Crying Out for an End to Overdraft Fees — Meet Grain Technology

By Robert McGarvey

Probably the single most despised charge at financial institutions is the overdraft fee – and a NerdWallet survey of the exact charges imposed by a selection of mid-sized (Navy Federal) through mammoth (Chase) institutions found fees at $20 (Navy Federal) and as high as $39 (KeyBank).

$35 is a particularly common charge in the survey.

Rapacious greed.

Ask yourself this. You present a Visa card at WalMart and the card is declined (and you know it’s because the balance is overextended and a payment is late).  Does the cashier say, “Sorry, bud, card declined and now you owe us another $35 for being a nuisance.”

That does not happen.

You walk out without your purchase but you aren’t dinged for a nuisance charge.

Overdrafts are different – charges are the norm – even tho at the financial institution all that happens is that bits and bytes shuffle around on a computer screen.

In the olden days, yes, a bounced check was a hassle. It generated lots of paperwork. Many hands of many clerks got involved. Very probably a fee was justified.

Not today. It’s all automated.

A few innovative, digital first institutions (Simple and Chime for instance) already charge no overdraft fees.  More will follow. But very probably many legacy institutions will cling to the fees because it’s easy money.

Some credit unions have worked up their own ways to help members dodge overdrafts – Hope Credit Union tell about its tools in this podcast – but many smaller institutions don’t know exactly how to handle this issue.

So they charge overdraft fees, the old school style.

It hurts consumers. It’s terrible for a financial institution’s reputation. But it is easy money.

So now third party work arounds are in the mix.

For the consumer the message is simple: you can keep your legacy checking account but make yourself immune to overdraft fees.

How?

Meet Grain Technology, a New York based start up on a mission to stamp out overdraft fees and, in the process, help thin file consumers create credit histories.  Win win.

For the participating credit union, it’s plug and play. The member links the sharedraft account to Grain and Grain takes care of the rest.

And Grain has been invited to play in the Arizona fintech sandbox where it is allowed to pilot its tools freed from some regulatory constraints. The company already has plans to offer its tools to students at Arizona State, the nation’s biggest university.

Exactly what does Grain do?  In a conversation with Carl Memnon, COO of Grain and a co-founder (hear the podcast here), the details emerged.

The building blocks are that Grain takes a new look at the consumer’s spending habits, income, expenses. It generates a proprietary algorithm. This lets it predict when a consumer’s linked checking account is likely to go into overdraft and Grain can offer an injection of cash to inoculate against an overdraft fee.

The charge? Grain sees its APR ranging from 12% to 15.99% and it envisions cash injections typically ranging from maybe $25 to a few hundred dollars.

Result one: no more overdraft fees.

Result two: the consumer builds a credit history that Grain will report to monitoring agencies.  For a thin file young adult that just may be a real blessing. Especially since many of those generations are averse to using conventional credit instruments.

Right now Grain is looking to partner with credit unions that want to help members dodge overdraft fees. Most of those consumers, said Memnon, probably will come from the money center banks (with overdraft fees typically around $35 per incident).

What would prompt a B of A customer to ditch that institution in favor of a much smaller credit union? Just one overdraft fee could do it.  Especially when the recruitment pitch is that this tool will stop overdraft fees, period.

Memnon said Grain also envisions sharing its interest income with participating institutions.

All while essentially living up to the credit union mission of helping consumers manage their money better.


Find out more about Grain here: team@trygrain.com.

Listen to the CU2.0 podcast with Grain here.

The Cooperators Podcast Episode 6 Melissa Hoover, DAWI, on Worker Cooperatives

The deep dive into Workers Cooperatives continues in the Cooperators Podcast.  Last week we talked with Esteban Kelly of the U.S. Federation of Worker Cooperatives. This week it’s Melissa Hoover, executive director of Democracy at Work Institute, self described think and do tank that is doing a lot of thinking about worker cooperatives and how to form more of them, and how to position them to succeed.  

Hoover throws out lots of big ideas in this podcast but a key thought is that just maybe for many of us, as home ownership becomes but a dream, the real way to personal equity is a share of a business.

According to her for many workers that just may be a new, 21st century reality and it is a compelling driver for the belief that we will be seeing a surge in the numbers of new worker cooperatives.

Many of those co-ops likely will be in service businesses. Healthcare. Home care. Gateway jobs into the economy and if the worker can also be an owner, how great is that.

A technical point. We started this podcast using one service but ran afoul with technical difficulties.  In this podcast you will hear my recap of that short conversation.  And then you will hear the actual podcast recording – using a different service – with Hoover.

I kept that four minute starter recording however. For those who want to hear it, here’s the link.  It’s audible but the clicks and strange noises are annoying.  

The full Hoover DAWI podcast is here.


CU2.0 Podcast Episode 27 Hakan Nordfjell Gemalto on New Account Fraud

You want to make new account opening easy and fraudsters want to exploit that loophole to rob your credit union.

That is the gist of today’s podcast with Hakan Nordfjell, head of digital banking at Gemalto.  He tells about fraudster tricks and also the way financial institutions are fighting back.

He also warns that all your personal information is on the dark web and ready for fraudsters to exploit.  PII – personally identifiable information – just isn’t enough to open new accounts securely today. You need more weapons.  Nordfjell tells what.

This is information you need to know to protect your institution in what could be called the New Account Opening Wars.

Who’s winning?

Listen up.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available.

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.

The Irish Border and You and Me: The Wall Report


By Robert McGarvey

I remember sitting in my rental car, typically for an hour, maybe longer, just waiting to get through the Newry border crossing that separated Northern Ireland from Ireland.  It was always tense. That’s because, occasionally, bombs detonated and I did not want to be there when it happened.

Checks at the border, at least as regarded me, were always perfunctory.

It was the wait that got to me.

The drive time from Dublin to Belfast – my usual route in those days – is about two hours.

Plus the wait at the border.

Wasted time.  Pointless anxiety.

I cheered when the border checkpoints came down 20 years ago.

I’m not cheering anymore.

That’s because, as part of the Brexit deal or no deal, the specter rises of the 310 mile border again sprouting check points and, yes, fences, maybe even walls.  At one point there were 208 crossings and, over the years, I probably crossed at 20 of them and they all were nerve wracking and a time waster.

A hard border is very possible and even if you have no plans to go to Ireland and cross into the six counties, or vice versa, this just may impact you.

Pretty much everybody knows putting in a hard border in Ireland is nuts – but the EU and the UK are playing a game of chicken and it’s hard to say who’ll blink.

So a dumb border may in fact go up.

Exactly as steeper walls between the US and Mexico may.

Suddenly there appears to be a lot of interest in wall building.

Who knows where wall mania will erupt next?

As a business traveler, I just hate that. I remember – it wasn’t that long ago – when we had essentially no border controls with Canada.  Maybe some people were stopped but I know I wasn’t. I did not even show a passport on the first trips to Canada and I know that because I did not have a passport in those years.

Ditto Mexico.  I vividly remember walking into Juarez from El Paso and an hour later, walking back across the border. No stops. I didn’t have a passport but it didn’t matter because nobody asked.

Europe of course used to have thousands of border checkpoints but the 1985 Shengen agreement wiped out most of them.  You can cross from Austria into Germany, or Sweden into Denmark without a pause. And of course right now you can do similar crossing from Ireland into Northern Ireland.

Personally I have an Irish passport which wins me free passage into the Shengen countries – just about all of Europe – but now probably not into the UK.

Politicians – in Dublin and Downing Street – are gnashing their teeth. Many support what’s called the Irish backstop which says that if the UK and EU can’t come to a better agreement, the UK will remain in the EU customs union and, therefore, no hard Irish border is needed.

Isn’t that nuts? At least in the eyes of the people who voted for Brexit?

Pretty much.  

Invoking the backstop voids a lot of the insularity Brexit supporters had wanted.

But the backstop may be the best deal on offer for the UK.  Many warn that were a hard border restored in Ireland there would be a revival of so-called sectarian violence.  That’s difficult to predict and the generation of hard men, on all sides, that fueled “the Troubles” has aged out.  So who would pick up arms (and where would they get them)?

The violence in my mind is uncertain. The economic calamities that would afflict both Northern Ireland the Republic are certain however.  

A hard Brexit would be a catastrophe for the Irish, north and south.

It would also wipe out the nascent Northern Irish tourist business which has edged up in the 20 years of peace and for good reason. The Giant’s Causeway alone is worth the drive but, personally, I love the Antrim coast, walks in central Belfast, and a lot more.  Northern Ireland has been one of my favorite places to go over the past 30 years.

But put up a hard border and, guess what, it all goes poof.  

Walls are bad – bad for travel, bad for tourism, bad for economies.

I continue to think the UK will blink and will make a deal, however bad for it, that avoids a hard Irish border. The consequences of that border are too stark.

Yet I initially thought the English could not be so dumb as to think Brexit a solution to anything.

I just hope I’m not wrong again.

And I hope the rest of the world’s leaders get the message: Walls are bad.

Bonus: Here is an album of grand Northern Ireland photos by Toby Binder.

The Cooperators Podcast Episode 5 Paul Bradley on Co-Ops and Mobile Homes

Owning a mobile home park is like owning a Waffle House where the customers are chained to the table.

That quip is attributed to a leader in the mobile home industry.  

It’s a thought Paul Bradley, president of ROC USA in New Hampshire, often mulls. That’s because his company is in the business of helping mobile home park residents join together into a cooperative to buy the land their mobile home sits on.

Understand the weirdness. Mobile homes aren’t mobile, not usually. If they are, it would cost the owner thousands of dollars to move it.

They are in a poor position when it comes to dealing with rent hikes.

But when they are owners, everything changes.

Not one of the hundreds of deals Bradley has put together has gone bust. Not a one.

It’s a tremendous example of cooperative principles really working to transform lives.

A lot more can be done and, in this podcast, Bradley calls out for more efforts to bring cooperatives to the economically disadvantaged.

What’s stopping you?

Listen to the podcast here.

CU2.0 Podcast Episode 26 Carl Memnon, COO Grain Technology on an End to Overdraft Fees

Just say no more to overdraft fees.

And make this decision good for your members and also good for your credit union.

You may even grab a few customers away from Chase and the other money center banks.

That’s the promise of fintech startup Grain Technology.

In this podcast Grain co-founder and COO Carl Memnon tells about the company’s proprietary algorithm that lets it devise strategies for making fast loans to users who are about to trigger an overdraft charge and to also help those users find easy ways to start saving.

The latter is the why behind the company’s name – users will see their assets and their credit score grow “grain by grain,” said Memnon.

Memnon also talks about being in the Arizona fintech sandbox and the benefits for a small startup in playing in this sandbox.

Grain is actively seeking to align with credit unions that want to offer its overdraft protection service to members. In the podcast Memnon tells about the benefits to credit unions but a big plus is having cool technology that in effect let’s the member know they will see no more overdraft fees.

Listen up, you’ll find plenty of interest in this podcast.

Listen here.

BTW, the sirens you’ll hear are ambient noise in New York where Memnon was during the call.  If you’ve spent any time in New York you won’t even hear the siren. I couldn’t scrub it out so decided just to enjoy the New York moments.

Like what you are hearing in this podcast? Find out how you can help sponsor the podcast here. Very affordable sponsorship packages are available.

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.

Are You a Typical Top Tier Traveler?

By Robert McGarvey

Just how typical are you? Travel data co-op ADARA set out to portray what makes top tier travelers special and the result is a paper titled Understanding the Secret Lives of Top Tier Travelers: Uncover search and booking behaviors of loyalty members.

So the obvious question is, am I typical?

The other question is: do airlines and hotels really understand top tier travelers?

Exactly what is a top tier traveler? Here’s the answer to the last question: “ADARA defined top tier as members with higher than basic status.”

Personally I’d quibble with that. To me top tier is platinum and higher (such as United’s 1K). But ADARA throws in Gold too, to use United’s classifications.

According to ADARA, 22% of airline loyalty members are top tier. 46% of hotel members are too.

ADARA explained that top tier status just is easier to earn at hotels. It said: “People can drive to hotels, they don’t need to live in a hub city to rack up status on a program, and most hotels base tier qualification on either stay activity or spend, while most airlines have adopted qualification policies requiring both.”

ADARA added that when it looked at all people who booked air between May and July 2018, just 17% had any loyalty status at all.

A curious factoid is that just 12% of all basic airline loyalty members belong to multiple programs.

17% of top tier airline members belong to multiple programs.

Color me surprised. I belong to three – the big three US carriers – and although I have status on none, membership is a convenience and the miles do add up. Why not grab them when I can?

44% of people who booked hotel rooms in that same time window had loyalty status, per ADARA. 12% of basic loyalty holders belong to more than one program. 24% of top tier holders belong to multiple programs.

Personally I have gold status with Marriott and Hilton but only because Amex Platinum delivers it as a perk. I belong to many hotel loyalty programs, however, usually because a useful perk is given to members.

ADARA elaborated on why so many of us belong to multiple hotel programs: “there are more hotel chains than major airlines in the marketplace. Also, there are immediate perks consumers get from enrolling in hotel programs (for example, free wi-fi, or a loyalty member discount that can be over 10%) which are strong incentives to enrollment before arriving and at the time of check-in.”

Loyalty – especially top tier loyalty – genuinely seems to create consumer loyalty, according to ADARA. Its data show that 49% of basic airline loyalty members searched multiple carriers before booking. Just 40% of top tier members did likewise.

With hotels loyalty means not so much. 54% of basic members searched multiple brands. 50% of top tier members did likewise.

ADARA also sorted the data to focus just on high frequency travelers – who booked four trips in the first six months of 2018 – and it found that 47% booked air with their loyalty program carrier and 63% booked their rooms with their hotel loyalty program.

Meantime, per ADARA, hotels and air carriers are getting more creative in efforts to boost loyalty program participation. It said: “Airlines and hotel chains are both increasing the range of redemption options for their services (wifi on United) or for partners (Hilton points applied to Amazon purchases). The winning brands are employing these approaches alongside auctions for exclusive events–such as back-stage passes to concerts–to ensure their programs have both broad appeal for infrequent travelers and a powerful draw to satisfy their elite members.”

ADARA argued that, to step up loyalty program participation, the big travel brands need to hone in on personalization. Send me photos of upgraded hotel gyms and I’ll yawn – I never use the things – but there are some others who always use the hotel gym. The key is knowing which is which and the data usually is available. But travel brands often just don’t use it.

Said ADARA: “Brands know that they must keep pace with changing consumer needs. Top tier travelers come in all stripes, and good customer service means a prompt Twitter conversation to some and a free martini to others. Loyalty members also expect their brands to truly understand them, and provide a level of relevant service in order to keep them loyal.”

Sounds right to me. Brands that genuinely know me just are the ones that I typically go to. Travel brands, mainly, seem laggards in this regard, or so I think.

What about you? Do you think the travel brands you use really know you? The comments are open.

The Cooperators Podcast Episode 4 Esteban Kelly on Worker Owned Co-ops

Presented by Robert McGarvey.

Listen in here


That sound you hear just may be a tidal wave of worker owned cooperatives.

At least that’s what Esteban Kelly, executive director of the U.S. Federation of Worker Cooperatives, is hoping for and working for and dreaming about.

He believes that just now be the time for worker owned cooperatives.

Why? Because for so many of us our economic lives are grim. Income inequality is the economic buzz work du jour but it’s just that old saying, the rich are getting richer and the poor, well, you know what’s happening with them.

Kelly says that in a decade maybe 0% of Americans will have zero assets.

That’s busted, baby.

Worker ownership of businesses just may be the cure.

And a lot of it is happening today. Retiring Baby Boomer entrepreneurs are selling their companies to their employees, often as a worker co-op. Home health workers are joining together and forming co-ops. So are cleaning crews.

There’s soaring recognition that it just is better to own a slice of the pie.

Listen to this provocative half hour podcast.

And know we have three or four more worker cooperative podcasts in the pipeline.  Now’s the time to learn more about this movement. And The Cooperators Podcast is where to learn.

The McGarvey Credit Union Podcast: CU2.0 Podcast Episode 25 Joe Bergeron Vermont Credit Unions

Say congratulations to Joe Bergeron – he’s in his 40th year of service to Vermont credit unions and he presently serves as CEO of the Association of Vermont Credit Unions where he has a close up view of the issues and ideas that rock his state’s 19 credit unions, which vary in size from a $1billion+ institution to tiny ones.

In this podcast Bergeron also talks about the relationship between the state leagues and CUNA, state government and the federal, and how small credit unions sometimes matter way beyond their size.

For a topical hook he also talks about CUNA’s GAC and what Vermont credit unions get from that confab.

It’s a wide ranging talk with an eye always planted on the future.

Listen to this podcast here.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available.

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.

In VPN Should We Trust?


By Robert McGarvey

Mea culpa.  I probably have misled you about road warrior Internet security in the past. But today I am here to make amends.

The problem is the public WiFi so many of us use daily. In coffee shops, hotel rooms, meetings venues, airplanes – we hear the Siren call of public WiFi and often succumb to the temptation. We tell ourselves we will be safe because we use VPN.

For some time I have said that probably is good enough protection.

Now I am rethinking that position. A small project I’ve done with Authentic 8, a security company that has developed Silo, a secure remote browser, is what’s persuaded me that oftentimes VPN just isn’t good enough.

The problem with computing on the road starts with public WiFi which is – well documented – a hacker’s paradise.  Noted Kaspersky: “The biggest threat to free Wi-Fi security is the ability for the hacker to position himself between you and the connection point. So instead of talking directly with the hotspot, you’re sending your information to the hacker, who then relays it on.

“While working in this setup, the hacker has access to every piece of information you’re sending out on the Internet: important emails, credit card information and even security credentials to your business network. Once the hacker has that information, he can — at his leisure — access your systems as if he were you.”

If that didn’t scare you, read it again.  It’s saying that when using public WiFi you are a sitting duck.

Enter VPN, the putative magic bullet.  Many believe it makes public WiFi safe. I wrote as much myself. What VPN does is create a so-called secure tunnel and, they say, that’s ample protection against hackers.

Is it really?  That’s not what I discovered. In fact VPN often is hacked.  Here’s one write up that documents five ways VPNs can fail to deliver protection.

Here’s a headline from ComputerWeekly:  “VPN hacks can be lethal, warns security expert.”  

Here’s another headline: “DEF CON Update: Researcher Shows How To Hack VPN Services Via VORACLE Attacks.”

VPN can be hacked, it can be used to distribute malware, and, even worse, there are ever more bogus VPN apps that exist to herd the unwary sheep to hacker wolves.

Understand, I use VPN probably daily. It’s set up to self deploy on my Pixel phone when I’m in range of a public WiFi network.  I agreed to that offer from Google Fi, my cellular provider. But I am very cautious about what info I access under that arrangement. And it’s a Google VPN in the bargain.

If you are accessing public WiFi and all you have is VPN, use it.  Most of the time VPN will probably be good enough. And it’s definitely better than nothing.

But be very careful about what you access. Stay aware of VPN’s limits.

What if I want more access, and to access more sensitive data? For looking at brokerage accounts, company financial data, maybe even loyalty program balances, personal bank and credit accounts, VPN alone may not be good enough. That’s where I now say a user ought to deploy the secure, remote Silo browser or similar.  Advantages are plentiful. With it, the user location is opaque. No Web data ever touches the endpoint – what’s distributed are pixels, no more.

This document tells you what you want to know about Silo.  

What Silo does is process all web data remotely, inside a cloud container. It then transmits an encrypted display of the data back to the user. And when it’s done, Silo destroys the browser session, leaving no traces on the user’s device.

That’s the beauty of it. The web data is handled inside a secure, web based container.  There can be all manner of bad stuff in it and it won’t matter to your user session because it will live only in the cloud.  

Oh, and in my tests, I don’t see speed losses when using Silo. There of course are usually significant speed losses with VPN. If there’s a reason users don’t deploy VPN when they have it available, it’s the speed bump.  That isn’t a problem with Silo.

Note: Silo does not run on phones. For them, you will still want to use VPN. It does run on iPad. Also laptops of course.

The key point is if you want something better – more secure – than VPN, know it exists.

Full disclosure: I have done contract writing for Authentic 8, which is how I grew aware of Silo. I was not paid by Authentic 8 for this column, which I wrote on my own initiative, in large part because I remember the many cases where I scolded friends and colleagues about public WiFi and told them they needed VPN.  So I was half right. But also half wrong. Mea culpa.