A new FICO report vividly documents how badly most financial institutions are flubbing identity management, especially in crucially important new account opening.
Sure, credit unions have KYC and AML obligations in onboarding new members. But that is no excuse for chasing prospective new members away with clumsy, antiquated, and even hostile new account procedures.
Here are key findings of the research:
“Operationally, lack of automation and the time taken for identity verification is an obstacle for over half of institutions.”
“Physical checking of identity is required for digital applications for personal banking at half of institutions.”
Even as the nation’s air carriers do the right thing they manage to screw it up.
Case in point this week. First I saw a story that led me to want to applaud the courage of some carriers.
Then I saw a story that left me swearing at the carriers’ executives for their greed which threatens our health and defies commonsense.
First the good news: The WAPO headline tells it – Delta, United and Alaska Airlines have banned more than 900 passengers for not wearing masks. Bravo, if the emasculated federal government cannot summon the bottle to issue a mask mandate for public places – an action it should have taken months ago – it’s up to the airlines and some have stepped up.
I know flight attendants – understandably – hesitated to get involved in insisting on masks. They understood there are nutters who believe they have an inalienable right to go maskless (probably they think it is the US Constitution). But airlines and their flight attendants have done the right thing here.
And the carriers have upped the ante by issuing flight bans. Delta leads the pack – it has banned 460 passengers. United has eighty-sixed 300. Alaska has booted 146.
American and Southwest, sadly, declined to issue counts. American Airlines did tell the Washington Post this: “We expect our customers to comply with our policies when they choose to travel with us,” American Airlines spokesperson Curtis Blessing said. “We take action when that is not the case, but the vast majority of our customers have supported and welcomed our continuing efforts to strengthen our face covering policy based on the CDC’s guidance … we may deny future travel for customers who refuse to wear a face covering for the duration of this requirement.”
No, I haven’t an idea what that is supposed to mean and, for now, I won’t be flying American or Southwest anytime soon.
Which brings us to the two steps back. Southwest Airlines has joined the list of carriers who say they will stop blocking middle seats. They start stuffing coach on December 1 (and I do wonder how many passengers will fall ill with Covid-19 due to holiday travel).
According to a tally by The Points Guy the only carriers that are sticking with an empty middle seat policy are Alaska, Delta, and Hawaiian.
That is inexplicable. We are not flying because we fear getting the virus in the air…and we also know two things that are helpful in curtailing spread of Covid-19: mask wearing and social distancing, the latter being all the more important indoors (as in an airplane!).
Meantime, a seven hour flight to Ireland is linked to a staggering 59 Covid-19 cases in Ireland, according to a new report: “An outbreak of 59 cases of coronavirus disease (COVID-19) originated with 13 cases linked by a 7 h, 17% occupancy flight into Ireland, summer 2020. The flight-associated attack rate was 9.8–17.8%. Spread to 46 non-flight cases occurred country-wide.”
Of course I know about a new Harvard report that says, hogwash, air travel is safe. But I also know the carriers paid for the report and that causes me to keep looking for data.
Such as? Another recent report looked specifically at the question: does keeping middle seats empty impact Covid-19 spread. The authors’ conclusion: unquestionably yes. Here is what they write: “We use recent data and research results and a probabilistic model to estimate the chance that an air traveler in coach will contract Covid-19 on a US domestic jet flight two hours long, both when all coach seats are full and when all but middle seats are full. The point estimates we reach based on data from late September 2020 are about 1 in 3,900 for full flights and 1 in 6,400 when middle seats are kept empty.”
That’s commonsense. When you sit literally elbow to elbow next to a passenger in coach your chances of getting any and all contagious diseases rise. An empty middle seat is no panacea. But it definitely makes the flight safer.
No wonder I have re-installed my Delta Sky app – and of course I have now downloaded Alaska Air too.
Note to self: change Amex Plat $200 airline credit from American to Delta in January. Besides, Delta has spiffy new digs at Sky Harbor and there’s a new 7500 sq. ft Sky Club there too. That, plus a tough mask policy and empty middle seats win my business.
Do it for me. That is exactly what more and more credit union members expect from their financial institution. Especially around payments.
Amazon’s Alexa is smart enough to remind us that, based on our order history, it’s now time to re-order cat food. Why can’t my credit union remind me to pay my car lease, my mortgage, and the Discover bill that is always due on the 15th?
The insight of Payrailz, a Connecticut based fintech, is that the credit union in fact probably has all the tools it needs to do those reminders – even to initiate the payments for members that choose.
Enter the world of AI powered payments.
Mickey Goldwasser, chief of staff at Payrailz, said we are entering into an era of “Do It For me” – and AI makes that a very possible reality.
A member forgot to pay his/her American Express card bill – but won’t that member welcome a nudge? “Usually you have paid American Express by now? Is that bill due?”
Smart payment rails can also be called upon to actually make the payment.
The beauty is that drudgery is being taken off the member’s plate – and smart machines are running with it.
13 credit unions are in CU Railz, a CUSO that owns Payrailz. A few other credit unions, and a smattering of banks, also have adopted the technology. But, says Goldwasser, 90% of Payrailz business is with credit unions.
Size varies from small to the $12 billion Sun Coast.
Listen up. The time is now for smarter payments tools that anticipate what members want to pay and help them do it.
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
Airline executives and their lobbyists are thick as locusts on Capitol Hill as they make a last minute push for another federal bailout. Their opening bid is $25 billion. But they would take more. And some inside the Beltway support this public largesse.
What’s wrong with that? The better question: is anything right with the idea?
Look, I take no joy in the many tens of thousands of unemployed airline employees. It’s a bloodbath. In Phoenix, for instance, the number of flight attendants has gone from 1900 a year ago to around 1000 today. That’s a lot of human suffering. Airline employees and those in related industries have gotten screwed in this pandemic and, often federal aid that was supposed to go to them, in fact went to executives, according to a US House report.
But face this reality: with or without new federal handouts, the airline business is going to shrink. By a lot. The chairman of United has said carriers may shrink by half.
The International Air Transport Association says air traffic will not reach pre-pandemic levels until 2024 and maybe not that quick.
Rising skepticism about the Trump tainted vaccine program – with New York and California governors both saying go slow – makes it ever less likely that many of us will flock for vaccines in the early going. And yet most experts say air traffic will not begin to rebound until vaccines have been widely distributed.
Surviving airlines will in fact shrink – they will literally often fly smaller planes and they will also shrink route maps.
And a lot of airlines just will go bust.
Many already have. Here’s a Forbes list from June. LATAM and Avianca had already filed bankruptcy (although both are seeking to reorganize).
In the US, View from the Wing has said the US carriers most likely to have their day in bankruptcy court are American and United.
According to CNBC, 43 commercial carriers already have failed outright this year. More will. The CNBC story ominously warns that historically airlines build up their cash reserves in the summer so they can survive the lean winters. This year winter is coming but summer has been a bust. Buckle up. Many more carriers will fold.
Haven’t I just made a powerful case for why we need massive federal bailout monies for airlines and we need it now? Nope. That would be the proverbial good money after bad.
Lowenstein added: “There is no reason to single out employees of a particular industry for favored treatment. And the airline industry is among the least deserving. In fact, the bailout will reward the carriers for egregious overcompensation and share buybacks.”
Writing in Wolf Street, Wolf Richter documents the many billions airlines spent in recent, flush years on stock buybacks, enriching executives and some shareholders. This is money that could have been tucked away for the inevitable rainy days – airlines are cyclical industries that get battered in recessions. They also are battered by rising petroleum costs. Bad times are inevitable for them. But, no, US carriers did not stach cash. They spent it on stock. Per Richter, “the big four airlines blew, wasted, and incinerated $44.6 billion in cash on share buybacks from 2012 through Q1 2020.”
In 2017-2019, executive compensation at just the top three carriers hit $325 million.
If they had held onto just half of the dough spent on buybacks and bloated paychecks they would not be on bended knees begging the House and Senate for yet more free money.
There is no reason whatsoever to think airline executives will behave more rationally and prudently going forward. They have a long history of blowing bailout cash – and then yet again getting caught flatfooted in the next bad economy.
It’s time to go Darwinian. Let those that can survive – by virtue of their wits, budget cutting and strong management – survive. The others will perish. There can be scant optimism about the future for today’s airline executives who are good at creating personal wealth but not much else.
And as the public’s appetite for air travel rebounds, new solutions will emerge.
It was once inconceivable that the US economy could function without GM and Ford – and now does anyone notice they are still here? Tesla’s market cap is double GM’s and almost three times Ford’s. And we are not short of automobile options.
Only 60 companies in the Fortune 500 in 1955 were still around in 2017. We are in an age of creative upheaval. And so it comes for air carriers.
There is plenty of reason for a similar embrace of transformation in air travel. When the passengers are there, so will the new carriers.
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.
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
Here’s the headline news from a new report via DepositAccounts.com: Branch closings slowed substantially in Q2.
According to the report: “Branch closures dropped to an estimated 376 in the second quarter of 2020, well below the per-quarter average of 631 from the second quarter of 2017 through the fourth quarter of 2019.”
Should branch skeptics such as myself, who believe many more branches need to close to rationalize financial services for a digital, contactless era, shut up and go home? As far back as 2014 I wrote in CU Times, “branches are an expensive albatross around the industry’s neck.”
Is it time for me to shut up? Nope. In fact, there is mounting evidence that every demographic, including senior citizens who hitherto have been tech holdouts but who now have embraced tech in the Covid-19 era, feel safer using tech than they do going into branches.
Call it seven hours of inexplicably unaware vanity flying.
That was the recent Qantas flight to nowhere which stuffed 150 travel starved flyers onto a 787 Dreamliner that – flying at altitudes as low as 4000 feet – went literally nowhere. Passengers paid $566 to $2734 for seats in economy, premium economy and business class.
The flight apparently sold out in 10 minutes.
The usual reason for buying: the passengers just missed flying. So when Qantas came up with this idea – Australia’s borders are closed so external flights are a no-go – people bought.
One has to assume that none of the passengers can spell “climate change” without help.
The stunning fact is that there are many more such flights to nowhere. And people are buying them.
Air travel produces about 3% of the world’s carbon emissions. A Guardian story reported, “Taking a long-haul flight generates more carbon emissions than the average person in dozens of countries around the world produces in a whole year, a new Guardian analysis has found.
The figures highlight the disproportionate carbon footprint of those who can afford to fly, with even a short-haul return flight from London to Edinburgh contributing more CO2 than the mean annual emissions of a person in Uganda or Somalia.”
It is one thing if a flight is to return home to be with a sick relative, to attend a close friend’s birthday party, or to close a big business deal. All valid reasons, all reasons we all have had for flying before.
Offhand the only flights I regret taking are two where I discovered upon heading to the meeting location that the event had been abruptly cancelled (a federal courthouse hearing in New Orleans and a trade association committee meeting at Newark Airport) and that isn’t bad in multiple decades of flying. No argument from me: where long distances are involved, I will be flying.
Yes, nowadays I will question if the event is actually necessary and I will also question if it could be done virtually. But when in-person is the best way, I’ll fly when a drive would be more than 4 or 5 hours.
And I’ll defend my choices.
But I also acknowledge that climate change is a reality – where I live in Phoenix we are recording one of our hottest years, ever. In Sonoma County, CA, where I used to live, wildfires have ravaged tens of thousands of acres. Up the west coast, the destruction is monumental. I own property in Taos County NM and that state has significant water issues that are exacerbated by climate change. Only a blithering idiot would deny the reality of climate change.
So I find myself rationing my own carbon impacts. I drive much less (walking is good for you!). I turn up the thermostat in the long Sonoran desert summer. In just about every way I strive to produce a little less carbon.
That of course means flying only when necessary.
And then I read about what amounts to a new fad, flights to nowhere, where the environmental impacts are real – but not much else is.
Here’s what they experience, per the South China Morning Post: “The captain of EVA Airways Flight BR5888 tells his 309 passengers – a full cabin – he will fly east from Taipei’s Taoyuan International Airport, to give them an ‘extremely clear’ view of the airport on the tiny Japanese island of Yonaguni, before swinging the aircraft back, and then towards Taiwan’s southernmost peninsula. The 2.5-hour flight will land where it took off.”
Really? Not only is this environmentally harmful it’s flagrantly unimaginative.
For four years Google has offered a VR ride that will let “passengers” experience “the whole wide world.”
In Japan there’s even something of a fad centered around VR flights. Per the Washington Post, “When an in-flight virtual reality experience called First Airlines started offering faux flights in the Ikebukuro neighborhood of Tokyo in 2017, you could say it was ahead of its time. Three years later, in the grips of a global pandemic that has grounded the vast majority of flights, Tokyo’s business travelers are leaning on the VR experience for a taste of international travel without leaving their city.”
No carbon involved.
VR flights are, well, odd – but if that’s your pleasure, have at it.
Flights to nowhere are different. They give all flying a bad rep.
And with US and European companies looking for every reason to flatten travel budgets for years to come, it just doesn’t pay to make plane travel into an unfunny joke with real environmental consequences.
So far, thankfully, flights to nowhere have not caught on in the US or Europe.
Let’s hope it stays that way.
And if there are complaints about the end of truly pointless flying, tell ’em to go eat cake. Qu’ils mangent de la brioche.
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.
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
Here’s your choice: pick a hotel with lots of contactless tech (check in via phone, room entry via phone, etc.) or one with plenty of Covid-19 combat gear ready for you (masks, sanitizers, etc.). Which do you want?
Does it have to be a choice? Excellent question but play along because hotel booking site HotelsByDay recently did a survey of some 1000 travelers and asked them what they expected from a reopened hotel.
Most wanted: hand sanitation stations (53% of us). Least wanted: contactless check in, check out (39%).
Falling in the middle are: mask requirements for staff and guests (50%); and a welcome package with safety items such as a mask and sanitizer (43%).
Ignore for now that a full half of respondents are blithering idiots who don’t demand that there be a mask requirement for guests and staff alike. Note: I would not stay in a hotel that did not require that and will walk out of one that, when I arrive, I realize isn’t enforcing their requirement (and they can go pound sand in trying to collect any cancellation fees).
The reason these poll results fascinate me is that hotels have in fact been doubling down on contactless since the advent of Covid-19 (and the realization that it will be with us for a while, at least another year). Indeed the April headline in a trade pub reads: Hilton Doubles Down on Contactless and similar can be said about every other big group.
Are they barking up the proverbial wrong tree?
I don’t think they are – indeed I believe the mid-range future of hotels and resorts will hinge on having lots of contactless tech and, really, there is no reason for human to human interaction at a check in desk (look at how many hotels have eliminated person to person checkout), there is no reason to insist we use those always failing plastic cards to get into rooms, and there is less than no reason to insist we hand a credit card to a server at a bar or restaurant. All those are ideal for touchless. Hotels just have dragged in adoption but so they always do because they are skinflints about tech. Now it is time to get moving because your guests will demand it, especially the age 40 and younger guests who increasingly will dominate.
But I think the either/or, either contactless or masks, is bogus. We can and should have both to safely travel in 2020-2021, the era of Covid-19.
Which brings us back to masks and hand sanitizers which, along with social distancing, are the three best steps we and others around us can take to keep ourselves healthy and safe. That understood, prepare to get mad. Here’s the lead from a recent story in Phocuswire: “Retail automation company Swyft is partnering with CVS to bring contactless kiosks to hotel lobbies.
“In addition to typical vending products such as snacks and toiletries, the machines will also be stocked with personal protective equipment such as masks and hand sanitizer.
Guests can make purchases from the kiosks any time of day using their smartphones.”
That means the push is on to monetize the supplies we might need to stay safe in a hotel.
Talk about chutzpah.
Flashback to the aftermath of 9/11. Remember how many hotels began stocking complimentary toiletries, shaving kit, toothbrushes, etc? Often we lost our toiletries in the then new TSA lines, or they got confiscated for being too big. Rather than nickel and dime the stalwart guests who nonetheless traveled in the aftermath of the 9/11 tragedy, many hotels and resorts thoughtfully stocked complimentary toiletry kits.
Today however the hotelier’s eye is on Mammon – if, that is, CVS and its vending machine partner are calling this right.
Let’s hope they are wrong, for our own sakes and but also for the industry’s.
Good news: So far, no hotels have signed up for the machine. Another story, in Vending Times, mentions machines in LaGuardia and also Boston’s South Station Bus Terminal. No hotels or resorts are mentioned, except in this vague claim: “CVS said it is considering an additional 50-plus locations throughout the country including college campuses, corporate offices, hotels and other transportation hubs to host vending machines in the future.”
There is hope. Hoteliers may realize that gouging guests a few quid for a mask and hand sanitizer is over the top when that hotelier should in fact be prostrate and kissing the feet of the hardy guest who braves Covid-19 worries to check in.
Especially when I shop at Whole Foods I am handed a mask, gratis, and there’s sanitizer spray that’s also free. It’s not expecting much to get that stuff for free when I am spending a couple hundred bucks, often much more, for a bed.
Memo to hoteliers: Don’t be pennywise. Hand out masks and sanitizers, gratis, and thank the guest for his/her courage in traveling. That’s the smart move.
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.
