Podcast

by Robert McGarvey

Here’s the fast track to making members feel they are being sold to: offer them products and services they have no interest in or use for. How often does your credit union do exactly that? 

But if you want a member to feel understood, valued, offer him or her something they honestly want or need.

If only it were so simple, you grumble.

Maybe it is exactly that simple.

Meet Fahd Rachidy, the CEO of London-based ABAKA, a company in the business of harnessing AI to help financial institutions – credit unions included – better serve their members.

Fahd also is a strong believer in democratizing his tools.  He proudly says ABAKA serves small financial institutions and giants.  The company uses a SaaS model – software as a service – so users pay as they go and for what they consume.  Some FIs spend low five figures in a year with ABAKA. Others may be high six figures and beyond.

So what you want to know is how offer members what they want. Really.  Listen to the podcast where Fahd tells about ABAKA’s tools for zeroing in on what he calls the next best action – that is, pinpointing what this member wants now.

How? By using account data the institution has on hand, supplemented with publicly available third party data (from social media posts to credit scores and history).

Crunch that data right, says Fahd, and an institution can jump from a 3% conversion rate to 30%.

You want to hear more about this.

Along the way in this podcast Fahd also talks about ABAKA’s conversational AI chatbot tools – and many members in fact prefer to talk with a machine – and also about how AI is making PFM tools, at long last, easy to use and actually useful.

The theme of this podcast is that AI has come of age and now is ready for credit union deployment.

Listen up.

Dig deeper into AI and credit unions in earlier CU2.0 Podcasts – with Posh Development  and Coalesce, both DCU Innovation Lab companies (our podcast with the Innovation Lab director Vasilios Roussos is here).

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.

Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto

 Most credit unions continue to wrestle with too many deposits and too few places to park that money profitably.  Call this Part 3 of the CU2.0 deep dive into lending in the pandemic era and that is because Barclay Keith, CEO of Artis Technologies, has developed tools that will enable a credit union to empower business members – think home improvement retailers, contractors, jewelers, etc. – to initiate personal loans to consumers, typically in the range of $3000 to $65,000.

For the credit union, this just may be a high yield lending arena that also may well bring in new members.

For the business, a fast, convenient way for a shopper to borrow may bring in bigger and more sales.

For the consumer, this may be a quick and easy way to borrow at competitive rates.

Win-win-win.

For the consumer it typically takes minutes to complete a loan app, a process that can be initiated and completed at the retailer.  The underwriting is AI powered, there’s instant KYC verification, and the lending institution – the credit union – gets to set its own policies. Some may not want to lend to subprime borrowers, others may.  Some may want to lend only to super-prime borrowers, many will have a broader standard. Artis Technologies lets the lending institution set the policies it is comfortable with.

The conversation with Keith in this podcast is a broad look at how the Artis tools work and the benefits that may come to credit unions that deploy them.

Part 1 of the new lending tactics series is #113 with Sherif Hassan on small business lending.  Part 2 is #114 with Nicholas Hinrichsen on opportunities in refinancing car loans and also lending to subprime car buyers.   

You know you have money on hand you want to put to work.  Listen to the CU2.0 trilogy for ideas you can use today.

Barking alert:  There is some barking and growling in this podcast, noises that defied filtering software used in editing the podcast.  The podcast is clearly audible.  And no animals were injured in recording the podcast.

Listen up.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.

Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto

by Robert McGarvey

Call this the best of times for digital member service company Glia and that is because, in the pandemic era, credit unions’ traditional member service tools have fallen out of favor and meantime just about all of us have become significantly more digital, said Dan Michaeli, Glia CEO and co-founder.

Just a couple years ago, many credit unions looked at digital customer service tools as a “nice to have.” That’s changed for many and, suddenly, these tools are must haves.

Especially at credit unions, says Michaeli and that’s because credit unions have always had a member centric attitude. And digital tools just may be the best tools around.

Here is what Glia says it does: “Glia creates digital-first moments that simplify and transform conversations between institutions and their customers using Messaging, Video, Voice, CoBrowsing, and Artificial Intelligence.” 

Even better, as service switches from channel to channel – as often happens – the context and history are retained. No more maddening moments for a member who just spent 10 minutes explaining a problem to a rep and now is asked by a new rep to  tell about the problem. From scratch.  How frustrating is that?

Right now, we are in a shift from telephone based member service into a variety of digital channels, including oldfashioned voice, but with text, AI and more claiming ever larger roles.

An upshot is that members may find themselves experiencing better service and now they will be able to pick their own channel.

Are these tools that mainly will abound at only the biggest financial institutions? Michaeli believes otherwise. He in fact believes that this technology levels the playing field and a $100 million credit union just may have member service tools that rivals that of a big five money center bank.

How cool is that?

You want to know – indeed, in the Covid era you need to know – about digital member service and that’s why this half-hour is a must listen.

Listen here

By Robert McGarvey

The Aspen Institute throws out a startling number of how many evictions we may see when the CDC’s eviction ban expires at year-end. Says the think tank, “According to the latest analysis of weekly US Census data, as federal, state, and local protections and resources expire and in the absence of robust and swift intervention, an estimated 30–40 million people in America could be at risk of eviction in the next several months.”

30 to 40 million people!  10% of us.

Credit unions just may have a savior’s role to play in this and it’s a role that would define credit unions in starkly different terms than their banker competitors.  Banks are fueling evictions, where credit unions can throw a lifeline to renters.

That’s the idea of Jake Schlachter, CEO of Madison WI based We Own It, an organization formed to shake up cooperatives.  Schlachter now has his eye on credit unions and he has thrown out a huge idea: credit unions could harness their excess excess capital (many have significantly more than the amount required by regulators) to create loan funds for tenants facing eviction.

Keep reading here

Call this Part 2 of our smarter lending for credit unions. The recent episode, #113, explored small business lending with Capiform’s Sherif Hassan. Listen here. This week it’s time for something entirely different.

Happy with your car loan portfolio?

Many credit unions are anything but and this has become a crucial issue as most are awash in deposits and now are hunting for profitable places to put that cash to work.

Car loans could be it. But indirect lending…not so much.

Enter Nicholas Hinrichsen, an online car sales veteran who co-founded an online used car marketplace in 2015 when he raised $10 million in venture capital. They sold that business in 2017 to Carvana, which by now has grown into one of the nation’s biggest used car retailers.

After logging three years at Carvana he is again starting up a new company, with $5 million in venture funding, where the aim is to help credit unions better sell car loans to their members.

Hinrichsen knows car loans and he also knows about credit union dissatisfaction with indirect loans.  He has a better idea: helping members refinance existing car loans issued by third parties, converting them into credit union owned loans.

Credit unions can win that fight, said Hinichsen, because usually their loans are better, at lower interest rates.

Most credit unions, he admits, do “spray and pray” marketing, sending out mailers to all pre-qualified members. In this podcast he tells a smarter, more cost effective way to contact the right members, ones who just might be prospects for car refinance.

Keep listening because he has an idea for tools that will essentially pre-populate a loan app for a member, using data the credit union already has. So filling out a loan application literally takes seconds.

And another – intriguing – idea he has is about how to profitably make sub-prime loans to existing members and, in the process, to create a path for them to get lower interest rates going forward. Just that may be a core credit union mission, especially as more members deal with economic pains of the pandemic.

You know you want to issue more and more profitable auto loans. This is a podcast you have to hear.

Contact Hinrichsen here.  The company is named Clutch

Listen up here.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.

 

Call this Part 1 of our smarter lending duet.  Part 2, posting tomorrow in podcast 114, is on smarter car loans with Nicholas Hinrichsen. You don’t want to miss that one. 

PPP loans just may have awakened credit unions to the immense opportunity there is in small business lending.  That’s what Sherif Hassan, CEO of fintech Capiform, believes.  The opportunity is there.

But to win that business credit unions need to speed up their lending process, said Hassan, and they also need to create a more efficient process that cuts costs.

Automation – smart technology – is the key.  At many credit unions, the typical cost for funding a small business loan is around $3600, said Hassan.  Capiform’s tools  get that cost down to maybe $360.

At that cost, suddenly making smaller loans – maybe $50,000 or $75,000, loans that often are what small businesses want – is realistic.

Community banks have long had a lead in small business lending, but CU2.0 Podcast listeners recently heard Steve Bruyn of Foresight Research say that his data shows a huge drop in customer satisfaction at community banks. That’s an opportunity for credit unions.

Add in the comfort many credit unions gained in the PPP program – where they learned they could successfully deal with small businesses and also with the federal government – and the path to more loans for credit unions is clear.

It comes at an ideal time. Many credit unions are drowning in deposits. Small business loans are a profitable path to safety.

Don’t many fintech lenders want that same market? They do. But credit unions – with their community focus – have a fast track to succeeding in that battle. Listen up as Hassan tells why.

You may have heard Hassan’s earlier podcast. Here’s a link.

Listen up to this new podcast here.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.

By Robert McGarvey

Now just may be the worst of times but it also is an opportunity for credit unions to reinvent themselves, by reimagining their roles and taking an active part in helping to limit what many experts see as a coming eviction crisis, as renters who have suffered enormous economic hardships in the Covid-19 pandemic are put out on the streets. 

What if credit unions made available emergency loan funds to help renters avoid that outcome?

That’s the question Jake Schlachter, executive director of We Own It, an organization devoted to reinvigorating the cooperative movement, asks.

A starting point is that many credit unions have more set aside than the 7 to 8% excess capital required by the regulator. What if those institutions used some of that money to help renters avoid eviction. What if….

Credit unions just might be seen as community heroes.

Suddenly, many would know exactly the difference between banks and credit unions.

Schlacter has sent out a letter to the CEOs of 1430 credit unions with assets above $100 million and significant excess capital. Here’s a link to the letter.

Now what happens? Listen to the podcast. You will hear Schlachter’s hopes and dreams.

Listen here.

This is a challenge to just about every credit union.  But the need is real and the possible payoffs are also real.

Want to hear more Schlachter? Here’s a podcast I did with him for a different series a year ago.  This one focuses on cooperatives in general with minimal direct references to credit unions.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.

Find out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto

Bank Transfer Day 2020, Bigger and Better?

By Robert McGarvey

You remember Bank Transfer day, that 2011 movement that brought in perhaps one million new credit union members, possibly more.

Something a lot bigger may be about to happen.

That’s the opinion of Steve Bruyn, CEO of Foresight Research who, writing in The Financial Brand, said that its extensive polling had found nearly a doubling of the number of consumers who say they intend to change financial institutions. Now 22% say they are heading to the exit of their present financial institution, per Foresight Research.  

Foresight Research elaborated: “We have surveyed almost 11,000 banking customers and credit union members in 44 markets to find out what is really going on in the world of banking from the customer/member’s point of view.  Then we added another survey of almost 700 customers and members to find out what the pandemic had changed in the banking industry.  We found a hot spot of churn.  Churn increased from 12% (over two years) to 22% expected churn in the next year or two.”

Hear the Bruyn podcast here.

The news gets sweeter still: “Of the people who intend to leave their financial institution almost 3 out of 4 are Gen Z or Millennials – the very block of business that drives the future of your financial institution,” said Foresight Research.

Foresight Research added: “So, what drove the high churn?  Even though satisfaction declined greatly (except at credit unions) that was not the culprit.  Customers and members were generally empathetic, likely thinking ‘we are all in this together’. It was all about financial issues like interest rates and fees.  The switchers while forgiving also are looking to reduce cost or increase interest on items like money market accounts, CDs, etc.”

This makes sense. The economy is the worst it has been since the Great Depression. Millions of us are unemployed and millions more are underemployed (working fewer hours).  It’s tough to balance the household budget when less money is coming in so a shrewd step is to slash unnecessary outgo.

Bank fees are prime to be trimmed. And that is a potential bonanza for credit unions.

Ask yourself this: where can credit unions beat banks, consistently?  The answer is and has long been on pricing of everything, from account fees to NSF fees and loan interest rates.  Credit unions are member owned, they have no shareholders who demand dividends.  Most have unpaid boards of directors.  Most pay their employees fairly but rarely lavishly – and here’s a CNN round up of bank c-suite compensation and note that the CEO of Bank of America had total compensation of $24.8 million but he was by no means the highest paid in the group.

Big salaries, big dividends to shareholders, and bloated, inefficient branch networks add up to huge expenses on the books and that means customers have to pay through the nose for the privilege of having a bank account.

According to Bankrate.com, 72% of credit unions offer free checking accounts with no minimum balance requirement.  Just 38% of banks do.

Want a checking account at Chase?  The barebones Total Checking has a $12 monthly fee unless a $1500 minimum balance is maintained.  That’s typical at most banks.

A free credit union sharedraft account offers every bit as much, for free.

When it comes to NSF charges, many credit unions charge around $25, per Nerdwallet.  Banks generally charge upwards of $35. (Yes, NSF charges should be zero but that’s a different column.)

For auto loans, an institution that often is rated best is Consumers Credit Union.  PenFed similarly scores high.  Digital only banks (Ally for instance) are very competitive. But rarely making the rankings of best auto loan sources are mainstream banks.  It’s just a fact. Any consumer shopping for a car loan is throwing money away if they don’t compare at a credit union.

Credit unions offer more consumer friendly terms across the board. That means they are well positioned to win in the coming financial institution reshuffle.

The credit union key: embark, now, on an aggressive marketing campaign, especially via Facebook and Instagram and possibly TikTok, that stresses the message: we are a financial institution owned by and designed for consumers.  Better rates, lower fees, more money in your pocket.

The WalMart tagline is an allstar: “Save money. Live better.”

Similar messaging is what credit unions should aim for to win their share of consumers switching financial institutions in search of relationships that leave more money in their pockets.  

Turn up the volume. And shout it out.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.

by Robert McGarvey

“What could we do to make our members’ lives better?” That question, said Mark Shuiling, vice president of technology at $900 million Wildfire Credit Union in Saginaw, MI, is what set the institution on a quest to bring its members a unified, omnichannel banking experience. The quest began maybe five years ago.

It is now coming to fruition, with help from digital platform developer Backbase.

Here is the story of an institution that decided that digital was its future – if only because it is what the Millennials and Gen Z members of any credit union crave.  These are people who grew up with personal computers at their sides and the younger ones cannot remember a time when they did not have an iPhone or Android phone in their hands.

When the COVID-19 pandemic hit, the wisdom of Wildfire’s decision became all the sharper, said Schuiling – it was suddenly obvious that digital is the future for all of us, simple as that. 

Understand, Wildfire is just now beginning to roll out its new unified banking platform and it will do it deliberately, carefully, said Schuiling.

Know too that Wildfire is way ahead of most credit unions in its digital journey. Sure, just about every credit union executive pays lipservice to the idea of digital banking, but the stark reality is that few have climbed aboard this movement. That’s why Vince Bezemer, head of strategy for Backbase, which also has worked with Navy Federal, Schools First, and State Employees’ Credit Union of North Carolina, estimates that maybe 10% of financial institutions really get what it means to be digital.

And 90% don’t.

Which side are you on?

Continued at CUInsight.com

by Robert McGarvey

No more cookie cutter solutions.  And put a branch in the member’s hands with mobile tools that allow the member to do pretty much anything he/she could do in a branch.

When Wildfire, a $900 million credit union in Saginaw Michigan, set out on its omnichannel journey four or five years ago it dreamed big, says Mark Schuiling, VP of technology.  

A lot of the process was doing hard thinking about what the institution wanted to be and what it wanted to provide members. From the start, however, Wildfire knew its future would be digital and it also wanted to provide members with a unified consumer experience, not the fragmented experience many credit unions offer because they have pasted together solutions provided by third party vendors.

At $900 million, however, and with only three programmers, Wildfire also knew it had to carefully pick a vendor and a tool that would suit its budget and its internal skills.

About a year ago, the process turned serious and Wildfire went all in on its digital transformation, working with Backbase as its technology partner.

Listen up to the Backbase podcast, number 110 in this series. 

This Wildfire podcast tells the story from the institution’s perspective and Wildfire candidly tells about its hopes, its challenge, and also why it now is going slow in the roll out of its omnichannel solutions to members (because it wants members to want the solution and to know they want it).

Listen up here.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com

And like this podcast on whatever service you use to stream it. That matters.