McGarvey's Words: Journalist…Podcaster..Speaker

by Robert McGarvey

Does your comfort – or your employer’s costs – come first in making choices about business travel?

Every trip of course involves a panoply of choice. Fly economy or premium economy (or, lucky you, business class)? Stay at a Marriott or a Courtyard? Take Uber on the ground or the subway?

In recent years many business travelers have grumbled that to their employers, cost always prevails. But just maybe that is no longer true.

Certainly there’s a positive sign: many travel managers had already indicated they weren’t buying airline basic economy fares for business travelers. The gripe there however is that in many cases the total fare actually edged higher when travelers were coerced into flying basic economy.

The bigger news out of a recent survey of Global Business Travel Association buying members – conducted by GBTA, in association with Travel and Transport and Raditz – suggests that many companies are more broadly embracing higher comfort for their business travelers. The survey’s topline finding: “60 percent of respondents said that traveler satisfaction is the most important factor when evaluating corporate travel.”

The survey continued: “Traveler satisfaction beat out hard dollar savings (47 percent) and policy compliance (40 percent), which were the next two considerations. Interestingly, traveler satisfaction remained the number one factor.”

“The best policies are in place to protect employees and help a business achieve bottom-line growth, but when road warriors are running on fumes, they can’t deliver those wins that businesses need to remain healthy. When they’re satisfied and feel supported, they’re more productive and the bottom line is healthier as a result,” said Joel Bailey, SVP, Customer Solutions with Travel and Transport.

Absolutely right.

And companies, flush with profits in today’s economy, are apparently recognizing that a comfortable employee is a better employee. Will they think that way in the next downturn? Almost certainly they won’t but at least enjoy today’s largesse.

Fly from Newark to Shanghai – 15 hrs, 5 minutes on United – in economy and you will not arrive in China rested and ready to battle. You will arrive seriously disadvantaged.

There just is much more space in premium economy – wider seats – a tastier menu, and it simply is a less hectic setting. The price difference is $1000 for the basic to maybe $1800 to $2000 for premium economy.

But there really is no number to reflect the much higher employee comfort.

That’s probably why – in my impressionistic surveys – premium economy is selling out of many Shanghai runs this winter while plentiful coach seating remains. Many employers are bellying up to this bar and parting with the shekels for better employee comfort.

As for hotels, frankly I don’t need a five star hotel on the ground – but I sure prefer a three or four star over a no star or one star. If I were flying to Montreal tonight I’d stay at the Hotel Nelligan, at maybe $175, even though in Montreal winters there are plenty of rooms in town for under $100. I just know where my comfort zone is. And note I don’t need the $300+ hotels either; neither do most business travelers.

But I much prefer quiet, well located, well run hotels over their bargain brethren.

As for ground transportation I am a pennypincher’s dream. In Phoenix, where I live, I take the light rail to/from the airport. In San Francisco I take BART. At Newark Airport I’d probably take the PATH. Often public transit simply is faster than a taxi or Uber and it sure is cheaper.

When it comes to food, people know I’m a skinflint on business trips. A Shake Shack supper is a splurge. A Starbucks breakfast is the norm. Of course if it’s a shared business meal, that stinginess is discarded.

So maybe my expenses balance out. Some columns are slim, others a bit more plump.

Either way, though, I know that those who pay for my travel get a much better deal when I am a cheerful traveler. Put a frown on my face and my value plummets. So there is more value to be had when I am cosseted than when I am tossed stale bread crumbs and a sleeping bag.

Probably true for you too.

Just saying. Employers might take note. It’s how to get value for money.

By Robert McGarvey

Now you see ‘em, now you don’t.

Somehow it feels as though I am writing a period novel about the disappearance of an entire type of financial institution right in front of the eyes of millions – executives, regulators, consumers, and just maybe you too, dear reader.

Surely that plot is too strange to be believed.

But exactly this may in fact be happening.

Th nation’s credit unions are in real trouble.

Trouble as in life or death.

It starts with superficially good news.  Mergers in 2018 were down from the prior year.  Trumpets blare at NCUA HQ.

In 2016 and also 2017 200 mergers were approved per year.  In 2018 the number fell…to 192.

But, wait, it gets worse. Exactly four credit unions merged out of existence because of their rotten financial condition.  It was merge or die. And the regulator always prefers a tidy merger. Avoids bad headlines. Members accounts conveniently roll into another credit union. What’s not to like?

Actually there is nothing not to like about tidy mergers that are driven by financial duress.

But there is plenty to dislike when healthy credit unions merge out of existence and, apparently, in 2018 188 healthy credit unions did exactly that.

Why does a healthy credit union simply decide to vanish?  

The other question has to become: at what point are there so few credit unions that the designation ceases to make sense?

Maybe the better question is, when will we hit that point?

Do the math. In 1960 there  were around 10,000 federally chartered credit unions.

Today there are around 5530.

Yes, there are more credit union members than ever – but how many of them are comparatively inactive borrowers of auto loans? How many are just there for the free checking? How many don’t know they belong to a credit union and that is a vastly different thing than a bank?

If 2000 credit unions vanish in the next decade – and that seems entirely possible – by 2030 there will be perhaps 3500 credit unions.

Is that enough still to matter? Is it enough to warrant its own regulator?

What’s especially odd about many of today’s mergers is that they seem pointless.  When a $375 million credit union merges with a $600 million one in New England, what’s the point? At $1 billion in total assets can the merged institution go toe to toe with Chase? Of course not. That credit union will not be the largest in its state. Nearer the 8th largest.

So what’s the point?

What’s the point of the increasing number of institutions that have stripped credit union out of their name? And how’s a consumer supposed to know that the institution is different?

The real trend from where I sit is that the top five or ten banks are getting bigger and bigger.

What happens next already is known.

We saw similar in the world of department stores – remember when seemingly every state had a home grown mini chain?  No more.

Look at auto dealerships. A generation ago, dealerships often were family owned and the family owned just one. Now it’s a business dominated by 100 or so very large groups that own many dozens of dealerships.  

Similar is happening in financial services- but I see no evidence that bulking up with a merger will help a credit union compete more vigorously. In fact mergers of healthy credit unions are triggering irritations among bankers – and there also is mounting grumbling about pay to play compensation schemes for some credit union executives in mergers.  

Neither does the credit union movement any good.

What I do believe is that a smart, well managed credit union that knows its community and is visible in its community can continue to do well. Capitalize on local, intimate scale, community focused and that is a massive differentiator from the money center banks.  

Join other credit unions in sharing resources that better control costs and also to attain needed skills/talents.

And look broadly for opportunities.

Credit unions that go after consumers whom the big banks don’t want as customers also may do very well. (Listen to my podcast with Cathie Mahon, ceo of INCLUSIV, the association of community development credit unions.)

There are ample reasons to be optimistic about the future of credit unions – if only they stop cutting their own throats.

Small can indeed be beautiful. And successful.

Podcast: Play in new window | Download (Duration: 29:42 — 40.8MB)

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After 26 years at the legendary Union Cab co-op in Madison WI, John McNamara headed west to pursue a new mission: helping new co-ops come to life and also helping existing co-ops to survive.

What’s fascinating is how the Northwest Cooperative Development Center is bringing to life what might seem surprising co-ops such as mobile home owners who join together to create a co-op to buy the land their homes sit on and also home health workers, to name two areas where NWCDC has had great successes.

Along the way in this podcast McNamara throws light on a lot of what’s needed for a co-op to tick. He describes being a co-op manager as akin to Ginger Rogers’ role where she did everything Fred Astaire did – “but backward and in heels!”

It’s a fast romp of a guide to co-operative success. Listen in here

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.

The McGarvey Credit Union Podcast: CU2.0 Podcast Episode 23 Gabe Krajicek of Kasasa http://bit.ly/2SRxtRu

By Robert McGarvey

More of you lately have been asking me the same question: where to eat at Sky Harbor Airport, Phoenix – which, for the record, is the nation’s 13th busiest airport – just behind Newark (11) and Orlando (12) and ahead of Miami (14) and Houston (15).

Makes sense that the questions are getting asked now, too. This is Phoenix’s busy season, the town is hopping with meetings, events, and Spring Training ball. There also have been recent, big culinary changes in Terminal 3.

Mainly, too, Sky Harbor is a pleasant facility. I can rant about JFK and am no fan of BWI but Sky Harbor usually seems well run, even calm.  I cannot even complain about the TSAs at Phx.

Can similar be said about the food?

Commendable is the airport policy to nurture local chefs.  Certainly there are the national chains – sometimes I believe there is a law requiring Starbucks at all airports – but in Phoenix your best choices may be places you’ve never heard of, by chefs you’ve also not heard about.

Thus the real need for local guidance.

Sky Harbor has three terminals and they are not equal. Terminal 4 is the busiest by far, handling perhaps 70% of Sky Harbor’s passengers.  

The best food choices, not surprisingly, are found in Terminal 4.  

By far the best.

AZCentral.com reporter Lauren Saria even managed to file a piece on the top 10 dining choices at Terminal 4.  There actually are good options.

A top choice is Barrio Cafe via chef Silvana Salcido Esparza who may be cooking the most thoughtful Mexican food in Phoenix.  

Also a good idea is Zinc Brasserie. Wrote Saria, “Zinc easily exceeds most expectations for an airport eatery. For a starter don’t skip the French onion soup gratinee, and for a more affordable entree the Zinc Burger can’t be beat. It comes with your choice of bacon and blue cheese or truffled gruyere and a side of crispy shoestring frites.”

It’s breakfast time?  Lucky you. Eat at Matt’s Big Breakfast, the airport outpost of a downtown Phoenix classic that has won its fame by serving very good breakfast staples such as scrambled eggs and bacon, what I always order.  The execution just is precise.

Save room for a stop at Sweet Republic – an outstanding local ice cream maker.  Really good ice cream.

And have a cup of coffee at Cartel. Wrote Saria: “When it comes to craft coffee, you’d be hard-pressed to find a more serious operation in greater Phoenix than Tempe-based Cartel Coffee Lab.”

If you have to eat at the airport in Phoenix, you will do well in Terminal 4.  You will do less well at the other terminals but you won’t starve.

Terminal 3 is a lesser used terminal. I can recall flying out of it only a few times.  That is reflected in the dining options.  But the good news is that, lately, there’s been a rush to open new venues. That’s giving diners much better choices.

Right now I would recommend Shake Shack and the Parlor Pizzeria (the airport location of a much praised Phoenix pizzeria that has sometimes been called the town’s best and that means better than Chris Bianco’s joints which is something. I don’t agree with that but Parlor is very good indeed).

I am also a longtime Shake Shack fan – so I won’t grumble when I can eat there.

Otherwise, Terminal 3 has a lot of blah choices – Starbucks, Habit Burger, Panera, and you get the drill.  Here’s the complete list.  

My advice: flip a coin. Heads you go for pizza, tails for a burger.  Forget the other options.

Stay tuned however because shortly a new Terminal 3 restaurant created by James Beard award winner Christopher Gross – called Christopher’s – is slated to open. That will demand our interest. I know I will give it a try.

Also slated to open soon is The Tavern, a new restaurant via Mark Tarbell, a local Phoenix celebrity chef. Mainly a burger, sandwich and salad place but Tarbell will try to lift it beyond the humdrum. I’ll stop here too when it opens.

Terminal 2 also is a lesser used terminal.  The best choice is NYPD Pizza, and fans of chef Silvana will want to stop at Barrio Avion.  Other choices include Wendy’s and a grab and go.

Terminal 2 is a backwater. Obviously. But at least you can get a decent burrito.

At what cost? Excellent question. Consumer alert: in December the Phoenix City Council repealed a policy that set airport restaurant prices at street plus 10%.  Restaurants may now set their own prices. So regular airport diners almost certainly will detect higher costs.

Is the food worth it? Remember my rule about inflight food: just don’t. Don’t eat the stuff, certainly not on any domestic flight.  So that often means eating at the airport.

By Robert McGarvey

The big guns are blasting, consumers are switching to p2p, mega banks are cashing in and where exactly does that leave you?

Several reports now are out on p2p and the inescapable conclusion is that Americans like p2p.  A lot. Many billions of dollars worth.

In a report written by Cornerstone’s Ron Shevlin and commissioned by Q2, Shevlin said “Consumers will rack up roughly $478 billion in P2P payments in 2018—a little more than half of that going through their banks or credit unions.”

Hear more from Shevlin in his CU2.0 podcast here.  It’s a lively look at “Is the Party Over?”

Surprisingly, PopMoney – once written off as dead by many – is at least on life support, per Shevlin’s research.  He said 7% of consumers use it. Will that number grow? Hard to say but PopMoney does not look like a big winner in this race.

The big winners are financial institutions – account to account transfers – and also big bank owned Zelle and PayPal owned Venmo.  Also PayPal itself.

Per Shevlin’s numbers 48% of consumers use PayPal.  27% use bank p2p. 22% use Venmo. 12% use Zelle.

But money talks and in 2018 transaction volume Shevlin shows banks ahead at $172 billion in p2p.  PayPal logs $142 billion. Zelle comes in at $122 billion. And Venmo lags at $64 billion.

A Pymnts p2p report offers another calculation: “Venmo posted an 80 percent spike in transaction volume, hitting $19 billion in the fourth quarter of 2018, according to PayPal’s most recent financial earnings release. When it came to total P2P volume, including transfers sent through the core PayPal service, the Q4 volume hit $39 billion.

That last figure was ahead of Zelle’s reported payment volume of $35 billion during the fourth quarter of 2018, but there’s a hitch to that — that $39 billion was for the entire PayPal network, not just Venmo for that quarter.”

Slice the numbers as you wish, a clear takeaway is that a lot of consumers are all in on p2p.  

Another takeaway, per Shevlin, is that this is not a winner take all contest.   “Roughly half of consumers between the ages of 21 and 53 use three or more providers. In contrast, just about a quarter of Boomers do so,” wrote Shevlin.

Surprised? Don’t be. How many of us use just one credit or debit card? Personally I have three or four in active use and that’s a rather typical number.  Apparently similar shows up with p2p tools too.

Wrote Shevlin: “Banks and credit unions are getting a share of the [p2p] pie—and the expansion of Zelle may further drive volume to financial institutions—but they will have to operate in an environment where consumers make choices on which P2P provider to use on a transaction-by-transaction basis, and will have to learn how to provide value in a multi-provider world.”

Incidentally, credit unions and smaller community banks are in fact embracing Zelle.  The Pymnts report noted that, per Zelle, 77% of FIs in its network state assets equal to or less than $1 billion.

The bottomline action item that emerges from the new research is that your credit union needs a p2p strategy. Sitting on the sidelines is not a smart move.  Consumers, especially younger ones, want p2p but there is ample evidence that many Baby Boomers too are using the tools (if only to shift money to their young relatives).  

Is PopMoney alone good enough? So think both of the credit unions I belong to — it’s the only p2p tool on offer by them – but the reality is that I use PayPal multiple times monthly. I do not recall the last time I used PopMoney but it was many years ago.  I also have Zelle connected to a Chase account.

So my credit unions are sidelined from my p2p, except that one is used to fund some PayPal transfers. A thankless task.

The question for credit unions is simple. Do you want to be an active player in p2p – or do you want a minor role?  To go active my advice is to look hard at Zelle and definitely also PayPal and Venmo.

P2p has become a mainstream money movement tool.  It shouldn’t be ignored. Give your members the tools they want and will use. Ask them what they want. And listen to them.

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

Have I stumbled onto Canal Street?

That thought popped into my mind on a recent flight as I witnessed attempt after attempt by the flight attendants to sell me stuff, lots of stuff. Everything from a credit card (note: I already have the thing!) to food (note: I don’t eat airline food) to alcohol.

Can’t a passenger get a little quiet?

The facial expressions of the crew are worth observing.  Some really get into this – presumably there’s a spiff system where the more they sell, the bigger the bonus – but the majority seem downright embarrassed.

As they should be.  I would not want to do the Canal Street hustle and I wouldn’t wish it on anybody else.

Then a Skift story popped into view: “In-Flight Pandering Erodes Airline Passenger Loyalty.” That’s because crews are turning up the heat.

According to Skift, “Several reports on social media share that captains and first officers on American are now making announcements on behalf of flight attendants while last week, a blogger on Boarding Area documented a credit card pitch that was flat-out wrong.”

Ouch.

It gets worse. On Frontier flight attendants now are actively soliciting tips. Bloomberg even asked the airline if, what the hell, is this sanctioned behavior and oh it is.  According to Bloomberg, “‘We appreciate the great work of our flight attendants and know that our customers do as well, so [the payment tablet] gives passengers the option to tip,’ said Frontier spokesman Jonathan Freed.”

Word of advice: just don’t. Don’t tip. I have long advocated – indeed lectured on — the importance of tipping hotel housekeepers, bellmen, et. al. but inflight is off limits in my mind. What, should we throw a deuce at the flight attendant when he/she bring us a glass of water? No.

Of course too we are getting ripped off when we buy stuff on a plane. The UK Independent, using data gathered by Kayak, wrote this about inflight purchases: “The report from travel search engine Kayak focused on the food and beverage offerings on Ryanair, easyJet, Jet2, FlyBe and British Airways, comparing staple items on the airlines’ menus with the equivalent at supermarkets Tesco, Asda and Sainsbury’s. Some of the biggest mark-ups were on drinks. A cup of tea on Jet2 was marked up by 8,900 per cent (£2.70 compared to 3p at the supermarket); coffee on a flight with the same airline had a 1,321 per cent mark-up (£2.70/19p).”

The report continued: “EasyJet were found to sell muffins with a 900 per cent mark-up (£2.50 compared to 25p) and chocolate bars for 260 per cent more (£1.80 compared to 50p).”

And then a tip on top makes sense?

You think it’s bad on United, American, BA, et. al.? It could get worse. Korea Air apparently wins the title as the most successful inflight shiller, garnering some $143 million in 2018 inflight sales.

Mainly Korea Air rings its cash registers selling cosmetics, booze and health supplements.

Don’t think this goes unnoticed in Chicago, Atlanta, or Dallas. The Big 3 US carriers have to be enviously eyeing this easy money. That’s why my guess is that more of this 30,000 ft retail is coming our way as carriers look for ever more “imaginative” ways to sell to a captive audience. Of course nobody reads the seatback shopping catalog anymore – is there still one? – and nobody reads the inflight magazine, so now the airlines have decided to put stuff to buy in our faces, literally.

But I can tell you this: I do not remember the last thing I bought on a plane.  I have a faded memory of buying a carton of Silk Cut smokes on a BA flight years ago but that was when smoking inflight was okay and also when I still smoked (I quit in 2001) so forgive my haziness.

If we don’t buy stuff they won’t try to sell it to us.

Say that again, say it loud, say it proud.

Just don’t buy and they will quit.

Eventually.

Meantime, earplugs will block the din out.  That’s my advice.

McGarvey on CU Technology: CU2.0 Podcast Episode 21 Ron Shevlin on “Is the Party Over?” http://bit.ly/2Dh1vDz #creditunion

By Robert McGarvey

Direct question: if you were opening a new account at a financial institution today, for yourself, perhaps for a child or another relative, where would it be?

It can’t be at your present employer.

That’s the only exclusion.  

So where would you open it?

A few months ago I opened a new account at a Phoenix credit union with a branch closest to my home and when I opened it, I did not bother to put a five-figure deposit into a savings account because the rate was pitiful,

Still is.  0.5%. I just checked.

A simple checking account pays exactly 0.0.

Oh, and opening an account using only online tools at this institution proved impossible. I had to visit the branch to conclude the process.

Yes, I was determined to open a credit union account. So I persevered. Will other consumers? 

Look at your institution through the eyes of a prospective new account holder. What do they see?

Do you like what they see?

Hold that thought and now focus on this: Today’s email brought a press release from MagnifyMoney announcing its rankings of the best online banks.

Many of these are institutions with robust advertising and marketing budgets. Consumers know about them. Will that consumer think of them – or of you – when they want to open a new account?  And when they compare the best online banks with your offerings, how do you stack up?

The best online bank, per MagnifyMoney, is Ally which of course dates back to 1919 and its former name GMAC.  Its longevity is as good as just about every credit union.

Ally pays 2.2% on its savings account.  0.1% on checking. 0.9% on a money market account.

How do you stack up?

Also high ranking in the MagnifyMoney scoring are Synchrony, Goldman Sachs, Barclays, and Capital One 360.

Vio won honors as the best new online bank. It’s a division of MidFirst bank.  Savings pays 2.39%. It promises online account opening in less than five minutes.

Again, the question is: how do you stack up?

A shrewd consumer just might find the smart move is to open a checking account at your credit union – and to park other money in savings at Vio.

Many executives at credit unions see free checking as the gateway relationship that leads to other relationships. But what if it isn’t?  Especially not today when it it is easy for a consumer to shop around online and to open new accounts at a variety of institutions. Maybe one for checking, one for savings, a third for a credit card, and a fourth for a car loan.

Then where is your business plan that revolves around free checking?

About now exasperated credit union executives will shout that the consumer should open an account at a credit union, instead of a for profit bank, because that is the right thing to do and it helps keep more money in the local community.

Yes, absolutely true. I agree.

The trouble is, not that many consumers agree.

In fact research reported by The FinancialBrand is adamant that consumers “know diddly squat about credit unions.”

64% of non members are not familiar with credit unions.

33% say there aren’t enough branches. 25% say there aren’t enough ATMs.

30% say it’s difficult to find a credit union they can join.

Sure, it is easy to say the consumers just don’t know – but we already stipulated they don’t know diddly squat.

They don’t and that is what makes the moral imperative argument ineffective.  It just can’t be counted to persuade that many consumers to go with a credit union.

Why aren’t the trades, the larger CUSOs, and the largest credit unions pushing the credit union advantage? Why haven’t they mounted powerful – effective – campaigns? Why don’t we see high profile influencers who are happy to act as evangelists for credit unions and the cooperative way?

I don’t know why but I sure would like to hear from the big players.

Another question: why are many of the largest credit unions yanking “credit union” out of their names?

The bottomline is simple. Credit unions, to win new accounts, need to work very hard to offer products that are competitive with the offerings from the online banks.

That’s not fair? It ignores the costs involved with brick and mortar?

True enough.  So what should your credit union do if in fact you cannot match the rates offered by online banks?  Double-down on the credit union advantages. Make them the cornerstone of your advertising/marketing. Educate consumers about credit unions. Make it an ethical argument. Go local, go self-ownership. Those arguments will resonate with consumers who just may want to open an account in an institution where they are an owner rather than with an online bank with better rates.

Talk about the Rochdale Principles.

Sell cooperatives and credit unions because – really – they are the better way. And many consumers will get that message. But first you have to tell it to them.

Read here: http://bit.ly/2UG9OQx