Marketplace Newsletter

In this issue:

From Laura’s Desk

Member Experience: Why Text Messaging is Essential for your Credit Union 

Pandemic shines a light on need to help members with investments 

One-Size Strategies Don't Fit All Situations

We Are Stronger Together

Community connection and credit cards for the win in 2021

Instant Replay: Economics of a virtual branch revealed

Three Payments Strategies to Help You Thrive in the Post-Pandemic World

Upcoming Webinars

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From Laura’s Desk

Hello! 

I wanted to share the information below regarding a League Partner in the text messaging space. 

Eltropy has become a premier provider in the credit union space for text messaging.  They are exclusively working with credit unions only and are strong supporters of the League system.  Eltropy, provides a high-quality, user-friendly product while also ensuring full compliance with the evolving law surrounding text messaging.   As a strong supporter of the League system, Eltropy has made known that they can/will offer sizeable discounts to League member Credit Unions, as well as offering a reasonable pricing model for credit unions under $50 million in assets.  

The basic dashboard has many great features to meet the needs for communicating with members while remaining user-friendly for your staff. The League has formed a relationship with the founder of Eltropy, Ashish Garg, and worked with him as he grew this solution into one of the essential communication technologies for credit unions.  

Anyone who is interested in learning about Eltropy should reach out to Laura Parrish [email protected]  to set up a private demo of Eltropy to see what this solution has to offer.  You can also get a quick pricing quote based on how you want to integrate this into your credit union.

Your Vision. Our Purpose.

Sincerely,
Laura Parrish
VP, Association Services

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Member Experience: Why Text Messaging is Essential for your Credit Union 

Tuesday, March 30th at 1 pm CST 

Learn how Eltropy's secure and compliant Text Messaging platform can assist your credit union to communicate effectively during the pandemic era and beyond. 

Click to register for the webinar.

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Pandemic shines a light on need to help members with investments 

By Robert Comfort, President of CUNA Brokerage Services, Inc. 

For more than a decade, the need for retirement savings and the level of focus needed on an individual’s investment plans has changed dramatically. The world around us has pivoted away from providing traditional retirement programs and pensions - putting the onus on the individual. This has become even more important during this time of global pandemic and economic uncertainty. 

We’ve known for some time that credit union members would prefer accessing financial services at a credit union – more than half of members state that. However, only 3% of members utilize their credit unions for investment services according to research from Kehrer Behlen. (1) With many members struggling financially and facing uncertain futures, this is a time when future planning on retirement goals might be put off. However, now more than ever is when credit unions should be the trusted, go-to source to help members through this crisis. 

Credit unions will benefit from increasing their focus on helping more members become educated and ensuring they have plans in pace to help provide peace of mind that their future needs are being covered. This delivers on member needs and builds the credit union business overall. As research shows, members who enter into an engagement with a credit union do more business with them in the long term. In fact, credit unions see an increase in loyalty – with members 5.4 times more likely to stay with a credit union - and have more loan and deposit products per member when they have an investment account. (2) Successful credit unions do this by ensuring that investment services are seen as equally important as their savings, lending and insurance businesses and defining a clear vision for their wealth management program. 

Making investment services core requires more than a vision. It involves deep thought, a different strategy and incorporation of these best practices: 

  1. Ensure your credit union has the right number of advisors to properly serve your membership. This starts by understanding how many advisors are needed to deliver on your members’ needs as well as confirming you have the right advisors in the right places to serve them. Perhaps, incorporate an associate advisor model where senior advisors mentor those with less experience. Nurturing the next generation of advisors is critical considering today only 11% of advisors are under age 40.(3) However, as Baby Boomers are expected to pass down up to $68 trillion of wealth to Generation X and Millennial family members, your credit union needs advisors on tap to build and nurture long-term relationships with those legacies. (4) To do this effectively, it makes sense to partner with the right external partner that has credit union expertise to identify, onboard and train advisors as well as drive the appropriate level of service based on what your credit union members need today. 
  1. Increase member awareness and understanding of your program’s value and drive referrals in both traditional and non-traditional ways. Expanding member awareness and filling the opportunity pipeline is a crucial part of growing your advisory business. Streamline marketing activities across advisors by working with a strategic partner who can help you create a 12-month integrated marketing and execution plan. This could include everything from employee engagement and referral programs to marketing campaigns and social media. We also recommend working with a partner who has deep data, analytics and lead generation capabilities to drive member awareness and leads. 
  1. Drive growth of advisory business. Working with a credit union wealth management partner can also help propel your investment services strategy. A qualified investment services provider can help your credit union develop a strategic plan with company-wide goals that increase the number of members helped with wealth management services and provide the tools and technology to accomplish these goals. 
  1. Leverage advanced analytics. Use your proprietary data and supplement it with financial behavior data so you can capitalize on the benefits of predictive analytics. These powerful insights will help you separate current clients as well as your overall membership into different customer segments and so you can prioritize your outreach efforts. 

Having a disciplined plan in place and planning for success, while being able to adapt to the changing world we live in and adjust as needed, works. It starts by treating the program as core. When you adopt a thoughtful, disciplined approach to growth, it pays dividends in terms of helping members achieve their goals while helping you deliver on your mission. 

To read more about financial advising in credit unions, visit our website.

 

1 Kehrer Bielan Consulting, “Making Wealth Management Core in Credit Unions”, Feb. 2019

2 Kehrer Bielan Consulting, “Making Wealth Management Core in Credit Unions”, Feb. 2019

3 JD Power, “Technology, Social Media Critical to Bridging Financial Advisor Age Gap, J.D. Power Finds” July 2019 https://www.jdpower.com/business/press-releases/2019-us-financial-advisor-satisfaction-study

4 Business Insider, “There are 618,000 millennial millionaires in the US, and they're on track to inherit even more wealth from the richest generation ever”, Oct. 2019 https://www.businessinsider.com/millennial-millionaires-baby-boomer-inheritance-wealth-transfer-2019-10

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One-Size Strategies Don't Fit All Situations

Customized overdraft approach offers tailor-made solutions 

By: Mark Roe, Executive Vice President of National Sales 

The past year has highlighted the vital role community financial institutions play in helping businesses thrive and consumers maintain their financial well-being. It has also taught us a great deal about the industry's ability to overcome difficult obstacles in order to provide valuable services and advice to keep account holders and employees safe, maintain effective work environments and keep communities up and running. 

Throughout all of the uncertainty, credit unions have implemented solutions to address both their specific circumstances and their members’ changing financial needs. The ability to recognize evolving conditions and make adjustments along the way reinforces our industry's resiliency and the people who make it work. 

There's too much at stake for one-size-fits-all solutions

As we look ahead to 2021, credit unions will continue to face operational challenges, increased demands for technology and ongoing performance concerns due to the impact of the coronavirus. Likewise, many consumers will continue to experience uncertainties due to job loss or underemployment that threatens their financial security and increases their need for safe, reasonably priced products and services to address short-term liquidity needs. 

With so many unknowns ahead, not implementing tailored solutions to fit your institution’s situation—or the needs of your members—can be costly in terms of operational efficiency, profitability, compliance certainty, and service quality. 

Find the perfect fit

For example, a customizable overdraft strategy can improve your overall results—based on your credit union’s specific operational and performance goals—with the following resources and support:

  • Proven program management consulting maps out an effective plan to increase revenue potential, minimize charge-offs, maintain consistent member communication and achieve continuous program improvement.
  • In-depth employee education—that addresses your staffing situation—reinforces consistent program understanding, strengthens employee confidence and improves service quality.
  • Reliable compliance expertise—along with periodic updates and advice—reduces regulatory uncertainty and legal risk.
  • Fully disclosed, consumer-friendly processes and procedures strengthen member loyalty. 

Build trust with clear, consistent disclosure

At the same time, a fully disclosed solution—supported by effective messaging and transparent processes—empowers members to better manage their finances. Armed with more information, they are aware of the option to access overdraft coverage for necessary expenses and unexpected purchases when dealing with occasional economic challenges. Plus, the right messaging and communications recommendations provide support to program users in the following ways:

  • Initial program explanation introduces members to the benefits and responsibilities of using the program option.
  • Ongoing communication re-educates them regarding how the program works, explains the service's value, describes the difference between available vs. actual balance, and offers other useful information and account management tips.
  • Disclosed overdraft limits—that are reviewed periodically for adjustment—fit individual members’ situations and provide valuable peace of mind.
  • Periodic account activity notifications address specific circumstances and reinforce your institution's commitment to better service. 

Tailor your solution with an eye on planned growth

Credit unions will continue to experience uncertainties that add stress to staff time and resources. Some of the most common issues include addressing sustainable revenue generation, increased competition, business activity restrictions, the pandemic's ongoing economic impact and changing member needs. 

Utilizing the recommendations and support provided by a professional overdraft consultant to implement and maintain customized program policies and procedures can reduce the burden on your staff. It is also an effective way to boost employee confidence, increase performance, strengthen compliance certainty, provide opportunities to create member loyalty, and significantly increase your growth potential.

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We Are Stronger Together 

By John Cassidy, CUNA Mutual Group 

As soon as the COVID-19 pandemic began, CUNA Mutual Group quickly took action to ensure we were there to support the credit union system, members and the greater communities we collectively serve. 

We established Stronger Together to provide relevant information and resources for our partners, while making a number of meaningful product changes such as increasing on premise cash limits for credit unions while waiving fees and providing premium payment flexibility to ensure members could keep their coverage without interruption.

In addition to the product changes, we focused on five key areas to support our customers and communities through the pandemic. 

  1. Advocating for Credit Unions: Our Corporate & Legislative Affairs team amplified credit union system advocacy efforts with members of Congress, adding our voice to help advance the credit union agenda, support efforts to increase funding for Community Development Financial Institutions (CDFI) and supported efforts to add a second round of funding for the Paycheck Protection Program (PPP) and credit union access as PPP lenders.
  2. System Collaboration: We committed an additional $1 million of our $3 million total contribution to CUNA’s Open Your Eyes to a Credit Union awareness initiative, provided more than $200,000 in additional financial support of state foundations and National Credit Union Foundation and partnered with Inclusiv on the CDFI awareness and certification campaign for credit unions
  3. Delivering Relevant Expertise: We hosted a record 2,440 attendees at our annual virtual Discovery Conference, provided regular economic and market updates from our chief economist and chief market strategist, and offered access to our experts across multiple business lines to help credit unions adapt and prepare for the future.
  4. CUNA Mutual Group Foundation: In a year of adversity like no other—when the needs of our communities were greater than ever—our employees answered the call, contributing more than $200,000 toward COVID-19 relief in the Spring and more than $500,000 this Fall toward education, economic security and emergency aid. And, with a dollar-for-dollar match from our CUNA Mutual Group Foundation, our communities will receive more than $1M as they work to support those in need.
  5. Diversity, Equity & Inclusion: As we continue to advance our own DEI strategy, we helped launch the CU DEI Collective as a Founding member. We expanded our partnership with the African American Credit Union Coalition (AACUC) and the Network of Latino Credit Unions and Professionals (NLCUP) and shared our company’s stance on social justice

While most vendor relationships are primarily transactional, we consistently demonstrate that we are far are more than just a vendor. We help credit unions navigate through challenging times and thrive when times are good. We’ll be there to make a difference in the lives of your current and future members, in partnership with all of you. We are Stronger Together. 

Learn more at cunamutual.com/strongertogether.

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Community connection and credit cards for the win in 2021 

By Phil Seely, LSC 

Increase member satisfaction and generate ROA with a well-rounded portfolio. When credit union members are the first priority, designing a robust portfolio that meets their needs is of utmost importance. The essentials to member satisfaction, and credit union growth, are two-fold: impressive service and competitive programs.  

Including a credit card program in your credit union portfolio is a benefit to members and ultimately leads to growth. Unfortunately, including a credit card program can be overwhelming and stressful. It might seem like too much for your team to take on during uncertain, often challenging times.  

How can you determine if your credit union is ready to take the plunge into offering a credit card program? First, assess the requirements of a program. Credit card programs must include four elements: 

  1. Operational service and support
  2. Multi-channel marketing campaign
  3. Reward program to encourage sign-ups and card use
  4. Responsible payment planning 

Next, consider the questions: 

  1. Do we have the existing bandwidth to add a credit card program in 2021?
  2. Can we grow without a credit card program?
  3. Can we afford not to offer a credit card program if we want to grow? 

The fact is, in 2021, growth is necessary for credit unions to remain relevant and to serve their members through the tough road ahead. A credit card program does not have to be a burden. As an extension of your credit union team, LSC can support the implementation and execution of a successful credit card program with the Accelerated Growth Program (AGP). 

Members love their credit unions because of the service. People connect at credit unions and feel supported on their financial journeys. Unique to credit unions, connectivity and community thrive within a community financial cooperative in a way that many larger financial institutions simply cannot create. Marrying the credit union experience with powerful financial tools will result in increased member satisfaction and credit union growth.

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Instant Replay: Economics of a virtual branch revealed

What is a virtual branch? Should your credit union consider building a virtual branch? Credit unions across the country have been building virtual branches to increase member convenience and improve physical branch efficiencies.  Learn how your credit union can start building your virtual branch today.

WATCH NOW >

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Three Payments Strategies to Help You Thrive in the Post-Pandemic World

By John Patton, Senior Payments Advisor 

As a member of the CO-OP SmartGrowth Team, I’m constantly asked by our credit union clients what the future of credit and debit spending will look like after the pandemic is over. And it is times like these I wish I had a crystal ball!

Over the past year, my colleagues and I have witnessed unprecedented change in the payments space, from wild swings in credit and debit transaction volume to a surge in digital payments and a complete upheaval of what we might call “normal” spending by category. 

One thing is certain, though: to become their members’ primary financial relationship, credit unions must continue to adapt their credit and debit programs alongside member needs. This will be important not only for portfolio growth but also for ensuring they offer the payment products and services that cardholders care about. A great example: a recent study found that one in five consumers say they have made a contactless payment for the first time during the pandemic. [i] 

While we can’t know for certain what payment trends are temporary and which are permanent, credit unions can put themselves in a stronger position to drive payments growth post-pandemic by implementing these three strategies: 

#1 Stay on Top of “Passive Payments” With a Comprehensive Digital Offering

Even before the pandemic, there has been a steady shift towards “passive” payments, where members are thinking less about which card or payment method they use. They care about the experience being fast, convenient, and secure. COVID-19 took that to a new level as a large share of payments shifted to online and mobile channels. 

This is a big reason why we believe digital wallet capabilities and contactless cards will become table-stakes for your credit and debit offering. Comparing payment transaction data from the 1st and 2nd half of 2020, we saw monthly mobile wallet and contactless transactions surge nearly 40 percent. We expect to see another 20-30 percent growth in contactless and wallet payments in 2021. This means that there will be a huge share of passive payments up for grabs… if you can capture it. 

That’s where digital card issuance will become incredibly important. Digital Card Issuance enables you to instantly issue or reissue a credit or debit card digitally so that a member can start transacting immediately. It may seem like a small feature, but that will be enormously powerful in securing top-of-digital wallet going forward. Best of all, CO-OP’s forthcoming Digital Card issuance solution will offer the ability to integrate with multiple mobile banking solutions and our existing Digital Wallet Solutions. This means that members can load their cards into their preferred wallet or apps at the click of the button, rather than manually entering their card information. 

It cannot be understated that becoming the passive payment method of choice should be at the top of every credit union’s payments strategy in 2021. 

#2 Ramp Up Your Portfolio Optimization

Credit unions have rich troves of payment data at their disposal. Having that data is one thing, but COVID-19 really underscored the importance of acting on that data. For instance, credit unions that capitalized on increased spend in categories like hardware and discount stores, online groceries and Amazon purchases saw huge lifts in their portfolio over the past year. Meanwhile, traditionally popular categories like travel and in-person dining saw record low levels of spending. 

As we head into the next phase of the pandemic, we can expect to see a slow reversal of that trend; but it is really important for credit unions to dig through their portfolio to see how their members’ spending has shifted as a result of COVID-19. 

Not sure where to start? Try this 3-step formula: 

  1. Start by analyzing which generational groups make up the majority of your membership. Recognize that Boomers and members of the “Silent Generation” spend differently from millennials and Gen Z and may need more education to use online subscription services, contactless cards, and digital wallets.
  2. Next, review your members’ spending behaviors by channel, looking at three primary buckets – traditional swipe and card-present purchases, card on file/subscriptions, and digital wallet/in-app transactions.
  3. Lastly, analyze spend down to the MCC level to determine where most of your cardholders make their purchases. Compare all of the above data points with the broader market trends to see where your membership is in line with national spending behavior versus where you have gaps. 

If you’re wondering how often you should be doing this type of analysis, I would say that it all depends on how valuable it is to your bottom line. 

Consider this: our SmartGrowth team was able to partner with OMNI Community Credit Union to help them increase their activation rate by 11 percent, average monthly spend by nearly 10 percent year-over-year, and drive a 15 percent increase in interchange revenue by performing an analysis of their portfolio and developing targeted campaigns based on member spending activity. 

We see examples all the time of credit unions overcoming low utilization and activation rates through a deep portfolio analysis and a series of targeted, data-driven campaigns. 

(If you’re interested in learning how SmartGrowth can help you do that kind of analysis, reach out to us) 

#3 Lean into What you Do Best as Credit Unions

Finally, credit unions must continue to do what they do best: putting the member first. Our “people helping people” ethos really made an impact in the early months of the pandemic. While big banks put their wealthiest customers first during the first stimulus check roll out, credit unions were there to support their members with interest and fee relief and financial wellness tools. Our members won’t forget that; but is incumbent on us now to grow those member relationships through payments. 

It’s going to take a big shift in thinking on our part. Start by recognizing that having the lowest credit card APRs on the market is no longer enough to earn a greater share of payments. Instead, credit unions must augment their payment products with compelling rewards and incentives that target members where they shop the most. 

My colleague Deb Wieczorek pointed out a great example recently in CU Today: 

“Now may be the time for credit unions to look at launching partnerships with local businesses that are popular among their membership, as businesses scramble to try and bring customers back. Credit unions need to go out into their communities now and speak with the mom-and-pop shops. Create an alliance with them. Create deals where if the credit union member comes into the shop they receive some additional rewards points—give them more points than if they would shop at some large retailer, like Target.” 

I loved that example not only because it’s a powerful portfolio growth opportunity but because it embodies two pillars of the credit union mission: supporting local businesses and building loyalty with members. 

Final Thoughts…

As the payments landscape continues to evolve in 2021, capturing and retaining a greater share of your members’ payments will be critical to long-term success. That is where you can look to CO-OP for support. We see the past year as validation of our product roadmap: from our early investment in the latest digital payments solutions (like contactless cards and Zelle integration) to the modern payments platform we’re building to help our credit unions understand, anticipate, and meet their members’ needs. And if you don’t already process with us: now’s the time find out what you’re missing! 

Request a digital copy of CO-OP’s ever-expanding roadmap to discover what CO-OP is building in 2021 to help our credit unions deepen engagement and strengthen operational efficiencies: https://mktg.coop.org/CO-OP-Roadmap-2021

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Upcoming Webinars

To register for any of these webinars, please go to https://www.cunamutual.com/resource-library/webinars

The Ripple Effect...of 2020**

3/17/2021 1:00 PM (CT)
The pandemic along with changing consumer, political, and socio-economic status has required change in many ways. For credit unions, the ripple effect of 2020 has brought on changes to business practices and should have you rethinking how to protect your people, assets, and reputation.
Register at the Protection Resource Center(opens in a new window) | Download 2021 Schedule(opens a PDF in a new window)

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