Credit Union Geek

Marketing, Strategy, and The Force by Joe Winn

Tag: money

Billions of Dollars for Data? You bet!

You may not have seen, but Microsoft just wrote a check few can imagine. In pursuit of a comprehensive business platform, they are acquiring LinkedIn for a staggering $26.2 billion. In cash.

It would be the largest acquisition in company history, far exceeding the $8.5 billion they paid for Skype. So what can a social media platform for job hunters, executives, general employees, and recruiters possibly have to offer for a software and services firm like Microsoft? I mean, they have Office. What else could they want?

Big Data. Hold on, let me rephrase that. #BigData. Because knowing the trends behind it helps to better understand the rationale. Remember that article CU Insight shared of mine about your members’ data? It’s truly big business, and whatever you aren’t doing, someone else is. Besides, it’s really about better serving your members, and using the information you already have is the best way forward.

I cannot stress enough the importance of embracing data to further your personalized offerings. And once again, you don’t have to be working with millions of people or data points. Just a few carefully-selected points helps you draw incredible conclusions. Sure, it will raise important conversations about member privacy. That’s a good thing. But you have to be doing it.

I’m here to help. Feel free to contact me here (the old-fashioned way) or on Twitter @JoeCUGeek. I promise your credit union can take substantive steps for less than $26B. Trust me, I’m a geek.

Image credit: http://www.aicpa.org/Advocacy/CPAAdvocate/PublishingImages/Data%20Tunnel.jpg

Cash Out Needs Cash In

None of us want to see another lending crash. With today’s NCUA and FDIC insurance programs, money won’t be lost, but investments, collateral, and jobs are always in limbo.

How many of you know someone at a credit union which underwent a managed merger, either as the takeover entity or the one being absorbed? It accelerates a consolidation of the market, sure, but I don’t need to explain to any of you the hardships endured.

This post arises from a situation we faced during a recent partner planning meeting. The credit union had less-than ambitious goals for their auto lending growth. “Odd”, we thought. It was not until later in the meeting that we learned some background on their numbers.

Ever hear the phrase, “too much of a good thing”? This credit union was living it. They had been quite successful recently in their lending, so much so their cash reserves were depressed. The institution no longer had large sums of cash to lend and chose to devote marketing resources on growing their share account values. Turns out it isn’t an uncommon problem, as reported by CreditUnions.com

What a wild challenge! It got me thinking. How can a credit union build cash reserves which are secure for a period of time, yet provide a value to their members? While, of course, having a low cost of attainment and maintenance?

I’m no financial expert (if my schooling had finance, I don’t remember). However, before I became more involved in investing, my go-to “safe bet” was a Certificate of Deposit. One year, three years, even 5 years; it was ok, since the money was safely locked away and earning a fixed interest.

Might CDs be a cost-effective strategy for growing cash reserves? No debit card required, the cash has a guaranteed term, and the member is happy to get more than 0.00014% interest.

Granted, I grew up in a world of Ferengis hoarding gold-pressed Latinum and a Starfleet which did away with money hundreds of years in the past. Perhaps I’m Scotty talking into the computer mouse in confusion.

Disclosure: As an independent agent working with credit unions, forced mergers are usually bad for our business. If our partner is the one being absorbed, we can probably bid their alliances goodbye. However, if it’s the other way around, we may find the potential market expanded. In truth, we would much rather expand our business through organic growth and greater credit union partner success. So, credit unions, please use your best judgment on maintaining a conservative loan to shares ratio. We are but lowly partners and should never be looked to for financial management advice. Besides, I’m a geek Millenial/Gen Y. Everyone knows you can’t trust us.

Disclosure 2: Image from Star Trek: DS9. Source: http://www.adafruit.com/blog/wp-content/uploads/2013/03/quark_600.jpg

Making Change With Your Change

Unless you were in cryogenic storage on your way to Pandora, you’re likely aware of the Apple event held Tuesday (September 9).  Among the wonderful surprises they had for us was Pay (properly written as shown with the Apple logo…Mac users, that’s Option-Shift-K).

Tim Cook explained that their goal was to make the lowly leather wallet a thing of the past.  Pay is their first step in that direction (though I would say the iPhone began the journey, carrying photos, cards, and more, but, stay on topic here, Joe).  Is it as revolutionary as implied?

Yes.

Apple is unique amongst technology companies.  They are rarely first to announce/release anything.  In fact, they are often last.  Music players?  Archos had decent-enough MP3 players long before the iPod.  Phones?  Palm, Microsoft, and RIM (Blackberry) made smartphones for years prior to the iPhone announcement.  Tablets?  You could buy a Windows tablet way back in the 90s.  Was it terrible?  Only if you wanted to use it like in Star Trek.

Waiting is a tough pill to swallow.  You’re watching potential market share pass you by, and shareholders see profits missed in every competitor’s sale.  But, if done strategically, it can make you great. More about waiting in the future.

Google has had a mobile payment system for a few years now, called Google Wallet.  It integrates with Android (and iOS) devices, and on certain phones, can support touch-to-pay at merchants using compatible terminals.  No credit cards to carry or swipe.

Sound familiar?

In principle, Pay is no different than efforts made before.  It imagines a future where we pay for things easily and securely by waving our phone (or wrist) in front of sensors or tapping a button on a website.  Money is transferred.  We get our coffee.  The universe is happy.

What makes their platform unique is scale, trust, and integration.  At launch, over 80% of cardholders will be supported by large banks and Navy Federal.  I’m certain the second line of launches is not far behind.  Where can you use the system?  Well, launching with over 200,000 places ready to go is nice.  Knowing every Whole Foods you enter will accept your phone to pay is reassuring.  Then there’s trust.  I won’t delve into what makes the system so secure, only the most visible: a fingerprint.  To pay, you “sign” by validating your fingerprint.  Can’t fake that one.  Finally, the concept is integrated into places both in the real world and online.  Sites/apps will have a “Buy with Pay” button, eliminating the need to enter your name, address, card number, expiration date, or anything.  Again, verify with a finger, and you’re done.

Does Apple make money from it?  Sure.  Does it make our lives just a bit easier?  Definitely.  I realized yesterday that Apple obsesses over the things we consider minor annoyances. What bothers you is a critical flaw for them.  Frustrated you left the light on in the living room before leaving for a trip?  Properly equipped, you can get a notice when your phone detects you’ve left the house, asking you if it should be turned off.  Did you leave the credit card you wanted to use for shopping at home?  That’s ok, you can just tap it in your phone.

Integration of our lives digitally is happening.  Claiming each improvement is only a small change with no revolutionary impact is being short-sighted.  Seldom do we realize we’re living a new chapter in the next generation’s history books.  This was another turn of the page (or screen, on the hovering-holo-e-book-reader).  If you’re not already preparing for this and what will evolve from it, you’re falling behind.

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