By Robert McGarvey

 

For CU2.0

Do you believe Fox Communities Credit Union in Appleton, WI is the nation’s best performing credit union?

S&P Global Market Intelligence does and therein lies the seeds of a fierce debate.

I am not pointing a mocking finger at Fox Communities. No doubt it is a fine institution.

I do have questions about the how of the S&P ratings.

“Their metrics make no sense,” a longtime credit union analyst grumbled to me when he brought this story to my attention. He requested anonymity mainly because credit union people don’t like to be seen as boat rockers.

But two things – he may be absolutely right that the metrics used by S&P Global make little real world sense and just maybe, too, some aggressive boat rocking is exactly what the credit union world needs now as it faces a universe of threats, from mega banks to non banks, all of which want to step on small FIs like so many uninvited ants at a Spring picnic.  

The way forward will be led by great, inspired, energetic credit unions whose tactics and strategies light a path for others that choose to follow.

Do any of the purported “best” credit union rankings actually show the way? Understand: there are many ways to measure a credit union’s purported health. There’s NCUA CAMEL system.  Callahan has its own metrics.  Fiserv’s RADDON has another system.  DepositAccounts.com, a subsidiary of Lending Tree, now has released its tally of the nation’s “healthiest” banks and credit unions.

What does any of it mean?

Set aside the non public rankings – via Callahan and CAMEL.  Are the public-facing rankings worth much?

Here is how Fox Communities grabbed its top spot in the S&P tally, according to an S&P press release: “Aided by a pair of mergers, Appleton, Wis.-based Fox Communities Credit Union dethroned five-time champion Chubbuck, Idaho-based Idaho Central CU, to grab the No. 1 spot in S&P Global Market Intelligence’s annual ranking of the 50 top-performing credit unions. Last year, 81-year-old Fox Communities merged with two different Green Bay, Wis.-based credit unions — Horizon Community CU and Harbor CU — which helped the credit union post 17.6% membership growth in 2017 and 21.4% market growth.”

Mergers – that is, buying members and market share – equate to “best performing?” Really?

A lot of mergers are shotgun marriages of ailing partners.  That’s just reality.

In the DepositAccounts.com rankings, the Denver Fire Department FCU is the nation’s healthiest. Runner-up is Cascade Community Credit Union in Oregon.

The “healthiest” bank, by the way, is First Commercial in Alhambra, CA and, nope, I haven’t heard of it either.

In the RADDON rankings, winners are presented alphabetically. 23 credit unions – out of 500 analyzed – are cited.  I cannot say I am familiar with many of them.

All these rankings make for press releases and applause.

Does it add up to anything that matters?

Here’s the real question: what makes a credit union successful? What makes it a model for peers to study?

A handful of measures to me matter:

• Organic assets growth
• Organic membership growth (more members without mergers)
• Bigger local marketshare (how does the CU stack up against local competitors)
• Solid financials (gleaned from NCUA call reports)
• Board quality
• Management quality
• Readiness for the digital battles ahead
• Preparedness for the Millennial members of tomorrow

That list can – should – be debated. But what needs to happen is the debate. Now is the time for credit union leadership to doubledown on fostering the survival skills they will need to make it through the banking wars that loom ahead of us.

This is no time to go full out ostrich.  

The next recession – many experts now whisper about a brutal 2020 global economic turndown – will be ugly.  Who will survive? It’s coming, hard to say when, but downturns are inevitable.

Some credit unions are making all the right moves to position themselves to grow. In bad times and good. They are getting out their message that they are all the bank a consumer needs, and a better deal for the members and their communities.

Many, many others are just holding on.

Here is what the industry really needs now: a ranking of the top 10 credit unions for digital excellence, that is, excellence tomorrow and today. 

Who wants to help pick them?

by Robert McGarvey

 

Research via PhocusWright pinpoints what the company identifies as a major revenue opportunity for hoteliers – and what may become a major annoyance for us.

Here’s the punchy headline: A $28 Billion Opportunity for Hotels.

I shudder to think how annoying every hotel stay is about to get in an attempt to sell us all manner of ancillary services.

The model – the source of hotelier envy – is that airlines rake in billions selling us everything from beer to snacks, credit cards, and better seats.  Airline estimated ancillary revenues are above $80 billion globally – the top 10 carriers alone took in north of $28 billion in 2017, more than tenfold more than in 2007.

A flight on many carriers in coach increasingly resembles a stroll down Canal Street in Lower Manhattan.  Maybe without the counterfeit gear. But certainly with all the brazen hustle and salesmanship.

Do you want your hotel stays to be similar experiences?

PhocusWright sets the table this way: “[H]otels are increasingly turning toward the sale
of ancillary goods and services to help drive additional revenue. For hotels, the phrase ‘ancillaries’ typically refers to optional guest add-on products and services…. These may take the form of in-hotel ancillaries, such as room upgrades, food and beverage services, additional in-room amenities or spa/wellness/entertainment products offered by the property itself. Alternatively, ancillaries may also include in-destination ancillaries such as sightseeing tours, car rental, transfers or event tickets, typically provided by third parties.”

What do I want from a hotel room on a business trip? A place to sleep, a place to do some work (ideally a desk but I’m flexible – a decent chair and lighting will suffice), good WiFi, probably a lobby coffee shop (or – better still – one outside within a short walk), and that’s about it.

I have never bought spa/wellness/entertainment products from a hotel, at least never for myself.  I have never bought sightseeing tours, not on a business trip (in London, yes, on vacation).  I have never bought event tickets.  And I generally seek to avoid hotel f & b, unless I am very pressed for time.

Color me a bad candidate for upselling.

What about you?

PhocusWright, which surveyed a large number of consumers, said that in fact we are eager to buy ancillary products and services.  “A substantial potential market currently exists for both in-hotel and especially for in-destination ancillary products and services. Two types of on-property offerings – dining at the hotel and early check-in/late checkout – are the most popular services that consumers would be willing to pre-book from hotels. However, guests are also open to purchasing a diverse range of alternative, externally provided products and services, including museum/attraction tickets, sightseeing or other tours, event tickets and transportation.”

I read that and am speechless, almost.  Very, very few hotel restaurants are so busy that it requires advance booking to snag a table and what’s hard about making one’s way to the Metropolitan Museum in NY or the Heard in Phoenix? A few museums make advanced booking highly desirable – I’m thinking of the Uffizi in Rome but we simply booked ourselves online a few days before.

*If* a ticket is hard to get – think Hamilton when it was Broadway’s darling – I would gladly have tipped, generously, a concierge who could have delivered seats, but PhocusWright seems to be talking about hotels acquiring easy to come by ducats and marking them up.

Who needs that?

PhocusWright continued: “Facilitating the pre-booking of in-destination ancillary products and services clearly represents an interesting opportunity for U.S. hotels. Eighty-one percent of respondents indicated that they had participated in a bookable in-destination activity during their last trip. The most popular of these activities were day trips, excursions and sightseeing tours (42%); visiting museums, galleries or cultural attractions (30%); and outdoor activities (28%).”

Mind you, iSeatz, which sponsored the research and just a few days ago replayed it on Tnooz, insisted that “the majority of business travelers surveyed are very interested in purchasing either on-site or off-site extras. The research also identifies business traveler segments and details the preferences on when, where, and what extras business travelers are interested in buying.”

Really?

iSeatz continued in Tnooz: “many business travelers are interested in booking products such as trip cancellation insurance (45%), high-speed wi-fi (41%), parking (41%), transportation options (23%), and museum/attraction tickets (25%) at the time that they are booking their stay.”

Nah. I just don’t buy this, and I don’t see business travelers buying much on this list. Okay, I can in fact see business travelers purchasing late check out or early check in, room upgrades, and airport transfers.

But most of the upsells are just annoyances.

That’s why my hope is that hoteliers bury this report and ignore its findings.

But – shudder – I doubt they will.

 

 

By Robert McGarvey

For Credit Union 2.0

Sign up as a new member at your credit union – or pick any credit union – and what happens?

Ask yourself a sharper question: what doesn’t happen?  Think hard on that because the future of this new member relationship hangs in the balance.

Amy Downs, CEO at Allegiance Credit Union, a $260 million institution headquartered in Oklahoma City, has been thinking hard on these very questions and she believes she has found an answer that helps bring her credit union squarely into the 21st century’s digital world.

Mind you, Amy has worked at Allegiance for many years, 30 in fact. She remembers the new member welcomes of the old days. Back then Allegiance was officed in the Alfred P. Murrah Federal Building and it serviced federal employees.  As new workers were onboarded by human resources, they ordinarily were brought by the credit union and of course they got a warm welcome from the credit union employees, recalled Amy. Many of those new employees signed up on the spot.  And why not? They had been sincerely greeted by credit union employees – probably including the president, definitely senior managers. They knew they had a name and face they could seek out down the road if they had an issue they wanted to discuss.

What bank could match those human faces at the credit union?

Flashforward to nowadays and what happens when a new member joins a credit union? Increasingly that happens online. Then what? Probably there is a welcome email – and doesn’t that sound warm, friendly and inviting?

Not.

Probably, too, there is a welcome packet that arrives by US Mail – along with bunches of postcards from nearby dental offices, solicitations for donations, and maybe a past due notice on an electric bill.

Credit unions are scrambling – and many are failing – to make good, warm ties with new members. And many of those new members drift away or, even more commonly, they never put more than a few dollars into their credit union account. The bulk of their wallet is at another institution.

The future for credit unions is terrible – if things stay like this.

Matters got especially complicated at Allegiance. In 2002, the credit union got a community charter where it now serves people who live or work in the six counties around Oklahoma City.

In that transition, what was lost was that new employee introduction and that was a powerful moment that set up thousands of strong member – credit union relationships.

Amy thought on this and then she heard about an alternative.  What she now sends new members is a welcome video in which her smiling face is on camera, offering a sincere happiness that the new member brought Allegiance their business.

A couple times a week she scans the list of new members and when she recognizes a name, she makes a personal video. When she saw a husband of a close personal friend, she laughingly said in that video, “About time you listened to your wife!”

But even with the members she doesn’t know, what they see in Amy’s video is a person who is glad to meet them.

“We are losing our personal touch, all credit unions are,” said Amy.  “Everything has changed. It’s not the way it was, when we were on a first name basis with all our members. Now we have to work at it.”

When Amy heard about new member welcome videos, she wanted to know more. When she discovered the costs are nominal – she records her own, using a digital video recorder that cost $65 – and the actual time to record is a matter of minutes, she was all in.

Understand: the video is similar to what would have been an in-person meet and greet with a new member a generation ago. Amy’s videos are in the vicinity of 30 seconds. That matters because our attention spans just aren’t suited to movie-length video welcomes.

The bottomline for Amy and Allegiance: “We have to start marketing in different ways, or credit unions will be left behind.”

Use the technology that is readily available to forge stronger ties with new members. Welcome videos – absolutely – are a step in that direction.

Credit Union 2.0 has developed video solutions for new member welcomes – they in fact facilitated the work for Allegiance. For more info, here’s the contact.

Want to see Amy’s video? Click here.

 

By Robert McGarvey

 

New research from Expedia owned business travel management shop Egencia says that we like bleisure add ons to business trips – kind of, sort of, maybe.

We’ve lately been bombarded with trend reporting – paid for by hotel interests? – that has insisted that bleisure  has been cresting, especially with Millennials, and for some years I’ve wondered just how accurate this reporting is.

I’ve also wondered if any of this is at all new.

The Egencia research throws light on this.

Understand, I have long personally added leisure in connection with trips to cities that especially interested me in that moment such as New Orleans (and its long recovery from Katrina) and Chicago (where I made a tour of deep dish pie purveyors and grew to like them, but not as alternatives to thin crust pie, just as something different) and Washington DC (which I have liked as a town since I lived there 45 years ago).

I also strongly believe that a little “bleisure” is just the right touch to just about every business trip. See below. But what I’m talking about doesn’t involve extending stays and adding room nights.

That’s from where I sit. What’s the actual fact?

Egencia waded into this to find the statistical realities.  It surveyed 9000 business travelers. And it has some real insights into bleisure.

One finding resonated with my experiences: “Destination location is by far the biggest factor in determining whether or not to take a bleisure trip, with 30 percent of North America business travelers prioritizing location.”

A fun location, the company said, is the #1 reason to extend a business trip.

Agreed. There are towns I have been to a lot on business and have never spent a second more. Las Vegas, for instance.  Houston is another example.  I’ve traveled to both, a lot, in the past decade and like them fine but haven’t seen any reason to prolong the trip.

My point: bleisure always has to be seen as a contextual choice.

Egencia has still other, rich data. A key finding: “Twenty percent of business travelers have foregone adding leisure portions to their trips because of how it may look to their employer. ”

That is, will your bosses think you’re a slacker if you add on a few days to a Phoenix trip to enjoy spa treatments at some of the country’s best?  If you think your boss will see you as a mooch, you’ll go straight home, suggested Egencia.

Egencia offered a qualifier: “Proximity to the weekend may minimize that perception, with nearly one-quarter of respondents saying this impacts their decision.”  Sure. When a meeting ends Friday midday – quite common with many conferences (although most attendees evacuate Thursday evening, in my experience) – what’s the harm in extending and returning home Sunday night?

When the meeting is a Tuesday-Wednesday affair, we have problems.

Another issue in my experience – not explored in the Egencia data – is the role of an at home spouse or partner. Do you really want to go out on the town in the French Quarter while your partner sits at home watching PBS re-runs?

Proximity to family, by the way, was cited as important by 16% of Egencia respondents in making bleisure stay decisions.

Either way, we are doing a lot of bleisure, said Egencia: “68 percent [of respondents] take at least one bleisure trip per year.”

74% of us are planning or considering a bleisure trip in the next six months, said Egencia.

20% made adding in bleisure a resolution for the year.

Is this a generational thing? Naw. The reality is that Millennials, increasingly, carry a bigger share of the business travel can. But that age group has done so, certainly since the 1970s.  Nothing has changed. Baby Boomers had such decisions to make in the 1970s and 1980s, it’s just that the word “bleisure” didn’t exist.

The choices did

Last advice which is my own bleisure prescription: always build in at least one personally important thing on every business trip. That can be a muffuletta at Central Grocery, a visit to the Warhol Museum in Pittsburgh, a walk through Central Park in Manhattan, a noon Mass at St. Mary’s Basilica in downtown in Phoenix – whatever catches your interest.  I have not always done that (let me count the trips to Las Vegas) and I regret at least some of those missed opportunities (not so much involving Las Vegas).

But I firmly believe that doing one personally important thing on every business trip makes those trips that much more satisfying. It doesn’t require adding on a weekend, just making a half hour for a noon Mass or a similar amount of time for some gumbo and a beer at Emeril’s.  And you don’t need a poll to know this is the right thing to do to add a dash of pleasure your life.

 

 

 

 

By Robert McGarvey

 

For Credit Union 2.0

 

Did your credit union make the 50 most convenient list?  Stop wondering, click to see the MagnifyMoney ranking.

What this ranking is about is how easy it is for a member to access the services he/she wants, when he wants them, and so it looks at both the analog and digital worlds, branches and mobile apps, among other touchpoints.

Understand a couple things about the ranking: it ranks only the 50 biggest credit unions and, according to the data, the top rated credit union notched 90 points out of a possible 100. The lowest rated pulled down only 46.6 points.

That represents a huge spread.  The #1 credit union in this convenience scorecard – Alliant – literally grabbed twice as many points as the lowest scorer, Mountain America.

There may well be many more credit unions, outside the biggest 50, that also outscore Mountain America.

So what exactly is getting scored?  MagnifyMoney looked at 5 fields: opening hours (more means more points); how many ATMs; telephone service hours; mobile app (how satisfied are users); and data portability (do accounts sync with Quicken, etc.)?

A complaint about that group of five is that different members want very different touchpoints. I couldn’t care less about branch hours because I live around 2500 miles from the nearest branch at my chief credit union.  I care only about digital access. But I have relatives who care only about branches and phone services. So it makes sense that MagnifyMoney sifts different channels.

It also breaks out top 10 scores in each category.  Here, for instance, are the top five scorers for mobile app:  Eastman Credit Union; ESL Federal Credit Union; Redstone Federal Credit Union; SEFCU; Wright-Patt Credit Union.

Here are the credit unions with the best surcharge-free ATM coverage: Alliant Federal Credit Union; Hudson Valley Federal Credit Union; Northwest Federal Credit Union; OnPoint Community Credit Union; Suncoast Federal Credit Union; Wings Financial Credit Union and Wright-Patt Credit Union.

As for longest hours, the winner is Hudson Valley Federal Credit Union, with 59.9 hours per week.

You want 24/7 access? MagnifyMoney found a handful of top 50 credit unions that in fact offer exactly that via phone: Alaska USA Federal Credit Union

• Alliant Credit Union
• BECU
• Delta Community Credit Union
• First Technology Federal Credit Union
• Navy Federal Credit Union
• Redwood Credit Union
• Security Service Federal Credit Union

How did credit unions do as a whole? MagnifyMoney co-founder Brian Karimzad said that generally credit unions are not competitive with big banks on branch opening hours and telephone service hours. But, in the other categories, credit unions do very well.  Shared ATM networks – via CO-OP and CuLiance, for instance – give participants ATM networks numbering in the many thousands and those are numbers that stand tall against the ATM fleets of the biggest banks (more than 15,000 each at Chase and Bank of America; CuLiance claims more than 75,000 surcharge-free ATMs in its network).

As for how credit unions fare on convenience against other credit unions Karimzad stressed that there are “wide disparities.”  But the key is providing what matters to this member. A generic score is good to know but where the pedal hits this metal is in measuring how convenient the credit union is to this member.

Karimzad, incidentally, said in an interview that MagnifyMoney readers express a lot of interest in credit unions, usually because credit unions typically offer some of the best deals on loans, credit cards, and similar.  The movement already has significant recognition for its highly competitive rates.

And maybe now more consumers will understand that credit unions also can be very competitive on convenience, too. The reputation endures that credit unions keep short, banker’s hours, are laggards in technology, and are nearly impossible to join. The reality of course is very different.

And that’s why, despite the quibbles, it’s a good thing that rankings such as MagnifyMoney’s convenience scorecard get out the message that in many ways credit unions equal – maybe even beat – banks when it comes to how easy they are to use.

The more consumers that get that, the better for all credit unions.

Now, where did your credit union rank?

 

 

By Robert McGarvey

 

For CU2.0

 

A new report out of Celent asks a question that just may terrify you: Are banks ready for a real time world?

You probably know the answer at your credit union.

Join the club: many – probably most – credit unions are nowhere close to embracing a real time financial services universe.

Tell me why it takes a day – sometimes several days – to move money from an account at my credit union to a payee already in the system when, truly, it simply is a matter of shifting bits and bytes?

Money can – and now should – move as fast as a text message and if a friend in India sends me an SMS via Facebook right about now it is showing up in my FB queue.

It can happen in financial services. With money. Everybody – that means you – will have to climb aboard. “Real time payments,” said Celent, “have moved beyond being an if to a when.”

Here’s a Celent observation: “Most existing payment engines have a number of challenges in delivering real-time payments. First, they are generally batch-driven, rather than single message and instant, and so simply not suitable. The second, and less obvious reason, is that they require downtime for maintenance and upgrades, something that isn’t allowed in a real-time payment solution. Many real-time payment schemes only have downtime over the year measured in seconds. Old technology simply wasn’t designed to support that.”

What Celent is prescribing is adoption of a robust payments hub that can provide the 21st century world what it wants.

“Real-time payments require all the activity in the value chain to be carried out, typically in under a second, if not quicker. If all the processes are within the hub, they are easier to manage and coordinate. But as volumes increase, this becomes more and more essential. Furthermore, functions that sit within the hub will be subject to the same design requirements in terms of availability and maintenance,” wrote the Celent author, Gareth Lodge.

Some real time functions already are in use in the United States.

Digital currencies – the report pointed in particular to Ripple – are paving the way for a shift to real time money movement.

Zelle also is a step into real time for institutions that adopt it (and some credit unions already have – such as America First Credit Union and BECU).  And Dwolla offers real time ACH transfer functionality.

Don’t necessarily expect smooth sailing for your institution into the real time universe. Exactly how – and how well – many competing real time systems will integrate with each other is not yet known.

Then, too, as Celent pointed out: “The term real-time payments perhaps hides an obvious truth: in order to make the payment real-time, everything and anything that touches the payment, including fraud checking, balance checks, and the front end initiation system have also to be real-time…24 hours a day, seven days a week.”

All of that represents a massive change in how credit unions work.  Digital banks, Celent pointed out, are architected from the word “go” to handle real time. A legacy institution has a different, very real set of challenges. Said Celent: “Real-time payments then are the vanguard of the digital bank. New banks, built from the ground up, do not need to give this a second thought, but for any other bank, the task of converting from the existing infrastructure is a huge task.”

And the news gets worse.  Said Celent: “Many banks still run core banking systems that are over a decade old. The chances are that unless it has been replaced within the last five years, it is still a batch system. This poses immediate challenges — how to update the customer balance until the next batch, overnight run.”

Institutions – and their cpre providers – are fiddling with workarounds.  But that’s the point: there will definitely have to be workarounds and they may not always be easy, elegant or even straightforward.

What to do?  The first step is recognizing that now indeed is the start of real time banking.  That, said Celent, is integral to the transformation into the digital bank that just about all now know is the future. Wrote Celent: “Banks may see the need to move to a digital bank, but they may be struggling to make the business case for investing in real-time payments. Yet there is a confluence of the digital banking trend with real-time payments, as they share many of the same attributes and indeed, that make it impossible for a digital bank to truly exist without it.”

Absolutely right. Until real-time payments are part of the package the institution just isn’t a digital bank. Period.

 

By Robert McGarvey

 

The ACLU has now filed suit against TSA, claiming that agents are searching the devices of domestic travelers.

“Domestic” is the key word.  For some years, the US government – along with many foreign governments – has searched devices owned by international travelers.    That’s handled by US Customs and Border Patrol agents and, in 2017, searches were in fact up 60% from 2016.

But the total number of searches in 2017 hit only 30,200.  Customs, by the way, has a clear right to search such devices – only diplomats are excepted – and it can search people arriving or departing, US citizens as well as foreign nationals.

About 80% of searches are on devices of non US citizens.

And, really, not many people are searched.  0.0007 of international travelers in 2017.

Domestic travel searches of devices is an entirely different matter.

And I know many very senior executives who sometimes travel with highly confidential documents – pertaining to merger and acquisition targets, for example – who would freak out if they feared their documents might have been scanned in a TSA search. And maybe they could have been.  

There’s a lot we just don’t know about domestic data searches.

For what it’s worth, TSA denies it conducts searches: “TSA does not search the contents of electronic devices,” a TSA executive told The Guardian.  

ACLU has a different perspective.  “We’ve received reports of passengers on purely domestic flights having their phones and laptops searched, and the takeaway is that TSA has been taking these items from people without providing any reason why,” staff attorney Vasudha Talla told the Guardian. 

One fact: I personally don’t give much of a hoot if TSA wants to search my devices. Not personally. But I do care a great deal if civil liberties are trampled upon and, per the ACLU, that’s exactly what is occuring.

The ACLU staff lawyer, in a press statement, elaborated: “TSA is searching the electronic devices of domestic passengers, but without offering any reason for the search,” said Talla. “We don’t know why the government is singling out some passengers, and we don’t know what exactly TSA is searching on the devices. Our phones and laptops contain very personal information, and the federal government should not be digging through our digital data without a warrant.”

As far back as July 2017, TSA in fact did issue some details in a press statement:“As new procedures are phased in, TSA officers will begin to ask travelers to remove electronics larger than a cell phone from their carry-on bags and place them in a bin with nothing on top or below, similar to how laptops have been screened for years. This simple step helps TSA officers obtain a clearer X-ray image.”

Notice the phrase:  “similar to how laptops have been screened for years.”  I recall the days when , occasionally, TSA would ask a traveler to remove a laptop from a bag and boot it up. I recall sidelining a computer with a bad battery because it couldn’t reliably perform that chore.  I doubtless grumbled…but it didn’t bother me particularly.

What about today? And the apparent entry of TSA into device data searches? The ACLU suit fingers the hottest button: “the federal government’s policies on searching electronic devices of domestic air passengers remains shrouded in secrecy.”

Thus the ACLU suit.

ACLU, by the way, said it had previously filed Freedom of Information Act demands for data from TSA but the agency had ignored those filings.

The US Customs and Border Protection has issued a detailed, 12 page report on its search of devices of international travelers.  It’s extensive and if you have questions, probably the answers are in this January 2018 document.

TSA, by contrast, is opaque.  Per the ACLU suit: “TSA has not made publicly available any policies or procedures governing searches of electronic devices, especially those held by passengers engaged in purely domestic air travel. As such, the public is unaware of the legal basis for TSA’s searches of electronic devices of passengers not presenting themselves at the border and flying on a domestic flight. Further, the public is unaware of TSA’s policies and procedures for advanced or forensic searches, in which external equipment is used to search, examine, or extract data from passengers’ electronic devices and SIM cards. And the public has no knowledge of TSA’s policies and procedures relating to seizure of electronic devices, retention or destruction of data resident on those devices, or use of the device to access data held on a ‘cloud’ or elsewhere.”

Question: if you have a confidential document, how can you shield it from TSA? I’m guessing if it resides in the cloud, not on the device, you might be good to go. But that’s just a guess.

Question: do you need to start carrying sanitized devices on domestic flights – and that’s been the advice of corporate security for international travelers for as long as I’ve covered the space.

There’s just a lot savvy business travelers need to know to keep organizational secrets safe – and right now we just don’t know all we need to know to make shrewd decisions.  Maybe the ACLU suit will shed the light that’s needed.

At least we can hope.

 

 

By Robert McGarvey

For Credit Union 2.0

 

Should your credit union offer payday loans?  Don’t rush to say no. In North Carolina, and spiraling out of there, Self-Help Credit Union and its offshoots such as the Center for Responsible Lending have documented that there is good to be done, and even some money to be made, by offering payday loans.

Technology, by the way, may be the magic that lets this flourish.  Read on.

Start with Pew Charitable Trusts’  blockbuster report that says credit unions should look hard at plunging into payday lending.

Some credit unions already are doing it.  Like Technicolor FCU.  Unify FCU.  Horizon FCU.  Banner FCU. There are others.

But there could be more.

Understand: according to Self-Help’s CRL, the average rate for a payday loan is 391%.

In bygone days, when the Mafia offered street lending at shipyards and factories in north Jersey and New York City the typical term was “five for six.”  Borrow $5 on Tuesday and when payday came on Friday the borrower owed $6. If he couldn’t pay in full, he could pay $1 to stay current. Many borrowers did exactly that, forever paying interest on a principal that long before was spent.

Everybody knew those loansharks were evil.

But – and this is the point that often is missed – they thrived because they lent money when others said no, and there weren’t that many others anyway. Banks and credit unions had no interest in small dollar, unsecured personal loans. There were no consumer credit vehicles in mass distribution (a la Visa and Mastercard).  Mainly there were relatives and friends and when they said no, borrowers turned to loansharks.

An estimated 10 to 12 million of us want payday loans every year today.

Everybody knows these loans, too, are evil.  

The market continues to thrive however. People need these loans, to feed their families, to keep the lights on, to stop an eviction.

So why aren’t more traditional lenders wading into these waters? Regulators are dragging their feet in enabling small dollar loans and many institutions just don’t like the smell of them, said Pew.  “Because regulators have not yet issued guidance for how banks and credit unions should offer small-dollar installment loans, or granted specific regulatory approvals for offering a high volume of such loans, these programs have not achieved a scale to rival the 100 million or so payday loans issued annually.”

The Center for Responsible Lending has campaigned to cap interest rates on small dollar loans at 36% – enough, said CRL, for a smart institution to make some money but not so much as to bury the borrower in a spiral of indebtedness.  According to CRL, 15 states plus the District of Columbia have enacted caps of 36% or less.

Payday loans to members of the military already are capped at 36% APR.

What needs to happen to get more credit unions making small dollar, personal loans? Said Pew: “banks and credit unions will need to develop small-loan products, and their primary regulators—the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board of Governors, the Federal Deposit Insurance Corp. (FDIC), and the National Credit Union Administration (NCUA)—will need to approve the products.”

The NCUA has given a green light of sorts to credit unions to proceed, cautiously: “NCUA is aware that an increasing number of FCUs are interested in establishing short- term loan programs that are more advantageous to their members than programs available from traditional payday lenders and pawn shops. NCUA believes a well-run loan program can be an opportunity for an FCU to improve the lives of its members by providing low cost, small loans.”

Just offering such loans isn’t enough. Pew stressed that credit unions would have to get the word out that they in fact offer low interest payday loans.  Just as cucially, noted Pew, “banks and credit unions would need to compete with nonbank lenders on speed, likelihood of approval, and ease of application.”

Pew did note that credit unions entering payday lending could do so with a lot of advantages: “banks and credit unions would also enter the market with large comparative advantages over nonbank lenders, with their lower costs of doing business allowing them to offer loans profitably to many of the same borrowers at prices six times lower than those of payday and other similar lenders.”

Note: Pew, in its report, persuasively argues that credit unions have enormous cost advantages when it comes to issuing payday loans versus a standalone paycheck loan operator.  That can translate into much lower – but still profitable – interest rates.

Pew added: “The average payday loan customer borrows $375 over five months of the year and pays $520 in fees, while banks and credit unions could profitably offer that same $375 over five months for less than $100.”

A key to doing this profitably, said Pew, is to embrace automation: “The cost of manually processing applications is too high to offer small loans at scale. So, to keep the cost of origination low—and to compete with nonbank lenders on speed and ease—banks and credit unions will need to largely automate the lending process, including determining eligibility, establishing the maximum loan size, processing applications, and disbursing funds.”

What about provisions for losses? According to Pew, in pilots, charge offs have been comparatively few.  

A bottomline: many Americans want credit unions to make payday loans and they are willing to pay for them.  The regulators, admittedly slowly, have signaled support for cautious entry into payday lending. Smart, community focused credit unions will take the cue and get out the word that they are there to make loans to the very needy.

That’s a win in terms of community relations, it’s a win for the borrowers, and – according to the Pew and CRL data – it’s a win for the credit unions.

Auto loans, subprime borrowers, and your credit union – CUInsight http://bit.ly/2FFcZFc

 

When I first saw the headline that American Airlines planned soon to roll out its barebones basic economy fares on international flights, I shrugged with haughty indifference: I’d never buy a seat that came without the ability to actually pick the seat so what does this matter to me?

A few days later the horror set in: I will be impacted powerfully. So will you.

Watch just about every carrier pile into this. Delta of course has offered basic economy to Europe for some time.  United now is saying it will be on board with this later this year. Of course all the legacy carriers want to combat WOW, Norwegian and any other no frills carrier with an eye on US international routes. And they’ve decided basic economy is the card to play.

Basic economy international is trending.  And now that I get what’s going on, I want to scream.

Okay, if you fly upfront, none of this much impacts you. But I hear of fewer and fewer organizations that pay for upfront seats, not even on international flights. Sure, I think that’s pennywise (especially with ever better sleeping possibilities upfront) – but I am not and never have been a corporate accountant so nobody on the highest floors is listening to me about this.

And all the rest of us now have to wrestle with Basic Economy’s spread into international travel.

AA spells out the rules regarding its international basic economy here.  There are changes from the US basic economy” fare, notably passengers to Europe do get to check a bag, gratis.  International basic economy passengers also get to use the overhead bin, unlike AA domestic basic economy passengers.

Here’s the one big difference between “Basic Economy” and standard economy for international travelers: “Seat assignments: Free seat assignments are made automatically when customers check in. Customers flying trans-Atlantic Basic Economy can purchase a seat assignment at any time.”

That means they can’t pick a seat when they book the flight a few weeks, or months, out.

Why this impacts us is that – I’m sure you do likewise- when picking a seat I study the seating maps and occupancy, looking especially for empty middle seats next to the aisle seat I always pick.

Often I’ll review my choices a day or two before travel.

Now I have no way of knowing if I have the right seat because middle seats will fill in as the basic economy passengers check in and many of them, count on it, will check in not long before boarding.

My entire system for picking slightly more comfortable seats to Europe is in jeopardy.

Look at the seat map for the AA 757-200.

The 767-300at least has the rows of two seats on the aisles. But picking that aisle seat does not give me an empty seat next to me which is what I want.

Worse: on domestic flights a growing number of corporate travel policies have nudged employees into buying basic economy -or upgrading on their own nickel.  Expect to see similar on flights overseas. Some companies are blocking basic economy but know that others are embracing the perceived savings.

That means there’s a probability that you may find yourself steered into basic economy on an international flight.

What a horror show.

Honestly, I never much missed flying upfront on flights to Europe because when you picked the right seat, on the right flight, there was a high chance of a lot of personal privacy in the back, maybe even more than in business class upfront.

I think those days are just about over however and what we are looking at is the high probability of planes with every seat filled even in coach on international flights.

Know too that upgrades are not possible, regardless of your elite status, when you fly basic economy internationally.

And you board in the 8th group – after everybody else. (Exceptions are made for those with elite status and who bought tickets with certain AA credit cards.)

Basic economy of course also is a scam.  Yes, ticket prices are a little lower – but the evidence is plain that the carriers are making that up with a raft of fees.  In a recent quarter passengers paid $1.2 billion in baggage fees alone – a new record. Delta even has yanked the free checked bag and now wants $60 for that luggage to accompany you to Europe when you fly basic economy.

The worst news is that there really is no alternative to flying when it comes to Europe. From my Phoenix base, I can – and probably will – drive to Las Vegas and Los Angeles. But I sure am not going to drive to Paris.

What should business travelers do about basic economy in international travel? Start by flatly refusing to fly it when an employer asks – and point out that the “economy” often is a false promise.

And begin agitating for employers to pay for upgraded seating because, really, the days of gaming the system to nab a better economy seat on international flights is coming to a close.

The game is over, the carriers have won.