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CFSI develops guide for small-dollar credit offerings

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CHICAGO (2/28/14)--Access to high-quality, small-dollar credit can help individuals build wealth and weather financial turbulence. The Center for Financial Services Innovation (CFSI) released a Compass Principles guide to help identify what such a program would look like.
 
In 2012, consumers spent an estimated $41.2 billion on small-dollar credit products such as payday loans, deposit advances, tax refund anticipation checks, auto title loans, and secured and subprime credit cards.
 
Broadly speaking, small-dollar credit refers to consumer loans of less than $5,000 with terms ranging from two week to three years, CFSI said. It defines an affordable small-dollar loan as one where the borrower can successfully repay the loan without re-borrowing and still meet the basic needs of food, shelter and medical care. Loan amount, repayment period, interest rates and fees all factor into the affordability of the loan.
 
Unfortunately, many small-dollar credit products serve not to get the borrower through a tough time, but instead enmesh them in a cycle of deepening debt and repeat borrowing.
 
The guide defines high-quality, small-dollar loans as ones that:
  • Are made with high confidence in the borrower's ability to pay;
  • Are structured to support repayment;
  • Are priced to align profitability for the provider with success for the borrower;
  • Create opportunities for upward mobility and improved financial health
  • Have transparent marketing, communications and disclosures;
  • Are accessible and convenient; and
  • Provide support and rights for borrowers.
All need to reflect the Compass Principles of embracing inclusion, building trust, promoting success and creating opportunity, CFSI said.
 
Credit is not the answer for every consumer, the guide noted. "For some people, however, access to credit might only worsen their financial situation" because they have little income or unmanageable debt. They are at risk of becoming repeat borrowers, falling deeper into the cycle. Non-credit solutions--job training, budgeting help or savings tools--may be more appropriate.
 
Advisers to the project included Consumer Federation of America; Kinecta FCU, Manhattan Beach, Calif.; the National Federation of Community Development Credit Unions; and Self-Help FCU, Durham, N.C.

Filene connects human-centered design, financial services

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MADISON, Wis. (2/28/14)--The deadline to register for Filene Research Institute's colloquium on design thinking is Wednesday.
 
The one-day event, set for March 26 in Austin, Texas, is meant "to help financial leaders inject design thinking into their own organizations."
 
Design thinking describes a commodity development process that centers around the perspective of the user ( The Wall Street Journal Feb. 13).
 
"Financial products are commodities, and financial institutions are commodified," according to Filene. "And the expansion of innovative players means credit unions have to work harder than ever to build the confidence and trust of members."
 
Speakers at the Filene colloquium include:
  • Drew Miller, creative director of frog Design, a global product strategy and design firm;
     
  • Toby Sterret, director of user experience for the online bank Simple;
     
  • Mohamed Khalil, director of product, data and partnerships for a real-time mobile money budgeting tool called Moven;
     
  • Ryan Hovenweep, director of thirteen23, an interactive design studio in Austin; and
     
  • Andy Wright, associate vice president of marketing and online delivery for Seattle Metropolitan CU, which incorporates strategic and functional design in marketing.
There will also be a panel on using design for social impact, with representatives from the University of Texas College of Fine Arts.
 

Doss added to SF Fed Reserve advisory council

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SAN FRANCISCO (2/28/14)--The Federal Reserve Bank of San Francisco announced that David Doss, president/CEO of Arizona State CU, is one of the latest appointees to 12th District's Community Depository Institutions Advisory Council (CDIAC).

Doss, who leads the $1.47 billion-asset credit union in Phoenix, joins two other credit union representatives on the council. Darin Moody, president/CEO, Utah First FCU, $251 million in assets, Salt Lake City; and Robert Stuart, president/CEO, OnPoint Community CU, $3.3 billion, Portland, Ore., also serve on the council.

The CDIAC represents banks, thrifts and credit unions of various asset sizes within the 12th District. It provides input on economic and banking conditions, regulatory policies and payment issues. Appointees typically serve three-year terms.

CU System briefs (02/28/2014)

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  • IRMO, S.C. (2/28/14)-- South Carolina Treasurer Curtis Loftis visited management and staff of Family Trust FCU, Rock Hill, S.C. ( In the Loop Feb. 27). During the Feb. 19 visit, Loftis met with Family Trust FCU's Lee Gardner, president/CEO of the $316 million-asset credit union, and David Casey, vice president of business development and government relations. Also on hand was Billy Boylston, director of government affairs, Carolinas Credit Union League (CCUL).  Loftis, who oversees state-chartered financial institutions in South Carolina, has been a longtime supporter of credit unions, according to In the Loop. "We appreciate any opportunity to arrange for our lawmakers to visit local credit unions," said league President/CEO John Radebaugh. "Credit unions have great stories to tell and branch visits like the one today from Treasurer Loftis provide a firsthand look at how credit unions are serving their members." ...
  • COLUMBUS, Ga., and RICHMOND, Va. (2/28/14)--Known since its inception as TIC--the Infantry Center--FCU , the only credit union on the Fort Benning, Ga., base will change its name to Kinetic FCU , effective March 10. The $260 million-asset credit union has increased its presence in the Chattahoochee Valley and was searching for guidance for a name or logo change ( Ledger-Enquirer Feb. 27). "But as we got into the process, the research confirmed that the majority of consumers did not know what TIC stood for, so we started work on a new name. We really liked Kinetic from the beginning," said Mark Littleton, vice president and chief strategy and marketing officer . RF&P FCU, Richmond, Va., also announced it has changed its name to RiverTrace FCU . In searching for a new name, the $21 million-asset credit union "discovered that in historical context, the James River was literally 'traced' by early settlers to its most navigable point inland, which is where Richmond stands today," said President/CEO Catherine McDermott. ...
  • NORWICH, Conn. (2/28/14)--After 36 years in the credit union movement, including 14 years as president/CEO of $192 million-asset CorePlus FCU, Warren Scholl announced his retirement effective in May ( The Bulletin Feb. 17).  Scholl has been with the Norwich, Conn., credit union since 2000, first serving as executive vice president. His credit union career included stints in Kansas and Oklahoma as well. In January, Scholl became president of the Northeastern Connecticut Chamber of Commerce. ...