Posted by Steve Stovall, AVP, Credit Union Resources, Inc on 10/18/2018
By: Robert N. Trunzo, CUNA Mutual Group
 
Today marks the 70th anniversary of International Credit Union Day (ICU Day), a day to celebrate the history and achievements of the credit union movement.  On this milestone, I'm reflecting on a few things that make the credit union industry unique, and why I’m proud to be part of it.
 
Giving Back is What We Do
Credit unions provide financial services for the purpose of improving lives, and a core principle of the movement includes supporting the sustainable development of communities.
 
CUNA Mutual Group was founded on this “people helping people” philosophy, and we take that to heart by giving back in many ways. This year alone, our employees put in more than 13,000 volunteer hours to date and we recently contributed an additional $20 million to our foundation to create a sustainable funding source for many years to come.
 
I’m extremely proud of our commitment to making a real difference in our communities.
 
The Power of Cooperation
The spirit of cooperation is another core principle of the credit union movement, and I witnessed this principle in action earlier this year when the Iowa legislature passed the largest tax overhaul in state history. If adopted, the bill would have set a dangerous precedent for the credit union tax status across the nation.
 
Many of our employees took part in grassroots advocacy efforts to show their support for credit unions. They generated hundreds of letters, emails and phone calls to local representatives, urging lawmakers to protect the credit union tax status. On top of that, many drove several hours to attend events at the state capitol in Des Moines to tell legislators personal stories about their credit union experiences.
 
Collectively, our voices were critical in having the final Iowa tax bill pass without a tax increase on credit unions.
 
Positioned for a Bright Future
The credit union philosophy centers on the simple idea of people over profit. As the ICU Day theme points out, that's why credit unions always offer a platinum lining.
 
At CUNA Mutual Group, we believe credit unions are an outstanding choice for consumers, and that’s why we were one of the first to contribute to Credit Union National Association’s (CUNA) nationwide campaign, pledging $1 million to help raise consumer awareness about credit unions and the positive outcomes they help members achieve every day.
 
By supporting CUNA and the Leagues on this important initiative, CUNA Mutual Group believes we can collectively increase consumer consideration of credit unions and position them for a bright future.

On ICU day and every day, I’m proud to be part of an industry that puts people first and cares about the well-being of its customers.

This blog originally published at CUNA Mutual Insights on Thursday, October 18, 2018.

Categories: Business Partners, Sales & Service
Posted by Mr. Bill Meyer, Communications/Public Relations, Credit Union Direct Lending on 10/12/2018

 

When CEO Robert Einstein decided to implement a new loan origination system at UMe Federal Credit Union, all he was looking for was an LOS that would upgrade his online loan application process to include instant decisioning.

 

He got it. But he also received so much more. The $215 million Burbank, California-based credit union now also enjoys double digit annualized loan growth and a paperless back office.

 

When UMe began its LOS search in 2015, it struggled to find vendors who were willing to work with a credit union of its size, which was $160 million at the time. One told him, “if you’re not at least $500 million in assets, don’t even bother.” Another was too expensive, and even though the vendor offered to create a new pricing structure, Einstein wasn’t interested in investing the time required to blaze that trail. And although cost was important, the ability to customize each service channel to provide a consistent brand experience was just as important.

 

When he reviewed CU Direct’s Lending 360 platform, he was thrilled to find an affordable, configurable solution.

 

CU Direct’s CUSO structure was also a selling point. “Our tech vendors also need to be a partner. We want them to be vested in our success,” he explained. “Additionally, they must be forward thinking, and always planning for the future.”

 

UMe wasn’t unhappy with its old LOS, but that satisfaction was more a matter of not realizing how much more efficient a new system could be. Entering loan applications was mostly a manual process on its Symitar core system, and although the credit union had improved the process a little here and there, it still took an average of 45 minutes to approve loans. There were also inconsistencies in decisioning among loan officers.

 

That changed when UMe went live with Lending 360 in December of 2016. First came new efficiencies, which helped long-term employees who were resistant to change, embrace the new technology.

 

“With any change, you’ll see some resistance, and we had the previous system in place for a long time,” Einstein recalled. “We had to entice some staff to use it, but we also had some who embraced it and trained others. Then, as everyone saw the efficiency improvements, they all embraced it.”

 

Loan decisions that fall outside of UMe’s set approval parameters still require personal attention, but Einstein said Lending 360 has made approval faster and more consistent on standard approvals. On average, loans take just 25 minutes from application to funding.

 

UMe processes new and used car loans, signature loans and Visa cards on the Lending 360 platform. In 2016, prior to the new platform’s implementation, those loan categories had only posted a 1% annualized growth, with vehicle loans actually posting a 0.65% decrease. The following year with its new LOS platform, the credit union had almost a 15% aggregate loan growth in those three categories, with a dramatic 15% vehicle loan growth. This year, UMe is expected to exceed 2017’s figures, Einstein said, with vehicle loan growth so far this year annualized to increase 20%.

 

“We had more than a few years of stagnant loan growth, prior to implementing the Lending 360 system, but we’re on pace for really strong growth this year ... it’s been a big success,” he said. “And that’s something that’s really quantifiable. To grow consumer lending by double digits, we hadn’t had that in quite a while, and we couldn’t have done it without Lending 360.”

 

The platform’s online integration has allowed UMe to leverage the power of digital marketing, which has been very successful in fueling overall growth. After about six months on the platform, the credit union hired a digital marketing firm that optimized the credit union’s website and placed paid advertising on social media. Even though UMe previously had online loan application capabilities, it wasn’t receiving any online applications. Now, Einstein said, it receives more than 90 online loan applications each month.

 

The credit union also uses Lending 360’s new member processing capabilities, which produces an average of 23 new members each month. In total, UMe adds about 90 to 100 new members per month, which means about 25% come through the online channel, Einstein notes.

 

“We didn’t go into it thinking we would get reduced processing times, increased efficiencies, and so much loan and membership growth,” he noted. “Lending 360 has definitely surpassed our expectations.”

Categories: Technology Consulting & Compliance
Posted by Mr. Anthony Burnett, Customer Experience Director, LEVEL5, LLC on 10/4/2018

The Five Questions Every Credit Union Needs to Answer About Their Branch Strategy

The traditional financial institution business model of the past was built around a decentralized branch strategy. Find a heavily populated area, sprinkle a network of easily accessible branches around it, and watch the growth happen. Pretty simple, right?

It worked like magic.

The psychology behind putting branches everywhere was intriguing: more branches implied a financial institution was doing well, so one’s money was somehow more secure. It wasn’t necessarily true, but it still seemed that way. Then the Great Recession hit. The large banks initially took the greatest blow, shuttering branches left and right. Then regional and community-scaled players (including some credit unions) continued the trend, despite the economic recovery that followed years later.

Market density matters.

What could have kept some of these recently closed branches open? Why close so many, even in places where there wasn’t a lot of competition? Turns out, maybe each financial institution’s misunderstanding of market density came back to hurt them. Given these ever-changing times, what kind of density solution is required to be successful?

Larger financial institutions often close branches, not because of a shift toward digital and mobile channels (it’s certainly a factor), but a failure to plan for them in the first place. Though customers demand omni-channel options, at times, they still desire face-to-face contact with their branch. The latest surveys show the branch is a key channel: 

What happens when a branch closes?

Closing a branch is a short-term solution, that while saving money initially, has long-term implications. Studies have shown that up to 40% of consumers will change their financial institution if their branch leaves the area.

Before you build your next branch, consider the following questions:

  1. Does your branch need to be large or small?
  2. Should the branch be fully-automated, or mostly?
  3. How can the credit union’s staff be convenient to the member?
  4. Does it have to be a freestanding facility?
  5. Is a branch even right for the particular area?

So what’s the answer?

Perhaps many financial institutions have done a poor job identifying the real opportunities for growth in their markets. Branching today takes considerable planning and precision, and if not done well can lead to unprofitable locations that are a drag on the institution.

Market densities matter and the deployment of the right density matters even more. Density solutions are important and they do not always result in freestanding branches, which can be short-term considering the expense and risk. It’s really about convenience for members and their needs.

Branch site selection done well can have a tremendous impact on the credit union. However, the process is combination of science and art. To learn more, check out this article on The Art of Branch: Site Selection Edition.

Categories: Education & Training, Marketing & Printing, Research, Sales & Service, Strategic Planning & Consulting
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