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Will mobile banking change remittances

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NEEDHAM, Mass. (8/15/08)--Mobile remittances are moving in on the global remittances market and the accelerating investments in mobile payment platforms will be a disruptive industry force, says a new TowerGroup study. However, the World Council of Credit Unions (WOCCU) doesn't see that happening anytime soon. Mobile remittances are a person-to-person payment system that is cross-border in nature and involves mobile data applications at either end of the transaction, according to TowerGroup, a Needham, Mass.-based research group. TowerGroup maintains that an emerging revolution occurring for sending and receiving remittances may undercut existing fee structures and traffic volume of incumbent brick-and-mortar money transfer operators, which the firm says already appear to be under pressure in the economic climate. However, WOCCU is hesitant to agree with the assertion that mobility will change the nature of remittances, said Tiffany Kultgen, WOCCU's program manager, technical services responsible for credit unions' international remittance program, IRnet. "There are two major components to a remittance--the transfer of data and the transfer of funds," she told News Now. "While mobile solutions may enhance the ease of data transfer for many, they don't circumvent the need for physical locations in order to realize the transfer of funds for the market as a whole. "I think more pieces must be added to the puzzle before we'll see a complete transformation of the remittance market," Kultgen added. Kulgen noted there has been talk about mobile remittances "for quite some time, and to my awareness there hasn't been any major shifting of the market from cash-based transfers to mobile transfers--at least not in the U.S. or Latin America. "There has been a lot of hype about mobile remittances in Kenya and the Philippines, but the demographics of those markets are quite distinct from individuals who have migrated to the U.S. from Latin America," she said, adding that she has read that M-Pesa isn't having much luck opening up remittance corridors outside of Kenya due to security and compliance concerns. Kulgen noted that "WOCCU is continuously exploring new developments within the remittance market to assure that the credit unions are able to meet their members' need. Thus far, we haven't experienced a significant demand for mobile remittances; however, that is not to say we won't see changes in the future." TowerGroup says its analysis indicates that the benefactors of mobile remittances may be banks, especially those that emphasize growth among unbanked customer segments. That's because remittances are "an avenue for banks to initiate relationships with unbanked consumers who are heavy users of both remittance products and mobile phones." The relationships then can fuel deposits through later cross-sale of more traditional banking products such as share draft/checking accounts, the firm's report said. On the receiving side, mobile remittances will spur evolution of the financial sector in developing countries and economies so recipients can direct their remittances to checking accounts, bill payments and microfinance applications, said TowerGroup. "The inevitable convergence of remittances and mobility offers new opportunities for banks to grow this market by making payments faster, more convenient, more secure, and more accessible to a greater number of senders and recipients," said the report. Virginia Garcia, senior research director in TowerGroup's Cross-Industry practice, and Charul Vyas, an analyst in the Emerging Technologies practice at TowerGroup, co-authored the report, titled, "Disruptive Technology Spawns Market Revolution: The Ascent of Mobile Remittances into the Mainstream."

Oklahoma Texas outsourcing deal in the works

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TULSA, Okla. (8/15/08)--The Oklahoma Credit Union League is working to complete a partnership and outsourcing plan with the Texas Credit Union League. It will be at least six months before everything is finished, and at least nine months until the league moves to its new headquarters building, Credit Union House, in Oklahoma City, Debra “DJ” Morrow, league interim president/CEO, told News Now. The one-year partnership will allow Oklahoma to partner and outsource credit union assistance, training and education, the Oklahoma Credit Union Foundation and chapter leadership with Texas. The league also expects to gain some back office efficiencies. Oklahoma will maintain its independence as a league, with its own board and staff, Morrow said. “We’re looking forward to implementing the partnership,” she said. “Everyone’s looking forward to seeing what we’ll bring forth.” Dick Ensweiler, president/CEO of the Texas league, said there is a longstanding natural relationship in the southwest between Texas and Oklahoma. "We look forward to concluding the negotiation process and working even close together," he said. "Just as credit unions are finding that outsourcing, partnerships and other types of collaboration generate efficiencies in operations, so do we find that leagues can also benefit this way," he added. Regionalizing leagues makes the most sense, Morrow said. “We will continue to seek partnerships with other leagues.” Oklahoma also will partner with the Missouri Credit Union Association on a volunteer and leadership conference next year. Leagues that Oklahoma contacted for advice on merging were “forthcoming,” Morrow said. “The spirit of cooperation is alive and well in the leagues.” Morrow recently sent a letter to credit union CEOs about the proposed partnership. The letter noted that Oklahoma’s Credit Union House would open next May. Next year is the league’s 75th anniversary, she said. “It’s an appropriate time to open Credit Union House.”

Pennsylvania judge sets conference date in tax uniformity case

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HARRISBURG, Pa. (8/15/08)--Pennsylvania Commonwealth Court Judge Dante Pelligrini has scheduled a status conference for Sept. 9 with legal counsel for all parties in a uniformity of taxation case. The conference's purpose is to discuss moving the case forward, said the Pennsylvania Credit Union Association (PCUA). The case stems from a lawsuit by bankers involving the applications for community charters by Trumark Financial CU, based in Trevose, and Freedom CU, based in Warminster. At issue is whether credit unions and banks are sufficiently distinguishable to merit different tax treatment consistent with the Pennsylvania Constitution. A provision in the state constitution states that like entities should be taxed in a like manner, said Rick Wargo, general counsel at PCUA. That tax uniformity issue is different from the tax exemption issue, which the Pennsylvania Supreme Court ruled on in June, he told News Now. In that ruling the Supreme Court unanimously upheld PCUA's arguments and said banks are not entitled to appeal the lower court's dismissal of several claims. The case had stalled for about two years while the appeals went to the Supreme Court to address procedural and community chartering matters, said PCUA. A status conference is an informal meeting where attorneys for the parties in the case discuss with the judge the procedural posture of the case and what the parties anticipate they will need in terms of discovery. PCUA said the court likely will set a schedule to proceed forward at the conference.

Study CUs look good trust drives wallet shares

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BOSTON (8/15/08)--Consumers’ trust in their primary financial institution is directly correlated to wallet capture--and credit unions are doing well, indicates a study released this week. Credit unions are outperforming banks in rates, fees, pricing, products, reliability and engagement, according to the study, by Mercatus LLC, a financial services consulting firm (MarketWatch Aug. 13). The average wallet capture share for financial institutions increased by 18 percentage points on a five-point scale, from 34% at a trust score of 1, to 52% with a trust score of 5, the study said. Trust relationship scores for credit unions and banks ranged from 64% to 84%. Credit unions and local banks scored higher in transparency than other financial institutions at 75%, compared with national banks’ average score of 63%. Factors affecting trust include transparency of costs, employees’ willingness to go “above and beyond,” and operational processes clarity. Trust also drives retention and cross-selling. To build trust, the study said financial services providers should:
* Disclose fees for products and services; * Explain steps to open new accounts or address service issues; * Ensure safety of members’ information; and * Maintain fees at levels members expect.

Mobile banking on a growth spurt in CUs banks

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NEEDHAM, Mass. (8/15/08)--Mobile banking overall is emerging fast as an indispensable business asset to financial institutions to retain member/customers and reach new segments, says new research. Every month until the beginning of 2009, between 150 and 300 U.S. credit unions and banks will sign contracts for mobile banking solutions, according to TowerGroup, a Needham, Mass.-based research firm.
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Mobile banking will reach nearly six million users by the end of 2008, says TowerGroup's report, "Transforming Customer Interaction: Mobile Banking Delivers Adoption as Wheels of the Market Align." The firm forecasts that 42 million U.S. active users of mobile banking will exist by 2012. "We believe the rise of next-generation mobile banking and payment solutions will forever change banks and payments companies," said Virginia Garcia, co-author of the research and senior research director in TowerGroup's Cross-Industry practice. "Mobility has the potential to enable timely, relevant and actionable outreach that will ignite customer engagement unlike any other channel," she said. "Ultimately, TowerGroup expects mobile phones will do for financial services what Apple iPods did for music--spur a sea change in the way consumers access services and suppliers deliver them," said Garcia.

CU System briefs (08/14/2008)

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* BLOOMFIELD HILLS, Mich. (8/15/08)--Members of T&C FCU based in Bloomfield Hills, Mich., have approved a merger of the credit union with USA CU, Auburn Hills, with 91% of voters approving the merger. The merger already had been endorsed unanimously by both credit unions' boards, and approved by state and federal regulators. "We are absolutely delighted so many of our members agreed with our plan to merge," said Dianne Addington, T&C president/CEO and the CEO-designate of the merged credit union, Genisys CU. "We did everything we could to ensure that our members understood the reasons behind the merger and what it will mean to them, and they obviously listened." Genisys will have 130,000 members and $1.2 billion in assets, making it the fourth largest credit union in Michigan … * OGDEN, Utah (8/15/08)--The Federal Bureau of Investigation (FBI) has placed on its Most Wanted List a man accused of the armed robbery of Goldenwest CU July 3. Curtis Brad Cordery allegedly forced two tellers into the vault and filled a bag with money, then left in one teller's car. Authorities found the abandoned car four blocks from the credit union. A teller, Jeffery Lyle Nay, who was a friend of Cordery, admitted to being part of the heist, the FBI said. Cordery made a call to Nay from the San Francisco area afterward. Both men are charged with armed robbery. Nay faces a maximum of 25 years in prison and a $250,000 fine, but prosecutors believe there may be a plea deal in the works ( Aug. 13) … * LOS ANGELES (8/15/08)--Albert Talton, 45, of Lawndale, Calif., pleaded guilty to federal conspiracy and counterfeiting charges related to a large-scale ring that produced more than $7 million in fake currency. He is among six people charged with making bogus bills using an inkjet printer, newspaper and special paper, computer software, and hairspray. The ring had brokers sell the bogus bills. A raid by federal agents on Talton's home yielded nearly $250,000 in completed bogus bills and about $825,000 in partially completed bills. Co-defendants David Goldberg, Paul Tracy McCorry, Cory Nero, Troy Stroud and Ernest Alexander are charged with conspiracy, and distributing and manufacturing counterfeit currency. Stroud pleaded guilty. The trials for Goldberg McCorry and Nero are Sept. 16. Alexander is still at large (The Mercury News and Aug. 11) … * HARRISBURG (8/15/08)--Leaders from two State College, Pa.-based credit unions--SPE FCU and Penn State FCU--meet with Glenn Thompson (seated at right), a candidate in the Fifth District congressional race. Christina Milhalik, Pennsylvania Credit Union Association (PCUA) assistant vice president, also attended the event at SPE FCU (Life is a Highway Aug. 14). Russ Brooks (standing), CEO of SPE FCU and member of PCUA's Governmental Affairs Committee, discusses credit union history during a Meet and Greet. Thompson, a long-time credit union member, said credit unions provide a launching pad of affordable services for new and existing members. He said credit unions will be needed more than ever during the credit crunch. (Photo provided by the Pennsylvania Credit Union Association) …

Illinois leagues small CU conference attracts 80

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(From left) John Bratsakis, Illinois Credit Union League (ICUL) chairman; Dan Plauda, ICUL president/CEO; and National Credit Union Administration Vice Chairman Rodney Hood at the league’s Small Asset Size Credit Union Conference. (Photo provided by the Illinois Credit Union League)
NAPERVILLE, Ill. (8/15/08)--More than 80 credit union staff and board members attended the Illinois Credit Union League’s seventh-annual Small Asset Size Conference for credit unions under $20 million in assets. At the conference, Rodney Hood, vice chairman of the National Credit Union Administration (NCUA), discussed the state of small credit unions. He said Illinois’ small credit unions are strong, with a net worth of 15.5%, compared with 11.1% nationally. About 98% of those credit unions have CAMEL ratings of 1, 2, or 3, he added. “We are committed to small credit unions,” Hood said. “As vice chairman, I want to keep you healthy and vibrant.” Small credit unions should reach out to NCUA’s Office of Small Credit Union Initiatives for resources, including community development grants, economic specialists and partnerships, he added. Other topics at the conference included disaster recovery, bankruptcy and collections, compliance updates and networking. “We strive to be a focal point to help our small credit unions succeed,” said Dan Plauda, ICUL president/CEO. Small credit unions represent 75% of ICUL’s members. The conference was sponsored by the league; the Illinois Credit Union Foundation; Members United Corporate FCU, Warrenville, Ill.; and CUNA Mutual Group.

Latin American Regulators Roundtable at forum

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GUATEMALA CITY, Guatemala (8/15/08)--The World Council of Credit Unions (WOCCU) and Sistema Cooperativo Federado de Ahorro y Credito de Guatemala (FENACOAC), the Guatemalan credit union association, are hosting credit union representatives and regulators from 12 countries this week at WOCCU’s Latin American Regional Forum.
Manuel Bolanos (left), CEO, Federacion de Cooperativas de Ahorro y Credito de Costa Rica, and Berta Silvia Mena, financial manager of the Federacion de Asociaciones Cooperatives de Ahorro y Credito de El Salvador, speak with participants during the regulators roundtable sponsored by the World Council of Credit Unions and the Guatemalan credit union association in Guatemala.
The forum is taking place in Guatemala City, Guatemala, with 300 attending. This is the first time the forum is open to non-WOCCU members and the first time Latin American regulators have participated in regional roundtable discussions. A regulators roundtable was last hosted at the WOCCU World Credit Union Conference in Hong Kong in July. Twenty-five regulators from 10 countries attended Tuesday’s Latin American Regulators’ Roundtable. “Throughout Latin America today, credit unions are in a strong and stable position, and both regulators as well as participants in the forum are using this time of growth and stability in the systems to ensure the preparedness of the organizations,” said David Grace, WOCCU vice president, association services.
Regional and local Guatemalan culture was displayed for participants of the Latin American Regional Forum. (Photos provided by the World Council of Credit Unions)
“If you have a good system of supervision and control but do not have the capacity in credit unions, not much will happen. If you have capacity but not control, you will see problems. This week, with the roundtable, forum and Manager Certification Program, WOCCU is working on both of these issues in the region--systems of control and building capacity,” he added. The Manager Certification Program is a two-year training program for current and aspiring credit union managers. Other roundtable discussions included building credit unions’ managerial and governance capacity, and applying risk-based and prudential credit union supervision in the region. A representative from Costa Rica’s Superintendent of Financial Institutions led a discussion where regulators reviewed Costa Rica’s 1998 credit union crisis and lessons learned. Participants also are visiting five area credit unions and viewing cultural displays by FENACOAC. Anne Cochran, president/CEO, Louisiana Credit Union League and WOCCU board member, delivered the forum’s opening address. “This shows the dedication and commitment evident in Latin America for enhancing people’s lives through access to credit and savings cooperatives, thus providing financial dignity to thousands of people.”