Marketplace Newsletter

In this issue:

BOLI: An alternative way to fund benefits

How to Use Text Messaging to Maximize Member Engagement

Credit Union Members Want Value, Not Fake, 'Free' Services

Embrace Change for 2020 to Experience Greater Outcomes

When was the last time your credit union website had a full compliance check-up?

Turn Tax Season Into Savings Season - Strengthen Member Relationships and help your members save on TurboTax!

Increase Your Card Revenue with an Automated Marketing Program

A Partnership Rooted in Our Collective Purpose

Upcoming Webinars

Subscribe to Marketplace


 

BOLI: An alternative way to fund benefits

What if your credit union could take advantage of a product that offered expanded investment choices and a competitive, consistent yield with strong crediting rate guarantees? Then, what if you could use the potential income you earned from it to offset and recover expenses of employee benefits programs? 

It’s not too good to be true. It’s business-owned life insurance (BOLI), and it could help your credit union continue to offer the compensation and benefits that attract and retain top talent in your organization. BOLI is a type of insurance policy you take out on a group of key executives, with a goal of building cash value. If your credit union purchases general account BOLI, the carrier invests the premium. The carrier looks at its investment yield in the general account and, on an annual basis typically, gives the credit unions a gross crediting rate based on the actual return in that general account.

Think of it like taking out a $1 million loan for working capital – except it comes with a competitive, consistent yield and strong credit rating guarantee.

Here are some other reasons credit unions can benefit from using BOLI: 

  • Pre-funding can help soften the blow if health care expenses continue to rise
  • It can help diversify your credit union’s overall investment portfolio
  • It may help you establish or enhance a charitable giving program
  • Fees and costs are embedded into your net returns – there are no separate investment fees
  • It is a low-risk and low-cost way to generate additional revenue

To illustrate the last point, let’s compare taking out a $1 million BOLI policy to building and maintaining an equal-sized auto loan portfolio. Assuming an average loan size of $20,000, it takes 50 loans to build your $1 million loan portfolio. But building the portfolio is just the beginning. Assuming an average duration on your auto loans of 30 months, you would have to make 150 loans in five years just to maintain your $1 million portfolio. That’s not including costs associated with replacing auto loans, such as acquisition costs, staff to monitor the loan portfolio, loan loss reserves and charge-offs. 

“In a declining interest-rate environment, BOLI can be a powerful investment tool,” says John Pesh, Executive Benefits Director for CUNA Mutual Group. “The carriers have mature portfolios with locked-in long-term yields, so BOLI delivers higher rates with minimal market risk.” 

If BOLI sounds intriguing, check with your CUNA Mutual Group executive benefits specialist to see if this funding solution is right for you and what you need to be aware of when vetting BOLI products.

BACK TO TOP


                     

How to Use Text Messaging to Maximize Member Engagement 

Like most business trends, text messaging is moving so fast it’s leaving a spate of questions in its wake. How do I get started? How can each member-facing team in a credit union use it? How do I write effective texts? How do I collect opt-ins? What about compliance? Eltropy has answered many of these questions in blogs about use casesopting in, and compliance. This article focuses on how credit unions can write more effective text messages to improve member engagement. 

“Text messages appropriately worded and delivered at the appropriate times will increase response rates,” said Rick Leander, co-founder and development director of Understood Connections, a behavioral science consultancy that does the bulk of its business with credit unions. 

With Leander’s help, Eltropy has captured best practices for how to phrase text messages for three credit union services: 

  1. Sales: 95% of text messages are opened within 3 minutes and responded to within 90 seconds, according to the CTIA. Beyond leveraging text messaging, Sales teams also must pay attention to how they text. When they cross-sell or upsell, they can spur action by citing the behavior of a member’s peer group. Write this basic text: “Households like yours are starting to plan for the future.” Customize it to match what you are selling: a car loan, mortgage, home equity line of credit, student loan, etc. “Starting to” serves as a call to action. “I don’t want to be left behind in this trend,” a member might conclude. In addition, Leander pointed out that an aversion to loss is a powerful motivator to act. Phrases like “Act now to lock in these low rates” or “Don’t miss out on this discount” appeal to members’ desire to save money and make wise decisions for their families. 
  1. Lending: The loan origination process can be tedious, causing frustration among members. However, text messaging offers speed and convenience to streamline the process and enhance the member experience. Use secure links to quickly exchange documents. For example, members can take a picture of their driver’s license and securely upload it to their mobile device in just seconds. And the use of DocuSign to secure electronic signatures eliminates printouts and wait time. To foster positive feelings throughout the process, send a text message to mark each milestone. Doing so reassures the member that you are making progress and encourages the next step. Write a text like this: “Congratulations! You’ve successfully completed the first three steps in the loan approval process. Just two steps to go!” 
  1. Collections: Leander cited an example of a credit union that was troubled by the percentage of members incurring late fees on payments of loans, credit cards, and even mortgages. After some digging, the CU discovered that most members had the resources to pay on time, but they were forgetting to do so. The CU decided to send reminders three to five days before the due date. Although the CU used a mixture of phone calls, emails and text messages, Leander noted that texting delivered the best results of the three methods. “This credit union realized a double-digit percentage improvement in on-time payments,” he noted. Finesse is required to properly phrase a message that asks for money! “Remind them of previous good behaviors to reinforce future behavior,” Leander said. Here’s a sample text: “Congratulations, you’re on a roll! You’ve made on-time payments 6 months in a row. Your next payment is due in 3 days. Click here to make payment.” Combine encouraging words with the convenience of immediate payment. 

First Impressions Count

Regardless of the use case, remember to craft thoughtful messages that include a call to action. “If people feel that text messages are helpful from the start, they tend to continue to think that way going forward,” Leander said. “But if the first interactions are seen as obtrusive, it’s hard to change people’s minds.” 

The business world mimics personal relationships. We’ve all heard the expression, “It’s not what you say; it’s how you say it.” Thanks to Rick Leander for helping Eltropy to apply behavioral economics to member engagement practices. 

Ready to start text messaging at your credit union? Request a custom demo of Eltropy’s Text Messaging + Analytics platform to learn how to get started today. 

Watch this video on how Advantage Plus Federal Credit Union is using Eltropy to collect required loan documents over text. 

https://www.youtube.com/watch?v=yZgPtzubzK0

BACK TO TOP


  

Credit Union Members Want Value, Not Fake, 'Free' Services

Instead of offering free checking accounts that in fact come with fees, consider data and identity protection services.

Recent news about the growing number of credit unions replacing “free” checking with checking accounts that include more value-added features is a clear indication that credit unions are listening to what their members really want. 

Consumers and credit union members want something of real value and they’re willing to pay for it. 

As recent articles published in 2019 have pointed out, many credit unions have seen the pitfalls of pushing “free checking.” Often, members who have free accounts begin to feel “nickel-and-dimed” and misled due to fees such as check reorders, ATM transactions and overdrafts. Also, as stated by Ron Shevlin, a director of research for Cornerstone Advisors, “Free checking is not a springboard for a deeper relationship.” 

Furthermore, in 2018, Cornerstone Advisors published survey results that indicated millennials want and are willing to pay for non-financial services that come as valued-added features with their accounts at financial institutions. According to the study, the majority of millennials want value instead of free – especially when it comes to services that provide data and identity protection. These value-added services are excellent ways for credit unions to facilitate more profound relationships. 

It’s a perfect time for credit unions to consider offering valuable protections that members want, such as mobile phone insurance, ID theft protection and child ID theft protection. These are the kinds of protective services credit unions should strongly consider offering to their members and attaching perhaps to a checking account to build value that goes far beyond “free checking.” These services can help credit unions significantly increase member engagement and loyalty, as they become a safe harbor for the members’ wealth, identities, phones and families. 

The same members who have no problem paying as much as $15 a month for subscriptions such as Netflix, Amazon Prime and Hulu will appreciate “value checking” accounts versus accounts with perceived, fake, “free” services. Credit unions have a unique opportunity with their members to create the ultimate engagement opportunity and prevent members from seeking these services from a less trustworthy online resource. 

The increasing dangers presented by the recent avalanche of data breach events such as Capital One, DoorDash and Zynga (publisher of mobile games such as Words with Friends), creates an environment of uncertainty for all consumers – including your members. This is the perfect time to enhance your services to protect members beyond the walls of your institutions and provide them with peace of mind. Embed more valuable protective services into your financial account offerings and secure your membership for years to come.

BACK TO TOP


 

Embrace Change for 2020 to Experience Greater Outcomes

3 steps to increasing outreach and improving performance 

A quick peek into what lies ahead for credit unions in 2020 reveals some formidable challenges, but also exciting opportunities for institutions that embrace change and remain focused on putting members first. By keeping an eye on the internal and external conditions that impact your service delivery capabilities and utilizing proven resources to implement consumer-friendly, compliant services, you can make the most of the opportunities that exist and improve the overall service experience for your members. 

Know your member service needs

Though the economy remains stable, 41 percent of households in America would struggle if faced with an unexpected expense of just $400. What’s surprising is that many respondents to a research study indicated that they have the money in their checking or savings account. But it is already allocated for other expenses. In these situations, where do consumers turn for help? 

Implementing programs that assist members with accomplishing their financial goals has always been part and parcel to the credit union movement. For Plus4 Credit Union, this includes providing a responsible option to help members cover occasional overdrafts. 

While managing their program in-house, credit union leadership began to notice that member outreach efforts were lacking consistency. They were concerned about whether they were providing all members with options to meet their individual needs. 

To address this concern, leadership upgraded to a fully disclosed overdraft solution. And by committing to a strategy that was supported by program implementation and maintenance experts, the credit union achieved a better level of across-the-board service consistency. 

Make effective technology decisions

Going up against the big banks and fintech companies can seem overwhelming for community credit unions. But in today’s tech-driven world, effective utilization of cloud-based software and intelligent analytics is a major component for driving growth and creating a satisfactory member experience. 

Another reason Plus4 management reached out to a professional overdraft provider was their inability to track overdraft program use and results effectively. Consequently, they weren’t able to precisely identify which members had opted into coverage for POS and ATM transactions. 

After updating their overdraft program—powered by next generation software—they gained access to important program tracking and analytics in an easy-to-use format. This allowed program administrators to see who was participating in the program and helped identify which members they hadn’t spoken to about the service—or who might need a follow-up to help them use it more effectively. 

Know when it’s time to ask for help

Consumer preference for mobile and online banking options is on the rise. But that doesn’t mean they are ready to give up the opportunity for face-to-face service when they have a question about their account or need financial advice. 

In these situations, it is incumbent on credit unions to have knowledgeable staff members who can address member concerns and confidently explain the services that are available to meet their financial needs. 

Plus4 employees gained insight into what makes an overdraft program valuable to members through professional training resources. They learned what elements had been missing from their program, as well as where they needed to focus in order to improve processes and procedures. 

The credit union also took advantage of compliance expertise and advice to ensure they were fully compliant regarding consumer protection regulations or other oversight related to their overdraft strategy. Expert reviews of their member disclosures sealed their confidence that their program would avoid examiner scrutiny or possible civil litigation. 

As technology and evolving consumer service trends continue to drive the way our industry operates, being open to change, and seeking expert advice and resources in order to retool outdated and obsolete solutions is essential for optimal performance. For Plus4 Credit Union, gaining professional insight into how to maintain a socially responsible, compliance-guaranteed overdraft program was in line with its mission “to invest in people to improve lives” and led to stronger member relationships and growth opportunities. >> Read the full Plus4 Credit Union case study

ABOUT JOHN M. FLOYD & ASSOCIATES (JMFA)
JMFA is one of the most trusted names in the industry. Whether it’s recovering lost revenue, uncovering new savings with vendor contract negotiations, creating more value, serving members better or delivering a 100% compliant overdraft service—JMFA can help you deliver measurable results with proven solutions. To learn more, please contact your local representative or call us at (800) 809-2307.     

BACK TO TOP


 

When was the last time your credit union website had a full compliance check-up? 

As your most accessible credit union location, your credit union’s website is your window to the world. And if your members are going there, of course regulators are going there as well. 

Website compliance can be tricky to maintain, as websites are frequently updated. But don’t worry, the experts at PolicyWorks are here to help. 

Fill out the form to get the Credit Union Website Compliance Checklist, a handy tool that walks through key compliance items to consider on any credit union’s website. This checklist is a great starting point for your credit union to comply with the NCUA rules and regulations. 

How do you know it’s time to have your website reviewed for compliance? 

Websites build over time, so it’s easy to forget which pages contain service descriptions, rates and fees. To ensure you’re maintaining compliance and keeping your site up-to-date we recommend annual reviews of your website content. 

Perhaps you just launched a new website, added a new product or service, or have recently changed website vendors. If that’s the case – we’d say it’s time for a full checkup. PolicyWorks is here to help! 

Download the website checklist by filling out the form.

BACK TO TOP


                   

Turn Tax Season Into Savings Season - Strengthen Member Relationships and help your members save on TurboTax! 

The Love My Credit Union Rewards TurboTax program is a great way to offer your members discounts on tax services from America's #1 do-it-yourself tax service, and there are great opportunities for your credit union to:

Strengthen member relationships by helping your members save on TurboTax

  • Capture refunds to grow deposits and investments - over $239B in refunds were directly deposited into financial institutions last tax season
  • Improve share of wallet by leveraging tax refunds to promote your core products and services
  • Be your members' trusted advisor, stay at the center of their financial lives by helping them get their taxes done right
  • Provide "everything tax" educational content to your members so they can learn more on how life events will affect their taxes
  • Accentuate your brand on your TurboTax co-branded microsite
  • Best-in-class client management support from CU Solutions Group staff 
  • FREE marketing materials to help you promote the savings to your members 

Click here to access the TurboTax program overview.  Click here to enroll your credit union in the TurboTax program.

BACK TO TOP


 

Increase Your Card Revenue with an Automated Marketing Program

U.S. consumers are awash in credit and debit cards. Sixty-one percent of U.S. adults own at least one general purpose credit card – about the same percent as in pre-recession times – and now cardholders are charging purchases at record levels. Debit card usage also continues to rise as it displaces paper for everyday transactions. 

Card programs make significant contributions to financial institutions’ revenues through interchange fees, interest charges on credit card balances and balance transfer fees. Large financial institutions with deep pockets bombard consumers with card marketing campaigns to garner adoption and ideally gain top-of-wallet status.

At smaller credit unions, however, card marketing programs often take a backseat to other priorities as the resources required to create and execute effective campaigns are constrained. Lacking effective marketing programs, smaller credit unions lose the benefit of creating stickier, more loyal cardholders through card programs, as well as the revenue associated with card usage. How can these smaller credit unions successfully compete? 

Timing and targeting count

Timing is not quite everything. A successful market campaign is well-timed but also precisely targeted to motivate specific groups of consumers to take action, such as activate their cards. Credit union clients have identified two common challenges in marketing their card programs: 

  • Lack of personnel to create marketing campaigns to promote activation and usage among no- and low-usage members.
  • Lack of expertise in optimizing data from core processing systems to improve targeting and appropriately time campaigns to significantly boost response rates.

Automated marketing engines drive effective card programs

Automated marketing engines for financial institutions such as PaymentsEdge can conquer the marketing challenges and enable financial institutions to earn previously untapped revenue. These full-service marketing engines develop cost-efficient and effective campaigns to generate brand awareness and promote card activation and usage. Examples with proven success include: 

  • Balance transfer campaigns. Our experience shows the average response rate to these campaigns of 2.8 percent yields an average transfer of $2,402 and a 6.25 percent increase in average balances.
  • Debit activation and usage promotions have resulted in double-digit growth (averaging 10.5 percent) in year-over-year transactions.
  • Credit card activation campaigns have produced 4 percent growth in active accounts. 

Such programs also build cardholder loyalty as measured by lift and retention over time and can extend the brand’s reach to new cardholders. 

What you should look for

Questions to ask in evaluating automated marketing programs that increase activation and usage among cardholders include: 

  • Does this program provide an end-to-end solution that includes design, execution and fulfillment of campaigns?
  • Is it easy to manage campaigns and customize collateral? What tools are provided to the financial institution to monitor campaigns?
  • How has the program performed for financial institutions with similar characteristics? Are there credible testimonials?
  • Can the supplier demonstrate proven results – specifically, what are the metrics on:
    • Activation and usage by key segments – e.g., dormant cardholders, cardholders who have activated their cards but haven’t used them, cardholders who use their cards infrequently
    • Retention of cardholders, post campaign
    • Sustainable lift over time
    • Return on investment in campaigns
    • Comparisons with industry averages

Let's Talk

Together, we can work to solve your business goals. Feel free to contact Laura Parrish at [email protected] to discuss how FIS can help grow your credit union.

BACK TO TOP


A Partnership Rooted in Our Collective Purpose

By Gerry Singleton, CUNA Mutual Group

The collective power of our collaboration as credit union system partners helps us remain competitive in a rapidly changing financial services marketplace. We’re excited to finalize our new agreement with the entire league system, as we continue building on our strong history of advocacy and support for the credit unions we collectively serve.

CUNA Mutual Group was established nearly 85 years ago as part of the credit union movement, founded the principle of people helping people. A lot has changed since our founding in 1935, but we’ve stayed true to our roots and our fundamental belief that a brighter financial future should be accessible to everyone.

The people we serve in partnership with credit unions work hard for what they have and want to protect their livelihood and loved ones. We work every day to deliver innovative, reliable solutions and experiences that enable more people in more ways to make financial decisions that work for them.

Customer expectations are changing fast and we’re changing with those expectations. We clearly aren’t the same company we were a few years ago. We’re going through our own transformation to remain relevant to the credit unions and consumers we serve today. We’re looking to the future and embracing innovation and disruption. Technology will continue to transform how consumers interact with businesses and we’re making high-levels of investment in technology and the customer experience.

Today, we protect nearly 30 million consumers and have relationships with 95% of credit unions in the U.S. Helping credit unions remain strong is a big priority for us. That’s why we support organizations that contribute to the growth and vitality of credit unions; providing more than $155 million to the movement over the last 5 years.

United on Advocacy

Our commitment to credit unions extends well beyond our products and services. When the advocacy battles heat up, we are there to stand united with credit unions. Most recently, we focused our resources and advocacy efforts to preserve the credit union tax exemption in Iowa, Kentucky, Kansas and Illinois. That battle isn’t over yet and we’ll continue to stand united with credit unions on these critically important issues.

Giving Back Part of our Core

Like credit unions, giving back to the community is part of who we are. Last year, our employees donated their time, money and expertise, logging more than 15,000 volunteer hours. We also contributed an additional $20 million to our foundation to create a sustainable funding source for many years to come. We want to make a real difference and help close the gap on economic and educational disparities in our communities.

Fostering a Diverse, Equitable and Inclusive Culture

We believe greatness can come from anywhere and anyone and we’re building an environment where everyone feels included. Our 12 employee resource groups are driving greater awareness around how our unique and diverse backgrounds build a stronger and more innovative organization. 

We’re excited about the future. We believe CUNA Mutual Group will continue to be the partner credit unions count on to help them grow in new ways and to build deeper member relationships. 

We’ll be there to make a difference in the lives of your members, in partnership with credit unions.

We’re getting better and better at anticipating and responding to your needs.  We’re delivering insight, products, and service that exceed your expectations.  We are here to help credit unions and the system succeed.

Gerry Singleton is the Vice President, Credit Union SystemRelations for CUNA Mutual Group, the leading provider of insurance and financial services to credit unions and their members. Contact him at [email protected].

BACK TO TOP


 

 

Upcoming Webinars

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

Office Hours: Emerging Risks

12/11/2019 1:00PM (CT)
Join us for an opportunity to interact with our Risk Consultants. Ask a question, share a comment on risks or mitigation tips associated with a specific topic, or hear from your credit union peers.
Protection Resource Centers/Live Events 

*In order to attend this webinar your credit union must 1) offer Debt Protection or 2) be licensed to offer Credit Insurance or be in a state that doesn’t require licensing. (If your credit union participates in the Lender Development Program, you meet the requirements to attend these sessions.) 

BACK TO TOP


Subscribe