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Speaker CUs need strategy for a new world

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BOSTON (6/26/09)--Credit unions should consistently focus on their relationships with members, take advantage of competitors' weaknesses, and not be shy about investing in technology. Mark
Credit unions should consistently focus on their relationships with members, take advantage of competitors’ weaknesses, and not be shy about investing in technology, Mark Sievewright, senior vice president, Fiserv Inc., Brookfield, Wis., told America's Credit Union Conference & Expo Wednesday in Boston. (Photo provided by CUNA)
Sievewright, senior vice president, Fiserv Inc., Brookfield, Wis., delivered that message Wednesday at America’s Credit Union Conference & Expo in Boston. Sievewright shared six strategic themes changing the movement today:
* Decreasing financial performance is prompting efforts to spur growth and restore confidence in future returns. “Net interest margins have been declining since 2004, and the credit union movement won't see a 1% return on assets anytime soon,” he said. Most credit unions, he maintains, are moving to a 12- to 18-month planning schedule versus a five-year schedule. * Market consolidation, product commoditization, and more demanding consumers are changing the rules of how credit unions do business. Thousands of banks and credit unions are competing for the same business. And in consumers' minds, financial institutions are one of the least differentiated brands in the U.S., according to a recent Fifth Third Bank study. Consumers don't trust banks today, Sievewright claims. “This is a huge opportunity for credit unions to win market share. You may not get another opportunity like this,” he said. * Redefining existing business models is essential to the long-term sustainability of the industry and movement. “We're at a tipping point in the movement,” he declared. Credit unions’ net interest margins remain lower than operating expense ratios, and non-interest income has become more important. Consumers are shifting their behavior to saving, and financial firms are trying to capitalize on that mentality. Credit unions to brainstorm with staff for a suite of revenue ideas, citing examples such as gift cards, identity theft protection, and account packages, he said. * Delivery channel changes will be profound. Branches won't go away, he said, but there will be slower growth in new branches. His projected annual growth per delivery channel over the next three years: online, 27.2%; telephone, 7.1%; branch, 1.4%; and ATM, 0.5%. “In what channel would you put your money?” he asked. * Demographic shifts will redefine service and channel delivery. Recent Labor Department statistics show today’s consumers will have held six jobs by age 30. Many, in fact, will hold three jobs at once. These shifts will affect how you do business, in terms of both products and their delivery. * Regulatory changes will redefine our business and its revenue and profits. Credit unions can expect more regulatory burden, he predicted. While safety and soundness are essential, credit unions need to get involved in advocacy. A simple roadmap to a real relationship with members is: trust, plus experience, plus knowledge, plus advocacy, he said.
The CUNA-sponsored ACUC conference ended Wednesday.

Columbia CU earns second LEED certification

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VANCOUVER, Wash. (6/26/09)--Columbia CU, Vancouver, Wash., received the Leadership in Energy and Environmental Design (LEED) Gold Certification by the U.S. Green Building Council for its Grand Central branch. This is the second LEED certification Columbia CU has received--its Washougal branch was awarded gold certification earlier this year. To earn LEED certification, a building must meet certain criteria. Columbia applied for and earned 42 points toward gold certification for site selection, energy use, lighting, water and material use, waste management, air quality and innovation in design. “Our Grand Central branch uses about half the gas and electricity and 40% less water on average than our comparable branches,” said Columbia CU interim CEO Steve Kenny. The credit union also reduced construction waste by 75%. “Throughout the construction process, work crews carefully separated scrap metal, wood and concrete for recycling,” Kenny said. “This prevented excess building materials from going to landfills.” Notable green features at the branch include an omni-directional skylight, a cistern for rainwater collection, porous concrete, Forest Stewardship Council-certified lumber, corn fiber work station panels and guest chairs made from recycled seat belts. Columbia CU has $770 billion in assets. The credit union is one of several nationwide that have worked to become more environmentally friendly. News Now reported May 7 that Redwood CU, Santa Rosa, Calif., had achieved LEED status in its Santa Rosa branch and administrative building. Michigan State University FCU, East Lansing, Mich., also embraced green concepts when it built its headquarters building, and is aiming to receive LEED gold certification this year (News Now May 7).

Relevance key to social networking

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MADISON, Wis. (6/26/09)--Credit unions interested in using social networking to reach their members and communities must ensure that their social networks are relevant, according to a social media expert. “Communicate specifically to a demographic,” advised Ryan Brown, CEO of MindBlazer in Charlotte, N.C. MindBlazer is an education-based marketing and technology company that provides digital media to help financial institutions communicate. The most successful way to network socially is to create a Facebook page, for instance, that is event-driven, offers financial education, and has specific calls-to-action, Brown told News Now. When Twittering, Brown suggested credit unions come up with a list of 40 “tweets”--such as 40 tips to stretch a dollar. After the tweets are posted, the credit union can invite followers to post suggestions they have to save money. “Go beyond [twittering about] offering great rates on loans,” Brown said. “Be practical.” Being relevant can help credit unions avoid backlash on their social networking spaces. Examples of “backlash” can include a small Facebook friend or Twitter follower list, or one made up solely of employees--it doesn’t bring credibility to a site and takes away value instead of adding it, Brown said. For credit unions using YouTube, backlash could consist of negative comments--or indirect backlash--no comments at all. Credit unions engaged in social media should also integrate videos in their online space and blend them with other media--such as pictures and text. Video is the highest engaged media being used, Brown added. Using sites like Facebook and MySpace may trigger worries about security. While information on Facebook or MySpace can “fall into the wrong hands,” the benefits outweighing the risks are tremendous, Brown said. “It’s another channel,” he said. “Information technology departments need to embrace it. It’s not a distraction; it’s another business tool companies are using.” Credit unions concerned about employees posting personal info on their profiles that could reflect poorly on the credit union could create online policies about what information they should share. Or, employees could create two profiles--one personal and one for business, Brown said. Some financial institutions have began to offer their members the opportunity to bank through Facebook--using applications such as Fiserv’s MyMoney or MShift. The banking applications are still catching on, Brown said. Credit unions need to give their members a reason to use Facebook to do their online banking. “Using online banking [through Facebook] has to be more than just convenience ... it’s not a huge pain to go to a credit union’s website,” Brown said.

CU System briefs (06/25/2009)

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* MIDDLETOWN, Pa. (6/26/09)--Mid-Atlantic Corporate FCU announced the retirement of Brad Stewart, senior vice president and chief investment officer. Stewart will retire July 31 but will continue to write his economic column “FYI. Stewart joined Mid-Atlantic Corporate in 1992 as senior investment officer and manager of the corporate’s Investment department. Mid-Atlantic Corporate FCU is based in Middletown, Pa ... * CHICAGO (6/26/09)--American Airlines FCU will celebrate the grand opening of its Chicago O’Hare Cargo branch at Chicago O’Hare International Airport today. The credit union will offer specials on share certificates and auto loans during the celebration. The O’Hare Cargo branch will be open Monday through Saturday during select hours. American Airlines FCU has more than $5 billion in assets ... * WEST LAFAYETTE, Ind. (6/26/09)--Purdue Employees FCU (PEFCU) hosted a private golf outing with NFL New Orleans Saints Quarterback Drew Brees Monday to raise $50,000 for the Purdue Athletes Life Success (PALS) program at Purdue University.
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Brees, a PEFCU member since 1997, has served as PEFCU spokesman since 2000. PEFCU also awarded four PALS campers with bicycles at Purdue University. Campers (left) MacKenzie Donahue, Devon Siple, Vanessa Gonzalez and Jalen Pope received bikes from (back row, from left) Brees and PEFCU CEO Bob Falk. PEFCU has $529 million in assets. (Photo provided by Purdue Employees FCU) ... * MEDFORD, Ore. (6/26/09)--Rogue FCU, Medford, Ore., plans to promote a free foreclosure prevention and assistance program--Building Hope--statewide. The program offers three classes on budgeting, preventing foreclosure and consumer rights. Credit counseling also will be discussed during the classes (McClatchy-Tribune Regional News June 23). Building Hope was offered in Jackson County in March and was expanded to two other counties in May. Building Hope will be offered in Bend, Eugene and Portland by mid-July. More than 450 consumers have participated in the program, Rogue said. Rogue has $416 million in assets ... * SANTA ROSA, Calif. (6/26/09)--Redwood CU (RCU), Santa Rosa, Calif., will offer a Financial Literacy Academy Aug. 3-6 for students entering into 11th or 12th grades at any Sonoma County high school. RCU is partnering with the Santa Rosa school district and the Chamber of Commerce to offer the 16-hour academy. The credit union will use the High School Financial Planning Program created by the National Endowment for Financial Education. RCU has $1.8 billion in assets ...

Newport News FCU launches VIDA program

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RICHMOND, Va. (6/26/09)--Kendra Square-Jarman and Patricia Weekes are among 21 new homeowners in Virginia thanks to the Virginia Individual Accounts (VIDA) program, administered by Newport News (Va.) FCU and officials from the Virginia Department of Housing and Community Development. VIDA is a matched-savings program providing participants with a $1 to $2 savings match--up to $4,000--toward a down payment on a new home, education costs or to start a small business. Newport News FCU was the first Virginia credit union to offer the program in February 2008. Since then, the credit union has enrolled 10 savers. Weekes and Jarman each saved more than $4,000, which was matched with $8,000 through VIDA. Currently, 228 individuals statewide are participating in VIDA. About 73 have graduated so far--63% of which purchased homes. VIDA requires participants to undergo asset-specific training and complete financial training courses. Participants have two years after opening an account to complete training and save for their goal. Eligible individuals must be a U.S. citizens or legal aliens, be employed, have a dependent child age 18 or younger living in their home and meet household income requirements.

Wisconsin league helps teachers with fin ed

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PEWAUKEE, Wis. (6/26/09)--With financial pressures bearing down on families statewide, Wisconsin teachers are preparing young people for their financial futures by attending a series of workshops starting this week that will help the educators improve classroom instruction on money matters. Wisconsin credit unions are lending financial support. The three training sessions--one this week and two others July 13-17 and August 3-7--are called the National Institute of Financial and Economic Literacy. The sessions offer the latest insights from professionals experienced in the financial industry and make lesson plans, curricula, teaching strategies and other materials available for classroom use. This is the ninth year credit unions are sponsoring local teachers’ attendance, with additional financial support for the institute from the Wisconsin Credit Union League. “Our country’s economic challenges provide an opportunity for teachers to talk about the importance of living within one’s means, saving regularly, handling credit responsibly and being more savvy overall when it comes to money management,” said league President/CEO Brett Thompson. “The institute offers tools to cultivate young savers who can not only weather economic storms but get a great start to get ahead financially.” The institute is organized by the Jump$tart Coalition for Personal Financial Literacy--a consortium of public and private organizations working together to improve Wisconsin’s financial literacy. Although there is no law requiring personal finance to be taught in schools, many teachers do so using state standards as a guide because, too often, “money basics” aren’t being taught at home; studies have shown that less than 25% of parents discuss money matters with their children. In addition to supporting the institute, Wisconsin credit unions supervise 83 youth-run credit union branches inside Wisconsin schools, an effort which teaches young people the habit of saving. Credit unions also provide classroom curricula, internships and classroom speakers and sponsor local events that teach responsible financial decision-making. Credit unions support financial education as part of their REAL Solutions initiative--an effort that strives to help people save and build wealth.

Creative class could be new niche for CUs

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MADISON, Wis. (6/26/09)--Credit unions are well-suited to provide financial services to businesses that work in the arts, design, marketing, media and performing arts fields--known as the “creative class,” according to the Ohio Credit Union League. The nation’s small business population yields marketplace niches, which present opportunities for credit unions to provide tailored products and services for the organizations and their employees, the league said (eLumination June 24). Credit unions can provide better-priced, tailored solutions than their competitors for business checking, real estate loans, employer retirement plans, revolving lines of credit and other services, the league said. The workers of the creative class have financial service needs like everyone else. They need savings, loans, checking, credit and debit card services, ATM access, online banking, bill payment and more. Credit unions also should consider the unique needs of artists, designers, actors, and musicians who may not have steady work. To customize products and services to better serve the creative class, credit unions should consider flexible loan terms, special saving programs to prepare for tighter financial times, and loan programs to weather employment droughts, the league said. Credit unions should look for niche opportunities in their local communities that they can capitalize on for future growth. It could be a sector already served that could be enhanced, or a new discovery, the league added. Often, small businesses are considered a niche market. There were an estimated 27.2 million small businesses in the U.S. that employ about half of the nation’s private workforce, as of September 2008, according to the U.S. Small Business Administration. More than half of all credit union business loans were for $50,000 or less, according to a U.S. Treasury Department study.