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“ Providing Strategies for Success ”

“ Providing Strategies for Success ”. Growing Against the Grain: Best Practice Credit Union Thrival Strategies Utah League Annual Meeting March 14-15 th , 2014 Presented By: John A. Vardallas CAE,CUDE Professional Speaker/Business Strategist

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“ Providing Strategies for Success ”

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  1. “Providing Strategies for Success” Growing Against the Grain: Best Practice Credit Union Thrival Strategies Utah League Annual Meeting March 14-15th, 2014 Presented By: John A. Vardallas CAE,CUDE Professional Speaker/Business Strategist Founder/CEO TheAmericanBoomeR Group www.theamericanboomer.com

  2. Welcome Utah Credit Union Leaders! Chevy’s The Green Bay Packers Credit Unions Chevy’s The Green Bay Packers Credit Unions

  3. My First Car…….

  4. My Team…….

  5. My Credit Unions… UW Credit Union ($1.7 Billion) Summit Credit Union ($1.9 Billion)

  6. Today s Program ObjectivesThis session will focus on how CU s can position themselves for future growth…. • To identify and assess the new financial services marketplace competition. • To utilize the Credit Union Competitive Advantage in telling our story to members and the community. • To explore Strategies for Thriving not just Surviving for using our competitive advantages in increasing loan volume and market/wallet share. • To review some “Best Practice” Credit Unions for Ideas on utilizing sound Business Growth Strategies.

  7. Today We Will Discuss CU Growth During Uncertain Future Times

  8. Credit Union Metrics for 2013… Total Credit Unions: 6,500+ Total CU Branches: 21,000 + Total Membership: 96,000,000+ Total Assets: Surpassed $1 Trillion Milestone

  9. Stronger Member Activity in 2013 • Loan/Share Ratio 70.9% • Loan Growth Up 6.9% • New/Used Autos grew 11.2 %/9.8% • Share Growth 2.8% • Consumer Lending Up 8.5% • Net Worth Ratio: 10.7% • 2.3 + Nationwide Average Accounts Per Member (Callahan)

  10. Why this Resurgence in 2013? Improving economy? Better pricing? Lingering Bank Transfer Day effect? Pull back by the competition? Competitor missteps? Credit unions’ approach to serving their member owners? Consumers using different criteria when selecting a different kind of financial institution?

  11. Key Factor 4 Why Growth in 2014: Net Interest Margins Are Not Cover Operating expenses! Data as of December 31 Source: Callahan’s Peer-to-Peer Analytics

  12. The 2014 Economic “New Normal” Trends… • Slow Economic Growth • Weak Demand for Goods • New Era of “Consumer Thrift” • Higher Unemployment • Tighter Underwriting Standards • Loan/Savings Growth (7%/4%) • Stagnant Household Income • Higher Tax Levels (CUNA E-SCAN)

  13. Lets Look at Why Credit Unions Need to Continue Our Growth Strategies… LETS TRAVEL DOWN THE COMPETITIVE FINANCIAL SERVICES HIGHWAY

  14. The New Competition… 10% Market Share out of $63 Trillion Total Fin Services Industry

  15. The Competition: Who Are They? -- Banks/Prosper.com/Lending Club/KEVA.com (PTP online lending/borrowing .coms) Western Sky Financial/Cash Net.com -- Finance/Insurance Companies (GM/Ford/State Farm Bank/Allstate/USAA). -- Mutual Funds/Brokerage Houses/H&R Block. -- Retailers/Card Companies/Wall Mart/Home Depot. -- .com Orgs (Lending Tree, National Mortgage, Car Quest, My Card.com, ING Direct, etc). -- Pawn Shops/Quick Cash/Pay Day Lenders/Campus Cash/ Check Cashers/Money Stores. What Do They Want? Your Members Business!

  16. How Can A Credit Union Grow? Let us Count the Ways…. • More Members (Market Share) • More Product/Service Usage by Members (Wallet Share) 3) Mergers • Fees/Investments • Non Interest Income (Interchange) (Sales from Insurance/Fin Products)

  17. We Must Think “Outside the Box” and Look to Create Our “Blue Ocean”… • Our Leaders must Embrace Change and the New Normal: More Emphasis on Innova-Shun--Less on Tradi-shun. • Creativity is thinking up new things. • Innovation is doing new things. Theodore Levitt management expert

  18. Ideas for How We Can Create Our “CU Blue Ocean” Can we create our “Blue Ocean” for….. • SmallBusinesses by being the Financial Institution of Choice in our community? • Can we create our Blue Ocean for Serving theUnderserved? • Can we create our Blue Ocean by helping Immigrants (the New Americans) get established in our communities? • Can we create our Blue Ocean by being a Trusted FinancialAdvocate/Advisor for our members/offering the best Financial Education programs to consumers?

  19. The Lifeblood of Credit UnionsFocus on being a Member Centric CU because Members are the Source of All Prosperity Members Transactions

  20. What Will It Take To Keep Me A Member in the Future…. More Customized Products– I want to see products designed/crafted to my needs! Personalized Marketing– I’ am tired of zapping through the same old information. Send info about products I want via e-mail, web site,cross sell, newsletter, I don’t care. If its news I can use I’ll pay attention. No Excuse Service– Train your people to respond to my concerns as if they were the most important things in the world. Ban the phrase “Its not my dept”. Wow me at every chance you get to serve me. One Stop Shopping– Make it easy for me to interact and do business with you in person and online 24/7/365. Rapid Change– Don’t wait to make these shifts…. I’ am already shopping your competition!

  21. When We Bring in A “New Member”… Offer A “CU Welcome On-Boarding Packet”: -- Welcome to Our CU Family Letter signed by CEO/Chairman (Member Advocates Connect with new members First 90 days) -- Product/Service Information Brochures -- Hours of Operation (7x24x365)/Web Site info -- Member Card/Discloser Forms -- All in One Member/Loan Application -- Department/Staff Listing/Concierge Services -- Certificate of Member Ownership/Member Care 800# -- Teach Members to Self Serve Themselves via Tech -- Set up Outbound Call Center/ follow up personalized calls to build more profitable relationships with members who join through remote channels.

  22. Note: Tips 4 Connecting With Different Gen Members • Greatest Generation(Pre WW2) Write Me! • Baby Boomers (1946-1964) Call Me! • Generation X (1965-1981) E-mail Me! • Generation Y-Z (1982-1995) (1996-ON) Text/FB/Tweet Me!

  23. Thoughts on Fees…. 2 FEE or NOT 2 FEE? Fee, Fy Fo, Fum We Need Some Income!

  24. Review Your “FEE” Structure Why? With Tight Margins/Flat Yields in Financial Institutions… we need to consider: Fee Income as offsetting this situation. 40% of Banking Income is from Fees CU Fee Income Up 30% last ten years. 10% of Credit Union Income is from Fees Strategic Q: Are you leaving $ on the table? Suggestion: Have Good Waiver Policies (Loose approach leads to missed $)

  25. New Business Growth Opportunities Abound !… • Serving New Americans/The Underserved (Hispanics) (30+ million immigrants in USA/$Bill Remittances) • Offer Risk Based Pricing/Debit Cards for Interchange $ • Check Cashing/Business Services/Lending/E-Car Lot • Offer Burial/Will/Tax Services • Lifestyle/New Image Lending (Nip & Tuck Services) $12 billion spent on Cosmetic Procedures in USA • Health Savings Accounts/Better Pay Day Loan Programs • Get to Love Boomers/Women/SBO s More • Capitalize on Bank Vulnerability: Occupy CUs/Recapture Checking Business (Utilize Switch Kits More) • Other Non Interest Income via CUSO (Insurance/Travel)

  26. Some Divide & Conquer: “Work the Street Growth Strategies”… Break Down Members into Cluster Groups and Market to those needs • Youth/Young Adults • Single/Married • Baby Boomers • Seniors • The Underserved • Small Business Sector 3 Key Groups/Areas to Focus on: 1) Young Adults 2) Boomers 3) Small Business

  27. Divide & Conquer Example: The Gens Y&X (“The Utes”)(They are the Next Gen of Borrowers)… Age Demographic: Born After 1980 Characteristics: Born with Internet, experiences beyond their years, older parents, may not have to work, independent earlier . (80% unaware they can join a CU) Looking to Credit Union for help with: Getting started, establishing credit, checking acct, education loans, first car, credit/debit cards Reach Them By: Clubs, Student CUs, I-pods/phones/I-app with Loans, Kool cu web page, put on Youth Task Force/Committees, Provide Scholarships/Offer Brass Magazine .com

  28. 2) Americans Over 50… the New 30!“A BIG MARKET”… • 70% OF WEALTH • 77% OF FINANCIAL ASSETS • 50% OF IRAs/KEOGHS • 40% MUTUAL FUNDS • 66% OF STOCK MARKET • 46% OF HOME EQUITY LOANS • 40 MILLION CREDIT CARD USERS • 41% OF NEW CAR PURCHASES • 50% OF DISCRETIONARY SPENDING

  29. Divide & Conquer Example:Your “Boomer” Members (They Have/Will Have the $) Age Demographic: Born 1945-1965 Characteristic: Known as “Sandwich”, Me Generation (Stand to Inherit $10 Trillion/ Will Pass On $30 Trillion 2 Gens X/Y) Looking to the Credit Union For help with: --Trusts, Luxury Cars, RV/SUVs?/Harleys? -- New Image (Nip & Tuck Lifestyle Loans) -- College Fund/Bill Pay/Reverse Mortgages -- IRA/Business Loan/Long Term Health Care -- RETIREMENT PLANNING/Wealth Transfer Management (Pensions Declining trend, shift to Personal responsibility) Have Other Influences on their Kids/Parents

  30. What Can Your Do to Make Your Credit Union More Appealing to Boomers… • Make information Simple and in larger type fonts • Have Carpeting in the CU for a more quiet area • Use soft Retro Musak/Make literature racks eye level/Have staff use Direct eye contact with Boomers • Use warmer Paint/Tone colors in your CU • Go Green, use plants soft white lights • Make Parking spaces/drives through a bit wider • Omit the using Senior when addressing Boomers (they consider themselves mid lifers) • Set up a “Retirement Planning Education Center”– Offer Special on setting up a SS Direct Deposit Acct since now all Retiree checks from GOV will be direct deposit • Bring back the “Toaster” as a premium giveaway!

  31. 3) The Small Business Sector… Is the Growing Small Business sector in Your Community an opportunity for your CU ? -- 5 Million Small Businesses in US (companies less the 500 employees/45 % of private payrolls/created 60-80% of US JOBS the last decade) -- 10 Million self employed persons + (Restaurants/Salons/MDs/Dentists/Service Companies/Retail Stores/Consultants) -- Loans -- Deposits -- Fee Income/Merchant – Funded Rewards -- Potential Employee Membership

  32. Common Strengths & Practices of Successful CUs in 2013…. • A Good/Improving Sales Culture. • Consistent Underwriting/Good Standards. • Market Power - 1st Choice Community Lenders. • Symbiotic Product Lines -Cross selling from each other- auto and credit cards. • Direct/Indirect Lending -To Existing Members and Branch Traffic/Strong Dealership Relations. • Make Bank Transfer Day Everyday! Keep Fanning the Flames of New Member Fans! • Offer Incentives– Lifetime Free Checking/Debit Rewards/Cash Backs/Convert Credit Cards/E-Statements/Mobil Apps/Groupon.

  33. A Look @ Some Recent Best Practice Growth Credit Unions… 1)Alabama Telco CU ($450M+) Birmingham AL Deposit/Loan Balances up to 20% New Loans/ New Households Up 60% CU Strategy: How Did they do it? -- Took A Strategic Marketing Approach -- Use MCIF Analyzer (pull demographics/break down accts into profitability and trigger follow up calls/mail campaigns) -- Sell more to each Member Household -- Created Member On Boarding program for New accounts / Contact prospects into Members

  34. Best Practice Credit Unions (cont) 2)Brewton Mill FCU ($21M) Brewton, Alabama Five Year Average Annual Growth: 10%+ Five Year Average Membership Growth: 20% CU Strategy: How Did they do it! -- Moved to Community Charter, expand CU services, adding debit, share drafts, and CDs -- Immersing CU in the Community Sponsoring local events/charities. -- Converting Bank Customers focusing on CU Safety -- Increasing Advertising activities/Re-Branding the CU with message CU is for Everybody

  35. Best Practice Credit Unions… 3) United Labor Credit Union ($9.7 M) Kansas City MO Primary Membership: Construction workers Auto Loan Growth Up 9% CU Strategy: How Did They Do It! -- Improving Relations with SEG/Get out in Front of People/Build Trust. -- Go after Pent up Demand for Vehicles. -- Less emphasis on Credit Score/Offer “Empower Hour”to learn more about members financial needs. -- Offers regular Financial Education/Retirement Planning Seminars and looks for opportunities how the CU can help members.

  36. More Best Practice Credit Unions… 4)Upper Cumberland Credit Union ($30M) Crossville, TN Achieved a 7%+ Membership growth/30% Loan growth. CU Strategy: How Did They Do It? All staff carry the title Member Advisor/All take time with members to cross sell/ all trained to contribute to the success of the CU has a institution –wide sales emphasis. Rewards/Bonuses are spread across all CU business units. 5) Randolph-Brooks FCU ($5.3B)San Antonio, TX witnessed a 10%+ Real Estate Lending, 10% Auto Lending and 20% Credit Card Growth. CU Strategy: How Did They Do It? Increased Marketing, Shorter term loans focusing on members in their 20/30s who need Core services, first home/car/checking account. Non interest income driven & diversifying income streams.

  37. My Top 13 in 14 “CU Thrival” Growth Strategies… • Work Your CU Back Yard (wallet share) Focus on Deepening Relationships by promoting we have $ to Lend with your current Members. Lending is still King! • Review Your Fee Structures- for market place adjustments and to offset decline in NIM. • Have a Merger/Alliance/Collaboration Strategy- be prepared for the potential of taking in another CU. • Train staff to Cross Sell and Wow members at every Touch Point opportunity 7x24x365. • Create Best Value Proposition for Members. Reconnect with Current/New Members. Keep the CU Transfer On Going. Show Membership has privileges offer Incentives: Groupon/Free Credit Report/Prepaid Gift Cards/Cash Backs/Miles Member Care 800#/Certificate of Membership.

  38. Top 13 (cont)… 6) Offer Relationship Pricing—the more members use the CU s services, the better the deal. Bundle products (checking/debit cards) to maximize income. 7) Reach out to Boomers/Women via Small Business Services/Lifestyle Lending products. 8) Exploit Cost Efficiencies/Control Expenses via Technology (E-Channels/Online/Mobile/Remote). Eliminate waste: Practice “Kaizen” “Process Improvement” Activities. 9) Make it a Strategic Imperative to Reach Out to Youth/Young Adults (focus on FinancialLiteracy ) via their means: Schools/ I-Phone/Soc Networks. The under 30 demographic is your next generation of business for your CU.

  39. Top 13 in 14… 10) Consider starting a CUSO offering DP/HR/IT/TravelProducts and Services. 11) Focus more on Non Interest Income: Debit Cards, (Insurance Products (Pet) GAP Coverage, Credit Protection) (Interchange/Over draft Fees) Investments/Brokerage Services. 12) Embrace Mobile/Tablet Technology and SocialMedia. Utilize innovative ideas to create Apps for this and that and do not Fear Facebook (1 Billion Members Worldwide!) (7 Billion Smart Phones/70 Million Tablets Worldwide) Consumers/Members are a Mobile Branch! 13) Get the Right Staff in the Right seats on your CU Bus and lead them in the Right direction to Serve Members more effectively and Teach members How 2 Serve Themselves.

  40. Transform Your CU Into A Benchmark Consumer “Wow” Brand Organization • Disney (Customers are Guests) • Lands End (Satisfaction GTD) • Starbucks (Taste the Sensory Experience) • Ritz Carlton Hotels (5 Star Service) • Nordstrom’s (Lifetime WRTY) • Southwest Airlines (Fun & Cheap) • Your Credit Union (Member Centric Service?)

  41. Traditional: “Institutional” Capital/Assets ROA Delinquency Charge-Offs New: “Member Focused” Average Member Balances Product/Service Usage Market Share Member Return For Future Growth--I would like to see CU s Include Performance Measures to Be More Member Focused…

  42. “Its not the strongest of the species that survives, nor the most intelligent, it’s the one that is most adaptable to Change” Charles Darwin And Finally…As we“Think Outside the Box” and “Grow Against the Grain”… Remember

  43. Thank You For Your Attention & Input….. I wish you Personal and Professional Success! jvardallas@aol.com www.theamericanboomer.com

  44. About John A. Vardallas CAE,CUDE“Providing Strategies for Success” John A. Vardallas is an International Credit Union Business Consultant and Founder/CEO of TheAmericanBoomeR Group, a Madison Wisconsin based Speaking and Consulting Business. His work focuses on helping credit union leaders and organizations increase productivity and profitability.He conducts High Performance Leadership & Management Development, World Class Service, Change and Growth programs forstaff and directors. He also facilitates Strategic Planning sessions for a variety of credit unions throughout the US each year. For a free E-Catalogue of Programs & Services you may contact John/ Office (608) 221-4621 Cell (608) 577-8707/e-mail jvardallas@aol.com/ www.theamericanboomer.com

  45. Lets Keep the Conversation Going… • Check out Johnny V s Blog/Website @ www.theamericanboomer.com Leadership Development/Strategic Planning/World Class Service/Subscribe Free to “Today s BoomeR” Digital Magazine • E-mail John Vardallas: jvardallas@aol.com • Check out TheAmericanBoomeR on Facebook • Follow TheAmericanBoomeR on Twitter @theamericanboomer

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