Here’s the headline news from a new report via DepositAccounts.com: Branch closings slowed substantially in Q2.
According to the report: “Branch closures dropped to an estimated 376 in the second quarter of 2020, well below the per-quarter average of 631 from the second quarter of 2017 through the fourth quarter of 2019.”
Should branch skeptics such as myself, who believe many more branches need to close to rationalize financial services for a digital, contactless era, shut up and go home? As far back as 2014 I wrote in CU Times, “branches are an expensive albatross around the industry’s neck.”
Is it time for me to shut up? Nope. In fact, there is mounting evidence that every demographic, including senior citizens who hitherto have been tech holdouts but who now have embraced tech in the Covid-19 era, feel safer using tech than they do going into branches.
Call it seven hours of inexplicably unaware vanity flying.
That was the recent Qantas flight to nowhere which stuffed 150 travel starved flyers onto a 787 Dreamliner that – flying at altitudes as low as 4000 feet – went literally nowhere. Passengers paid $566 to $2734 for seats in economy, premium economy and business class.
The flight apparently sold out in 10 minutes.
The usual reason for buying: the passengers just missed flying. So when Qantas came up with this idea – Australia’s borders are closed so external flights are a no-go – people bought.
One has to assume that none of the passengers can spell “climate change” without help.
The stunning fact is that there are many more such flights to nowhere. And people are buying them.
Air travel produces about 3% of the world’s carbon emissions. A Guardian story reported, “Taking a long-haul flight generates more carbon emissions than the average person in dozens of countries around the world produces in a whole year, a new Guardian analysis has found.
The figures highlight the disproportionate carbon footprint of those who can afford to fly, with even a short-haul return flight from London to Edinburgh contributing more CO2 than the mean annual emissions of a person in Uganda or Somalia.”
It is one thing if a flight is to return home to be with a sick relative, to attend a close friend’s birthday party, or to close a big business deal. All valid reasons, all reasons we all have had for flying before.
Offhand the only flights I regret taking are two where I discovered upon heading to the meeting location that the event had been abruptly cancelled (a federal courthouse hearing in New Orleans and a trade association committee meeting at Newark Airport) and that isn’t bad in multiple decades of flying. No argument from me: where long distances are involved, I will be flying.
Yes, nowadays I will question if the event is actually necessary and I will also question if it could be done virtually. But when in-person is the best way, I’ll fly when a drive would be more than 4 or 5 hours.
And I’ll defend my choices.
But I also acknowledge that climate change is a reality – where I live in Phoenix we are recording one of our hottest years, ever. In Sonoma County, CA, where I used to live, wildfires have ravaged tens of thousands of acres. Up the west coast, the destruction is monumental. I own property in Taos County NM and that state has significant water issues that are exacerbated by climate change. Only a blithering idiot would deny the reality of climate change.
So I find myself rationing my own carbon impacts. I drive much less (walking is good for you!). I turn up the thermostat in the long Sonoran desert summer. In just about every way I strive to produce a little less carbon.
That of course means flying only when necessary.
And then I read about what amounts to a new fad, flights to nowhere, where the environmental impacts are real – but not much else is.
Here’s what they experience, per the South China Morning Post: “The captain of EVA Airways Flight BR5888 tells his 309 passengers – a full cabin – he will fly east from Taipei’s Taoyuan International Airport, to give them an ‘extremely clear’ view of the airport on the tiny Japanese island of Yonaguni, before swinging the aircraft back, and then towards Taiwan’s southernmost peninsula. The 2.5-hour flight will land where it took off.”
Really? Not only is this environmentally harmful it’s flagrantly unimaginative.
For four years Google has offered a VR ride that will let “passengers” experience “the whole wide world.”
In Japan there’s even something of a fad centered around VR flights. Per the Washington Post, “When an in-flight virtual reality experience called First Airlines started offering faux flights in the Ikebukuro neighborhood of Tokyo in 2017, you could say it was ahead of its time. Three years later, in the grips of a global pandemic that has grounded the vast majority of flights, Tokyo’s business travelers are leaning on the VR experience for a taste of international travel without leaving their city.”
No carbon involved.
VR flights are, well, odd – but if that’s your pleasure, have at it.
Flights to nowhere are different. They give all flying a bad rep.
And with US and European companies looking for every reason to flatten travel budgets for years to come, it just doesn’t pay to make plane travel into an unfunny joke with real environmental consequences.
So far, thankfully, flights to nowhere have not caught on in the US or Europe.
Let’s hope it stays that way.
And if there are complaints about the end of truly pointless flying, tell ’em to go eat cake. Qu’ils mangent de la brioche.
Most credit unions continue to wrestle with too many deposits and too few places to park that money profitably. Call this Part 3 of the CU2.0 deep dive into lending in the pandemic era and that is because Barclay Keith, CEO of Artis Technologies, has developed tools that will enable a credit union to empower business members – think home improvement retailers, contractors, jewelers, etc. – to initiate personal loans to consumers, typically in the range of $3000 to $65,000.
For the credit union, this just may be a high yield lending arena that also may well bring in new members.
For the business, a fast, convenient way for a shopper to borrow may bring in bigger and more sales.
For the consumer, this may be a quick and easy way to borrow at competitive rates.
Win-win-win.
For the consumer it typically takes minutes to complete a loan app, a process that can be initiated and completed at the retailer. The underwriting is AI powered, there’s instant KYC verification, and the lending institution – the credit union – gets to set its own policies. Some may not want to lend to subprime borrowers, others may. Some may want to lend only to super-prime borrowers, many will have a broader standard. Artis Technologies lets the lending institution set the policies it is comfortable with.
The conversation with Keith in this podcast is a broad look at how the Artis tools work and the benefits that may come to credit unions that deploy them.
Part 1 of the new lending tactics series is #113 with Sherif Hassan on small business lending. Part 2 is #114 with Nicholas Hinrichsen on opportunities in refinancing car loans and also lending to subprime car buyers.
You know you have money on hand you want to put to work. Listen to the CU2.0 trilogy for ideas you can use today.
Barking alert: There is some barking and growling in this podcast, noises that defied filtering software used in editing the podcast. The podcast is clearly audible. And no animals were injured in recording the podcast.
Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com
And like this podcast on whatever service you use to stream it. That matters.
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
Here’s your choice: pick a hotel with lots of contactless tech (check in via phone, room entry via phone, etc.) or one with plenty of Covid-19 combat gear ready for you (masks, sanitizers, etc.). Which do you want?
Does it have to be a choice? Excellent question but play along because hotel booking site HotelsByDay recently did a survey of some 1000 travelers and asked them what they expected from a reopened hotel.
Most wanted: hand sanitation stations (53% of us). Least wanted: contactless check in, check out (39%).
Falling in the middle are: mask requirements for staff and guests (50%); and a welcome package with safety items such as a mask and sanitizer (43%).
Ignore for now that a full half of respondents are blithering idiots who don’t demand that there be a mask requirement for guests and staff alike. Note: I would not stay in a hotel that did not require that and will walk out of one that, when I arrive, I realize isn’t enforcing their requirement (and they can go pound sand in trying to collect any cancellation fees).
The reason these poll results fascinate me is that hotels have in fact been doubling down on contactless since the advent of Covid-19 (and the realization that it will be with us for a while, at least another year). Indeed the April headline in a trade pub reads: Hilton Doubles Down on Contactless and similar can be said about every other big group.
Are they barking up the proverbial wrong tree?
I don’t think they are – indeed I believe the mid-range future of hotels and resorts will hinge on having lots of contactless tech and, really, there is no reason for human to human interaction at a check in desk (look at how many hotels have eliminated person to person checkout), there is no reason to insist we use those always failing plastic cards to get into rooms, and there is less than no reason to insist we hand a credit card to a server at a bar or restaurant. All those are ideal for touchless. Hotels just have dragged in adoption but so they always do because they are skinflints about tech. Now it is time to get moving because your guests will demand it, especially the age 40 and younger guests who increasingly will dominate.
But I think the either/or, either contactless or masks, is bogus. We can and should have both to safely travel in 2020-2021, the era of Covid-19.
Which brings us back to masks and hand sanitizers which, along with social distancing, are the three best steps we and others around us can take to keep ourselves healthy and safe. That understood, prepare to get mad. Here’s the lead from a recent story in Phocuswire: “Retail automation company Swyft is partnering with CVS to bring contactless kiosks to hotel lobbies.
“In addition to typical vending products such as snacks and toiletries, the machines will also be stocked with personal protective equipment such as masks and hand sanitizer.
Guests can make purchases from the kiosks any time of day using their smartphones.”
That means the push is on to monetize the supplies we might need to stay safe in a hotel.
Talk about chutzpah.
Flashback to the aftermath of 9/11. Remember how many hotels began stocking complimentary toiletries, shaving kit, toothbrushes, etc? Often we lost our toiletries in the then new TSA lines, or they got confiscated for being too big. Rather than nickel and dime the stalwart guests who nonetheless traveled in the aftermath of the 9/11 tragedy, many hotels and resorts thoughtfully stocked complimentary toiletry kits.
Today however the hotelier’s eye is on Mammon – if, that is, CVS and its vending machine partner are calling this right.
Let’s hope they are wrong, for our own sakes and but also for the industry’s.
Good news: So far, no hotels have signed up for the machine. Another story, in Vending Times, mentions machines in LaGuardia and also Boston’s South Station Bus Terminal. No hotels or resorts are mentioned, except in this vague claim: “CVS said it is considering an additional 50-plus locations throughout the country including college campuses, corporate offices, hotels and other transportation hubs to host vending machines in the future.”
There is hope. Hoteliers may realize that gouging guests a few quid for a mask and hand sanitizer is over the top when that hotelier should in fact be prostrate and kissing the feet of the hardy guest who braves Covid-19 worries to check in.
Especially when I shop at Whole Foods I am handed a mask, gratis, and there’s sanitizer spray that’s also free. It’s not expecting much to get that stuff for free when I am spending a couple hundred bucks, often much more, for a bed.
Memo to hoteliers: Don’t be pennywise. Hand out masks and sanitizers, gratis, and thank the guest for his/her courage in traveling. That’s the smart move.
Call this the best of times for digital member service company Glia and that is because, in the pandemic era, credit unions’ traditional member service tools have fallen out of favor and meantime just about all of us have become significantly more digital, said Dan Michaeli, Glia CEO and co-founder.
Just a couple years ago, many credit unions looked at digital customer service tools as a “nice to have.” That’s changed for many and, suddenly, these tools are must haves.
Especially at credit unions, says Michaeli and that’s because credit unions have always had a member centric attitude. And digital tools just may be the best tools around.
Here is what Glia says it does: “Glia creates digital-first moments that simplify and transform conversations between institutions and their customers using Messaging, Video, Voice, CoBrowsing, and Artificial Intelligence.”
Even better, as service switches from channel to channel – as often happens – the context and history are retained. No more maddening moments for a member who just spent 10 minutes explaining a problem to a rep and now is asked by a new rep to tell about the problem. From scratch. How frustrating is that?
Right now, we are in a shift from telephone based member service into a variety of digital channels, including oldfashioned voice, but with text, AI and more claiming ever larger roles.
An upshot is that members may find themselves experiencing better service and now they will be able to pick their own channel.
Are these tools that mainly will abound at only the biggest financial institutions? Michaeli believes otherwise. He in fact believes that this technology levels the playing field and a $100 million credit union just may have member service tools that rivals that of a big five money center bank.
How cool is that?
You want to know – indeed, in the Covid era you need to know – about digital member service and that’s why this half-hour is a must listen.
The Aspen Institute throws out a startling number of how many evictions we may see when the CDC’s eviction ban expires at year-end. Says the think tank, “According to the latest analysis of weekly US Census data, as federal, state, and local protections and resources expire and in the absence of robust and swift intervention, an estimated 30–40 million people in America could be at risk of eviction in the next several months.”
30 to 40 million people! 10% of us.
Credit unions just may have a savior’s role to play in this and it’s a role that would define credit unions in starkly different terms than their banker competitors. Banks are fueling evictions, where credit unions can throw a lifeline to renters.
That’s the idea of Jake Schlachter, CEO of Madison WI based We Own It, an organization formed to shake up cooperatives. Schlachter now has his eye on credit unions and he has thrown out a huge idea: credit unions could harness their excess excess capital (many have significantly more than the amount required by regulators) to create loan funds for tenants facing eviction.
Ian Schrager (The Edition, The Public Hotel, et. al.) unquestionably is a hotel innovator but I will tell you this: His crystal ball is broken and he doesn’t know what is happening, or not happening, in tomorrow’s travel.
What triggers this is that I have recently been bombarded with emails and calls from friends and colleagues telling me I am wrong in my predictions that our travel lives after Covid-19 will be very different from what we had before. I am no pessimist – indeed I think great times are ahead, starting probably in 2022. But they will be different.
Where Schrager comes into the frame is in a speech he gave at the 2020 Boutique Lifestyle Digital Summit where he said that when the hospitality industry recovers it will return to “not a new normal, but the same normal we’ve always had.”
He added: “I don’t believe in paradigm shifts.”
An odd comment because the world of 20th century travel is a world of paradigm shifts, where the car made it possible to travel hundreds of miles, quickly and in comfort, the plane extended the range, the jet made intercontinental travel accessible and reasonably comfortable, and mass market hotels (think Holiday Inn) redefined who would stay in hotels, for what reasons.
I understand why my hospitality industry friends take comfort in Schrager’s viewpoint – a comfort zone is a frightening place to exit – but to my eyes those in hospitality who cling to old paradigms will perish. And some who recognize that things are different today just may find a path to a new prosperity.
Covid-19 has unquestionably triggered what will be enormous paradigm shifts in travel.
Three legs of a stool of change say this will be so and they are all coming together at the same time.
The duration of the Covid-19 crisis. It takes time to form new habits, new attitudes. We have that time with Covid-19. People are still dying. World Bank forecasts show 2.5 million dead globally by January 1, 2021. That’s more than double today’s 1 million death toll.
Yes, there are those in Washington DC who insist we will have vaccines available before year end (by all means, take mine; I won’t, not this year when the process has been tainted by toxic politics). No rational person thinks we will have any significant distribution in the US of a vaccine until mid 2021 at the soonest.
And then there is the rest of the world to vaccinate. When will that happen? And know that the US has said it will not participate in a WHO effort to distribute a vaccine globally – leaving that up to, I don’t know, maybe imaginary beings?
But if the rest of the world is sick, we will never be healthy. Not in today’s interconnected society.
Count me as saying Covid-19 will continue to hold back travel through 2021 and into 2022. Meaning we will have two years of training how to live a Covid-19 lifestyle and most of us already have adjusted to it. We may grumble but we wear masks, we don’t go to movie theaters, we don’t eat in restaurants (we do love take-out), we don’t fly in planes (especially not internationally) and we don’t stay in hotels. You know what, this “new normal” isn’t so bad and I know few people who really, truly want to get back to how travel was.
The Revenge of the Beancounter. Corporate bookkeepers have always hated business travel, which they have seen as a giant boondoggle that paid for golf, booze, steaks and to what end? Covid-19 just may have given them the ammo they need to dramatically lower travel budgets longterm.
That’s because most companies are learning that they can continue to make sales and develop relationships without travel and face to face meetings. For how many decades have I heard that if we don’t travel we can’t close deals? And yet deals are getting done even with what amounts to a near total ban on travel in many companies.
This has not gone unnoticed by the beancounters.
Face it, some business travel has indeed been important, maybe essential. But a lot happened because we always have done it.
The business world hasn’t ended even though a lot of travel has stopped.
There also is a simultaneous generational change. Baby Boomers may have grumbled about business travel but in our guts we kind of liked it and we prided ourselves on being “road warriors,” a label that glamorized bone crushing monotony and somehow made airline food seem, well, edible.
Don’t think Millennials and Gen Z are on board with this. They aren’t. They see much business travel for the drab, uninspiring slog that it is. Of course they will travel when there is a reason. But a lot of business travel has happened without reason and, as for these younger generations, hell no, they won’t go.
Sustainability and climate change. The elephant in the room when talking about travel is the negative impact it has on the environment, especially the impact of air travel. The era of flight shaming will only grow in volume and intensity as the economy heals and Covid-19 retreats.
The reality of climate change is undeniable, as is the damage and destruction it is bringing.
Millennials and Gen Z are especially concerned about longterm environmental impacts, understandably so. They will question the need and desirability of air travel and these will not be generations that hop on a plane to weekend in Paris or for a lunch meeting with a prospect in Tulsa.
Add up duration, frugality, and climate change and it’s a trifecta for change in how we travel. The new normal will be different. Very different indeed, and I applaud the Millennials and Gen Z who are creating this reality because they will have to live in it.
Call this Part 2 of our smarter lending for credit unions. The recent episode, #113, explored small business lending with Capiform’s Sherif Hassan. Listen here. This week it’s time for something entirely different.
Happy with your car loan portfolio?
Many credit unions are anything but and this has become a crucial issue as most are awash in deposits and now are hunting for profitable places to put that cash to work.
Car loans could be it. But indirect lending…not so much.
Enter Nicholas Hinrichsen, an online car sales veteran who co-founded an online used car marketplace in 2015 when he raised $10 million in venture capital. They sold that business in 2017 to Carvana, which by now has grown into one of the nation’s biggest used car retailers.
After logging three years at Carvana he is again starting up a new company, with $5 million in venture funding, where the aim is to help credit unions better sell car loans to their members.
Hinrichsen knows car loans and he also knows about credit union dissatisfaction with indirect loans. He has a better idea: helping members refinance existing car loans issued by third parties, converting them into credit union owned loans.
Credit unions can win that fight, said Hinichsen, because usually their loans are better, at lower interest rates.
Most credit unions, he admits, do “spray and pray” marketing, sending out mailers to all pre-qualified members. In this podcast he tells a smarter, more cost effective way to contact the right members, ones who just might be prospects for car refinance.
Keep listening because he has an idea for tools that will essentially pre-populate a loan app for a member, using data the credit union already has. So filling out a loan application literally takes seconds.
And another – intriguing – idea he has is about how to profitably make sub-prime loans to existing members and, in the process, to create a path for them to get lower interest rates going forward. Just that may be a core credit union mission, especially as more members deal with economic pains of the pandemic.
You know you want to issue more and more profitable auto loans. This is a podcast you have to hear.
Contact Hinrichsen here. The company is named Clutch
Listen up here.
Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com
And like this podcast on whatever service you use to stream it. That matters.
Call this Part 1 of our smarter lending duet. Part 2, posting tomorrow in podcast 114, is on smarter car loans with Nicholas Hinrichsen. You don’t want to miss that one.
PPP loans just may have awakened credit unions to the immense opportunity there is in small business lending. That’s what Sherif Hassan, CEO of fintech Capiform, believes. The opportunity is there.
But to win that business credit unions need to speed up their lending process, said Hassan, and they also need to create a more efficient process that cuts costs.
Automation – smart technology – is the key. At many credit unions, the typical cost for funding a small business loan is around $3600, said Hassan. Capiform’s tools get that cost down to maybe $360.
At that cost, suddenly making smaller loans – maybe $50,000 or $75,000, loans that often are what small businesses want – is realistic.
Community banks have long had a lead in small business lending, but CU2.0 Podcast listeners recently heard Steve Bruyn of Foresight Research say that his data shows a huge drop in customer satisfaction at community banks. That’s an opportunity for credit unions.
Add in the comfort many credit unions gained in the PPP program – where they learned they could successfully deal with small businesses and also with the federal government – and the path to more loans for credit unions is clear.
It comes at an ideal time. Many credit unions are drowning in deposits. Small business loans are a profitable path to safety.
Don’t many fintech lenders want that same market? They do. But credit unions – with their community focus – have a fast track to succeeding in that battle. Listen up as Hassan tells why.
You may have heard Hassan’s earlier podcast. Here’s a link.
Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com
And like this podcast on whatever service you use to stream it. That matters.
Now just may be the worst of times but it also is an opportunity for credit unions to reinvent themselves, by reimagining their roles and taking an active part in helping to limit what many experts see as a coming eviction crisis, as renters who have suffered enormous economic hardships in the Covid-19 pandemic are put out on the streets.
What if credit unions made available emergency loan funds to help renters avoid that outcome?
That’s the question Jake Schlachter, executive director of We Own It, an organization devoted to reinvigorating the cooperative movement, asks.
A starting point is that many credit unions have more set aside than the 7 to 8% excess capital required by the regulator. What if those institutions used some of that money to help renters avoid eviction. What if….
Credit unions just might be seen as community heroes.
Suddenly, many would know exactly the difference between banks and credit unions.
Schlacter has sent out a letter to the CEOs of 1430 credit unions with assets above $100 million and significant excess capital. Here’s a link to the letter.
Now what happens? Listen to the podcast. You will hear Schlachter’s hopes and dreams.
This is a challenge to just about every credit union. But the need is real and the possible payoffs are also real.
Want to hear more Schlachter? Here’s a podcast I did with him for a different series a year ago. This one focuses on cooperatives in general with minimal direct references to credit unions.
Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.com
And like this podcast on whatever service you use to stream it. That matters.
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
