21st Century Member Education – The Credit Union Exchange http://bit.ly/2BujvYu My reporting

 

By Robert McGarvey

I have long been on record as a TripAdvisor fan. My argument has been, sure, some of the reviews are nuts or blatant puffery but when there are enough reviews, a kind of commonsense reality will emerge.

I take all that back.

I no longer recommend TripAdvisor as a trustworthy source of hotel commentary and – sadly – I have no recommendation about what to replace it with.

TripAdvisor’s sin of course is that it has been caught deleting reviews that claimed the person had been raped on property, sometimes by hotel staff.

But other kinds of negative comments too were deleted.

An investigative piece in the Milwaukee Journal Sentinel initially explored the suspicious death of a Wisconsin student in Mexico, apparently from drinking contaminated alcohol at a resort. As the paper poked into this, it found evidence that many, many reviews and comments on TripAdvisor apparently had been deleted.

Evidence mounts that TripAdvisor has a longstanding policy of removing some kinds of negative commentary.

Even when that commentary is exactly what a potential guest might want to know before before booking a stay.

The FTC may now be investigating TripAdvisor. The Journal Sentinel reported: “The Commission has a strong interest in protecting consumer confidence in the online marketplace, including the robust online market for hotel and travel,” wrote Maureen Ohlhausen, acting chairman of the FTC. “When consumers are unable to post honest reviews about a business, it can harm other consumers whose abilities to make well-informed purchase decisions are hindered and harm businesses that work hard to earn positive reviews.”

Senator Tammy Baldwin (D-WI) has upped the presure on the FTC to investigate TripAdvisor. In a Tweet she wrote: “This may be a case of putting profits over providing an open, honest forum for traveler reviews on TripAdvisor. I called on the F.T.C. to look into this and they should get to the bottom of it.”

TripAdvisor apparently justified deletions by saying the posts were hearsay or off topic or in violation of a “family friendly” tone.

Maybe so, but would you want to know if a resort has a history of selling tainted booze or condoning sexual predators on staff?

It gets worse. The Journal Sentinel reported this: “An untold number of TripAdvisor users have been granted special privileges, including the ability to delete forum posts. But the company won’t disclose how those users are selected. “

Nor will TripAdvisor disclose who they are.

That has to trouble you in the way letting a coyote guard a chicken coop would.

TripAdvisor, for its part, has issued its own mea culpa. It denies that it removed any posts to please hotels and resorts but acknowledges that a prevailing “family friendly” content edict had resulted in removal of many posts.

Some of those posts detailed sexual assaults.

The company claims it has loosened its language restrictions.

TripAdvisor now says: “A simple search of TripAdvisor will show numerous reviews from travelers over the last several years who wrote about their first-hand experiences that include matters of robbery or theft, assault and rape. We believe any first-hand experience should be posted to our site as a means to communicate to other consumers looking for information on where they should travel.”

The company added: “In order to better inform consumers and provide them with even more information about their travels, TripAdvisor is creating a ‘badge’ notification to apply to businesses to alert consumers of health and safety or discrimination issues at that business reported on within the media or other credible sources of information.”

Here’s an example.

In searches on TripAdvisor for reviews that include allegations of rape I found quite a few reviews. Here are some for Cancun. Here are 1600+ sitewide – but many are mentions of “The Rape of the Sabine Women,” sometimes rape flowers, some complain about getting price gouged, but at least some pertain to claims of sexual misconduct.

Are you willing to forgive TripAdvisor and take its new policy at its word?

TripAdvisor plainly is trying to make amends for its past missteps.

Do you trust it now?

I do not. Much more transparency is required to regain trust. Who has deletion privileges? How is it used?  What hotels can delete reviews?  

A lot of deletions occurred in the past.  How can TripAdvisor be trusted to stop?

If a review site cannot be trusted to post reviews alleging serious misconduct, how can it be trusted at all?

The real hair puller here is that, honestly, there are no alternatives. Various hotel organizations talk about creating their own review sites. Some hotel companies talk about seeking out more reviews. But, really, everybody with an interest already has too much skin in the game. They aren’t unbiased.

That’s why I want TripAdvisor to work, I want them to fix this. I hope it’s fast.

  -30-

12/10 – Read about how TripAdvisor was pranked into rating a fake restaurant London’s best.  A chilling tale.

 

By Robert McGarvey

For CU 2.0

 

Call it a core credit union marketing misstep: there’s wide assumption that consumers trust credit unions more than banks.

Rubbish.

They should, I’ll readily acknowledge that, but there is no persuasive evidence that credit unions in fact score any higher in consumer trust than do banks.

And banks really stumble in trust ratings, a fact underlined in the recent Landor Pulse analysis of financial services organizations. Guess what came in first?

PayPal, which, per Landor, emerged “the clear leader.” It came in as the most trustworthy. By a sizable margin.

Remember this about credit unions. Kirk Drake, the author of CU 2.0, has pointed out that in the aftermath of the 2008 banking meltdown, which costs innumerable Americans their jobs, their houses, their retirement savings, and everywhere banks were excoriated by angry consumers, credit unions “saw their market share grow by a measly 1%.”

Chew on that. In 2008, credit unions were handed the ball on the opponent’s one yard line and they could not drive it in for a touchdown. How terrible is that?

They couldn’t even kick a field goal.

The Landor research findings help clarify what has happened here and it starts with the low esteem in which all financial institutions are held.

Maarten Lagae, Landor’s senior manager of insights and analytics, said, “Comparing BAV [BrandAsset Valuator, a Landor proprietary metric] data over the past 10 years shows that perceptions of trust have eroded in all industry categories, but especially in the financial sector. In addition to secure assets, the ‘must-have’ for financial services brands is trust. Consumers are increasingly wary of institutions serving motives other than customers’ best interests. This is even more true with millennials, who are the first to engage with businesses that provide transparency and disrupt unequal power relationships.”

How many focus groups have you seen where consumers say about credit unions, “nope, I don’t belong, don’t like ‘em because I don’t like credit and don’t like unions.” I know I have seen and heard exactly that a number of times. It’s easy to dismiss it as rooted in misunderstanding. But that consumer still walks past your door without stopping.

Back to the Landor trustworthiness rankings: in second place is Visa with 25; Mastercard comes in third with 23; American Express comes in 4th with 17%.

Curiously, other than PayPal, digital tools did not fare well. Apple Pay and Google Wallet are each trusted by 13%. Venmo, PayPal’s kin and widely popular among the young, won just a 10% trustworth rating.

What about banks and credit unions? Hang on for bad news. Capital One and Chase are the highest rated at 17%. Bank of America came in at 16%. Wells Fargo, amid its avalanche of bad press, tumbled from 23% in 2006 to 19% in 2016 to 14.5% now. That last ought to trouble credit union and bank executives because it says that many consumers are paying attention to the news and they do know bad press when they read it. And it shows up in these trustworthiness ratings.

As for what the rankings mean, here’s Landor’s take. “Financial services brands are still seeing an impact from the 2007–2008 crisis, augmented by ongoing issues facing myriad financial institutions over the past two years,” noted Louis Sciullo, executive director of financial and professional services at Landor. “We see credit card brands faring better because of their daily place in consumers’ lives and the relative clarity of their fee model. Meanwhile, PayPal’s high trust ranking stems from the amazing job it’s done to establish confidence in its digital platform.”  

Some 55 financial services brands are rated by Landor.

No credit union bubbled to the surface in these trustworthiness rankings but don’t assume that means credit unions did fine.

There’s no indication any credit union scored high enough to win notice.

What to do about that?  Landor offers a six step program to win more consumer trust:

• Be transparent. That means open.
• “Be honest – it’s the best policy.”
• Have true values you live every day.
• Treat your employees well – they are brand ambassadors.
• Deliver excellent products and services.
• Protect customer data. Breaches are costing every FI reputationally.

None of that is hard. But many financial institutions struggle with taking these six steps. And that includes many credit unions.

Bottomline: a lot of financial services companies have sunk in trustworthiness rankings in the last decade. Credit unions have an opportunity to win wider public applause – and much bigger marketshare – but so far have not capitalized on this. Make doing that job 1 in 2018.

 

 

By Robert McGarvey

 

Blogger Ben Schlappig at One Mile at a Time recently threw a very large spanner in the delicate machinery of many press outlets which rush to cover new first class air cabins. According to Schlappig, “All the time I see mainstream media articles ranking the world’s best first class products. There’s only one problem — the person writing the story typically hasn’t actually flown any of the products, and just uses airline-provided images  and marketing bullets for their rankings.”

Skift thought enough about that allegation that it ran this.

Color me surprised that there is a brouhaha about this.  It may not be good journalism but it is also standard operating procedure.  

A lot of coverage of travel plays by different rules than, say, political reporting or business reporting.

I know enough about hotel coverage to know that in many, many cases – possibly most – the writers who cover hotel stays have benefitted from comped rooms. Typically, too, there’s no acknowledgement that this is so. Does getting a free stay influence how a writer reviews a hotel?  Probably yes but I’m unaware of any research into this. In my own case, I have gotten many free hotel nights but I have rarely covered hotels as such. It’s not my beat. I have put hotels in lists – “where to stay in Berlin Mitte” — but that’s about it.

As for air, in years past I often got free seats, but often, too, they were in coach and I don’t think I ever wrote about specific flights. Coach flights are fungible in my mind.

The new breed first class cabins are a different breed however. They definitely are not fungible.

Business travel blogger Joe Brancatelli may believe that first class cabins are dying – he has the numbers to prove his point – and CNBC says similar. So does the Telegraph. So does Bloomberg. But nonetheless we do like reading about how the other half lives.

Thus a shower of press write ups about first class air.

Definitely, too, much of it is written by people who have never stepped inside the cabin.

Singapore Air for instance is now winning an avalanche of press for its new first class cabin which does not debut until December and, therefore, nobody has flown it. And yet the press coverage multiplies.

Coverage often gets downright gushy, as have many write ups of the new first class cabin coming to Emirates.

Some publications have covered the war among airlines to provide yet more dazzling features up front.

Now tell me this: in glancing at this coverage do you believe the writers have in fact stepped in the cabins and flown long flights?

I don’t.

I agree with Schlappig, most of this front cabin coverage is based on press releases and photo libraries supplied by the carriers. But what’s the harm in that?

Far better would be an actual review of a cabin – here’s a nice piece about flying business class on Vietnam Air with at least one grumble voiced – but doing that with the new first class cabins is difficult. Seats are few, they are very expensive, and they usually are on long flights.

Besides, the whole point of the wave of coverage pre debut is to stir up interest in buying tickets when the cabins are ready to fly.

But even if offered a freebie when the Singapore Air flight begins, I’m unsure I’d accept because my personal ROI – involving my time – probably would be pathetic.

Would I write up the cabin now if a paying editor requested I use the press release? Probably not. I don’t see that I could say anything that hasn’t already been said and, personally, I just don’t like doing stories that are entirely based on press handouts. And I do think writers who write up the cabins based solely on press materials should note this.

Brancatelli, meantime, pointed out to me that just about all the press reviews of front cabins miss the mark for business travelers because they aren’t written from a business travel perspective.  He’s right. The write ups are about fluffy PJs, good champagne, gourmet delicacies, and other tokens of the posh life. But when I travel upfront I don’t drink alcohol and I judge my flight on the quality of my sleep and the usability of the workspace to do some quality work.  If the food is health focused, all the better.  The business travelers I talk with tell me their concerns are similar. Not a one has ever mentioned the slippers that might be available. So, yes, Joe is right when he snorts that many of the front cabin reviews are “ludicrous” when read by a business traveler.

That’s why what I personally would like to write rather than a cabin review based on press handouts would be a story based on interviews of  maybe six paying passengers about their Singapore Air first class experience. Is it worth the money? What did you do? How did you sleep? What did you eat?  It would be great if it were a Rashomon but if they all agreed it was a great flight, money well spent, that would be great too.

Maybe that is a story I will write some day. But it will have to wait until December when the cabin is actually open to the public.

Until then all we have are the handouts.

 

By Robert McGarvey

 

For CU 2.0

 

Two stats jump out of a PSCU and Javelin report entitled “The Credit Union Guide to Opportunities in IoT, Biometrics and E-commerce.”  Credit union members love their smartphones -80.9% own one. That’s roughly comparable to big bank customers – 88.4% of them own a smartphone.

Where credit union members falter however is in mobile wallet usage. 46.3% of big bank customers have used a mobile wallet – such as Apple Pay – in the past 90 days. But just 10.8% of credit union members have.

In the past week 3.7% of members have used a mobile wallet. 19.3% of big bank customers have.

Those stats have to scare you. Credit union members have smartphones. They just aren’t using them to pay. Big bank customers are 4x more likely to pay by phone.

Why are credit union members so slow to adopt mobile wallets? It’s all the more puzzling when so many big retailers have embraced Apple Pay and that typically also means Android Pay and Samsung Pay too. It’s now easy to go a day without ever using plastic cards, from coffee in the a.m. at Starbucks using its app through stocking up on dinner groceries at Trader Joe’s or Whole Foods with Apple or Android Pay.

And there are growing numbers of consumers who are coming to see mobile wallets as a convenient and secure way to pay.

But there just aren’t many inside credit unions.

PSCU and Javelin said that the relatively low credit union usage of mobile wallets compared to big bank customers leaves credit unions “vulnerable.”

Partly this anemic usage is because credit union members skew older and the demographics that have most jumped on mobile wallets are younger.

Another factor: few credit unions have actively marketed mobile wallets to their members. Initially, when Apple Pay debuted, as credit unions rolled out the tools they blew trumpets to announce they had the latest technology. But now many are silent. Plainly they would rather tout other products to their members, in part because mobile wallets such as Apple Pay cost a credit union money while many other products – such as a credit union’s own credit cards – make the institution money.

That’s understable but also short-sighted. Mobile wallets are the future of payments and an institution that plans to hang around needs to be at the forefront of surging consumer usage.

“When a credit union has Apple Pay it helps position it as more progressive,” said Bryce Roth, a marketer with Verve Credit Union in Oshkosh, WI.  He added that every week questions come in, do you have Apple Pay? The answer is yes but, to Roth, the takeaway is that at least some consumers really want to know Apple Pay in particular is available.

Note too: having multiple wallets – such as Android Pay too – just may position a credit union as that much more progressive.

Now for the scary moment. Look again at how much more mobile wallet usage there is at the big banks. The disparity with credit unions is frightening.

At least some big banks have further fueled mobile wallet usage by doling out perks to customers who use them. Chase for instance has promoted mobile wallet usage with a promotion that adds a bonus point for every dollar spent with mobile wallets on some credit cards.

Wells Fargo also has offered sweeteners to mobile wallet users.

What’s a credit union to do? Definitely, think about offering promotional bonuses to encourage usage.

But there are free tactics too. Start by reminding members of the wallets supported by your institution. Make it easy for a member to find this out. DCU in Massachusetts does this well. Study its pages.

Navy Federal, the first credit union to offer Apple Pay, is another to study.

Then do as PSCU and Javelin advise: “The key challenge for credit unions will be persuading their members to load their mobile wallets with the credit union’s debit and credit cards instead of those from another banking institution.”

How to get there? Ask – and keep asking.

It’s not easy to get a member to change a credit card preference that has been entered into a mobile wallet. Many have a faint memory of what card is associated with Apple Pay.

Ask and ask again.

 

By Robert McGarvey

For CU 2.0

 

A two word question recently asked by a credit union board member puts in a starkly bright light the challenge many, many face: “What’s fintech?”

No need to embarrass this board member who will remain anonymous. In fact this director may deserve some applause for knowing what he didn’t know.

But a 2018 reality for many credit unions is that they need to confront a big question: do we have the right board to survive and thrive in the 21st century?

The answer in just about all cases is that, no, you don’t have the right board. Parts may be exactly right but almost certainly there are changes that must be made as every credit union confronts the imperative to digitally transform.

Smart boards – and smart credit union CEOs – are already tackling this issue.

You’ll remember that in 2011 NCUA threw down the challenge that directors have to demonstrate a measure of financial literacy. There was grumbling about that but, really, it’s essential and important.

Just maybe there now should be a requirement that board members have a measure of technology literacy. Not enough to write code. But enough to pay a bill in a mobile banking app, deposit a check with mRDC, and send a p2p payment to a relative. Financial services are migrating to the mobile phone and the institutions that plan to be around will have leaders who understand and use technology.

Your board has a distance to cover?

Join the club.

But know that some are taking steps to get there and they will share what they know.

At South Bay Credit Union in California, board chair Chris Otey said that a focus has been on creating a board that’s ready for today’s challenges and, said Otey, there are two ways to do this.

First: commit to ongoing education of the board. At South Bay, most board members will do an educational conference each year. CUES, CUNA, and many state leagues offer good educational programming that can help directors adapt to the 21st century.

Is that asking too much of volunteers?Sarah Snell Cooke – former editor in chief of Credit Union Times and now a consultant in Maryland – said she fully supports increased educational requirements for board members. She added: “Not just a webinar or one conference. Some feel like that’s asking a lot from volunteers, and it is but if you’re not prepared to do the job to the best of your ability, don’t sign up.”

Jennifer Kurttila Zanassi, CEO of Western Heritage Credit Union, said: “My board has attended the certification at CUNA for board members. After the class, they came back so much more involved and energized.” She added:  “I’m truly blessed with a great board.”

But don’t stop with conferences. Make tech education a continuing focus. At South Bay Credit Union, for instance, Otey ups the educational ante by personally leading a short – perhaps 10 minute – tech focused segment at each meeting. His goal is to update directors on tech developments, emerging threats, and innovative steps other credit unions are taking. Said Otey: “Every credit union should have an employee or board member regularly update the board on tech. It’s become essential.”

The second step: “we have actively recruited new board members,” said Otey. Recently, for instance, he persuaded a 28 year-old member with good tech fluency to join the board. Such approaches aren’t always successful, Otey acknowledged. But he sees this as a necessary part of keeping a board strong.

In a similar vein, Cooke said she “recommends a board assessment, preferably by a third party, but those can be politically touchy and expensive. Honest self-assessment can be useful as well. The chairman should collate and review the self-reported strengths and weaknesses to determine subject matter areas that need a boost when it comes time to recruit new board members.”

That’s now a necessity. Recruit to fill needs. Said Otey: “You can’t wait for new board members to find you. You have to go out and find them.”

Bottomline: “Your board can’t look and behave the way it did in 1987,” said Otey. Succeeding in the 21st century will take a 21st century board and the only way to get there is to start making changes now.

 

 

By Robert McGarvey

 

We like our loyalty programs. That’s a fact in recent research by Phocuswright and Acxiom which found four in five US travelers belong to loyalty programs.

The story’s headline hammered the point home: US Travelers Are Heavy Users of Loyalty Programs.

But it twisted this knife in the sub-head: But travel trails several other verticals in the popularity of such plans.

What do you think?

Curiously the study found business travelers are more committed to loyalty programs than are leisure travelers. But not by much.

62% of business travelers are signed up for a hotel’s loyalty program, compared to 54% of leisure travelers.

As for air, 60% of business travelers are signed up for an airline’s program, compared to 50% of leisure.

Count me as seriously surprised that 40% of business travelers aren’t in an airline program – and more are in hotel programs than air.

I agree: air frequent flier programs have gotten progressively more worthless.  But in my mind, as long as I don’t alter my behavior to “succeed” in a program, whatever crumbs I’m tossed for my meager loyalty are welcome.

Personally in fact I belong to a packet of loyalty programs. American Air, United, Southwest, Hyatt, Hilton, and a few more hotel programs that I’ve probably joined multiple times because I don’t keep track of the log in details and when I want to claim a loyalty member perk, like free wifi, I join again.  

There were others I’ve been automatically enrolled in due to patronage – several cruise lines for instance – but I never kept track of those, either.

In all programs nowadays my loyalty is thin.  Fragile.

When I think of loyalty programs here’s what comes to mind. A few months ago I realized that there are Murray’s Cheese counters at some Fry’s supermarkets in Phoenix. I had a hankering for Cabot clothbound cheddar – the best domestic cheddar imo – and decided the Fry’s Murray’s probably sold it so I ventured into a Fry’s.

The cheese was in. But I was in a supermarket, so I tossed other stuff in the cart and at checkout of course I got a Fry’s loyalty card to get the member discounts on paper towels and bathroom cleansers.

I won’t return until the next time I crave Cabot clothbound.  (I shop at Trader Joe’s and Whole Foods.) I have zero loyalty to Fry’s – tho I like the discounts.  My loyalty is to Murray’s and Cabot.  

Very probably your loyalty to many – most – programs you belong to is also thin.  

I remember knowing – I was one myself – very loyal Continental Air passengers.  Flying out of Newark, often to Houston on business, there was no budging me out of Continental and I liked the many perks the airline showered on me for my loyalty. There was a time when if I didn’t get an upgrade to business class I somehow felt cheated.  That’s how often I got the upgrades.

But in recent years I have gotten bupkis and, honestly, the only travelers I know who express satisfaction with loyalty programs are the super elites, the kind who log well over 100k miles annually and 100+ room nights. They are happy.

The rest of us not so much.

That’s underlined in additional research by Bond Brand Loyalty that found only 39% of us expressed satisfaction with airline loyalty programs. That fell to 38% for hotel programs.

My surprise is that the numbers are that high. I would have guessed maybe 25% – one in four of us – for both categories. There’s just not much to be loyal to.

What’s interesting in that Bond Brand Loyalty survey is that in all but one category less than half of us expressed happiness with the various loyalty programs we belong to.

Credit cards, said Bond,  managed to hit 52% of us claiming satisfaction. And that’s the best.

Hospitality companies are performing at a mediocre level but it’s not that far off the performance of other kinds of retailers. They all sleepwalk through loyalty.

Message to retailers: if you want us to take loyalty programs seriously it starts with you. You need to take them seriously and upgrade them.

That message is all the louder in hospitality.

 

Your Next Steps in Digital Reputation Management – The Credit Union Exchange http://bit.ly/2h8OhOQ

 

By Robert McGarvey

 

Call it news…not.  The headline screamed: A Majority of Avid US Travelers Have Never Used Airbnb.  Color me surprised not at all.

I haven’t used it either. And I’ve become a big fan of Uber so I am fine with the sharing economy (and years ago I even drove a taxi in Boston and I feel for those drivers but by now most who can have transformed into Uber/Lyft drivers). I can’t recall the last time I took a taxi in the U.S., it’s been that long.

Sharing economy lodgings are a different matter.

The trigger for the headline is a new Skift Experiential Traveler Survey that found 63% of avid US travelers have not used Airbnb.

Only 16% said they had used Airbnb multiple times.

Incidentally, 88% said they were satisfied or very satisfied with their most recent Airbnb stay.  

The real surprise: In cooking up its numbers, Skift narrowed the focus to leisure trips.  Which means two in three vacationers still have never used it. Not once.

Of course there’s no surprise that Skift eliminated business travel from the calculations of Airbnb’s popularity. As a business traveler I have no interest in Airbnb.  Usually my timelines are tight, I need predictability, I don’t need quirky or stylish.  Chain hotels work for me. Location, reliability and price matter a lot more to me than the cool factor for business stays.

Of course Airbnb has been chipping away at how to draw in business travelers – and it’s gotten clever about enticements – but apparently some 90% of Airbnb revenues comes from leisure travel.  

It’s hard for me to see a big bump in appeal of Airbnb among business travelers anytime soon.  Millennials who are determined to be different may opt for it.

Leisure travel potentially is a very different matter.

Personally I see great appeal to using Airbnb or Homeaway if going on a family vacation to a resort area such as Santa Fe NM.  A whole two bedroom within an easy walk of the plaza can be had for $149 per night.  For friends I have researched Airbnb whole house and condo deals in many resort areas and often they are vastly superior to taking a couple adjacent hotel rooms.  Cheaper and more spacious.

I can also see real appeal to using Airbnb if I were planning on staying perhaps a couple weeks in a Manhattan or San Francisco, where I could have a whole apartment – with kitchen – for no more than a hotel room would run.

Joe Brancatelli reminded me that he has often used VRBO  to rent whole apartments in Europe and he’s right. I’m planning a trip to Dublin where the current intent is to use Airbnb or VRBO to get a whole apartment in Dublin’s D4 neighborhood.  For even a long weekend this might be the way to go in Dublin or Berlin, even Rome.  In such cases, by all means, go to the sharing economy. I’ll be there with you.

But, mainly, I still prefer traditional hotels in the US, for leisure as well as business, simply because of the predictability. It’s not because of the loyalty points. It’s not because of any brand loyalty. It’s just that a well-run chain hotel – with decent TripAdvisor ratings – can be counted on to not disappoint and if perhaps it does, generally in my experience those hotels are very, very good at recovery. They know how to make a bad situation right and they typically are committed to doing so in realtime.

Do I see Airbnb picking up an expanding market share?  I do.  There’s a real appeal to some to spend time in a real home, not a hotel.  

But for me, right now, I prefer the consistency of known hotel products and there’s nothing new in that attitude.  I recall when years ago stays at b and b’s were the rage among friends and I tried it out once or twice.  After sharing a bedroom with an owner’s extensive doll collection I decided the b & b route was not for me.  I don’t think I stayed in more than a couple b and b’s.  

I am not saying Airbnb offerings are that eccentric.  At least I have heard of none.  

But – boring traditional hotels may be to some – to me it’s that predictability that’s the draw.  

 

By Robert McGarvey

For CreditUnion 2.0

Feast on a frightening metric: PayPal, an Internet company from the start, now is worth more than venerable American Express. Its current market cap is north of $80 billion and, meantime, it is busy fighting multiple wars, against Apple Pay at point of sale, Square in cash transfers, and Chase and Citibank backed Zelle in peer to peer payments.  

Here’s the question for you: are you better off fighting PayPal or seeking partnership?

Traditionally senior credit union management has viewed PayPal as an archenemy – one  executive once told me with a smile that he knew Satan walked in our midst and it is called PayPal.  That made a sort of sense because at the time around five years ago PayPal was seen as a barrier in p2p plays taking root at credit unions and it also chipped away at point of sale transactions that credit union execs believed should be theirs.

Many have seen PayPal as intent on disintermediating credit unions and banks.  

But maybe it’s a time for a rethink.

Especially at credit unions.

PayPal may well be in a take no prisoners war with the money center banks – it has to see Zelle as a dagger aimed at its heart – but credit unions just may appeal to PayPal as potential partners that in fact help it spread its p2p tools, also perhaps its POS tools.

There also is a history of credit union – PayPal partnerships. And lately PayPal has buried its hatchet with Mastercard and Visa, working with them to provide essentially instant transfers of PayPal cash balances into associated bank and sharedraft accounts.  PayPal even offers these super fast transfers for a fee of a quarter, significantly less than Square charges for similar.  

It’s on the move too. A few months ago it debuted tools that let Skype users send money within the Skype app. Right in that conversation, you can fire off $50 or $100 to help that relative.  Convenient.

Remember, credit unions and their traditional vendors have not excelled at the tools – especially p2p – that make PayPal (and its golden child, Venmo, which handled $17.6 million in transfers in 2016).  And the digitally savvy credit union – a credit union with a plan for longterm success — will want to have p2p tools that members actually use.

It’s not just Millennials that love p2p. It’s also the parents and even grandparents of Millennials who send money via p2p.

Future-thinking credit unions have seen the PayPal value for years. As far back as 2012, Tech Credit Union announced a technology that let members tap a few buttons on an ATM screen and send money to just about any US mobile phone number.  A few months later, Tech CU rolled out Send Money Powered by PayPal that lets Tech CU members send money to a mobile phone number or email address in some 60 countries worldwide, via Tech CU mobile or online banking.  

Many more credit unions now have ties to PayPal.  Alliant for instance.  Peninsula Credit Union.  California Coast Credit Union.  Wescom Credit Union.  America’s Credit Union.  Mountain America Credit Union.  Pacific Marine Credit Union.  

Even giant PSECU recently added PayPal to its offerings.  

The list goes on. There are many, many credit unions that partner with PayPal.

The Michigan Credit Union League even has a piece on “Why Credit Unions Should Not Fear PayPal.”  

(PayPal did not respond to a request from this reporter for detailed information on its many credit union partners.)

Bottomline: for millions of consumers PayPal is a trusted, known way to shift money around.  It’s a good p2p tool for credit unions to consider offering to members and, yes, a tab can be built into many mobile banking apps.

Won’t some consumers think about ditching the credit union and doing all financial services with PayPal?  Not many, especially not if the credit union has done a good job selling itself and its uniqueness as a member–owned, member-centric institution.  Besides, PayPal just doesn’t offer the range of services most credit unions do – and there is no indication it wants to achieve full bank status in the U.S. Does it want to battle Facebook, Google, Apple? Yep.  But that is the fintech, nonbank arena and it’s there that PayPal wants to be a heavyweight.

By all means, keep watchful of PayPal if you choose to partner with them. But know that there are things it does extraordinary well – p2p payments for instance – and it is difficult to see how many credit unions could realistically hope to rival PayPal there.  

And your members may in fact be jazzed when you tell them they can use PayPal within the mobile app.

That’s a lot better outcome than losing them to Chase and Zelle.