you might be a bank if…

I just stumbled upon this ABA article about “You Might be a Morphed CU if…”

Well you might be a bank if:

-you charge your “underserved” members $35 dollars a month for a checking account
-you can’t remember the last time you reversed a fee
-you charge your customers to talk to you on the phone
-you charge your customers to write checks
-you charge your customers for bill pay
-you only offer 3 CD’s
-websites like this pop up about you

feel free to add on because I’m sure I missed some…

The changing times

“My grandma belongs to that credit union” is something I frequently hear. CU’s do a great job of serving their current, aging members. But we are going to have to change our focus very soon to providing services to our younger members. To quote Debbie Matz from the Board of the NCUA:

“Members age 18-24, who are about to enter their prime borrowing years, represent only 5% of adult credit union members. It is unnerving that more than half of all adult credit union members have aged beyond their prime borrowing years and there are very few young members to replace these aging members.”

CU’s need to change their mindset and starting making decisions for their future. We need not only to get these new members, but have products that fit their needs, a brand that they can associate with, and a way to provide them with greater financial opportunities.

shrinking margins…

As the fed keeps raising rates (I hear an 80% chance for the upcoming meeting), credit unions are trying to find new and innovative ways of squeaking out some more margin. You’ll notice by looking at some of the call reports, or just attending the TrendWatch quarterly conference call put on by and Callahan, lots of CU’s are getting into the business lending game. Many are investing in business lending CUSO’s to handle the larger participations.

So what about some internal margin tweaks? What are some of the basics that everyone is doing to try and keep their cost of funds down and loan yields up? Aggressive expense cutting? It looks like everyone is liking the certificate market at the moment. We’re seeing anything around the 12 month term go for at least 5.25 now.

The whole borrow short term, lend long term isn’t going to work for much longer if/when there is an inversion of the yield curve. And in that inverted state, the CU’s that will survive will be able to manage their margins internally with creative thinking. The CU’s that have to play rate games are going to have a painful time in front of them.

CU’s and WiFi

I’ve heard some whispers that the credit union industry might be uniquely positioned to provide WiFi service to areas surrounding their branches. While this proposition could pose security risks, additional cost during a margin-shrinking period, and operational problems (think about people hanging out in the lobby all the time), it is also ripe with opportunity.

Currently our branching structure isn’t exactly setup to house people just sitting around in our branches, but it does provide a unique opportunity to offer our services to anyone using the WiFi and it can drive foot traffic. Marketing materials could encourage people to come to the branch and try out the new kiosks, check out the CU website, use online banking to pay their bills, balance their check book in the car, or give them something to do during their hopefully short wait time.

Additionally, the added bandwidth (assuming you didn’t want to share a branch’s main line) could be used in a fail over situation. We, for example, have direct T-1’s to all of our branches. But if one of those connections went down, we could simply direct traffic to our fail over.

Lots of possibilities, so it will be interesting to see if anyone can implement something like this.

Think big

One of the problems I see credit unions having is not having a larger-than-life vision. Many companies have BHAG’s (Big Hairy Audacious Goal) but they probably are little things like ROA at 1.5% or checking penetration of 70% or the most branches in their community charter.

As big as some of those BHAG’s are, they aren’t big enough. Just because most credit unions are smaller in size in both assets and employees, doesn’t mean we shouldn’t think like a big.

It’s the franchise mentality. Starting from cashing a check to locking the front door, every process in a branch should be identical everywhere you go. Every teller sign and banner in a branch should be the same. Every Starbucks triple-latte tastes the same no matter if you are in Kalamazoo or Denver. Because credit unions normally can’t expand outside of a state boundary, we never think of having 100 branches. But when you have 100 branches, or 1000, you have to have processes and brand awareness that is unanimous everywhere.

Ask yourself, what would we do if we had to roll this process or new marketing material out at 101 branches? And your answer should be applied to all 4 of yours.

CU Websites…

So we’re going through a re-design of our website. And I’m seeing more and more of the so-called “generational gap”. I never thought that I’d see it first in personal differences in web design, but sure enough, here it is.

I’m what a recent Fast Company article would call a “millennial”, while most of our marketing department thinks like Generation D when it comes to web design. Our IS team is actually writing the site, with direction from marketing. The IS guys know what’s going on. Sites like and are some wonderful examples of up-to-date web design. In my experience there are a few CU’s coming around and accepting the Web 2.0, but most credit unions are stuck in the Web 0.1.

Even though we’re coming up with some fairly good web design elements, the old guard of our credit union is hindering us. Its the “we’ve always done it this way” mentality. If credit unions do not begin to dust of their brands and lose “my grandparents belonged to this credit union” feel, they will begin losing, rather not attracting, the members that will see them through the future.