Independence Day: A True Credit Union Holiday

by Amy Neale, Content Marketing Manager
(in her last CU Solutions Group blog)

As our country is about to celebrate 239 years of independence this Saturday, I wanted to reflect on how credit unions celebrate independence on a daily basis. 166 years ago, German citizens declared their financial independence with the first credit union. This “people’s bank” was created to provide credit to urban entrepreneurs. The United States followed suit 60 years later. 

While it may seem a bit of a stretch to compare the independence of our country to that of our not-for-profit organizations, I truly don’t think so. Taking a financial institution’s control out of the hands of shareholders and into members’ hands is no small feat. Cooperative in nature from day one, credit unions soon became known as offering an alternative to traditional loans to help the working class in 1800s Germany. This ideal spread to Canada in 1901 when Alphonse Desjardins learned of a resident that was paying $5,000 in interest on a $150 loan. 

When Edward Filene helped credit unions spread to the U.S., he founded them from an employer-based bond of association. Future paychecks were used as collateral, putting financial control even more in the hands of credit union members. 

No matter what country, credit unions worldwide are based on a single principle: that people could pool their money together to make loans to each other. How’s that for independence?

After looking on the NCUA website, I discovered that there are three credit unions with the word “independence” in them, one with “democracy” and a dozen with “free” in their names. I can’t think of too many banks with those words in their names, can you? It’s no coincidence that the most independent financial institutions in the world often have names to reflect their mission.

So, as this year’s Independence Day rolls around, remember that credit unions have a lot to celebrate as well. Hope you all have a fun and safe 4th of July.

Developing a Private Student Lending Program that Lasts at Your Credit Union

 

by Amy Dolk, Credit Union Student Choice

Over the past several years, hundreds of credit unions have entered the private student lending market. By focusing on several important pillars, these credit unions are delivering a valuable solution to borrowers while also returning positive results to their bottom line.
 
It may seem daunting to dip your toes into the student lending pool, but the basics are the same as most other lending initiatives. Focus on your members and their individual needs so you can point students and their families in the right direction toward paying for college. Here are the key pieces to focus on as you begin (or expand) your private student loan business.

• Education: A college degree comes with significant benefits, but students and families need to understand how to responsibly pay for a college education. Prospective borrowers should be educated on the importance of finding “free money” (grants and scholarships) and low cost funding options before applying for private loans.Of course, it’s also important to show families why YOUR private student loan is a smart choice. Focus on the credit union philosophy of putting people before profits, and emphasize details like flexible repayment terms and payment options. It’s not about bad-mouthing “the other guy” – it’s about showing members they can trust you with their future.
  
• Certification: School certification engages the college financial aid office for verification of enrollment and validation of the loan amount. This ensures the loan amount is not more than the cost of attendance and is disbursed directly to the school. It also allows financial aid officials to counsel the family on available options for reducing costs and utilizing lower-cost alternatives before relying on private student loans.
  
• Underwriting: It is vital to use underwriting criteria that factors in credit score and history, encourages the use of a co-borrower, and takes into account the type of school. These items have a major impact on repayment. Data from several of the largest private student lenders in America show that private loans with a focus on these items perform better than federal programs, and result in fewer delinquencies and charge offs.
  
• Repayment: Offering longer repayment periods and graduated repayment options helps support recent graduates who might be underemployed for a period of time. Young adults can easily be overwhelmed by entering the workforce and paying bills. If a student loan payment is unmanageable and borrowers don’t understand the consequences of default, it can be all too appealing for them to simply stop making payments.
  
• Relationships: Lending to students and families within your existing footprint leads to a genuine opportunity for long-term relationships and a younger membership. You know your communities and their residents; listen to their needs. Remember word of mouth is always crucial to building business. When you are able to help members and their families through a major life change, you’re building a valued relationship that will be shared with those around them.

By focusing on these pillars, you can build a strong student loan program with a positive reputation. Learn more about how you can offer private student loan options to your membership!

2015 Mobile Trends of Credit Union Members

by Chris Steffes, Remote Services Consultant

The mobile disruption is far from over. In fact, the speed to market for digital innovation will likely increase in 2015. BAI Banking Strategies surveyed financial services leaders, including credit union executives, and identified the top banking trends for 2015. It is no surprise that consumers’ heightened use of digital channels, especially mobile, rank high on the list, along with an amplified focus on the member experience. 2015 will be the year in which consumers shift their view about banking at credit unions - from being an obligation to a preferred lifestyle of convenience and mobility - due to the latest trends in mobile.

Their insight includes the following trends:

• Expedited deployment of digital branch delivery.
  Whether it's pushing member-driven functionality to your mobile channel or changing your branch experience to a self-service model with kiosks and advisory services, providing a digital experience will continue to transform the way credit unions serve their members. Getting out from behind a desk and meeting a member in a newly created space, similar to a lounge or café setting with a tablet, will continue to improve member perception as long as credit unions continue to present themselves as visually appealing, technically savvy and millennial-friendly. This is particularly significant in the middle and up-market demographics, as members will gauge a credit union’s value and progressive vision by their commitment to using digital tools for member convenience and business efficiency.
  
• Mobile-First design.
  According to the BAI article, banking and credit union executives believe 2015 will be the year when banks and credit unions will use mobile design strategies as the basis for all customer touchpoints. Their goal is to position mobile not only as a full-service delivery channel, but as the flagship channel for member engagement. Their strategy of increased revenue-generating functionality on mobile, along with member servicing tools like mobile video chat - especially popular with tablet users – will attract and drive new membership.
  
• Increased digital and social selling.
  Compared to 2014, Forrester Research predicts that twice as many customers will research financial products on their smartphones and tablets in 2015. And as millennials’ appreciation for all-things-social continues to grow, credit unions that transform their marketing tactics from traditionally static ads to more intimate engagement on digital channels and social media will see more success in revenue generation. This requires credit unions to make a fundamental change in how to communicate to members along with developing new strategy for optimizing digital media to engage consumers.
  
• Mass acceptance of mobile payments.
  With Apple Pay setting the benchmark in the mobile payments space, 2015 will be the year when mobile wallets will likely become the differentiator for attracting new members. According to Cap Gemini Research, m-payments are projected to grow by over 60% in 2015. While experts in the wallet space caution credit unions to carefully conduct regulatory due diligence in the payments space prior to selecting a vendor, it is wise to start analyzing device types of your current member base and begin a vendor selection process for a wallet provider that not only provides an agnostic solution among device types, but will feature your credit union debit and credit cards as a payment device within the wallet.

Gearing your digital strategy toward this year’s emerging trends will position your credit union to weather the demands of increasing member engagement and provide a better member experience at every stage of the member lifecycle. 

If your credit union needs help navigating the mobile world in 2015, contact CU Solutions Group - we've got mobile experts that can keep you moving forward.