credit union

McGarvey on CU Technology: CU2.0 Podcast Episode 21 Ron Shevlin on “Is the Party Over?” http://bit.ly/2Dh1vDz #creditunion

By Robert McGarvey

Direct question: if you were opening a new account at a financial institution today, for yourself, perhaps for a child or another relative, where would it be?

It can’t be at your present employer.

That’s the only exclusion.  

So where would you open it?

A few months ago I opened a new account at a Phoenix credit union with a branch closest to my home and when I opened it, I did not bother to put a five-figure deposit into a savings account because the rate was pitiful,

Still is.  0.5%. I just checked.

A simple checking account pays exactly 0.0.

Oh, and opening an account using only online tools at this institution proved impossible. I had to visit the branch to conclude the process.

Yes, I was determined to open a credit union account. So I persevered. Will other consumers? 

Look at your institution through the eyes of a prospective new account holder. What do they see?

Do you like what they see?

Hold that thought and now focus on this: Today’s email brought a press release from MagnifyMoney announcing its rankings of the best online banks.

Many of these are institutions with robust advertising and marketing budgets. Consumers know about them. Will that consumer think of them – or of you – when they want to open a new account?  And when they compare the best online banks with your offerings, how do you stack up?

The best online bank, per MagnifyMoney, is Ally which of course dates back to 1919 and its former name GMAC.  Its longevity is as good as just about every credit union.

Ally pays 2.2% on its savings account.  0.1% on checking. 0.9% on a money market account.

How do you stack up?

Also high ranking in the MagnifyMoney scoring are Synchrony, Goldman Sachs, Barclays, and Capital One 360.

Vio won honors as the best new online bank. It’s a division of MidFirst bank.  Savings pays 2.39%. It promises online account opening in less than five minutes.

Again, the question is: how do you stack up?

A shrewd consumer just might find the smart move is to open a checking account at your credit union – and to park other money in savings at Vio.

Many executives at credit unions see free checking as the gateway relationship that leads to other relationships. But what if it isn’t?  Especially not today when it it is easy for a consumer to shop around online and to open new accounts at a variety of institutions. Maybe one for checking, one for savings, a third for a credit card, and a fourth for a car loan.

Then where is your business plan that revolves around free checking?

About now exasperated credit union executives will shout that the consumer should open an account at a credit union, instead of a for profit bank, because that is the right thing to do and it helps keep more money in the local community.

Yes, absolutely true. I agree.

The trouble is, not that many consumers agree.

In fact research reported by The FinancialBrand is adamant that consumers “know diddly squat about credit unions.”

64% of non members are not familiar with credit unions.

33% say there aren’t enough branches. 25% say there aren’t enough ATMs.

30% say it’s difficult to find a credit union they can join.

Sure, it is easy to say the consumers just don’t know – but we already stipulated they don’t know diddly squat.

They don’t and that is what makes the moral imperative argument ineffective.  It just can’t be counted to persuade that many consumers to go with a credit union.

Why aren’t the trades, the larger CUSOs, and the largest credit unions pushing the credit union advantage? Why haven’t they mounted powerful – effective – campaigns? Why don’t we see high profile influencers who are happy to act as evangelists for credit unions and the cooperative way?

I don’t know why but I sure would like to hear from the big players.

Another question: why are many of the largest credit unions yanking “credit union” out of their names?

The bottomline is simple. Credit unions, to win new accounts, need to work very hard to offer products that are competitive with the offerings from the online banks.

That’s not fair? It ignores the costs involved with brick and mortar?

True enough.  So what should your credit union do if in fact you cannot match the rates offered by online banks?  Double-down on the credit union advantages. Make them the cornerstone of your advertising/marketing. Educate consumers about credit unions. Make it an ethical argument. Go local, go self-ownership. Those arguments will resonate with consumers who just may want to open an account in an institution where they are an owner rather than with an online bank with better rates.

Talk about the Rochdale Principles.

Sell cooperatives and credit unions because – really – they are the better way. And many consumers will get that message. But first you have to tell it to them.

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By Robert Mcgarvey

Put three business travelers at a Holiday Inn bar and around 9 p.m., after drinks have flowed for maybe three hours, toss out this topic – what’s the absolute best credit card for business travel, the one you won’t leave home without – and then hastily back off.

That’s because fists and bottles may start flying.

Nobody gets worked up debating the best domestic carrier – they all suck so why fight.

Or the best business travel hotel. Who gives a whit about Hilton vs Marriot vs IHC?

With the best bank there may be a little debate but, really, we all know the big banks stink and therefore the best answers are going to be curve balls. (Here’s my answer by the way.)

But the real fisticuffs come out when the debate is about credit cards because we all have them and we all have opinions.

The trigger for this column was a recent New York Times story headlined “Best Credit Card for Travelers? Probably Not One From an Airline.”

And right at jump I had to disagree.

Sort of.

According to the Times, your best bet for a travel card is Amex Platinum ($550) or Chase Sapphire Reserve ($450) — “they provide hefty credits that can be used with any airline to cover expenses like checked bags and in-flight purchases, along with other benefits like access to airport lounges.”

Personally I’ve had the Platinum card for years and I swear by the Centurion lounges, I like the annual $200 credit for Uber (dribbled out in monthly $15 tranches and a year-end bonus), the $200 airline fee credit (against checked bag fees, etc. – applicable only to one airline designated annually), free Priority Pass membership, reimbursement for Global Entry or Pre (I used it for Pre), and free Boingo Preferred WiFi access at many airports. There’s also 5x points on air and hotel expenses. And still more stuff.  It is indeed a feature rich card that returns what I pay for it and more.

But it is not quite enough for me.

Maybe I do not think they are the best credit cards for travelers. But I do also have a United World Explorer card – $95 per year and for that I get 2X miles at restaurants, hotel, and United purchases. There’s a free checked bag.  $100 towards TSA Pre or Global Entry (I used it for the latter.) A couple club passes annually. And no foreign transaction fees.  

There’s also priority boarding which is why I have the card in the first place. That gives me the key perk that comes with low level elite status which I no longer have because I have no airline loyalty.  None.

I also have an American Airlines AAdvantage Aviator card.  Also $95.  2X miles on American purchases. Free checked bag. No foreign transaction fees.  

And, again, priority boarding.

If you don’t have elite status – and unless it is easy to get why bother? – an airline credit card gives you what you most want from status.

Do I need both the airline cards? Probably not. I got the United card (nee Continental) when I lived in Jersey City NJ, flew out of EWR and always flew Continental.

I now live in Phoenix and usually fly American, thus that card.

But until Platinum gives me priority boarding – and I do not see that day coming – I will have at least one airline credit card. When you do carryon and only carryon, which is how I’ve flown for over a dozen years, early boarding is a must.  Hanging out at baggage carousels to collect a gate checked bag just is so uncool. And a complete waste of my time.

So I pay a small fee (tax deductible) for a card that gives me early boarding and that combination of an airline card with Amex Platinum is to me just about perfect.

Except — there is one perk I definitely think a travel card ought to include and that’s free access to Authentic 8’s Silo or a VPN, to give travelers much better Internet security at airports, inflight, at coffee shops, and also hotels. Public WiFi is a trap, simply awful. I do not use it. And recommend others don’t unless they take security precautions. Sure, a decent VPN or Silo can be yours for under $15 monthly – Silo is better, but it doesn’t run on everything – but as a perk I’d take either over Boingo any day. Just saying, Amex.

http://bit.ly/2Dg2jda

By Robert McGarvey

The best bank for the business traveler just may not be a bank. But understand this is a story where such claims carry asterisks with qualifiers.

What does a business traveler need from a bank? Nowadays it comes down to ATM access in most cases. I can tell you how to get the most free ATM access and will in a bit. I am a purist about this. I can tell you all the times in the past six years I paid for ATM access – exactly once. I quiver with rage at the thought of paying $3 or $5 or more to get $100 out of a machine. Plain wrong. Free is the only price I will pay.

And yet there I was five years ago in Las Vegas on a business trip and I had to do a wire transfer – it had to happen that day – and it occurred to me I had sufficient funds in a Chase account. I glanced at the website, decided not to bother with it, got in a cab, rode a few miles to a Chase branch and, whoosh, the money was on its way. Chase could not have been cooler about processing a six figure transfer. Yes, the money was going to a known mortgage escrow company, not a cousin in Albania, but still, this was frictionless. I maintain a Chase account and probably long will.

Nonetheless that’s not the institution I recommend for business travelers.

Look at most articles about why credit unions won’t work for you and, in most cases, a decisive reason is the sparseness of the ATM fleet. In truth a credit union with a fleet >100 is a rare beast. Some have just a single digit count of ATMs.

Yet I will tell you that a well chosen credit union will give you the broadest, deepest ATM access in the nation.

A 2016 count of bank owned ATMs found Chase with the most, around 18,600. B of A had a tad over 16,000. Wells Fargo had 12,800. PNC had about 9000.

But don’t think that therefore Chase or B of A or Wells is necessarily your best bank.

Much better is a credit union that belongs to the CO-OP ATM network or the CuLiance (nee CU24) network. CO-OP has around 30,000 ATMS in its network. CuLiance says it has more.

Joining either network requires the credit union to give fee-free ATM access to members of other, participating credit unions.

It’s a credit union perk that it is difficult to see how banks could match. You just don’t see Chase, B of A and Wells pooling their networks. No way.

Thousands of credit unions do. But not all. When opening a new account, always ask, are you a member of the CO-OP or CuLiance fee free ATM network?

There’s one more credit union perk: CO-OP shared branching which allows members of participating credit unions to conduct business in other participating credit unions exactly as though they were home. Need a wire transfer? You got it.

My principal credit union is in the shared branching network (and, no, I could not do the transfer through it because I did not have enough dough in that account).

CO-OP claims its network gives it 5600 shared branching locations. It says 1852 credit unions participate and that gives their 62 million members what amounts to a cross country branch network. (Wells Fargo has the largest branch network in the US with 5900 locations. Chase is second with 5200. But heads up. Big banks are shuttering locations so these numbers are dynamic.)

Does this mean a credit union is the best choice for the business traveler?

For many, yes. Not for all.

The exceptions are those with heavy international travel. Few credit unions offer enticing services for international travelers.

But Capital One 360 does, per Nerdwallet. It imposes no foreign transaction fees and it also does not charge for foreign ATM access (the machine owner may and probably will). It also has no account fees so it’s a good card to keep for just the occasional foreign trip.

That’s key by the way: I advise most of us to have several accounts. I do. One with Chase, one with a large credit union. I have a third account that bounces around so I can explore institutions (it had been with Capital One 360 but I moved it to a small Phoenix credit union and probably it will go in motion again – but I’m a banking nerd and don’t recommend this kind of shuffle to any who aren’t).

So there you have it. Have a credit union account – literally thousands offer free checking with no minimum balance – and also a Capital One 360 account and you are well covered, domestically and internationally. You will pay minimal or no fees, get the service you need, and may even start cussing about how rotten your bank is.

CU2.0 Podcast Episode 17 Victor Corro on Hispanics and Credit Unions http://bit.ly/2D0lyau

By Robert McGarvey

A chart in consultant Marvin Umholtz’s year-end CU Strategic Hot Topics newsletter jumped out at me and triggered a tsunami of worries about the future of credit unions.

Crunching NCUA data, Umhoeltz said there were 5480 credit unions as of mid 2018.  But get this: 3904 have assets under $100 million.

1454 have assets under $10 million.

Just 542 have assets above $500 million.

So what?

Here’s what: many experts I talk with tell me that the minimum size needed for credit union survival is $1 billion. Some scoff at that and say a well run institution with $500 million will do fine.

Nobody is optimistic about the future of micro credit unions.

But, increasingly, I believe that it is the micro credit unions that are the face of the movement and they are cause of some benefits that go to even big institutions.

Such as tax exemption.  No politician wants to give tax exemption to big credit unions that can go toe to toe with community banks – if only because community bankers continue to raise a loud, pained whine about tax exemption. But it is hard to turn down the plea of a micro credit union.

Small credit unions bring other benefits.  When credit unions “walk the Hill” – knocking on legislators’ doors in Washington DC – the ones who are likeliest to gain entry are the small institutions.  How do I know? Because CEOs of some of the biggest credit unions told me exactly that, that they ride in the wake of the small institutions.

But the terrible news is that as credit unions shrink in number it is the small ones that are folding.  Sometimes it’s because a longtime CEO retires and who wants to take over a small institution where the hours are long, the pay is low, and the responsibilities are high?

When a board can’t find a CEO increasingly it throws in the towel and merges with another institution.

Other credit unions give up because they can no longer keep up with government demands for BSA, AML, Patriot Act scrutiny of accounts and deposits.  

Sometimes, too, credit unions fold because they can’t figure out how to offer the technology that’s needed to stay current.

Occasionally, too, credit unions fold because they made hideously bad investments – think of the failures due to over exposure to taxi medallions.

But, really, bad investments are the lesser cause of closures these days. Now it’s mainly regulatory fatigue and inability to keep up in the personnel wars.

But this doesn’t mean small credit unions necessarily must close. They don’t.

Two years ago, I wrote a piece “How to Save Thousands of Small Credit Unions.”  

That article by the way noted that in 2010 there were 7486 credit unions.  That means 2006 closed in eight years. That’s roughly five a week, one every working day.

Wow.

In 2016 by the way there were 5916 credit unions.  Two years later there were 436 fewer.

Cue the bagpipe dirge.

For the big credit unions too because – again – they need the small ones.

In that 2017 article, I quote Jim Blaine, then CEO of State Employees Credit Union of North Carolina, the nation’s second biggest, thusly: “I hope we do a lot to help smaller credit unions. If the small credit union goes away, the larger ones will be in a mess.”

Blaine is spot on.

What can big credit unions do?  They can offer free ATM access for instance, that’s a big plus for members of tiny credit unions with maybe two ATMs. They can offer free management consulting. They can direct restless, ambitious, talented staff to cut the cord and take a job with a micro credit union, they can help spearhead innovative solutions, sometimes through credit union leagues, where small credit unions learn how they can join together to collectively hire a BSA expert or even a CEO (and, yes, there are cases where one person acts as CEO of multiple institutions).

Accept that the survival of small credit unions is critical to the survival of all and, suddenly, extreme actions start to make sense.

Word of advice: don’t shrug off the next death notice you read about a small credit union.

Because next the bells may toll for thee.

Tune into the CU2.0 Podcast for continuing thinking on credit unions, their challenges, and what tomorrow may bring.

McGarvey on CU Technology: CU2.0 Podcast Episode 14 Karan Kashyap Posh Development http://bit.ly/2QtPoMX