What banking futurist Brett King paints is a dystopian picture of financial services tomorrow where, increasingly, consumers want frictionless money transactions, they don’t give a hoot about banks vs. non banks, and they have no interest in a relationship with a one stop financial services provider.
Credit unions still think they are special. Think again, warns King.
What matters today is digital. Period. Sure, King, as the founder of digital bank Moven, has a bias.
But he very probably is right.
Financial institutions are getting left behind as the biggest banks get bigger – lots bigger – and fintechs gobble up profitable slices of the financial services pie.
Along the way in this provocative conversation, King talks about the new Apple credit card, why Apple Pay has stalled, and the inevitability of real time banking.
It’s a look into tomorrow.
And, yes, it may sound like a horror film.
But at least when you know what’s ahead you can start preparing for it.
Probably your principal travel providers – airlines, hotels, online travel agencies, and the like – know a lot of information about you, very sensitive information, perhaps including passport number, driver’s license details, credit card information, and loyalty program details.
The bad news is that, increasingly, travel companies are hacker favorites, ranking second or third among the chief targets.
You already know that hotel restaurants, bars, and gift shops are under relentless assault – so much so that my loud advice is to never use a debit card in them, really try hard not to use a credit card, and pay cash to maintain safety.
But what IBM is talking about is something different. Sophisticated nation state players are suspected of hacking into travel company databases in a search for information about travelers.
“I don’t see that slowing down any time soon. If you’re a nation state, you’re building large scale databases of people because the more you understand about people, the more you can manipulate and extort,” said Caleb Barlow, an IBM vice president, at a recent Amadeus event in Madrid.
He added, according to Phocuswire reporting on the event, “Not all attacks want to leverage the information straight away. Nation states might want to use it in 20 years.”
That has to scare you.
Do you want a nation such as Saudi Arabia or Hungary or Russia to have your travel history and preferences at their disposal?
Do you want the US to have it?
A morsel of good news is that, recently, per IBM’s Barlow, many hackers have shifted from data exfiltration to cryptojacking, which is putting victim computers to use mining cryptocurrencies for money.
Travel sites too appear to be victims of this. What impact might that have on travelers? Hard to say, since currency mining as such shouldn’t impact a consumer’s data. But when a hacker has control of the computers it stands to reason he/she would also pull out useful data to keep or to sell, simply to optimize the financial return of the hack. So I don’t see cryptojacking as mutually exclusive with data exfiltration. Not hardly.
Exactly what can you do to protect yourself in an age where travel sites are getting hacked?
I play with the idea of registering under a false identity, using, say, a good quality but fake Irish driver’s license and a fake passport. The problem of course is that fakes won’t pass scrutiny by government employees such as TSA. At a hotel, sure, I believe fakes generally will work fine. Note: I am not advocating scamming hotels, just creating false data trails that when stolen by a hacker will deadend.
But then there’s the problem of my data that already is in the system at multiple hotel groups, airlines, and assorted other travel vendors. A new, fake identity won’t erase the past, accurate data.
So here’s what I am doing in response to the epidemic hacking at travel providers: going online, stripping out all data that isn’t needed and filling in false data where possible — challenge questions for instance. There is no need whatsoever to use your father’s real middle name in a challenge. The only requirement is knowing what fake name you used.
My sense is that it is easier and safer to use substantial fake data with hotels. Not so much with airlines.
And keep remembering that ever more travel company data is in the hands of hackers.
Remember too that the hackers often appear to be highly skilled and that means the worse news is that very possibly there are plenty of hacks that so far have gone undetected. But our data may be leaking out.
That puts the burden on you. Keep monitoring financial accounts and regularly – at least yearly – look at a credit report. I also check my credit score monthly (free via various banks, credit unions, and credit card issuers).
But the sticky issue is if the thefts are by nation states with no intent to monetize the data via fraud it just may be impossible to divine what data has been copied.
Teresa Freeborn, CEO of Xceed Financial Credit Union, chairs the CUNA effort which she – make no mistake – sees as crucial in the longterm survival and prosperity of credit unions.
The campaigns blends research with marketing – much of it online – to reach out to a generation of consumers that simply may not even consider credit unions as a financial services option.
Ouch. It hurts to be ignored. But that is a credit union reality and that also is the why of the CUNA campaign.
A central mission of the campaign: raising consumer awareness of the benefits of credit unions as a different, better category of financial services providers. That’s ambitious. But it just may be critical in the industry’s survival.
In this podcast Freeborn tells the story of the campaign’s launch, it’s current status, and it’s hoped for future. She also blends in her perspective as the longtime CEO of a large credit union.
Alex Stone’s business is this: helping new cooperatives to start and helping existing ones to mature and do better. That’s the core mission of CooperationWorks! where she serves as executive director.
How is she doing? The podcast opens with a simple question: how many new co-ops form in a year? Stone explains exactly why that question is a lot harder to answer than you might think.
For Stone cooperatives got into her being early, during her student days at UC Berkeley where she lived in co-op housing and was also involved in a food collective.
Cooperatives, she saw, just work better in many cases.
That’s why she relishes her role in helping all kinds of cooperatives and in this wide ranging podcast she discusses worker owned cooperatives, housing co-ops, grocery co-ops and a lot more.
A key CooperationWorks! function is providing training to would-be cooperators and also board members. We just aren’t born knowing how to prosper in a cooperative system – but we can learn how to do it.
Another role of the organization is gathering data about co-ops but, as Stone readily admits, data is slim in many cases.
Buckle up for a fast ride into cooperatives today and tomorrow.
Like what you are hearing? The Cooperators Podcast seeks sponsors and supporters to help us spread the word about cooperatives and how they often are the better way. Contact Robert McGarvey to find out what you can do to sustain this podcast.
Two facts about my state when I return home after a multi night business trip: I am tired, exhausted if the trip has been over a week, and I am hungry for a decent meal.
You probably are too. Exhaustion and hunger are baked into today’s business travel.
Tell me again about the sybaritic joys of business travel.
I still hear people describing business travel that way. I just don’t see it in my life.
Did I ever? You bet. Forty years ago, when I was introduced to business travel as a cog in the oil industry, we lived pretty good. Our hotels were mainline brands – think Hilton and Sheraton and Hyatt — but we ate well indeed and we drank very, very well (too much, honestly, but this was the Mad Men era).
No more.
We stay in the same level hotels – in my world a J.W. is a stretch and don’t ever try for a Ritz Carlton – and the big brand hotels are fine, honestly, at least by my standards.
I do grumble about how little I sleep and I am not alone. None of us sleep well, apparently.
That’s partly why I am so tired when I return home after a trip.
A new Intercontinental survey reports that we sleep on average five hours and seventeen minutes per night on the road. Some of that sleep deprivation is just our discomfort in an unfamiliar environment but a lot of it is because our schedules are jammed nowadays. Yes, I am old and I recall when the work day on a business trip ended at 5 p.m. when it was time to occupy the hotel bar (and when employers did not question bar tabs, they just reimbursed them).
But we are in a different era where every business travel day is scripted and long.
But the impact on sleep is just the start of the impacts on how we live on the road.
What has really plummeted downhill is the eating and drinking.
I wish I could say, oh, on my latest trip to New York, I dined on a great steak at Wolfgang’s but that rarely happens (in fact I recall the last time I did, maybe seven years ago).
Time is the issue. Not so much money but time. It goes back to the heavily scripted days which, for me, usually start around 5 a.m. Why so early? There’s email that needs replies, new emails that need to be written, and I know if I don’t get them handled in the early morning they won’t be done. So I am accustomed to waking up when it’s still dark, fiddling with the inroom coffee maker, and getting on email.
About 7 a.m. I am out and looking for a bagel or a hard roll, usually for a solo breakfast, sometimes with a business contact.
Then on to meetings.
Lunch? You bet. According a report from business dining consulting firm Dinova, dining is the third biggest category of business travel expenses (after lodging and airfares); it totaled $77 billion in 2016. So eat we do on the road.
Eat what? Per Dinova, ” For many, local experiences and flavors top the list; a full 77% of business travelers said they prefer to ‘eat like a local’ while traveling. Another 52% said they search for restaurants that are popular with locals, and 49% research food that is unique to their travel destination.”
Sigh. Not me.
Sure, when I can, I head to Katz’s in New York for a pastrami, or I grab a hot dog at Pink’s in LA, or an Italian beef sandwich in Chicago.
But often I can’t. It’s about time. Time that I don’t have.
The Certify expense analysis report more accurately reflects where I eat. Starbuck’s is its number one dining venue. McDonald’s is number two. And I am baffled that my go-to doesn’t place in the top five: Subway. That’s where I eat pretty much every day on a business trip.
Could I expense more than I do? Yep. But I don’t have the time to eat fancier meals. Many nights I’ll grab a Subway sandwich and a diet soda, head up to my room, and work on email and blogs between bites.
Glamorous? If you say so.
But that’s my travel reality and it’s the reality of many of the travelers I know.
Ask me where I’ve eaten my best meals on business trips in recent years and the answer is loud: the Centurion Lounge in Las Vegas or Dallas, where I have supped many times.
How good is the food? Why ask me. I already told you what my best is and that should tell you my qualifications.
Don’t believe me. Believe Frank Shipper, an emeritus professor at Salisbury University in Maryland and editor of a book, Shared Entrepreneurship.
Shipper is a scholar who has spent years studying worker owned businesses – both ESOPs and worker cooperatives – and he really is convinced that in many cases worker owned businesses just outwork their conventionally structured competitors.
Why aren’t there more worker owned businesses? Partly it’s ignorance. Most of us just don’t know that much about them, and many of us confuse them with communes.
There also are issues around raising capital, especially with worker cooperatives.
Shipper, for his part, has labored hard to dispel the ignorance. And that’s what this podcast is about.
Like what you are hearing? The Cooperators Podcast seeks sponsors and supporters to help us spread the word about cooperatives and how they often are the better way. Contact Robert McGarvey to find out what you can do to sustain this podcast.
Consider this podcast a crash course on credit union lobbying, 2019 style. Our instructor: Patrick Conway, CEO of the Pennsylvania Credit Union Association, a very large league with upwards of 370 members.
PCUA lobbies both in Harrisburg, the state capital, and in Washington, DC.
A lot of what PCUA does however could be considered credit union education. For instance, PCUA has played a lead role in the new Philadelphia ID card – designed to give Philadelphia residents a low cost ID card. Will it be adequate for opening a new account at a credit union? That’s still being sorted out and PCUA is in the mix, offering education and counsel to its members.
PCUA is doing likewise with cannabis banking, a topic of significant interest to Pennsylvania credit unions.
Along the way we also talk about credit unions haves and the have nots and, in Pennsylvania, assured Conway, the big credit unions offer plenty of assistance to smaller institutions.
Other topics on the agenda: credit union tax exemption, the CUNA-league relationship, and what credit union can do to win greater consumer acceptance.
Honestly: I do not answer the inroom phone. Nor do I check the messages. I assume the call isn’t for me and if it is, it’s unwanted hotel sales and marketing. Easier just to ignore.
As USA Todayreported last May, “The hotel guestroom telephone is being ignored more and more these days.”
You bet.
So for some years I have advocated yanking the things out of rooms – and what’s caught my eye is there now, finally, is a rush to reinvent inroom phones and some of the ideas seem plausible.
But are the phones themselves too late to save?
Stop for a second however. Answer a key question: Would you miss the inroom phone if it vanished? Some say we would.
“Imagine walking into a hotel room that had no phone,” Chad Collins, VP of sales, Americas for VTech Communications, told Hotel Management for an August 2018 article. “While millennials and gen X guests are quite comfortable with emerging technologies and may not notice, the baby boomers and [the general public] are generally more comfortable with technologies that they are familiar with (i.e. guestroom telephone) and would consider it a fail to not have a phone in their rooms. This will remain the case for many years.”
Nah. Personally I would not notice that the thing was gone and I’m a leading edge Boomer. No fail in my scoring.
What about you? Do you really, truly, want that antique in your room?
Accepted by most experts is that we no longer use inroom phones to make outside calls. Maybe for inhouse calls. But outside, not so often.
In fact I cannot remember the last time I used an inroom phone to make an outside phone call. I would say it certainly was in the last century (I started carrying a cellphone everywhere in 1999). And, yes, I have more recently used an inroom phone to make a dinner reservation at an on property restaurant. But not to call other restaurants.
So the inroom phone makers are deep into a rethink of what functionality the device needs.
Joe Zhang, president, Bittel Americas, told Hotel Business: “We see the telephones in the future becoming simplified—speakerphone modules equipped with a number of one-touch, guest-service keys, with or without the physical dial pad.”
I like that – it might even persuade me to use the phone.
The key will be simplicity of use. If I have to think about how to use the thing I assure you I won’t – I won’t think about it and I won’t use it.
But very probably what I would much prefer in my room is an Alexa or Google Home device – and, yes, they can be put to use to make calls too.
I have both at home, use both daily, and would welcome seeing them in my next hotel room.
Can they be made easy to use? Sure.
And we know how to use them anyway. Amazon claims it’s sold over 100 million of them. We’re comfortable with them – concerns about spying aside – and it would be easy to build into an Alexa skills for opening hotel room blinds, adjusting the thermostat, turning on and off lights, and, yes, calling room service.
In my home I use those devices to turn lights on and off, to tell me the weather, to set a wake up alarm, to make phone calls, and it’s easy enough to set up to turn on the TV, to adjust the room temperature, and down the long list of proposed to-do’s for inroom phones.
There’s a pointed respect in which rethinking the inroom phone is a bit like rethinking the horseshoe in 1927.
Especially when the smart home devices are maturing fast and winning lots of users.
That’s my vote. Yank the phone – even if it’s a reinvented edition – and give me Google Home or Alexa.
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 Northern California 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 sidestep 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.
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.
Like what you are hearing? The Cooperators Podcast seeks sponsors and supporters to help us spread the word about cooperatives and how they often are the better way. Contact Robert McGarvey to find out what you can do to sustain this podcast.
