Filene Research Institute Articles

Strengths revolution

benrogers@filene.org (Benjamin Rogers) — Thu, 03 Jul 2008 00:00:00 -0400

Julie Cosgrove, 30 Under 30, Affinity Plus FCU

“It’s fine to hire bright sparks but to fail to plant them where they can fuel fire is wasteful.” Roy White, the VP of HR with Sony Europe. Roy White’s message to Sony’s graduate program employees who are moving into permanent roles is, “Do what you are passionate about and find a way to use your talents to contribute to the business.”

What do you see your credit union focusing more on with individual employees—-areas of strength or areas of weakness? Its not surprising that based on research that Marcus Buckingham facilitated on how often people actually really use their core strengths at work, he found only 14% of people who could say that they use their strengths most of the time.

Given the next generation of employees who thrive on environments that are less about command and control and more about the opportunity to be independent, creative and driven by doing what they are really good at, workplaces will have to find ways to further develop ways that maximize an employee’s strengths, resulting in even stronger performance outcomes for the members as well as for the organization.

Marcus Buckingham has remarked that while the statement “Our company’s greatest asset is our people!” is a nice motto, its basically meaningless without introspection and application. He believes that people aren’t your greatest asset, unless they’re in position to leverage their greatest strengths – those things they do well consistently and energetically.

In an industry that is founded on people helping people, the credit union industry has an incredible opportunity to be known as an industry that brings out the best strengths in people, maximizing performance outcomes for the members and communities in which they serve as well as creating the most engaged and passionate employee base.

Responsible Debt Relief

joseysiegenthaler@filene.org (Josey Siegenthaler) — Wed, 02 Jul 2008 15:36:41 -0400

In Responsible Debt Relief (RDR): An Algorithmic Assessment of Household Debt Capacity and Repayment Capability, Robert Manning, director of the center for consumer financial services at the Rochester Institute of Technology, introduces the concept of RDR. RDR is an algorithm that statistically estimates the net return to creditors and guides consumers to the debt reduction plan that best matches their financial situation. Dr. Manning is one of the country’s leading experts on America’s ever expanding debt phenomenon. Listen to his recent interviews on NPR:

All Things Considered Interview

Marketplace Interview

Baby Boom and You

kelseybalcaitis@filene.org (Kelsey Balcaitis) — Wed, 02 Jul 2008 00:00:00 -0400

According to the Center for Disease Control and www.babycenter.com, 2005-2006 saw a 3 percent increase in the number of babies born in the United States. This is the largest single year increase in the number of births since 1989, and the largest total number of births since 1967. But what does this have to do with you and your credit union?

Over 4 million babies are born in the United States each year, each one with the potential to grow up to be a credit union member. And how you market and appeal to these potential members is becoming increasingly important.

With so many resources and research going into learning about youth, there is a wide variety of information out there to help your credit union attract the younger generations.

One of our board members, Pat Smith, recently welcomed a grandson, Logan, into her life. Before she and his parents realize it, it will be time to teach young Logan about finances.

Congratulations Pat and family (Pat’s husband Bill is seen in the background)!

Couldn't We Just Flip a Coin?

joseysiegenthaler@filene.org (Josey Siegenthaler) — Tue, 01 Jul 2008 00:00:00 -0400

It is not unsual for decisions to be made at my house by flipping a coin. Economists have a much tougher job when it comes to forecasting the economy. With gas prices hitting another all-time high today, it is easy to see why people feel gloomy about our economic future. What isn’t easy, is accurately forcasting these economic highs and lows. Filene Fellow, James Wilcox, professor of financial institutions at UC Berkeley, shed some light on this topic in the Federal Reserve article Consumer Sentiment and Consumer Spending.

The paper found that the use of responses from the University of Michigan’s Index of Consumer Sentiment forecast model, could improve forecasts on consumer spending. Currently, most economic forecasts are based on the personal consumer expenditures (PCE). Wilcox found:

The ICS data reports on current and expected economic conditions versus what has already happened.
Consumer attitudes captured by the ICS may incorporate the impact of rate or unique shocks such as wars or Hurricane Katrina that could not be estimated by past data.
Household answers might reflect changed expectations and uncertainties about future conditions that have not yet occurred (such as changes in political candidates).

Wilcox went on to compare forecasts for 2001-2007 excluding and including consumer attitudes. He found that “forecasts including the ICS questions were more accurate when growth was failing.“

So, with all the economic forecasts and data available what resources do you rely upon at your credit union?

Imagine an Airport Oasis, Exclusively for CU Members

anngeocaris@filene.org (Ann B. Geocaris) — Mon, 30 Jun 2008 00:00:00 -0400

The idea of flying today conjures up images of long waits, missed flights, stressful delays, and rigorous security. While most travelers endure the discomfort of crowded airport gates, frequent flyers take advantage of the luxury airport lounge as a quiet and civilized escape. What if we could bring this “country club” atmosphere to credit union members? Why not?

One of Filene’s i³ teams is now working on a project to do just that. According to the team, a survey conducted at two large credit unions showed that 92% of members are very or somewhat interested in access to an airport lounge as a benefit of credit union membership. Considering that there are over 80,000,000 credit union members in the United States, that’s a lot of possible Airport Oasis Lounge visitors!

What will Oasis visitors enjoy? Members will relax with all the amenities of the airline lounges, while non-members will be welcomed in, given a tour, and provided with the opportunity to become CU members.

Where will Oasis be located? The vision is to have the initial pilot lounge in a major US airport, with the long-term goal of having lounges in all major US airports.

How can Oasis become a reality? America’s Credit Union’s Airport Oasis Lounge needs sponsorship and support from credit unions. Interested? What do you think of the idea? Sound off here!

Where's all the blue?

benrogers@filene.org (Benjamin Rogers) — Mon, 30 Jun 2008 00:00:00 -0400

Avery Cashman, 30 Under 30 member, Service 1st FCU

How can you compete in a cut throat industry with direct competition on every corner? Easy, stop competing for the same business.

It takes a lot of effort to get an established account from another bank to make the “big switch”. Think of some of the promotions your credit union has developed over the past year. Were they aimed at getting that lifetime bank account to switch to your credit union? Did you find that other local financial intuitions would counter that promotion with something almost the same? When competing in the same market, for the same target audience, with similar promotions; it can make “The Credit Union Difference” feel lost.

To create a new value for your credit union, think of ways to help differentiate your credit union from the competition. Maybe your credit union would benefit from a new market segment or a twist on traditional banking practices. To get the creative juices flowing check out The Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne. The Blue Ocean concept focuses on creating an uncontested market space.

(Editorial note: Also consider the Filene Research Institute’s take on this book … lots of credit union-specific thoughts here)

Photo: Marcelo Terraza

Tattoos, body piercings and ... credit unions?

benrogers@filene.org (Benjamin Rogers) — Wed, 25 Jun 2008 00:00:00 -0400

Megan Armstrong, 30 Under 30 member, Sunmark FCU

When I saw the blog post about pantyhose it got me thinking about the dress policy at my credit union and how each year the constraints have been coming loose. Over the past two years, the dress policy has changed to include: open-toed shoes, gauchos, sleeveless shirts, and pantyhose are now optional. (I’m hopeful one day flip flops will be allowed—at least for back office, I never come face to face with a member so what’s wrong with flip flops?)

Further adjustments were made to the tattoo and piercing policy as well, which gets me to my topic of discussion. Now we are free to display “small” tattoos and can put the wristbands and Band-Aids away. After the policy modification, I began to notice how many young adults were affected by this change.

It’s not surprising that a study from The Pew Research Center found:

Gen Nexters are not afraid to express themselves through their appearance. About half of them (54%) have either gotten a tattoo, dyed their hair an untraditional color or had a body piercing in a place other than their ear lobe. Among those three, tattoos are the most popular form of expression: 36% of Nexters have one. Tattoos are just as prevalent among Gen Xers – 40% of them have a tattoo.

Credit unions tend to be more casual than other financial institutions but still uphold a professional atmosphere, so what do you think?

Tattoos and piercings: let them show or cover them up?

Many people still see tattoos and piercings as unprofessional and others use them to stereotype. Do you think it makes anyone less professional because they may choose to express themselves with body art? For those of you with tattoos or body piercings, have you ever felt discrimination because of it?

Building a Culture of Credit Union Excellence

joseysiegenthaler@filene.org (Josey Siegenthaler) — Tue, 24 Jun 2008 10:10:46 -0400

As the financial services industry becomes more complex, more competitive, and more crowded, engaged employees are a critical ingredient contributing to credit union success. Filene held a colloquium at Loyola University in Chicago to examine the roles that compensation, human resource management, and organizational development play in a credit union’s ability to create a culture of excellence that engages in exceeding members’ expectations.

Building a Culture of Credit Union Excellence, features presentations by noted human resources theorists, including Paul Davis, president of the Scanlon Leadership Network. The Scanlon Plan aims to:

Include the worker in on the adventure, the decisions and the profits of increased production.
Help management tap the ingenuity of employees as a means of improving production.

The report also features the work of Dow Scott, professor of human resources at Loyola and president of Performance Development International, Inc.. Scott makes the case that, based on Scanlon methodology, an organization must meet the needs of three primary stakeholder groups. Scott also describes the relationship between a culture of excellence and a culture of innovation.

Additionally, Chuck Cockburn, CEO of Watermark Credit Union, presents a case study of Watermark’s initiation of the Scanlon process.

Spotlight on Filene Research Fellow Robert Manning

georgehofheimer@filene.org (George Hofheimer) — Sat, 21 Jun 2008 00:00:00 -0400

Filene Research Fellow and Research Professor at Rochester Institute of Technology has been all over the popular media and credit union conference circuit here, there and don’t forget this one with his thoughts on consumer debt, the housing crisis and personal bankruptcy topics.

You can hear Professsor Manning’s thoughts from an interview yesterday on National Public Radio’s Marketplace program about small business credit card debt:

He also weighed in on a USA Today story related to the impact of home values on consumer’s access to credit. Finally, He was interviewed for an ABC News story on unsavory credit card practices.

Leave us a comment and let us know if you agree with Manning’s thoughts. Also, if you run into him this summer, feel free to pass your opinions directly to him. By the way, as a Filene member you will get an opportunity to interact with him at our upcoming member breakfast in New York City.

Macro borrowers, micro loans

benrogers@filene.org (Benjamin Rogers) — Fri, 20 Jun 2008 00:00:00 -0400

Say I’m a conscientious citizen of the world and I don’t mind wearing glamour-challenged shoes. Chances are I’ll be intrigued by TOMS Shoes, a California shoe company that donates a pair of its shoes to a third-world child every time I buy a pair for myself.

The colorful shoes are not for the average soccer mom or even college student, but they do carry a certain hipster charm. Add the feel-good factor to a pretty modest (by hipster standards) price – $34 for tots through $48 for men – and you’ve got the makings of a sustainable business.

As for credit unions, why not put 5% of a loan’s profit into a deposit at Kiva or MicroPlace? Granted, it would probably play better in Palo Alto than in Peoria, but can you spell e-a-r-n-e-d m-e-d-i-a?

Mapping the River: A Report from 30 Under 30

benrogers@filene.org (Benjamin Rogers) — Thu, 19 Jun 2008 16:31:02 -0400

By the time it discharges near Shanghai, the Yangtze River pushes more than one million cubic feet of water every second into the East China Sea, a flow that could provide every person in China with 551 gallons of water per day. That immense movement of water belies the river’s humble origins, fi rst as a drip, then a trickle, then a tiny flow,4,000 miles away under a glacier in the Tibetan Plateau.

That’s kind of like Filene’s 30 Under 30 group. Read on …

Students in, loans out

benrogers@filene.org (Benjamin Rogers) — Wed, 18 Jun 2008 00:00:00 -0400

- Alex Alexander, 30 Under 30 member

As a graduate student, I am absolutely concerned about student loans. Many people are. At a credit union where I used to work as a member service rep, I remember several students and parents came in looking for some type of student loan product.

Because the CU did not offer student loans, I had to either cross-sell a collateral product to the parents (i.e., home equity) or recommend that the students apply for a Federal Loan through their school, and hope that it would cover their costs.

I discussed it with my branch Manager and even the VP of Member Service and I was informed that a few members asking for a product that we do not offer does not create an extreme demand. I still believe, however, necessity is the mother of invention. As a student I have experienced a gap between my federal loan and tuition. Many of the online student loan options come with high rates, difficult repayment options, and serve as an immediate option with some expensive long-term results.

A CUSO called Student Choice was developed by a handful of credit unions for the purpose of providing additional student loans for students who need help filling that gap. The loans do not have fees and have various repayment options. This is a plus because by the time you take a rate of about 8% and 7% (and in some cases I have seen more), origination fees, and the fact that most students defer payments and interest, you do not come out with a quality loan.

One response I received from my Branch Manager at that time was that the market for this type of product might be slim, and a product like this is a loss. According to the press release (PDF) sent to the Credit Union Times, Student Choice CUSO approved $1.5 million in loans in a thirty day time period. This is with only participation from about 7-9 CU’s. That means many students nationwide now have an additional window opened to them.

I believe in the value of student loans. This is another avenue for Credit Unions to be relevant to young adults. So many young people go to college, and how great it would be for credit unions to tap into that segment of this market, and possibly develop some relationships that last through the lifetime of the person. To me, the benefits, even the value behind this absolutely outweighs the costs.

Consider this excellent article at CreditUnions.com (full disclosure: Callahan and Associates publishes CreditUnions.com and also manages the Student Choice CUSO) that talks about how this type of loan could redefine the thought process behind college costs in a way they have never done, or had the opportunity to do in the past.

Any thoughts?

How much trust?

benrogers@filene.org (Benjamin Rogers) — Tue, 17 Jun 2008 00:00:00 -0400

The newest update from much-admired Amplify FCU (see here and here) comes courtesy of this morning’s CU Times: Honor deposits by cell phone.

It seems to me the technology required for this is actually less impressive than the institution’s confidence in its members.

Online deposits are building steam; note PSECU and Mountain America which are both large with widely dispersed memberships. And mobile photo deposits may not be far off.

Kudos to Amplify from someone who always likes the latest shiny thing. This is a great salvo from an institution that can’t blanket the city or the country with deposit-taking ATMs, let alone branches. Assuming Amplify, like remote deposit credit unions before them, puts reasonable limits on the amount that can be deposited remotely and on the time frame for receipt of the physical check, is there a downside to this?

MatriMoney Podcast

kelseybalcaitis@filene.org (Kelsey Balcaitis) — Tue, 17 Jun 2008 00:00:00 -0400

The Filene i³ innovation MatriMoney® holds great promise for credit unions, helping them with core deposits and member acquisition. So, how’s it going for credit unions that have implemented this innovation? Listen in on this candid conversation with Annette Zimmerman, senior vice president at Mountain America FCU, and learn how their adaptation of MatriMoney has become a marketplace hit.

For more information on MatriMoney, go to MatriMoney’s site.

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Filene Awarded Grant to Increase Savings Among Underbanked

danielhoover@filene.org (Dan Hoover) — Thu, 12 Jun 2008 00:00:00 -0400

The Filene Research Institute (Filene) and the Doorway to Dreams Fund (D2D) has received a grant from the Center for Financial Services Innovation (CFSI) to pilot an innovation aimed at increasing the savings rate among underbanked consumers.

The Prize-Linked Savings innovation works to transfer a portion of low-to-moderate income consumer lottery and gaming expenditures to a savings product that offers the chance to win prizes and build assets. The program encourages financial education and regular savings. Filene will partner with D2D to implement the Prize-Linked Savings pilot in targeted Michigan credit unions from June 2008 through December 2009.

CFSI selected four projects from among 133 applications. The four grantees will receive support for projects that provide improved financial services and asset-development opportunities to underbanked consumers. The grant is part of CFSI’s 2008 Nonprofit Opportunities Fund.

Please contact Maureen Maddox at maureenmaddox@filene.org if you would like more information about this project.

For more information:

About D2D, click here
About CFSI, click here
About the Michigan Credit Union League, click here