Can You Afford to Live to 100? – TheStreet http://bit.ly/2D6Y95i

There Is a Perilous Shortage of Elder Caregivers – TheStreet http://bit.ly/2D9xxRi

 

By Robert McGarvey

For Credit Union 2.0

 

There was a time when traditional financial institutions owned the home mortgage business. No more.  Non-banks now are eating up this business. Their share is 45% of home mortgages, according to the Federal Reserve.

Just about all experts expect it to climb above 50% pronto.

In 2011, just three big banks – Chase, B of A, and Wells Fargo – lent a staggering 50% of mortgage money.  By 2016 their share had dropped to 21 percent, according to calculations by the Washington Post.  

By 2016, six of the top mortgage lenders were non banks, with Quicken Loans leading that pack with 4.9% of the mortgage market, more than Bank of America with 4.07%.

Also among the nation’s top 2016 mortgage lenders were PHH Mortgage, loanDepot, and Freedom Mortgage.

Credit unions so far are holding their own.  In 2015, they lent 8% of US mortgages, up from about half that in 2010.  

Before applauding, though, recognize that credit unions face big challenges when it comes to just maintaining the current market share as mortgages become more digital. More on this below.

So, why have non banks grabbed so much market share, so quickly? Mainly because money center banks have largely pulled out of the mortgage market and it’s the non-banks that have nimbly moved to fill the void.

Many money center banks pulled out for two reasons.  They were blindsided by the tidal wave of defaults on home mortgages in Great Recession.  Maybe five million homes were foreclosed on. Big banks lost a lot of money – and a lot of positive reputation – in the meltdown.  Many bankers accordingly resolved to get out of issuing home mortgages.

Enter the Consumer Financial Protection Bureau which sent more big banks running away.  In their minds, the CFPB was anti bank, hostile, capricious and just bad news for mortgage lenders – so why make home loans?

That set the stage for the rise of non banks which plainly saw there are many, many consumers who have gained more confidence shopping online, they also became more comfortable applying for credit cards, car loans, and, eventually, yes, home mortgages online.

Non banks also have higher tolerance for consumers with less than perfect credit than do big banks and many credit unions. Most non banks also have found ways to live with, or avoid, the CFPB.  And – crucially – they are pioneering and perfecting home mortgage processes that are essentially totally digital.

That means much lower loan origination costs.

It also means much, much faster processing, Quicken, for instance, has a “Rocket Mortgage” — where approval can be had in minutes. Not weeks. Not days. Minutes.

How many credit unions can match that – and know that this kind of speed is becoming crucial to holding onto a chunk of the mortgage market.

BMW and Mercedes can finance and roll a new car with $50,000 in paper in a matter of minutes and that car loses 20% of its value in the first year.

A house, in most markets, is very unlikely to depreciate.

Can credit unions match what the car companies and non banks can do in terms of speed?

A survey of banks and credit unions by Fairfax VA consulting firm CC Pace offered worrisome news. Some 80% of respondents said they were not even halfway there to being able to offer a fully digital mortgage experience. Said CC Pace: “Everyone recognized that this is where the future lies, but many owned up to the fact that they have barely begun the process.”

Keith Kemph, a CC Pace consultant, noted that credit unions have particular – and particularly troubling – challenges and may in fact now be falling behind even community banks in the battle to stay relevant against non banks.  Kemph said credit unions “have not been as agile in the marketplace,” especially as the marketplace changes.  

And he said “they are still plagued with technology challenges that limit their ability to grow without increasing their overall operating costs.”

Bottomline: there are big opportunities in the home mortgage market especially for credit unions.  But credit unions may also lose this market unless they adapt to the changes that are transforming it – especially the push into digital mortgages.

Finding your growth targets: How to market your credit union – CUInsight bit.ly/2o0y1W2 My reporting for #Culiance

 

By Robert McGarvey

 

For Credit Union 2.0

 

A new research report from Javelin on “Why Digital Banking Often Fails to Reduce Offline Volume” has an infographic that just popped my eyes. The subject: “Reasons Why Consumers Avoid Mobile Banking and Turn to the Branch or ATM for Check Deposits.”

Javelin offers answers but, first, why do you think your members do this?  Especially when, in theory, nothing could be more convenient than using a smartphone at your kitchen table to deposit a check that came in the day’s mail.

But lots and lots of consumers don’t use MRDC.  Why? The Javelin report explores that question.

I can give you a hint about why. A few months ago I opened a new account at Arizona Central Credit Union.  I deposited a check for around $25,000, drawn on Capital One (closing an account), and I deposited it at a branch a few blocks from my apartment.

Recently I opened the ACCU app to make a deposit and saw my MRDC limit is $500. I shut the app.

I opened a Chase app, where my limit is many times that, and deposited the check.

I’m not alone. 15% of the consumers who don’t use MRDC told Javelin they were afraid their check was too big.

They’re probably right.

Even Mitek, the principal MRDC cheerleader, in its 2017 Mobile Deposit Benchmark Report, moaned about this barrier to wider usage: “Deposit-limit policies at three quarters of FIs essentially represent penalties for customers who use mobile deposit, representing an unsustainable barrier to digital migration and growth….Many consumers state they have been prevented from using mobile deposit by the FI’s dollar limits, yet conversations with industry executives tell us that advanced risk management policies can enable customer-friendly deposit limits that also limit misuse.”

Yep, and that’s been true for years. But still most credit unions retain absurdly conservative deposit limits.

As for long holds – and I have personally seen holds as long as seven business days on a mobile deposit – there is no defensible reason for the practice, other than a desire to thwart MRDC usage.

Could be that’s exactly what some credit unions want to do. Processing fees are involved with deposits via vendors such as Mitek. Force the consumer to walk the check in and there’s no Mitek fee.

But maybe there also is no consumer, as the consumer does as I did and calls up a friendlier app such as Chase and makes the deposit.

Note, too, Javelin said 17% of consumers who did not use MRDC said their reason was that “I needed the funds quickly.”  Long holds chase away members.

Probably the biggest barrier to MRDC usage, per Mitek, is insecurity about the technology.  Reported Mitek: “Fear of fraud is the most powerful impediment to widespread mobile deposit
adoption, cited by 43% of non-users from large FIs. FIs must unequivocally assure customers that mobile deposit is every bit as secure as an ATM or bank branch. Immediate feedback and receipts upon deposit acceptance, and notification of funds availability will help resolve these fears. Walking customers step-by-step through their initial experience may also alleviate worry, as fear over making a mistake is holding back 34% of non-users at large FIs.”

According to Javelin, 14% of non users said: “I didn’t feel safe depositing a large check via the phone.”

A last, huge obstacle to MRDC usage – fortunately seen at ever fewer financial institutions – is charging fees for MRDC. That never made sense and certainly doesn’t make good business sense today.  Reported Mitek: “In 2017, for the first time, none of the major banks reviewed charged a fee for standard processing of mobile deposits. Still, worries over fees remains a block to nearly one out of three FI customers. Therefore, marketing the costfree nature of mobile deposit is an imperative to boost channel migration.”

Now, just maybe MRDC will never capture all deposits. Javelin research found that 27% of non users said they had to go to the branch for other reasons. 32% said they had to go to the ATM for other reasons (presumably withdrawing cash).  So they made their deposits through those channels.

But there remains huge growth potential for MRDC if credit unions raise deposit limits, erase unnecessary holds, stop charging fees, and go on the offensive to assure consumers that MRDC is as safe as making a deposit at an ATM.

That’s because, among those who do use MRDC, a consistent comment according to Mitek is praise for the “ease of use.”

But there’s even hope for capturing the non-users. Advised James Robert Lay, CEO of Digital Growth Institute who specifically addressed how to gain usage by those who so far are resisting MRDC: “What will increase mobile deposit use is credit union staff working with account holders that come into the branch to deposit checks. Hold account holder’s hands (and their phone) to guide them through the process. Heck, employees might find the account holder does not even have a credit union’s mobile app downloaded to their device.

It’s a bit of a paradox but to increase digital product use requires human interaction and intervention as change is hard, even though the mobile deposit is easy.”

So right. So smart.

 

 

Would you pay a $25 “urban fee” to stay at a hotel near Times Square?

The question is not academic. A growing number of hotels – many clustered around Times Square – are dinging guests $25 extra per night in an “urban fee,” modeled on a resort fee of course.

On the list are Hilton New York, Marriotts around Times Square, even Le Parker Meridien.

When a staffer at the UK Independent called Marriott to inquire about the fee, here’s what they learned.  “A member of staff said it was a fee reflecting the hotels’ proximity to a ‘tourist attraction,’ that it was specific to Times Square, and that none of the other Manhattan hotels charged a fee.”

Do we have to put up with this?

The urban fees are in fact not new. As far back as 2013, Reuters noted that urban fees were showing up at some hotels.

It’s not just Manhattan either. In San Francisco, some 34 hotels charge an urban fee, up from just three in 2016.

What do you get for this fee? Not much. Usually hotels point to allegedly “premium” Internet access, maybe gym access, possibly a local newspaper, probably local phone calls – and, really, this is just stuff I don’t want or use and before it was usually free.

Even some hotel executives know such fees are hinky. At a recent conference, co sponsored by Hotel Business,  Bob Habeeb, CEO of First Hospitality Group, said: “I think the tricky thing with resort fees or amenity fees is they’ve got to represent a real value for the consumer and not be just a veiled play for ADR. During the waning days of the Obama administration, the FCC called Katherine Lugar [the CEO of AHLA] and said we’ve been looking at the way your industry uses these amenity fees as a backdoor way to collect unspecified and undisclosed revenue, and I think we’re going to look at this.”

Habeeb added that in the Trump era pressures from Washington appear to have lessened. But he added: “It’s inevitable that consumers are going to push back if these fees don’t represent something that they can find value in. It’s a great idea to have little packages people can buy into and enhance their experience, but you’re on slippery ground when you start talking about charging a fee for things people perceive should be part of what they paid for in the first place.”

I am on record, for some years now, as a loud opponent of  resort fees.  They are just a way for hoteliers to sneakily grab your money.

Resort fees in some locations have crept up over $50 daily.  I am not against hotels charging more – we live in a capitalist society. What I am against is showing one price as the daily rate and then adding on taxes and fees that can significantly raise the daily rate.

Hotels love fees. In 2017, NYU professor Bjorn Hanson estimated they’d rake in around $2.7 billion in fees and upcharges.

Hanson, incidentally, has stated that hotels are doing a better job of plaininly disclosing fees.  “Some fees and surcharges are sometimes unfairly called ‘hidden’ or ‘surprise,’ but disclosure on websites, confirmation emails, ‘tent’ cards in guest rooms, room service menus, and guest service directories continues to increase in the nature of the disclosure. In interviews for this update, the issue is more about unpopularity of fees and surcharges rather than fees and surcharges being ‘hidden’. One of the reasons for the sense that some of these fees and surcharges are ‘hidden’ or ‘surprise’ is because the categories are often established and the amounts are set hotel-by-hotel rather than by brand, and both can change frequently.”

The bad news: as hotels have gotten better at disclosure they also have dug in their heels about erasing them. Used to be, four or five years ago, if you made a ruckus at checkout about the resort fee, poof, it disappeared. Not so fast anymore, frequent travelers tell me.

So how can you avoid the new urban fees? For starters, just don’t stay at hotels that charge the fees. There may be three dozen San Francisco hotels that charge an urban fee, but there are around 500 hotels in and very near the city that don’t.  The odds are with you.

As for Manhattan, mainly the urban fee seems to be found near Times Square – and whyever would you want to stay there?

Many, many hundreds of Manhattan hotels don’t charge an urban fee so if you stay at one that does it is on you. Just don’t.

The point: it’s up to us to avoid the fees we don’t want to pay.

Most hotels on the Las Vegas Strip now charge a resort fee. Most hotels in Scottsdale do likewise. Ditto Hawaii.  There just are places where it’s tough to duck a resort fee so we will pay it and grumble.

Urban fees are different. They are at a handful of properties and if we skip those properties – maybe even posting that a reason is the urban fee – hoteliers may get the message that this is one fee too far.

It’s up to us to just say no.

 

By Robert McGarvey

 

For Credit Union 2.0

 

The good news for credit unions in this year’s MagnifyMoney survey of mobile banking apps: Many do very, very well, even against money center bank competition.

The bad news: Mobile banking apps, suggests MagnifyMoney, “have reached middle age.” That means, per MagnifyMoney, “overall, apps haven’t appreciably improved.” They have entered an era of complacency – and, listen up, that may well not be good enough.

A point not in the MagnifyMoney survey is this: non banks keep buffing their apps, benchmarking themselves not against financial institutions but best in class apps such as Uber, Airbnb, Amazon, and Venmo.  Before patting yourself on the back with congratulations about the quality of your mobile banking app, ask yourself how you stack up against the really good consumer apps that many people spend hours daily using.

Back to the MagnifyMoney data and the good news for credit unions: according to this survey, “in general, people still rate credit unions apps higher.  Probably unsurprising, as most CU users report a better experience in general. But traditional banks are catching up. 3 of the ten best overall apps are banks or direct banking apps. Last year all but 1 were CUs.”

Not all is cheery news in the survey. Chew on this: of the 10 worst mobile banking apps, per MagnifyMoney, four are credit unions. On the dishonor roll are VyStar Credit Union, Patelco, Northwest Federal Credit Union, and Tinker Federal Credit Union.

That means credit unions as a group can only get so giddy about their performance. Some appear to be in the same league as the worst banks.

But credit unions do score high in the round up of most improved apps.  Among the top 10 are Teachers Federal Credit Union, CEFCU, America First Credit Union, Schoolsfirst, Alliant, and DFCU.  That’s six of ten.

Among the top 10 most deteriorated apps are three credit unions: Desert Schools, Suncoast, and SECU of Maryland.

As for the 10 best overall, credit unions on this honor roll include Eastman Credit Union, ESL, Redstone, SEFCU, Wright Patt, and Delta Community, Visions.

The others in the top 10 are Discover, BBVA Compass, and Capital One.

How reliable are these ratings? Probably not very but at least this is a start. The issue is that the MagnifyMoney ratings start by sorting out the 50 biggest banks and 50 biggest credit unions, then looking at user ratings for the apps in the two big apps stores (iOS and Android).  As far as that goes, it makes sense but let me ask: how many apps have you reviewed in the apps stores?

Not many right.

I scratch my head in trying to remember the last time I reviewed an app in an app store. And whatever it was it was because the app was just terrible.  Or I was angry for other reasons with the provider.

So I’m unconvinced that app store ratings are the end-all when it comes to deciding the best and worst mobile banking apps.

Nonetheless, my advice is to look hard at the top rated credit union apps – and by all means scroll through the actual user comments in the app stores.

Do likewise for the worst rated,

Now ask yourself the really hard question: what are we doing right now to keep our app fresh and relevant for a new generation of credit union members?

What can we do?

How can we press our vendors to really upgrade the app to help us better serve our membership?

What do our members really want that they are not presently getting from the mobile app? Ask them if you don’t already know.

There’s no rest for the weary. This just came in from Bank of America in an email blast to media about upgrades to its mobile banking app: “Express checking account application —

With nearly one-quarter of all accounts opened digitally, Bank of America has introduced a new streamlined process for customers to apply for a checking account securely within the app. The enhanced, single-page design populates customer information into the application, simplifying the process.”

Can you match that?

What can you do to stay ready for the next wave of upgrades?

The process just doesn’t end and, at many credit unions, there’s resistance to the idea that continuous improvement is a must with mobile apps.

But give it up. Resistance is futile. With mobile banking, it has become improve or perish.

 

 

By Robert McGarvey

 

Amazon has sounded its intentions loudly: it really, really wants to see its voice controlled artificial intelligence device Alexa (aka Echo) in tens of thousands of hotel rooms, pronto.

I am all for this. It’s an easy way to make my every hotel stay a little more comfortable. 

I am aware of concerns about Alexa’s potential to spy – dealt with below – but I am not deterred.  I want such gear in my hotel rooms.

I’ve been an Alexa user since early 2015 and have also supported its penetration into banking – Capital One has had a live skill for many months that I’ve used and liked.  Presently I own an Echo, a Dot, an Echo Look, and I recently added a Google Home mini.  I’ve gotten into asking my devices for the information and actions I want. It’s a whole lot simpler, and more accurate, than me typing into a cellphone.  Exactly that is why, suddenly, big tech powerhouses like Google and Amazon have plunged into voice controlled devices

And I can imagine dozens of uses for Alexa in my next hotel room, if only it’s there.

For sure, Amazon wants it there. In a recent Amazon Web Services conference in Las Vegas, Amazon executive Werner Vogels noted that Wynn is rolling Alexa out to its many thousands of hotel rooms and will let guests use it to lower the blinds, turn on the TV, turn on lights, adjust the temperature, etc.

I can already picture myself waking up in a Las Vegas hotel room and asking Alexa for the day’s weather.  Also my calendar.  I can get news headlines read to me.  And, yes, I’d definitely use Alexa to open and close the blinds (a continuing struggle for me in Las Vegas and only in Las Vegas, I can’t explain why), to adjust the room temperature, and to turn lights on and off.  No more learning curve for the inroom technology.

And with Alexa, there really is no learning curve. Just preface any request with: Alexa. That tells the device you want something. Then ask. Sometimes it won’t know the answer but Alexa confesses ignorance and moves on to the next question.

Concur, the big corporate travel manager, has also integrated an Alexa skill that will let travelers ask for their itinerary – and that’s often a question on my mind. “Alexa, when’s my flight today? Where am I going?”

Skift reports that Alexa is in trials with Marriott, also Best Western.  Skift elaborated: “At Best Western Plus Hawthorne Terrace, the Echo device greets guests on arrival in the room. Guests can ask it for services like more towels or ask it for the hotel’s recommendations on places to dine locally by cuisine and time of day.”

Hotel Management, in its reporting on the Hawthorne Terrace deployment, said: “The new device acts as a gateway to all the local happenings in Lakeview East, the vibrant neighborhood where Hawthorne Terrace resides and encourages them to ‘Live. Play. Stay. Like a local,’ which is Hawthorne Terrace’s overarching purpose.”

In Nyack, NY Dream Hotel Group has put Alexa in rooms at its Time Hotel. 

A big player in this niche is Volara, a third party that helps hotels build out customized skills and that’s key because to be truly useful, the Alexa in my hotel room has to have knowledge about the room, the hotel, the city that I don’t readily have.  

Particularly cool is that Volara – and doubtless competitors – can build in answers for Alexa, what’s the WiFi password? What are the fitness center hours? When does the restaurant open for breakfast? Can I get towels brought to my room?

Work through the many demos on the Volara demo page and you get a sense of how useful this will be.

Think of it this way. You could call the front desk with all your questions. Or you could ask Alexa. Which do you believe will be faster? More accurate? I know my answer.

A frightening question: can Alexa spy on you?  The answer seems to be yes.  Sort of.  Definitely it has the potential to hear everything said in its range and, theoretically, could transmit it to others.  Is there proof this has happened?  Not that I’m aware of but I would say that if I were having a hush-hush, on the QT convo with Jeff Bezos, I’d be surprised if he didn’t unplug Alexa before he got into the nitty gritty of his plans for throttling WalMart and making the Washington Post the nation’s best newspaper.

Do likewise. If you are having a sensitive discussion in a hotel room equipped with Alexa, unplug it. How hard is that?

When you’re done talking, plug it in and within a minute or two it’ll be ready for new questions and commands. It’s really that simple.

This is one hotel in-room technology revolution I am all in with. Color me impatient: I want it now.

 

12/9 – Changed “she” pronouns to “it,” per reader suggestion.  

21st Century Member Education – The Credit Union Exchange http://bit.ly/2BujvYu My reporting