and fees as reasons consumers may move their accounts.

Cg42 said the frustrations expressed by 26% of customers surveyed mean that a projected $627 billion in customer deposits is in jeopardy (or "in play") at the top 10 banks, with $92 billion expected to walk out of the branches.

Bank of America, the most vulnerable brand in 2011 thanks to the unpopular debit card fee that prompted the Bank Transfer Day movement, now ranks as the third most vulnerable bank. Citibank took over the most-vulnerable spot and stands to lose the highest percentage of deposits and customers. In the current study, TD Bank has the lowest brand vulnerability score, replacing PNC, the least vulnerable bank in 2011.

"Customers still feel that their financial institutions aren't serving their best interests and they're frustrated," said Stephen Beck, founder and managing partner of cg42. "Comparing the brand vulnerability of big banks from 2011 to today shows that while the industry suffers from many of the same frustrations, institutions that addressed their customers' concerns significantly improved their competitive position in 2013."
 
Other key findings from the study show that:

  • 15% of vulnerable customers are actively looking to switch their primary bank  while 11% are very frustrated, but not actively looking to switch;
  • 11.4% of Citibank's customers are expected to defect and move $18 billion in deposits to another institution in the next year, which will need to be offset by new customer acquisition efforts;
  • 63% of customers believe that banks merely claim to have consumer interests at heart but in fact only care about their own interests, an improvement from 2011, when 71% believed this to be the case; and
  • 55% of customers in 2013 are uncomfortable with how large the major banks have become compared with 50% in 2011.

CU System Briefs

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  • ST. LOUIS (7/22/13)--Five Missouri Credit Union Association vice presidents have been promoted to senior vice presidents, announced Don Cohenour, MCUA president/CEO. The promotions became effective June 16. They include: Liz Adams to senior vice president of member relations; Amy McLard to senior vice president of advocacy; Bob Schuckmann to senior vice president of finance & technology; Barb Stanek to senior vice president of operations; and John Thomas to senior vice president of regulatory compliance. Also, Pat Behnen, vice president of administration, and Monica Burnett, vice president of human resources, will continue to report to Cohenour ...
  • BIRMINGHAM, Ala. and TALLAHASSEE, Fla. (7/22/13)--The League of Southeastern Credit Unions and Affiliates (LSCU) promoted Jared Ross to senior vice president of association services and Teresa Gray to senior director of education. The changes were made following the departure of LSCU Association Services Chief of Staff Cassandra Grayson, who is leaving to pursue a doctorate in education. Ross previously served as vice president of governmental affairs, overseeing the entire department and coordinating legislative advocacy for credit unions in Montgomery, Tallahassee and Washington, D.C. Gray is the liaison to the Southeastern Credit Union Managers Association of Alabama, where she is in charge of planning the annual meeting and educational sessions. Gray, who will report to Ross, will direct the education department, which includes two event planners and a support specialist ...
  • PLEASANTON, Calif. (7/22/13)--Erin Mendez has been named CEO of Patelco CU, announced the Pleasanton, Calif.-based credit union's board Thursday.  Mendez has 35 years of experience in the financial services sector and other industries. She will assume leadership of the $4 billion Patelco in mid-August. Mendez will move from her position as executive vice president and chief operating officer at the $9.7 billion asset Schools First FCU, based in Santa Ana, Calif., where she worked for 10 years. Previously she served as senior vice president of retail banking at American Savings Bank, senior vice president of operations and chief information officer for Western Financial Bank, and chief technology officer for Health Net Inc. ...
  • HARRISBURG, Pa. (7/22/13)--Belco Community CU President/CEO Lonny J. Maurer celebrated 40 years of service with the Harrisburg, Pa.-based credit union on July 2.  He began his career at Belco on July 2, 1973, as the assistant manager at the credit union's former downtown Harrisburg branch and became general manager on Jan. 15, 1974.  Maurer has been involved in many credit union-related activities with the Pennsylvania Credit Union Association and the Credit Union National Association and other local affiliated organizations.  Belco Community, which has more than $388 million in assets and more than 51,500 members,  will celebrate its 75th anniversary in 2014 ...

CUNA Council Paper Discusses Lending Technologies

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MADISON, Wis. (7/22/13)--Lending and information technology staff must work together with colleagues from other departments to identify solutions that cost-effectively deliver on members' expectations for easy, convenient access to credit, according to a joint white paper by the CUNA Lending Council and Technology Councils.
 
"Partners in Progress:  How Lending and IT Work Together to Improve Efficiency and the Member Experience" presents examples of recent steps forward in lending operations powered by technology, including mobile lending, more secure credit cards, and paperless mortgage and consumer lending.
 
Among the case studies explored in the paper is Royal CU's efforts to optimize its new mortgage lending software. Royal CU, based in Eau Claire, Wis., identified two strategies for its initiative: To revise its internal processes to capitalize on new system capabilities and to "find a partner invested in [our] success," said Erik LeMay, enterprise solutions manager for the $1.3 billion asset credit union serving 147,000 members. "Software is software, but a partner is success."
 
The credit union's aim to refine its mortgage processes to get the most from Mortgage Cadence's Symphony software is consistent with its adoption of the Six Sigma process improvement and quality-management methodology. Six Sigma is characterized by a commitment to produce measurable financial returns, an emphasis on strong management support, project leadership by internal experts, and data-based decision making.
 
Adopting this methodology has helped Royal CU focus on efficiency, on doing it right the first time, and on minimizing variance in its processes, LeMay said. In the case of its new mortgage lending software, the approach helped the credit union steer clear of customizing that might have sacrificed efficiencies built into the system.
 
A primary goal in the search for new mortgage software was to reduce turn-around time to 30 days or less from application to closing. Other key aims were improving the application process for members and employees entering data, accommodating interruptions in loan processing without derailing the loan, replacing paper loan files with e-documents, and providing an online portal so members could follow the progress of their loan.
 
The credit union piloted the Symphony system in May 2013 and went live the following month.

The mortgage software is a first step toward another goal Royal CU has set--to create a unified experience that "allows members to end up with the same result, regardless of how they started the process," LeMay said.

45 CU Leaders Graduate From SCMS

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FARMERS BRANCH, Texas (7/22/13)--Forty-five credit union leaders graduated from the Southwest CUNA Management School (SCMS) Wednesday, the Cornerstone Credit Union League said.
 
The three-year program, held on the campus of Texas Christian University (TCU) in Fort Worth, Texas, develops and enhances the management skills of credit union professionals (The Leaguer July 19).
 
"You are the future leaders of the credit union movement," Shannon Shipp, a professor in TCU's M.J. Neeley School of Business and the academic liaison between the university and SCMS, told the 41st graduating class. "TCU is proud to have hosted you during your three years in the program."
 
SCMS provides participants with a perspective of credit union management and operations, practical experience through the development of a strategic-plan, and opportunities to enhance professional presence through communications, presentations and networking.
 
Eight graduates were award recipients. They included:
  • Kelly Barrow, TTCU The Credit Union,  Tulsa, Okla., honors;
  • Thomas Green, Amoco FCU, Texas City, Texas, honors;
  • Lorraine Henderson, Beacon FCU, La Porte, Texas, honors;
  • Gregory D. Inman, Neighbors FCU, Baton Rouge, La., honors ;
  • Millicent Mayaka, InTouch CU, Plano, Texas, award of excellence;
  • Suzanne M. Peterson, Resource One CU, Dallas, honors;
  • Brad A. Scheit, Oklahoma Central CU, Tulsa, Okla., honors; and
  • Michael Walls, CUNA Mutual Group, honors.
For a full list of graduates, use the link.

Filene Report: Mine Big Data To Predict Member Behavior

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MADISON, Wis.  (7/22/13)--Credit union members follow simple paths during their life cycle and adopt different consumer products at each stage, according to a new Filene Research Institute report.
 
The report, "Big Data and Credit Unions: Machines Learning in Member Transactions," by Phillip Kallerhoff, shows that some simple patterns evolve using big data and machine learning--a branch of artificial intelligence that focuses on the construction and study of systems that can learn from data.
 
Five credit unions in the U.S. and Canada offered their members' anonymous profile information and transaction details to the researcher, who used variables as diverse as gender, product balances, credit score, income and transaction amounts--big data--to search for revealing correlations to predict member behavior.
 
Companies such as Amazon, Google, Walmart and Wells Fargo are turning to big data for insights that will help them serve customers and capture market share. Big data is the analysis of huge data sets. While individual credit unions may not have the resources of a corporate giant, advances in data storage and software tools mean that credit unions can start using similar tools and deriving similar value, the report said.

The five credit unions in the study each looked for different information, and the plasticity of big data means that, with the right tools and the right inputs, they could discover different insights. Because a machine learning project is only as helpful as the data that flow into it, the credit unions got more specific insights. But their combined data still offer generalizable findings for all credit unions.

Some key findings of the report were:
  • Credit unions can mine members' transactional data to predict member behavior and product life cycles, improve profitability and reduce risk.
  • The relationship between health and finances can be used as an example of looking at external factors to predict member behavior.
  • Applying machine learning to transaction data helps credit unions identify and leverage the paths that members follow.
  • Big data add another dimension to credit scores, allowing lenders to improve underwriting and use transaction information to take different risks on members than a standard credit score allows.
To access the report use the link.

W.Va., N.Y., And More Talk 'Don't Tax My CU'

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MADISON, Wis. (7/22/13)--Leagues and credit unions have stepped up their visits and letters to lawmakers in their effort with the Credit Union National Association to persuade Congress to "Don't Tax My Credit Union."
 
With less than a week's notice and temperatures soaring in the high 90s, West Virginia Credit Union League representatives took the "Don't Tax My Credit Union" message directly to lawmakers and their key staff Thursday.
 
Click to view larger image During the West Virginia Credit Union League's and state credit unions' visit to Capitol Hill Thursday to advocate preserving credit unions' tax- exempt status, the group stopped by Sen. Joe Manchin's (D-W.Va.) office. From left are Kirten Mehta, Manchin's general counsel; Bob Burrow, CEO of Bayer Heritage FCU, Proctor, W.Va.; and Mike Tucker, CEO of West Virginia Central CU. (Photo provided by the West Virginia Credit Union League)
League President Ken Watts; Proctor, W.Va.-based Bayer Heritage FCU CEO Bob Burrow; and West Virginia Central CU CEO Mike Tucker converged on Capitol Hill to talk about preserving the credit union tax exemption, which was established by Congress in 1917 and reaffirmed several times, said the league.
 
"Our meetings on the Hill today were very positive," said Watts, adding that Sen. John "Jay" Rockefeller (D-W.Va.), who sits on the Senate Finance Committee, "reaffirmed his strong support for the tax exemption through his legislative director."
 
Watts noted that the legislative process "is all really fluid at this point, and we want to leave no doubt with West Virginia lawmakers where we stand on this issue."
 
Credit Union Association of New York President/CEO William J. Mellin wrote a letter to Sens. Charles Schumer and Kirsten Gillibrand, both Democrats, to urge the two credit union supporters "to make the preservation of the credit union tax-exempt status a top priority in any legislation to revise the tax code."
 
Pointing out that credit unions already pay property and payroll taxes, Mellin said that ending tax exemption from corporate income taxes  "would be tantamount to killing the industry. At a time when people are still concerned that too-big-to-fail banks are not being held accountable for their mismanagement, credit unions offer New Yorkers a means of supporting community-based, member-run institutions where their influence isn't dependent on how many shares they can buy."
 
He wrote that the financial and social benefits that credit unions provide are far greater than the amount of money that would allegedly be generated by taxing credit unions.
 
In Pennsylvania, U.S. Rep. Mike Kelly (R-Pa.), a member of the House Ways and Means Committee, which has direct oversight of tax code reform, hosted a conference call with Mary Beth Wilcher, CEO of Erie (Pa.) FCU and Dave Ackerman, president/CEO of USX FCU, Cranberry Township, to discuss credit unions' tax status and regulatory concerns.
 
The taxation discussion focused on the structural differences between credit unions and banks, the benefits of credit union membership, and the direct and indirect effects of taxing credit unions, said the Pennsylvania Credit Union Association (Life is a Highway July 15). Kelly is a support of regulatory relief legislation and has publicly voiced concerns about burdensome regulatory environment that smaller financial institutions like credit unions face.

CUNA and the leagues have made more than 406,000 contacts with lawmakers on the issue, as of July 18. To help get the "Don't Tax My Credit Union" message across, credit unions and members are using CUNA's and the leagues' resources and social media sites including the Don't Tax My CU website, Facebook and the micro-video site Vine, and share the Don't Tax message through Twitter, @CUNAadvocacy and the hashtag, #DontTaxMy CU.  See News Now's related story, CUNA: Don't Miss Out on 'DontTaxMyCU Tuesday.'

Special Report: TopLine FCU Members 'Change' Savings Habit With SaveUp Program

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MAPLE GROVE, Minn. (7/22/13)--TopLine FCU, Maple Grove, Minn., put a new spin on the old idea of saving spare change to help members establish emergency savings accounts.
 
Instead of encouraging members to toss their spare change into an old Mason jar to build up savings, Topline FCU automatically transfers change into a savings account for members with its Sum-It-Up Savings Program.
 
Each time TopLine members who enroll in the transfer program make a purchase or ATM transaction with their TopLine Check Card, the total is automatically rounded up to the nearest whole dollar--and the difference is transferred into their savings account. TopLine's members add slowly and steadily to their savings, by using the debit card for everyday purchases.
 
"We wanted to design a program that was innovative and easy for our members to save," said Vicki Roscoe Erickson, Topline FCU assistant vice president of marketing. "We promoted it to help members save for an emergency fund, start a children's saving account, or just to start a fun money account."
 
About 1,000 members have enrolled in the program, Erickson told News Now. Since the program's introduction in June 2011, members have saved about $250,000. On average, members in the program combined save nearly $12,000 per month, Erickson said.
 
"Several of our members have saved nearly $500 on an annual basis using the program," she added.
 
During the program's roll out, TopLine promoted it through every channel, reaching out to members with branch merchandising, front-line staff, direct mail, on-hold messaging and direct mail.
 
Members notified the credit union of their wish to participate.
 
"It  just takes a virtual a flip of the switch within our core system to make the change on a member's account," Erickson said.
 
Many members have commented on how easy the program makes saving. "Almost everybody uses their debit card for everyday purchases," she said. "That means every time you use that card you're generating saving. When members see that, they say, 'Wow I already have $20 or $30 bucks in here.' Over the course of a year that adds up."
 
This article is part of a News Now series of exclusive, special reports on credit unions' outreach efforts and innovative ideas. Fostering service excellence and raising awareness about the value credit unions provide their members and communities are two prongs in credit unions' Unite For Good campaign toward a vision in which Americans choose credit unions as their best financial provider.