Some credit unions are making lots of very profitable member business loans. Most aren’t. In fact, by Mark Ritter’s count, maybe 300 of the nation’s credit unions are genuine players in this business. The rest are dabblers, he says.
That’s a shock because in the last couple years there has been a stampede of credit unions eager to get into member business lending. The reasons are obvious. There has been an avalanche of deposits that need to be put to work. Meantime, both the home mortgage and car loan markets are sputtering, definitely as far as credit unions go.
The eyes in the credit union c-suite shift to local businesses and the question gets asked: how do we lend to them?
Ritter, longtime CEO of Pennsylvania based CUSO Member Business Financial Services, which specializes in member business lending, knows the reality.
About 80 credit unions are active with MBFS – 13 are owners – and they range in size from tiny to over $1 billion in assets. Ritter pegs the MBFS sweet spot as institutions in the $300 million to $1 billion range but, he says, MBFS has no size limits, big or small.
MBFS in many ways provides credit unions with turnkey service. That means they prospect for borrowers, negotiate the terms, service the loan, and do pretty much everything except provide the capital to lend.
Want to know why member business lending initiatives sputter at many credit unions? Also want to know who not to hire to make those loans?
Ritter has the answers in this wide ranging podcast that is a must listen for any credit union exec who wants to get into member business lending – or wants to do better at it.
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What are the chief tools of old school debt collectors? Phone and US mail. Two problems. Nobody answers the phone when it’s an unknown number (do you?) and US mail, increasingly, is tossed unread because all the important, urgent stuff comes via email.
Enter Debtsy, a fintech that is pioneering 21st century collection techniques that are kinder, gentler and – above all – digital. The chief Debtsy tools are email and its website and, in the process, Debtsy also uses data to sift through charged off debts to zero in on those borrowers who have both the means and the willingness to repay.
A lot of debtors have neither. Debtsy seeks to focus in on the borrowers where the potential for return is real.
That approach looks vastly more effective than the old school techniques. It also is highly cost efficient because much of it is automated.
You will hear all about 21st century debt collection in this podcast with Tyler Gillies, Debtsy’s director of operations.
Debtsy of course knows that most credit unions seek to have a positive image in their communities and so it avoids the bruising, demeaning tactics of at least some debt collectors.
What size credit unions will Debtsy work with? Pretty much any size. Gillies says clients range from $10 billion+ behemoths to small credit unions. In the podcast he also details exactly how a credit union starts with Debtsy, what the costs are, and how long it takes for Debtsy to get busy trying to collect. Spoiler: the whole process usually is very fast.
Sure, we know talking charged off debt is a something of a bummer – but this nonetheless is a surprisingly upbeat podcast.
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The US hospitality sector is ebullient: the foreigners are coming, the foreigners are coming. After 20 months of shut international borders, the US is tearing down the barricades and is ready to welcome travelers from abroad (if they are vaccinated). New York, Miami, Los Angeles, Washington DC and more are in high alert ready for this influx of guests.
Observed the New York Times, “the beleaguered tourism industry is eagerly awaiting an influx in international visitors.”
Words of advice: stand down.
They ain’t coming. Not soon.
According to Lindsey Roeschke writing in Morning Consult, “Most travelers will wait until at least summer 2022 to visit the United States, and are prepared for the possibility of new COVID-19 developments derailing their plans.”
She added: “Among seven of the countries that send the most travelers to the United States in a typical year — in rank order of pre-pandemic arrival numbers: Canada, Mexico, the U.K., China, Brazil, Germany and France — relatively few people have definite plans to travel to the United States in the next three months.”
Why? Covid. And the fact that the US still does not have control of this epidemic. We in fact are sliding to the basement of the G7 in terms of vaccination rates.
If asked by a European if they should come to the US I would say no.
I think back to my own experience a few months ago planning a trip to Europe. I studied vaccination rates for Spain, where I wound up going, also Portugal.
Only 58% of the US is fully vaccinated today. 79% of Spaniards are. 87% of Portuguese are.
I can also attest from personal observation that mask compliance in Spain is very, very high, even outdoors in cities and definitely indoors.
The US cannot say any of that. What foreign visitors have to know is that they will be entering a country of risks. Risks that shouldn’t exist. But they do. And a rational person would decide not to come here.
And so they are.
Aren’t some US states safer than others? You bet. But that doesn’t seem to matter to many foreigner travelers. said Morning Consult, “Across all countries surveyed, respondents were much more likely to say they don’t feel comfortable planning a trip anywhere in the United States than to say they are comfortable going to some areas but not others.”
Morning Consult continues: “Travelers from key markets in the Americas — Brazil, Canada and Mexico — are the most likely to be certain about coming to the United States in the coming year.” Joy. Mexico is 49% fully vaccinated. Brazil is 59%. Both lower than us. Canada at 76% is significantly higher and if Canadians look at the math they will probably decide to stay home until we smarten up and get vaccinated.
Arguably, for Mexicans and Brazilians the math says they will be safer here and so perhaps they should come. But that same math tells Europeans to stay home. The only European nations with rates below ours are former Soviet bloc countries such as Hungary (59%), Poland (53%), and Ukraine (18%).
We need to pull our heads out of the sand and accept that if we do not get our vaccination rates up – over 70% fully vaccinated at a minimum – we won’t be globally competitive.
Reuters, incidentally, has a piece that is a dyspeptic look at the rebound of trans Atlantic business travel and its take is, don’t hold your breath. It reported: “the full transatlantic restart might not be as lucrative as airlines would hope.” Between Covid worries, travel budget cuts, and a general disenchantment with a lot of business travel, it is probable that trans Atlantic air traffic will remain at sharply diminished rates for some months to come
Meantime, back at Morning Consult, there’s a belief that international travel to the US may perk up by mid 2022. Possibly.
But surely a big issue will be if we finally get vaccinated.
If we don’t nothing will change regarding to international travelers. It would be dumb to come here until we fix our problems.
And, yes, I am personally planning a trip to Portugal. For me that is trip into a safer, healthier place.
That’s the kind of calculation smart travelers should be making and, unfortunately, the US comes out on the wrong side of the equation.
Business travel – no surprise here – is not coming back at full force and pretty much all rational observers now acknowledge it probably won’t happen next year. Possibly it will reach two-thirds of 2019 levels in 2022. Possibly.
Leisure travel is coming back faster, especially domestic travel. Lift to Europe remains spotty and lift to APAC is near non existent. Longhaul air needs a helping hand to come back in favor.
What will it take to get air travel back to 2019 levels?
Put aside the question about whether that should happen. Maybe, in a world where sustainability matters to ever more of us, air travel should remain at dramatically reduced levels, forever. But put that aside.
What must happen to re-ignite consumer enthusiasm for air travel? I see three huge impediments that are holding this back.
But they also are fixable. If we have the will. And that means us, carriers, airport operators, and the federal government. What I am proposing is stern medicine. It won’t swallow easily.
But if we do not take these steps travel will limp along for many months – possibly years – to come.
A starting point: Covid is not going away. In Colorado for instance hospital beds are nearly full, stuffed with Covid cases. 62% of Colorado is fully vaccinated, which means 38% aren’t and that is nearly four in ten.
No wonder people are getting sick.
Across America the vaccination rates lag. And globally only 50% of the population have received at least a shot of some kind of vaccination which means half haven’t. Increasing numbers of scientists now believe Covid is not going away, that it will become endemic, rather like flu, which means they also believe we will manage the disease into a less deadly format.
But very likely Covid will be with us for some time to come.
That’s why we need to take steps to deal with it, especially on airplanes. Why airplanes? Consumers are skittish about them still. We will drive, long distances, to avoid a plane.
But just a few steps, if taken, will get more of us on planes again. And that’s a sine qua non for travel’s recovery.
Here are the steps:
Lock ‘em up. The latest numbers from the FAA catalog 5033 “unruly passenger” incidents, many of which involve physical assaults on flight attendants, occasionally on other passengers. Enough is enough. We are not returning to “normal” flying as long as there is a lingering fear that violence will erupt at 30,000 feet.
Police have been called to many such incidents, the FAA has levied fines – which now can go as high as $37,000 per incident, and still the mayhem continues. Is it fueled by booze? Just plain awful manners? Rampant social crankiness?
I have no idea and I don’t care. What I do care about is making it stop and the cure, obviously, is to pursue vigorous prosecution of the malefactors and to lock them up, preferably for a couple years in a high security federal prison.
And publicize the sentences as loudly as possible. Get out the word that severe misbehavior in the skies will be met with a life-changing stint behind bars.
Will this reduce the number of violent incidents in the skies? I’m guessing yes and, frankly, I don’t have a better idea other than building in an exit chute that annoying passengers can be stuffed in and discarded at six miles high.
Just lock ‘em up.
Shut Up and Wear the Mask. Laughably the FAA notes that it has logged 3642 mask related incidents. What causes a giggle – or is it a scream – is that in recent hours spent at JFK and LAX I could have counted 300 mask related violations and I wasn’t even looking for them. We have become lax about masks and that just isn’t smart.
Is a mask a safeguard against Covid? Not if you expect a sure thing. But CDC guidance still recommends mask wearing when indoors in many places
Of course masks are still required on planes.
Just wear the damn thing.
So I am mystified by why a Southwest pilot apparently assaulted a flight attendant in a dispute about masks at a San Jose hotel bar. The pilot was cited for assault and battery.
Another Southwest pilot of course recently created a stir when he used the PA inflight to chant an anti Biden slogan. Or so the reporting goes.
Southwest perhaps deserved a footnote in this blog entitled Don’t Fly SWA.
But we’ll leave that to others to decide.
I know I won’t be flying it anytime soon because these aren’t the kinds of people I want steering my passage in the air.
But that’s my choice.
What I do insist on however is: wear the damn mask. I like ‘em no more than you do, I am fully vaccinated (with a booster!), and still I wear masks in most indoors contexts. It’s just safer. Smarter. Saner.
Only Vaccinated Need Enter. 58.1% of us in the US are fully vaccinated. For social safety to prevail that number needs to be 20 points higher, minimum.
It’s time to put some pressures on.
The federal government is pressuring its employees and contractors – good.
Let’s ratchet this up however. I propose requiring full vaccination status to enter an airport and of course to board a plane.
There’s a brisk market in counterfeit cards – predictably – and while using one is a crime, that isn’t a crime that has much been prosecuted.
Let’s change that. Let’s seek full federal prosecution – seeking a five year prison sentence – and we will see fake cards vanish.
And that’s important because to get more of us willing to step into airports and board planes we need to offer a safe and healthy zone. Vaccination proof is a huge step in that direction.
We need to take that step.
No one is saying people have to get vaccinated. But if you don’t you can’t fly.
That’s fair.
Three steps to more travel. We just need the will to take them.
Early in this podcast you will realize that Alexey Krasnoriadtsev is a different kind of tech CEO. For starters, this is a podcast where you will not hear much – probably nothing – that sends you to Google to look up words you don’t understand. But the bigger difference is that this is a tech CEO who talks about why it’s important that users of technology feel loved by their tech, that credit unions and other financial institutions do right by their users (and Alexey backs that up by refusing to help efforts that don’t align with that philosophy), and who admits a lot of FI tech is blah – and he tells why that is so.
You know his work. In podcast 172 you heard about Bank Dora, the innovative neo-bank birthed by a credit union. BankingON worked on that project.
The core BankingON pursuit is creating new mobile banking apps and that means tools that do what the users want (rather than what the vendors and FIs want which is the norm).
Be prepared to be surprised, often in this podcast. Especially if you are a CIO or CTO who knows how fintech execs talk.
Alexey talks about his frustrations, his hopes, his dreams and why at day’s end he is a happy guy.
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Meet Dora. She just may change all that you think about mobile banking.
A product of USAlliance – a $2 billion credit union based in Rye, NY that happens to be the legacy IBM employees credit union – Dora is the first credit union attempt to create a so-called neo bank, that is a branchless institution with no bricks and mortar.
USAlliance has been joined in this effort by three other credit unions: Affinity Plus Federal Credit Union ($3.5B in assets) headquartered in St. Paul, Minn.; Digital Federal Credit Union ($9.8B in assets) in Marlborough, Mass.; Service Credit Union ($5B in assets) in Portsmouth, N.H.
It may be seeking others to join in helping to spread Dora which, presently, is aimed at low to moderate income Americans who may be underserved or unserved by traditional financial institutions.
Can Dora survive in a marketplace where there are heavily funded, venture backed competitors – Chime for instance?
In this podcast USAlliance CEO Kris VanBeek offers candid, honest history about how and why Dora got birthed and how he sees it succeeding.
He is candid that he does not see Dora as a big money maker for USAlliance. But he believes it will generate a little profit.
He also indicates that Dora is going after different consumers than a Chime, say. He anticipates that many of Dora’s accounts will carry low balances and the economics of running Dora will be unlike a Chime.
Want to find out about Dora? The app is available in the Apple App Store, also Google Play. Signing up for an account is shockingly fast and easy. And Dora’s checking is free.
In this podcast VanBeek gives a shout out to BankingOn which played a significant part in creating the app. Tune in to next week’s podcast which will be with BankingOn and how it sees the future of mobile banking (think better, slicker, easier to use apps and be ready to toss existing apps in the dustbin).
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
American Express is here with the news: we are now putting real priority on our health and wellness.
A pandemic that has killed 750,000 in the US and almost 5 million globally will do that to you.
The Amex Trendex survey found that consumers are “investing more time and money in their physical and mental health to combat the toll the COVID-19 pandemic has taken on their well-being. More than two-thirds (69%) of consumers surveyed indicate that their mental health has been impacted by the pandemic – either by isolation restrictions or concerns for well-being – and 66% agree that the pandemic has encouraged them to spend more money on items or experiences that help with their overall mental wellness.“
Based upon my recent trip to Spain I heartily agree. Health and wellness, which I cannot say ever scored high in my travel priorities, suddenly loomed as make or break. I sought out restaurants with few diners rather than the crowded, buzzy places I had preferred. Walking the Camino de Santiago I eschewed bunking in the traditional barracks-style albergues and slept in private rooms in hotels. In airports I fled into clubs mainly because there were fewer people than in the public areas.
And of course I had chosen a holiday that involved a dozen days of walking outdoors, mainly on the rural pathways of Galicia and – this time of year – with comparatively few fellow travelers. That too ties in with the Amex findings which said: “Consumers surveyed are also spending on experiences as 76% of survey respondents agree that they want to spend more on travel to improve their well-being.”
And 60% of us are dreaming of planning a wellness focused trip.
Sure, I could have gone to Greece but I have done that and, frankly, those holidays tend for me to be more sybaritic. Lots of food and drink and, lovely as that can be, it wasn’t what I wanted right now.
What I wanted was exactly what Amex says: an experience that contributed to improving my well being. It is hard to beat a centuries old trek through northwestern Spain that culminates in a Catholic cathedral where a massive incense burner marks the occasion. (Video here.)
58% of Americans also say they want to explore the outdoors.
Word of advice: when planning your next vacation, think outdoors. It doesn’t have to be an out of the way state park. I can envision a delightful walking vacation exploring Berlin neighborhoods, a trip I actually did 11 years ago, and at least then it was wonderfully enjoyable to poke into the still not fully redeveloped neighborhoods of East Berlin.
Also: always ask – I know I’ve been doing it – is this place sanitary? Is it a threat to my health?
My guess is that the hotels, airlines and restaurants that prosper over the next year will be the ones that put a high and visible priority on health and sanitation. The pandemic will be with us in the US at least one more year and globally, who knows? It will be several more years.
So I am for dramatic steps to keep travelers safe.
To keep me safe.
Personally I support the airlines that require employees to be vaccinated and similarly I support hotels that do likewise.
I also support enforcement of capacity limitations. In Spain, for instance, restaurants were forced to seat only 50% of their capacity – that made for plenty of room.
And of course I support mask compliance indoors and, at least in some cases, outdoors. Crowded city squares are places where I think masks are required, not so much a lonely country hiking trail. But when it doubt, mask up.
When picking destinations, always check the current Covid numbers – and know that on that basis I am unlikely to consider setting foot in a quarter of the US. Definitely a full quarter of the world also is off limits to me. Too many unvaccinated, too many sick. Always check the numbers in trip planning and go with facts, not hopes and best case scenarios.
Travel, yes – but do it safely, mindfully and with a full commitment to personal health and wellness. that’s how to get through this and make it into tomorrow.
Irrelevance beckons. And it will swallow many credit unions whole.
That is the message delivered by Andre Iervolino, a longtime credit union senior staffer who wrote a provocative piece in The Financial Brand entitled “10 Factors That Will Determine Banks’ Future Relevance.”
Reading is article will rock you because, frankly, he is not optimistic about the future of many credit unions.
A core reason is that, often, they just don’t get that technology is rewriting the game book. What mattered 25 years ago does not count today.
In this podcast we explore the key takeaways of the article and the first is that the nature of a primary financial institution has changed and, said Iervolino, “Community financial institutions no longer compete only against the large banks within their marketplace, but also with big tech (Apple, Amazon, Google Checking, PayPal), fintechs, and neobank/mobile banks such as Chime, SoFi and Ally.”
He added: “On average, financial services customers have between five and eight relationships spread across multiple institutions, many of them not traditional banking providers.”
How do you compete against that complexity?
His second takeaway is remapping the future of the branch – think small footprint, cashless, staffed by Apple type geniuses and, yes, he tells how you will hire them. Hint: it involves paying a lot of money.
Next he throws the FICO score under the bus and proposes that credit unions adopt what he calls a Financial Health Score.
Along the way Iervolino offers key survival advice: Act like a startup.
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The sad, startling fact is that in autumn 2021 I felt much safer traveling in Spain than I did in the US portions of my recently completed three week visit to Spain.
Spain also requires incoming Americans to be fully vaccinated and – quite wonderfully – everywhere I went in the nation, at least indoors, mask compliance was at or near 100%. It’s just something Spaniards do as a commonsense measure to protect self and others.
I spent most of my waking hours outdoors – walking 130+ miles of the ancient Camino de santiago, enough to earn a compostela –
And on the hiking trail masks were rarely worn (I don’t recall ever wearing mine). But walking around city streets, especially in bustling Santiago which was bursting with pilgrims who had also walked enough to claim a compostela, masks outside proved to be the norm.
I just felt safer in Spain.
I also tested negative in the rapid result antigen test that I took at Madrid Airport, a requirement for re-entering the US. Personally I am not thrilled at spending over $100 on a test where I knew the result. Most of my time in Spain was spent in Galicia which statistically is the second safest region in a very safe country. Spain is way ahead of us in winning the fight against Covid. So I thought the test superfluous.
But if the US requires it, of course I will do it.
What Went Wrong and Sometimes Right
Nothing went wrong in Spain.
In the US, much did.
It started when my flight from Phoenix to JFK touched down in NYC and simply sat on the runway. And sat. And sat.
Lightning was why, they said.
The upshot is that I missed my connecting flight to Madrid – by probably 10 minutes (thank you, Delta) – and of course the customer service at JFK was woeful. I rebooked in the Delta app and, rather than endure a night at a JFK hotel, I taxied into Manhattan, booked a night at a midtown hotel in HotelTonight and headed to the nearby Empire Steakhouse where I forgot my airport grumbles with a few Manhattans and a lovely steak dinner. One thing Manhattan still does extraordinarily well is steak. Personally I had never heard of this joint but the hour was late and Wolfgang’s, my preferred NY beef place, was too far away so I took a chance and it paid off.
It almost made me forget missing the Madrid connection.
Almost.
The Delta flight back to JFK was uneventful but I will tell you a curiosity. At the Madrid Airport four different Delta employees asked to see my passport. Exactly one asked to see the negative Covid test result and yet the US government does not in fact check those results itself. It kicks that can to airlines. And one employee asked.
At JFK I of course headed to the Global Entry portal where, seemingly, half the passengers on the plane also headed. The kiosk snapped a picture of me and then identified me as someone I am not.
I looked at the print out with the wrong name and the long, slow moving line in front of me. Paces away, at the general entry portal, there was no line. I jumped the Global Entry ship and went there where I was processed in seconds, no sweat.
Note: I am not grumbling about Global Entry which I got for free with a credit card. But I find it amusing and bemusing that the free entry portal was faster.
At LAX – my next stop – the trip took an annoying turn when Delta had changed the gate of my plane to PHX a number of times and seemingly no Delta employee I asked could provide any help regarding the correct gate.
LAX, by the way, was stuffed with passengers. Empty seats were few. Mask compliance was lax. I have to ask: why doesn’t the US government require that air travelers be vaccinated? For the airline business to recover that is a necessary step. I felt real risk at LAX, something I hadn’t felt in three weeks in Spain.
I finally did find the gate and so was I home free? Nope. Remember the JFK wait to deplane. It was topped at PHX where just before we landed we were informed that law enforcement would be coming on board to remove a passenger.
There had been no drunken, rowdy incident on board, no violent mask defiance.
What had this passenger done? I had 10, maybe 20 minutes to contemplate that as we sat at the gate with the doors locked and nothing happening.
Finally a woman passenger was escorted by a flight attendant and exited. Maybe five minutes later a man did likewise.
Law enforcement never entered the plane.
After five more minutes we were told we could deplane.
What the hell happened? Your guess is probably better than mine because I mainly see only bullying bureaucratic incompetence.
Flying domestically sucks.
A Bright Spanish Moment
The bottomline: Spain shows that travel can work. Be vaccinated. Wear masks. Stay safe.
Things are different today in financial services and, increasingly, there is a realization that we are not going back to “normal,” not later this year, probably not ever. That means credit union executives have to think bigger – more boldly – about how to compete in a changing financial services landscape.
The podcast opens up with a huge credit union 2021 fact: institutions are awash in deposits. Why? What to do with them?
Data-driven thoughts on that and many more credit union issues come from Tim Keith, chief strategist of Account Boost for SRM, an independent advisory firm that focuses on financial services companies, credit unions included.
In the podcast Keith tackles tough issues – how should credit unions pursue branch realignment, how can they do business banking right, why aren’t they better at offering online account opening, and what is a simple action step for deepening relationships with existing members.
It’s a wide ranging podcast – take notes because you will get ideas well worth developing as you seek ways to navigate today’s turbulent financial services currents.
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
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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
