by Robert McGarvey

The realization is growing: at credit unions there is no “return to normal.” Forevermore how business is done will be different. And, a lot more technology focused.

That is the conclusion from dozens of conversations I have had over the past weeks with credit union CEOs, consultants, and just plain members. To a person, they all had initially thought the COVID-19 triggered changes – from branch closures to huge spikes in online and mobile banking transactions – were a fleeting change.

Things are different three months into the pandemic response. “I expect a lot of the changes that were made in credit unions will remain in place. We are not going back to how things exactly were before,” said Brad Smith, a credit union expert with consulting firm Cornerstone Advisors.

Continued at CUInsight

by Robert McGarvey

Easy question for you: can consumers originate a new account at your credit union within the mobile app?

I’ll bet you I know the answer and that is because the answer almost certainly is no.

This snippet from a recent Pymnts.com piece explains my confidence: “Only 8 percent of financial service onboarding applications, which includes personal account opening creation, can be completed on smartphones.”

That 8% number would have been terrible in, say, February. By now, it’s exponentially more awful, as many credit unions continue to keep branches closed or operating in a reduced form as ways of responding to the Covid-19 epidemic. So, where are consumers hunting for financial info now? In many cases, on their phones, because it’s the phone that always is with them.

Continued at the CU2.0 blog.

Cybersecurity starts with you.

“It’s about people,” said Nabil Hannan, managing director at cybersecurity firm NetSPI when asked when cybersecurity goes right and when it goes wrong.  He added in this podcast that Covid-19 and credit union responses have triggered their own cybersecurity issues that are very particular to today.

But they also need timely responses to thwart hackers.

Case in point: some workers are instructed to take their desktop computer home to work.  Question: does that box have full disk encryption set up? Many office computers do not. But what if it is stolen from the home?

Maybe even worse, some organizations sent workers home with older machines running old versions of Windows – including XP – and the bad news is that hackers already have bots scouring the net looking for XP machines because there are readily available hacking scripts that effectively automate an attack. No computer skill is needed by the hacker who has found an XP machine.

Hannan also has worked on cybersecurity issues that arise when two institutions merge – something many experts believe will happen with accelerated frequency among credit unions dealing with the fallout of the Covid-19 impacts on the economy.

In one case he worked for 2-1/2 to 3 years sorting out cybersecurity issues that arose when two large financial institutions merged.

 Two credit unions probably won’t have that much complexity.  But even a merger of small credit unions raises cybersecurity complexities because generally the two institutions will have divergent approaches and a common ground has to be found and implemented. ASAP.  Because hackers hunt for gaps and exploit the ones they find.

A bottomline problem: too many credit unions see cybersecurity as a cost. Period.  It does cost. That’s a fact. But think of the enormous costs of a security failure.  What hurts more?

Don’t think this is a techie podcast. It’s not. It’s an enjoyable – intelligent – look a what a credit union executive needs to know about cybersecurity in today’s Covid-19 world.  It’s not just for propellerheads. It’s news you need to know.

Listen up.

Fyi: Hannan has his own podcast, Agent of Influence.  Hear it 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.comFind out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto

America’s housing stock is old – often over 50 years of age in much of the nation and owners want, need, improvements to live in the home they want.

The problem: many buyers stretch to buy their home and they do not have that much equity built up, even after five or perhaps even ten years in the house. But now there are two more children, maybe a grandparent, added to the family and where does everybody sleep.

Historically, home improvement loans have ignored an obvious reality: many projects significantly increase the value of the home,

Sure, some do not – pools usually, saunas, a green house.

But add a bedroom,or a bathroom, or update a kitchen and that house is worth more money.

TV watchers know that from HGTV’s long-running “Love It Or List It” where after every reno, the realtor tells how much more the house is worth. Similar happens on “Fixer Upper.”

So why can’t a loan be created around the probable higher value of a home post renovation?

Why not indeed. That’s what the founders of Renofi asked and they now have created a fintech to help credit unions make loans based on that calculation.

In the process, Renofi has processes for calculating what value in fact a particular renovation will add in a specific market and also conducts due diligence on the contractor associated with the project.

Renofi already works with several credit unions – you will hear specifics in the podcast – and wants to hear from more.

Here’s what Renofi tells credit unions about itself: “RenoFi is a turn-key, end-to-end growth channel. We help our partner Credit Unions grow their loan portfolio by delivering highly-qualified new members seeking home renovation loans that meet your institution’s specific underwriting criteria.”

Sound good?

Listen to the podcast to learn more specifics.

And check out Renofi’s website.

Like what you are hearing? Find out how you can help sponsor this podcast here. Very affordable sponsorship packages are available. Email rjmcgarvey@gmail.comFind out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto

What will blow your mind as you listen to this podcast is how savvy and smart the guest is. That’s Sahil Pankhaniya, a 20 year old student at George Washington University in Washington DC who is pursuing the launch of a wholly new, student run credit union credit union at the Washington DC institution.

How cool is that.

The effort has been written up in Credit Union Times, and here Mr. Pankhaniya talks for himself.

Know this: he thinks very big. What if, he asks, if they can roll out credit unions at universities across the nation? What if indeed.  Not only would that get students familiar with credit unions it also would provide a stream of trained potential hires for credit unions.

The hope is to launch the credit union in the fall, a date that had been May but the coronavirus epidemic has pushed that back.

Pankhaniya and his fellow students also need to raise around $55,000 more to meet NCUA’s capital requirements.

It’s an exciting story. Listen up

Along the way, we discuss CUNA’s “Open Your Eyes” campaign – hear our podcast with Teresa Freeborn on this.

Know too that a recent podcast guest, Bill Kennedy, is a booster of this effort. Hear him on students and their need for mentors here. 

And to learn more about start up Maine Harvest – now successfully chartered – listen 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

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

How could we build a lending tool that anybody could use?

That is the driving thought that led Sherif Hassan to form fintech Capiform and the timing could not be better.

That’s because, with the Covid-19 pandemic and the ensuing recession, suddenly credit unions are awash with savings deposits (as investors flee equity markets) and they also see a rush of loan applicants, for everything from Covid-19 triggered SBA loans through equipment leases.

How to efficiently handle the volume?

Know that right now deposits are arriving at much large volume than are loans at credit unions – despite the member needs.

Remember, too, mega banks, for the most part, have scant interest in “small” loans which to them often means under $250,000. But to a typical credit union that size loan is ideal and even smaller may be better.

But the mega banks shy away from those loans because they don’t see how to make money on them.

How could a credit union hope to? That’s where Capiform’s tools come in, where the borrower does much of the work and that’s augmented by computer tools (that verify income, check identity, etc). Much of the process is automated. According to Hassan, using his tools, a credit union could easily process 10X more loans, maybe 20X, daily without stressing staff who would engage only in higher level tasks such as verification and loan approval.

Adds Capiform, “Capiform’s Lending-as-a-Platform empowers you to scale your lending portfolio immediately, configure underwriting instantly and deploy new compliance & product guidelines.”

Sound good?

You bet and the timing is so right.

In this podcast you will hear about how the Capiform tools were developed, what they do and how, and the real benefits they could bring your credit union.

Listen up.

Want more info? Contact Capiform at its website.

In this podcast there’s mention of the David Chang podcast.  Listen here.  Note: Chang uses many four letter words. Not for delicate ears.

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

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

by Robert McGarvey

The NCUA lit this bonfire when in early May it tweaked the criteria for a credit union to win designation as a low-income credit union. That matters because an LICU gains significant flexibility in how it can do business, notably it can accept deposits from any source and gain exemption from aggregate loan limits on member business accounts.

Remember the NCUA change is a tweak, nothing more. What the regulator did was change the rules to allow counting of Post Office Boxes as addresses. Before, that was a no-go; only street addresses counted. It is believed this tweak will allow counting of more military personnel, many of whom are said to use PO Boxes as addresses.

You might think that in the midst of the nation’s worst economic collapse in 90 years, there would be applause for this NCUA broadening of the criteria for qualifying as a low-income credit union.

You would be wrong, however, because the Independent Community Bankers of America (ICBA) sees a Trojan horse conspiracy. They think credit unions are using the benign appearance of servicing low-income segments—which few oppose—to forward an agenda letting credit unions engage in “unbridled commercial lending.” Lots of it, in fact, complained ICBA in a statement by CEO Rebeca Romero Rainey, in which she implores Congress to review the NCUA action.

ICBA went on: “Today’s sudden National Credit Union Administration move to change its methodology in designating low-income credit unions benefits neither low-income Americans nor military personnel—but the largest, most growth-obsessed credit unions, which continue to be subsidized by taxpayers.

“The NCUA’s changes—made without a formal rule subject to public review and comment—is another example of this captive regulator expanding the powers of credit unions well beyond the limits established by Congress to justify their tax exemption.”

Ouch.

CONTINUE READING AT THE CU2.0 BLOG

by Robert McGarvey

The annual J. D. Power U.S. Retail Banking Satisfaction Survey is out, and most years that is an occasion for a big yawn among credit union executives. Why? Because the report usually is a scorecard of how the big six banks are faring. And who else cares about that?

But this year is different. This year is the era of Covid-19. It’s a time when, suddenly, across the nation, many financial institutions have shuttered their branches and they are pointing customers and members to digital banking, meaning mobile and online.

J.D. Power sets up the battle line that this shift draws: “Now, as the COVID-19 pandemic places constraints on in-person retail banking and forces customers to increase reliance on digital service channels, banks are facing an important test. According to the J.D. Power 2020 U.S. Retail Banking Satisfaction Study… 52% of retail bank customers classified as branch dependent before the COVID-19 pandemic, and successfully transitioning them to digital—without compromising customer experience—will be critical in the weeks and months ahead.”

“With fewer customers visiting branches, it will be important for retail banks to replace the in-person service they would have provided with personalized services delivered instead through digital channels,” added Paul McAdam, senior director, banking intelligence at J.D. Power.

Read that again. McAdam is in effect saying, go digital or perish.

How is your credit union doing?

CONTINUED AT THE CU2.0 BLOG

Bill Kennedy has spent a credit union career moving from institution to institution. He has worked at 11 – “6 or 7 were turnarounds, 1 was a startup,” said Kennedy.

Often he’s been CFO, and he has also served as CEO. He’s seen a lot in his years at and near the top.

Know this about this podcast: Kennedy speaks his mind and he doesn’t soften his opinions.

And he has a very strong opinion about how many credit unions will close in the next year, mainly as a consequence of coronavirus.  It’s a big number. You want to hear it.

Along the way he says a huge credit union problem is poor board quality – and he does not mince words about that.

He also is worried about the industry’s comparative inability to attract smart young professionals as employees – the industry is aging out at a time when communicating with young consumers is paramount.

He asks as well how many young professionals you have mentored. He says he has mentored 80+ in the past 25 years.

That will be critical because he predicts around half of senior credit union executives will retire in the next few years. Who is on deck to fill their jobs? At many credit unions the answer is nobody – and that, by the way, is another reason many credit unions will close.  There will be a shortage of qualified senior executives.

Think this is a bleak podcast? It’s not a cheerful one. But Kennedy’s are provocative ideas you need to hear.

Hear the Kennedy podcast here.

Mentioned in this podcast is retired SECU CEO Jim Blaine – his podcast is here.

For a different perspective on boards, there’s the John Pembroke, CUES, 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.comFind out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto

From the future of branches (maybe brighter than you fear) to the profound impacts Covid-19 may have on your credit union, this conversation with longtime banking analyst Bob Meara, now a senior analyst with consulting firm Celent, will get you thinking.

For starters, accept that very probably Covid-19 will work lasting changes on how your credit union does business – and very probably there will be growing acceptance of digital tools that will last beyond the pandemic.

Face to face as a primary interaction will lessen as a result of the virus, he said.

But Meara also is something of a branch optimist, especially regarding credit unions.  Some mega banks are unquestionably over branched, he admits, but few credit unions are.  What he sees is that many credit unions need to make progress in deploying branches more effectively as tools for relationship building.

Members don’t need branches for transactions.

But many still want them for relationships, advice, help.

Along the way, Meara tells why video tellers have been something of a failure, and also why digital only banks mainly have sputtered.

But he also talks about where credit unions need to play catch up – think digital transformation and, especially, digital account origination (opening a new account needn’t necessitate a branch visit!).

Hear the Meara podcast 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.comFind out more about CU2.0 and the digital transformation of credit unions here. It’s a journey every credit union needs to take. Pronto