Just when you thought ATMs had to be going down for the count—and, honestly, who didn’t think that as the pandemic took hold?—the rumbling is loud that ATMs are emerging as a low cost branch replacement option.
Understand, too, that closure of bank branches is on a fast track. Pymnts forecasts that some 20,000 bank branches will close by year-end, mainly because many of us have shifted our banking to digital channels and correspondingly have cut back on branch visits. Personally, I cannot remember the last time I was in a branch. Recently, when I walked by the branch I had very occasionally visited, it had plywood on the windows and doors and a notice that it was closed.
Michael Perito, regional bank analyst for Keefe Bruyette & Woods, a New York investment bank, is on record saying that there needs to be closures of perhaps 20 to 30% of branches—“and that’s a conservative estimate.”
Sure, credit unions are unlikely to close as many branches as banks will because the industry is not over-branched the way money center banks in particular are. There will, however, be closures of credit union branches in neighborhoods where they are not demonstrating there is a need. And other branches will close as institutions “right size” branches from yesteryear’s 3,000+ sf to under 1,000sf (and often just a single teller line, down from the four to eight of yesteryear).
Call this a big branch rethink where what will emerge is the branch of tomorrow. Few believe credit union branches are disappearing. But many think that tomorrow’s branches will make much more use of self-service tools and technologies.
Already I am getting hopeful emails from business traveler buddies, all of whom want me to tell them that the revival is right around the corner. Get jabbed with the vaccine and you are good to go, they believe, and therefore some have started concocting wish lists of business travel destinations they plan to visit in 2021.
Word of advice: unpack. There is every sign that the revival of business travel will be slow.
Count me in the Bill Gates camp where the Microsoft co-founder predicted 50% of business travel will not return. The key reason: organizations have realized they can keep the business going without travel. And it is a whole lot cheaper to close a deal via Microsoft Teams than in person. Amazon alone has pegged its 2020 savings at $1 billion.
Lots of travelers hope Gates is right because a sizable chunk of frequent fliers have always complained about the grind and there also are the many medical studies that correlate frequent travel with impaired health.
Of course there are optimists. Delta for instance predicts a vigorous rebound in the second half of this year
At least some experts predict 70% or more of us will be vaccinated by June.
Dr. Anthony Fauci is more cautious, predicting we may reach “herd immunity” by fall and something like “normalcy” by year end.
The Rebound in Leisure Travel
I believe the vaccine will stimulate a rebound in leisure travel in 2021, probably by early summer. Business travel will lag, and usually that is what happens. Leisure travel gets strong sooner, says consulting firm McKinsey.
Drive vacations will come back first – and already are in some parts of the country. I am hearing about booms in holidays in the Berkshires of western Massachusetts and the Hudson River Valley in New York and in Phoenix, where I live, there already are strong signs of much travel to Sedona and Flagstaff.
As more of us get vaccinated, more will also climb on airplanes for leisure trips – at least domestically – before year end.
As for international leisure travel, I am more gloomy. A UN panel has predicted it will come back in Q3 2021 but at least as regards longhaul trips across oceans I don’t see an international leisure travel rebound until 2022. Mainly because many of us just don’t feel safe flying, even though the evidence for Covid spread on planes is not bountiful.
Those reasons are why many believe international travel just isn’t on for 2021, not even for leisure.
Casting Gloom on 2021 Business Travel
As for business travel, I do see it rebounding in 2021 but I see this as a fractionalized recovery. Some kinds of travel will rebound much faster. Some may never come back (remember Gates!).
As for what won’t come back, I see instructional events – where employees are briefed on the how to of using a new software tool, for instance. Pretty much all of that travel will be nixed because it is easier and much cheaper to learn at one’s desk.
I see many sales calls no longer happening in person – preliminary calls can just as well be done over Zoom. Instead of spending a day traveling to Pittsburgh, and home, and in a 30 minute meeting, a salesperson can do a quick Zoom call – and maybe five more in the time that day trip would have consumed. It just has not been a good use of time.
I see many “getting to know each other” trips stopped. We have all done these – where an employer or client packs us on a plane to Midland, Texas and we have a day of meetings with local executives and, yes, we can now associate a face with a name. But so what? I have done too many of these trips and, in retrospect, think just about all could have been done as effectively (and cheaper and more time efficiently) via Zoom.
You are right – low cost, easy to use video calling did not exist when I made most of those trips. But that’s what has changed. Technology has enabled behavior changes.
Business Travel That Is Coming Back in 2021
Some business travel will pick up, certainly by Q3 when many employees will have been vaccinated and employers can put them on the road again with some confidence they will stay healthy.
And with some kinds of travel, employees will see the reason to be on the road.
Like what?
*Service calls. When a customer needs help – the damn widget just isn’t working! – and online troubleshooting hasn’t worked, a body will be put on a plane to fix it.
*Buzzy, big events. We like them, we meet useful people, we build personal neworks, we may even meet possible new clients. Send me to a meeting of 1000 in Las Vegas and count me as happy to go. The big shows are energizing. I see good years ahead for everything from CES to Money2020 and Finovate. Maybe not 2021, but definitely 2022.
*Sales closings. The preliminary work will shift to video calls but when a signature is wanted on the line that is dotted, an in-person call will happen.
Are there other kinds of business trips that will rebound later in 2021? Sure. The year will not be a wipe out, as the last nine months of 2020 were for many of us. But we – companies and workers alike – learned much in that forced break from business travel. We will return to what is needed.
But what can be eliminated will be. Just remember, historically business trips got approved if they complied with organizational travel policies (class of air, grade of hotel, etc). In 2021 there now is a wholly new question: Is the trip necessary – can the goal be achieved with zero travel? That changes the equation. And we all will travel a lot less.
Ask Ray Crouse, CEO of the roughly $250 million in assets Parsons Federal Credit Union, if he is helming an endangered institution and be ready to get an earful.
Crouse well knows the NCUA data that show big credit unions growing (ones over $1 billion in assets) while little credit unions, and Parsons counts as small in many metrics, are struggling for air.
But Crouse does not see Parsons as endangered.
A few years ago, Crouse and the board explored how big Parsons FCU needed to be to be secure and the number that came back was $350 million. That is now the five year growth target and it obviously falls far short of the $1 billion minimum size some seers throw out for credit union survival.
But Crouse is confident the number will works fine for Parsons.
A big part of the reason is that Parsons is an unusual institution. It still primarily serves a single SEG (engineering company Parsons), it has just two branches (Pasadena, CA and Centreville VA), it has just three ATMs (but it belongs to CO-OP’s ATM network and also reimburses members for any fees incurred in using out of network ATMs), and member appearances at branches are rare. It’s an institution that went online and digital before Covid and that’s because the bulk of the members are engineers and people accustomed to being around engineers.
Parsons has just 22 employees. Some credit union half its size have twice as many employees.
In this podcast you will hear why Crouse is confident of survival and you will also hear how to well serve members in a contactless context.
There’s a grumble about NCUA’s demands on board members.
And Crouse also tells that Parsons is open to a merger but is in no rush and, first and foremost, needs to find a group that will be compatible with the Parsons engineering employees.
This could have been a woe is me, downbeat discussion about managing a credit union in an era of vanishing loan interest rates. It’s anything but. Crouse is upbeat. You will be too when you listen.
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Call it a secret pathway to a business startup. That’s exactly what the cooperative business structure is, where the workers own the business — and, hold on, isn’t that communism? Nope — that’s because a worker-owned cooperative is intended to be a profit-making business, but the profits are split among the worker-owners.
Right now might be a golden time for worker cooperatives.
Used to be, mainly I used the American Express Platinum card, and I still am a fan but my usage is way down. Other, surprising cards have sprinted to top of my wallet and with each there is a reason. Times have changed. So do my cards.
Case in point: my most used card in the last quarter is the Amazon Prime card via Chase which is fee free. I use this card only at Amazon and Whole Foods where it delivers a 5% refund on purchases. The refund comes as points that are redeemable at Amazon and in December alone I got around $125 to spend via that route (and bought the cool Simple Human kitchen trash can with it because who wants to shell out a c note in cash for a garbage bin?)
For Amazon the card works because it converted this occasional Whole Foods shopper into a regular. And it works for me because the 5% makes it seem like Partial Paycheck.
In 2020 I got back $870.41, just for shopping at Amazon and Whole Foods (actually $8.62 came from elsewhere, per a year-end summary).
Incidentally, via Chase, there is a way to convert the refund points into cash. I have never done it – I spend several hundred monthly at Amazon, month in, month out – so don’t ask for details. Just know that for those who want to cash out, there’s a way.
Next month my refund on that card will be down because in January and into February I switch to Sprouts to cash in on the Discover 5% cashback at grocers program. Discover caps the refund at $75 – which I always apply towards the credit card bill – so that will cover not quite two month’s of shopping. But I like exploring this Whole Foods lookalike and this is my time to do it.
In April the Discover 5% shifts to gas stations, wholesale clubs, and streaming services. I especially like the last bit because I feel the sting of losing the Amex $20 monthly credit on streaming services at year end 2020. It will be good to get a few pennies on Netflix and Hulu from Discover and, sure, I’ll buy some gas too (but who drives much these days?).
July-September the 5% shifts to restaurants and PayPal and my eyes lit up when I saw PayPal because the Amex $30 PayPal credit is set to expire June 30 so I will carry the discount forward a few more months with Discover. And come summer we just may be eating out more (tho I personally think that isn’t happening until 2022).
The last quarter the 5% shifts to Amazon, WalMart and Target and I don’t expect to use it much – but I will probably get around $150 from Discover by playing their 5% game this year.
Those three – Amex Plat, Amazon Prime, and Discover – are the three cards that claim 90% of my credit card spend. The quest in banking circles is to make their card top of wallet but, in my case, dream on.
There are three more cards in my wallet, probably one of which will go.
United Explorer. I’ve had this since it was Continental and it delivers many of the perks of low level elite status: free checked bag, priority boarding, 25% back on inflight purchases, and the real plum is reimbursement for Global Entry. There are also two club passes. At $95 a year it makes sense only when I am flying which, right now, I am not.
Barclay’s AAdvantage card. At $99, it delivers some of the perks of the United card but not all. There’s 25% back on inflight purchases, priority boarding, and a free checked bag. No TSA or Global Entry reimbursement. Mileage awards are doubled — a nice perk when I’m flying but of course I’m not.
Diners Club. The main get is the network of 1000 airport lounges globally and, in Europe, many of the lounges I have been to are swank indeed. An intriguing wrinkle is personalized rewards where members with over 50,000 points – I have 38,000 – can bag something they really want. Like what? Diners Club offers for instances: “Orthodontia: Nothing’s cheerier than your child’s bright smile. Bring a smile to your face too! Purchase of land: A spread in Texas; a ranch in New Mexico? Your dream can come true. Down payment on a car: Drive away with an easy deal. Getting into your dream car is easier than you think. Condo rental for two months: Escape to a luxury condo on the beach — your home away from home. Personal wine cellar: Have you always wanted a custom wine cellar? Or, perhaps help selecting your own private collection? Now you can have it. Choose a premium wine rack system for 200 to 2,000 bottles or secure the services of a wine connoisseur.”
Diners Club is $95 annually, I’ve had it since 1985 (only Amex has been on my body longer) and, call me nostalgic, I am not giving it up.
A last card in my wallet is Lili, a Visa business debit card associated with a neo bank of the same name that is aimed at gig economy workers such as me. It’s free and Lili positions it as a painless way to track business expenses – just use Lili for tax deductible purchases and nothing else and that simplifies your life. I’m sold. It may not save me any money but time is money and it saves time.
Will I have all these cards a year from now? I doubt if I will have both the AAdvantage card and the United Card. If travel suddenly resumed, I would. But I don’t expect that to happen in 2021.
Now, what about you? What’s in your wallet? What can you close and not miss?
Lee Wetherington, director of strategic insight at Jack Henry, the big core maker (Symitar is theirs), has a picture in his head of the path to success for tomorrow’s credit unions. Picture yourself as a platform, he says, and, yes, a platform company is Amazon, for instance, and what makes Amazon a platform is that it creates an environment where many other vendors can also sell and consumers in turn can reap the benefits of choice and keen prices.
How’s that apply to credit unions? Wetherington sees the credit union as a platform where the best, most useful finech tools are aggregated to best serve an institution’s members. The credit unions with the best tools win.
A necessary ingredient in this equation: core systems that provide an open environment that allows for reasonably easy and inexpensive integration of third party tools and, yes, some core providers maintained rather closed universes. But that just won’t work going forward, insists Wetherington.
Buckle up because Wetherington has more big ideas to throw your way. He says, for instance, that early in 2021 Google will unveil a powerful suite of banking tools that will be free to credit unions to offer to their members. But he calls it a Faustian bargain. That’s because what Google wants is the data of the members and although Google says it will not ask credit unions for access to the data, it has another route to getting it. In the podcast, Wetherington tells how.
There’s also a provocative discussion of cores in the cloud. Accept that that is the future and, actually, it’s better that way for most institutions.
By the way, Wetherington is adamant that core systems are a lasting part of the financial services universe. But he tweaks that by explaining that nowadays cores come in many different forms, with many different capabilities.
It’s a wide ranging podcast. Hop aboard for a voyage into tomorrow and your credit union.
In this podcast mention is made of a 2000 article I wrote for MITs Technology Review magazine. There’s a link to the interviews with Google’s founders in the show notes.
There’s also a link to a 2012 article I wrote on Google and its introduction at the 2012 Money2020 show of a predecessor to the banking tools it now is about to unveil.
A third link is to a Google video on its banking tools. Watch it.
A fourth link is to a story I wrote on neo bank Lili.
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Regular readers know I have long been a fan of Amex Platinum but in a new year, I find myself again looking into the wisdom of the $550 annual fee card. The big hit: at the end of 2020, the $20 per month Amex credit against cell phone bills and also streaming video fees vanished. Amex had always said those were temporary perks. There was no surprise here. But that cut my Plat benefits $40/month.
The good news is that when I dug – more on the process later – I found numerous perks that go to cardholders. But you do have to hunt. Amex does not give them to you unless you ask.
I say do likewise with any premium travel rewards card in your wallet. You just may find that the card has added new, tasty perks. Chase Sapphire Reserve, Plat’s doppelganger, is a case in point. It too has lot of perks cardholders may not know about.
And of course the backdrop to this quest is the other, huge loss for Plat cardholders, at least for me: the sheer lack of travel raises questions about any card conceived as a travel perks card and the Amex Plat has to be at the head of that pack.
A travel perks card that stays in your wallet is obviously of little apparent benefit. Thus, my new quest for value in the Platinum card. I have had one for some years. Only now have I become a perks hunter.
Understand, I see no near-term changes in my air travel appetite. Clients aren’t requesting my presence (Zoom works for them and for me at present).
I expect we will get more rational policies in the Biden Administration, but how soon will it be implemented and how many maskless morons will have to be physically thrown off planes?
Until we have mask clarity, and until the vaccines are widely distributed (so far the distribution has been a failure of Trumpian girth – “incomprehensible,” said Mitt Romney who added that it was “inexcusable”), count me as a deeply hesitant flyer – and probably I will make no use of the Amex Centurion clubs in the first half of 2021.
Mind you, Centurion clubs for some years alone persuaded me to keep renewing Plat. So their lack is a big issue for me.
Another Plat perk has been a $200 airline credit (good for incidentals with an airline selected by the cardholder in January – this is for snack boxes, beer, etc in coach). But I may not fly American – the airline I selected – at all, not in the first half of 2020.
There’s a $15/month Uber credit which is also applicable to Uber Eats and I will admit I have been derelict about using that, but in December – when the credit is upped to $35 – I used it to cover half of a meal delivery from a local Vietnamese restaurant, Rice Paper. I count that meal a success. I will use the Uber Eats credit again.
But I need more perks to justify the $550 fee for my card plus $175 for my wife’s card.
And so I visited the Amex Plat Offer and Benefits page which lists 100 deals and some are good. A favorite has been $50 off any purchase at Saks, useable twice yearly for $100 total.
$50 off a $250 purchase at Johnny Was.
Spend $45 at Teleflora, get $20 back, up to 10 times. That’s $200.
Spend $50 at Home Depot, get $50 back, up to two times.
Spend $50 at BestBuy, get $50 back, up to two times.
Those offers total $550 and there are 96 more that I see. Everything from the Container Store to Samsung (spend $1000, get $200 back) and Loews Hotels (spend $200 get $50 back).
Keep hunting for perks. New ones are popping up. For instance: OneMileAtaTime has found a $30 monthly PayPal credit, good through June. That’s $180. And no enrollment is needed. Just use Amex to pay via PayPal and you qualify, on most purchases, for the $30.
Whew. Yes, this is a bit of work. I’ll be glad when the Centurion and the $200 airline credit are ample for me.
But until then, stay alert. Amex (and its competitors) will be fiddling with their rewards. Be ready to pounce.
The $3 billion Colorado based Canvas Credit Union knows the answer for its members – and the answer is that they are.
That’s because, Canvas, working with Filene, compiled data that looked at the health of its members versus average Coloradans along three fronts: financial, social, and health. The verdict is that Canvas members score higher on all three fronts.
That, said Tansley Stearns, guest for this podcast and chief people and strategy officer at Canvas, is excellent news – both for the members themselves but also for the credit union.
That is because she believes that the brands that win over the next 10 years are the brands that consumers believe advance their health.
Stearns hopes that other credit unions do similar research and if there is a pattern where credit unions collectively boost members’ health think about the power of that messaging in getting across the credit union difference.
Doing good by members just may be the credit union ticket to ride to competitive success.
If this podcast leaves you wanting to hear more from Stearns, watch her CUBroadcast segment on this topic here. It’s a lively 12 minutes.
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Just when you thought business couldn’t get tougher—most credit unions now are wrestling with collapsing loan revenues as interest rates continue to tumble. And yet, more non-bank competitors enter the fray.
Sure, some experts shrug them off. The ABA Banking Journal, in a recent story about the rise of non-banks, features this quotation: “‘I saw the other day that I can get a bank account with T-Mobile or something, but I don’t want to bank with T-Mobile—I just can’t imagine that there will be millions and millions of American that are,’ remarks Canapi Ventures partner Walker Forehand.”
I can imagine it and my advice to you is do likewise. You do not have to open a T-Mobile banking account. But work at understanding why some of your members will.
And it’s not just T-Mobile. Suddenly, everybody from neo bank Lili—featured in this CU2.0 write up—and of course Apple (with Apple Pay and Apple Card) is plunging into banking.
Suddenly a lot of credit union CEO eyes are turned to small business as the financial institutions hunt for ways to bring in profitable business.
And credit unions – many of which have been especially active in PPP lending – are finding that small business is receptive to their overture. The money center banks often are indifferent to small businesses and community banks often lag in the tech tools small businesses want in a financial institution.
Monit, a new cashflow management app for small businesses, just may be the tool that helps bring in more small business members.
Monit is not in any app stores, it is only available to members and customers of financial institutions that are Monit customers, said Steve Dow, Monit CEO. The Monit app is customized to resemble the credit union’s.
Dow added that Bank of America lately has made much of its Cash Flow Monitor for small business – but Monit puts a similar tool set in the hands of small business users at credit unions and community banks.
What Monit does is monitor key financial numbers for the small business and it also forecasts cashflow.
For the credit union, additional tools are offered. For instance, a credit union can see exactly what share of wallet it has of small business members. Note: that data is anonymized except for small businesses that explicitly opt to disclose their data.
Monit will also help a credit union find targeted lending opportunities so that more efficient and effective offers can be made.
How Monit works is that it ties into the accounting software used by the member – often Quickbooks. Monit does not require integration into the credit union’s core.
In the podcast Dow explained the benefits for both the small business and the credit union with Monit.
He also talked at length about Monit’s PPP related tools which will prove newly useful in the fresh wave of PPP lending.
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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
