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5G Doesn’t Matter

Originally published on CUInsight.com

Hey again! It’s your friendly neighborhood Credit Union Geek, talking about the latest webs making their way through your community. Silk-free, of course. We don’t need those strands sticking to everyone. This is an invisible new tech that could change everything.

Or it could just be an evolutionary improvement that enables new capabilities for a range of industries. You decide.

Today we’re going to talk about 5G. Some say it will revolutionize banking. And e-commerce. And medicine. Basically, everything!

Others think it caused COVID-19. They’re wrong, just to be clear.

Join me for a few geeky minutes and we’ll figure out how 5G may, or may not, affect your credit union. And how you can prepare!

What Is 5G?

5G Tower

This isn’t a place to go into deep technical dives. Besides, there are people out there far more qualified than I to lead you on that journey. You want to know the basics. Here we go.

Take out your phone. Maybe it’s an iPhone. Perhaps it’s a Samsung Android-powered device. Whatever it is, I guarantee it connects to a cell tower to work. Sure, with work-from-home, we’re using a lot more wifi, but that doesn’t mean mobile providers are sitting still.

Take a look at the top of the display. There’s some signal bars and maybe a network name. Next to it, you might see a “3G”, “4G”, “LTE”, or something similar. (AT&T users probably see “5Ge”, which is a total lie done for marketing purposes only)

Most of the time, our devices are on an LTE network. That’s considered a 4th generation wireless technology, thus, “4G” is the same thing. It’s fast and does a pretty good job of working where we commonly go.

Sidenote: Yes, there are variations of 4G LTE like LTE Advanced, but remember I said this was a basic overview?

Like most technology, LTE was never seen as “the end of the line”. Even while it was being deployed, companies were working together to design the next generation of cellular tech. What came out of that collaboration is what we now call “5G”.

5G cellular technology promises a few things:

Ok, barring that last one, those all seem great. Let’s do it! I’m sure there’s no challenges standing in our way…

Challenges of Implementing 5G

Cell Tower Antennas
A lot of these to climb and upgrade.

Well, I did bring it up.

Like LTE’s deployment before, blanketing a country (or world) in a new technology is a huge undertaking. Even for companies like Verizon which make a ton of money, you’re still talking enormous investments in equipment, people, licensing, and sheer time.

Bottom line: Every single cell tower (and its “backhaul”, or lines connecting it to the world) needs to be upgraded to support 5G. And that’s not all.

5G is actually separated into two general categories, mmWave and “regular” 5G. The latter is mostly a “bolt-on” upgrade to existing towers, using similar frequencies and offering similar range. But they’re also only slightly faster than what we have today with LTE.

The 5G you see promoted by networks as “nationwide coverage” is the latter. Expect the improvements in each of the previous categories to be…a bit.

The big benefits come from mmWave, but it has a downside: Range. Just like an AM radio station carries for what seems like forever while an FM station goes to static quickly, the higher a frequency, the shorter its range. So short, it could only be a city street corner.

Yes, that means you need a cell “tower” (they’re smaller) on every block, and then multiple ones for a building.

Why bother?

Because mmWave 5G is fast. And extremely low-latency (quick response between device and destination). This can enable new uses, from drones to live VR and more. Right now, we are still figuring out what opportunities it opens up.

One More 5G Challenge

Girl with iPhone
Great photos. No 5G.

Your current device doesn’t work with 5G. Unless you have a new Android or iPhone 12, you’ll never experience the benefits of 5G. Sure, you will have a less congested network as other people transition to 5G, but you’re stuck on 4G LTE. Enjoy the “slow” lane, suckers!

Needless to say, from your perspective as someone not involved in the deployment of a nationwide network, consumer adoption is your greatest obstacle.

Ok, say we’re enjoying the iPhone 12 Pro right now. And I happen to live somewhere that 5G mmWave is accessible, plus, I choose not to use my home wifi (that’s probably about the same speed). How can this make my credit union experience better?

Uses for Credit Unions and Members

Finally, why you came to this party! And after all that education, you’re going to hate this answer, but it’s my responsibility to share it with you.

None.

There is no realistic use of 5G now or in the immediate future for credit unions.

“But I keep seeing articles saying how 5G will change the way credit unions operate!” You’re right. I applaud these people for looking ahead with new ideas. Yet none of them are dependent on 5G. I’ll address just a few here:

iPhone 11 Pro in Grass
  • Improved biometrics for security: Position data of a device takes a tiny amount of information to store and process.
    • With an iPhone, you can even see data on every step you’ve ever taken in Settings/Health/Data Access & Devices, then choose your phone or watch.
    • This information also requires permission to share, and how many members will say yes to their credit union seeing their motion activity?
  • Real-time language translation: Your iPhone does this right now, with the option for it to be totally on-device. No data connection even necessary!
  • Facial recognition: The idea is that your system can get a stream from the camera to identify the user and their facial expressions.
    • First, modern iPhones do all this on-device. Today. No need for 5G. Second, people aren’t fond of sending video of them without explicit permission (that’s why your phone now shows a green dot when it’s recording)
    • And third, you’re now responsible for securing member facial data and all the legal/regulatory issues associated. Any volunteers?
    • That’s not to mention the enormous data usage your app would now use, along with members wondering why your app asks for permission to use the camera.
  • Video chat with members: Yeah, you can totally do that right now with WiFi and LTE. Don’t you already?
  • Faster loan approvals: What’s the slowest part of your loan process? The sending of the data, or the processing on your system (or the manual work from your loan officers)? Yeah, sending documents a half-second faster won’t change this.
  • Reduced costs for CU: The perspective here is that you don’t need to build your services for slower devices. This confuses two kinds of performance, data connection and processing ability. 5G doesn’t make a phone load your app faster; a better processor and more RAM does.
  • Serving the unbanked: With 5G, you’ll connect with more rural and low-income people through a fast connection…right? Maybe, someday. For now, 3G loads your app just fine. Look to other strategies to serve the unbanked in your community.
    • This is a whole separate discussion on broadband definitions and expanding access to all Americans. Your credit union can support these policies, but they have nothing to do with 5G.

We could go on, but I think you get the point.

Instead of looking at 5G as this revolutionary change to how you can do business, let’s look at where you aren’t meeting member expectations today. Because that’s the most important path towards becoming a better community financial institution.

Lessons From 5G

Old Black Phone
Really, you’re just phoning this stuff in.

Since we’ve already established that the tech itself has minimal impact on your operation, what can we learn? Well, two things come to mind:

  • Data management
  • Continuous improvement

Data Management

5G is all about moving data more efficiently. At your credit union, your focus needs to be on managing all your data more efficiently. That way, you can access what you need, when you need it.

You’ve probably heard about “data lakes” and “single source of truth”. In fact, our own Learning Library is gearing up to cover these topics in depth. A friend in the industry, Anne Legg, is all about that process. Other connections at Arkatecture help make it happen.

It’s essential to improving your member experience.

Which brings us to the second lesson…

Continuous Improvement

Running Along Road
Just keep running.

Mobile providers aren’t satisfied with “same”. To grow revenues and attract new customers, they look ahead to how they can continuously provide a better service. Sure, a lot of it comes down to marketing, but if you don’t give marketing anything to promote, it’s more difficult.

5G comes at an enormous investment from the providers and chipset manufacturers. Then you have to redesign devices so they’ll work with the new tech. It’s way more complicated than you’d expect, but it continues the onward march of technology.

Yet being able to say your network is faster, you can do more with Verizon (or T-Mobile, etc.) than ever before, and that they are connecting you in new ways has value. And then they deliver on the promise with actionable results (like blazing-fast speed tests!).

5G May Not Matter, But…

So, how are you creating your own “5G improvements” at your credit union? What new ways can members interact with their money, connect with your team, and work towards a more financially free and empowered life?

Sidenote: This gave me major deja vu to the Are You Bluetooth or Wifi? follow-up post from what feels like ages ago!

And what are you doing to bring all your data together so anyone can get the info they need? Yes, whether they are using wifi, a back office computer, 4G LTE, or the fancy new 5G mmWave on the corner of fast and blazing fast.

Your mission is your 5G. And better access for all sounds like a good benefit to me.

Are 80% of Credit Unions in Trouble?

Originally published in CUInsight.com

This was going to be an article about holiday cheer and Christmas music. The first paragraph would be asking you when you first heard that holiday song this year. And then there would be a section on how holidays seem to be starting up earlier in 2020.

Which is totally fine, because if there was ever a year we needed some extra cheer…well, yeah.

Instead, a coworker (ok, my dad) shared a recent Credit Union Times article about the performance of the industry, separated by segments. He noticed they are now calling all institutions smaller than $1B in asset size “small”.

$1B Is Small?

Kids Shoe
Small for an adult shoe or huge for a kid’s shoe?

Are you from a $750M asset size credit union? Do you feel small? Because now you are. Join 4,875 others that fall under that classification. Not to mention you make up 92.3% of all credit unions.

Doesn’t that seem, odd, to you? It did to us as well. So I started digging into the numbers. Spreadsheets, here we come! Don’t worry, you’ll only get the highlights. I’m not subjecting you to more columns and rows than you already have at work!

Feel free to check my data using the publicly-available 5300 call reports. I’d love to be wrong in this. You’ll see why soon.

It’s Good to Be King

Lion
It was either Mufasa or Mel Brooks.

First, let’s take a look at the top of the top…our $4B+ credit unions. There are 70 of them as of December 2020. Here’s their big stats:

  • $705B in total assets (industry as a whole has $1.81T, or $1810B for consistent decimal points)
  • 42.7 million members out of a total 125.1 million (34% in 1% of CUs)
  • 18.2% average asset growth (17.6% median growth)
  • 5.7% average member growth (5% median growth)

In addition to those positive numbers, none posted any losses. Overall, big credit unions are doing great! It is a testament to the hard work of thousands of credit union employees. Congratulations on helping serve millions of Americans through a not-for-profit financial cooperative.

So I’d assume if the top is doing so well, everyone else must be, too! “A rising tide raises all ships” is a phrase heard often in our industry. And I love seeing the cooperation between institutions.

I mean, there are hard-working and dedicated people at credit unions of every size, whether “small” or actually just a few thousand members strong! Good things for all, right?

“Small” Credit Unions Doing Well

Sapling Growing Out of Dirt
Growth is great!

You can check out some of their data in the aforementioned article. In general, the numbers look positive. But remember, that’s counting all credit unions under $1T asset size in one pot. A bit crowded, don’t you think?

Plus, it’s important to have some social distancing.

I wanted to dig deeper, and not into that group, but one which you’re more familiar.

And, it was time to put that one statistics class I took to good use. Besides, it wouldn’t be the first time I highlighted how you can make stats say almost anything.

A Different Picture <$250M

Fingers Holding Tiny Dollar Bill
Are you getting the full dollar, ahem, story?

I remember not long ago when “small” credit unions were considered those with an asset size below $250M. Even today, you make up 4230 of 5,244 institutions. That’s 86.8% of the total!

In speaking with some of you, I’ve learned that you serve members whom the larger ones cannot. You fulfill a need for financial services in our country that no one else does. Thus, you’re important!

Here are some of your numbers:

  • $210.6B assets (11.6% of total CUs)
  • 19.6 million members total (15.7% of total)
  • 11.2% average asset growth (10.9% median)
  • 8.75% average member growth

Despite making up a small portion financially, and even numerically, you’re doing well. Asset growth is strong, whether we use average or median. In case you’re wondering, I used median to eliminate the effects of “extreme outliers”.

Essentially, using both gives us confidence that the numbers we see are representative of the group.

“But, Joe, you forgot to include the median for average member growth!”

Great catch. I was saving it for right now! Because something really interesting happened when I ran this value. In fact, I even did it a few times to make sure I hadn’t messed up.

For credit unions with a $250M or less asset size, median member growth is currently -0.92%. Yes, negative! Small credit unions are, in general, losing members.

“But the average was up so much!”

True. I looked at the data and some credit unions post 40% or higher member growth (and some with similar swings downward). Since they only have a few thousand members, it takes less to create large swings. Hence why I checked the median as well.

Deeper Still and More Concerns

Scuba Diver and Rocks
Let’s bring some light to that darker dive.

That made me want to see if the member loss was more prominent on one side of the group or another. Sadly, it was. I looked at the 2811 credit unions with <$50M asset size, composing 53.6% of the total. Their average member growth is 13%. Hooray! But…

Their median member growth is -1.3%. Nearly .4% lower than the larger segment. 

So why are the numbers so divergent?  PPP loans could have had something to do with the success of large credit unions, but not likely the member growth numbers.

Sure, they proportionally did more PPP lending, providing part of that boost. Truly smaller credit unions didn’t have an opportunity to provide as much of this assistance.

I recall hearing about how difficult the processes were. If you were filing them manually, you were getting fewer done, and that’s even with the enormous amount of time and energy you put into it!

At the end of the day, large credit unions benefited and smaller ones, as a whole, did not.

Though that alone shouldn’t explain the disparity.

With Your Data, You Can Act

Group of People at Table with Notes and Laptop
Make your plans with the best information.

I’m not here to ponder the reasons. You have a whole bunch of really smart people ready to dive into analysis. Sometimes I’m one of them, but not today. As I said above, this was just to share the data.

I believe it’s essential to have good information before you make any plan or take action. It’s why our company runs an unbiased and honest Learning Library, filled with insights and guidance for a range of products and services.

So seeing an article that puts a $900M credit union in the same group as one which has 4,000 members forced me to take action. You know you have different challenges and strategies for growth (or survival). Addressing you together isn’t helpful.

So, are 80% of Credit Unions in Trouble?

Caution Cone on Keyboard

That’s not a question I can answer. And yes, I may have triggered Betteridge’s law of headlines, though I really don’t know if it’s definitely a “no”.

There are definitely concerns which you may not always get to see. If viewed widely, this article likely won’t make me many friends in high credit union industry positions. It points out some concerns about a large portion of credit unions that many would not like promoted.

But data doesn’t exist to make you happy, sad, satisfied, or frustrated. It exists to be processed, so you can act on it. And you know what? I hope I’m wrong in my analysis. That I made some silly mistake.

Take a look at your own data. Does it line up with what I shared? Regardless, learn from it and take appropriate actions.

Because everyone deserves the best information so they can make decisions which benefit their credit unions, communities, and the members they serve. Isn’t that what the credit union movement is all about?

And in case you haven’t heard it a thousand times already…”I don’t want a lot for Christmas…”

Holiday Candle and Pinecones

Happy holidays to all!

You Can’t Shake Hands In Cyberspace

Originally published on CUInsight.com

You’re expecting another, “back in the days before COVID-19” reminiscing post. Too bad. This topic came to me years ago. You know, BC…Before Coronavirus. Yes, that time really did exist. It’s not just a dream.

Why mention the time frame?

Because it helps you understand that some of today’s challenges aren’t new. For many, remote work is our normal. In fact, getting to meet people IRL (in real life) was a special treat! In case it’s not obvious, the “our” here is me. I work remotely.

Take a look at some of my event posts to feel the excitement of being around other people. Yes, even for this introvert.

What’s Changed?

Ha! What hasn’t changed? Amirite? There’s no minimizing the enormous impact that-virus-which-shall-not-be-named has on society and business. Many, if not all of us, had to adapt to rapidly-changing norms and precautions.

When in-person became “no way”, those who could and weren’t already took shelter online. You joined us on Zoom, a platform we’ve been accustomed to for years. It’s like we’re innovators. Ok, not the way to blaze new paths. You’re welcome here as long as you need.

What Hasn’t Changed?

People Working
Who’s craving this?

People want to interact with other people.

In fact, maybe that’s changed too, because in our physical isolation, the desire to connect is even higher. Either way, for some things, there’s no replacement for an in-person experience.

At the same time, the concepts of digital transformation charge onward. Sure, it meant moving faster than you ever thought possible, but you did that because you’re awesome. Now, it’s time to think about the why. “Why did we need to implement these digital solutions?”

Yes, an unprecedented global event happened. I suppose we can’t really ignore it. At the same time, it forced an acceptance of where things are moving. Tasks which can be made easier and more convenient by using an app or website…should.

This is a golden time to look at what parts of your operation should be driven by human interactions and which can improve with digital ones. Naturally, there will be overlap, but that awareness can help guide your planning strategy, no matter what crazy events transpire.

Digital transformation doesn’t mean making everything digital. It means evolving to provide the best service, experience, and human connection with the right tools in the right ways. At your core, you’re a bunch of people working to help lots more people.

How to Adapt?

Chameleon
Get it? Adapt?

To be honest, the hardest part is the human element. Sharing data or other forms of information (interactive charts, whiteboard, etc.) is actually easiest on a platform like Zoom. Cue that time your whole team struggled to load a file off a USB drive for the meeting.

Digital stuff works great on these services. Cloud-based sharing makes secure and simple transfers possible. No more wondering if that computer’s USB ports are disabled, or if this browser is allowed to load Dropbox. Or if your emails went to spam.

Where we struggle most, and I bet you also, are the casual interactions. For all the love I have for great Zoom happy hours, you know it’s not the same as actually meeting up. As of now, no tech can replace that experience (I’m looking at you, future Apple AR Glasses).

There’s real value to meeting in person, even if we’re wearing masks. Since that’s not a feasible or potentially safe option for many people, here’s some suggestions on comfortably embracing video chat (with qualifications).

Make Video Chat Awesome (Or at least better) For Your Team

Woman with Mask on Video Chat
Good thing…you don’t have to go to this extreme.
  • Help equip your team with good cameras, lighting, and mounts/stands for their cameras (Trust me, being well-angled and lit makes such a difference both for you and other’s confidence)
  • Recognize that you can’t look people in the eye while looking them in the eye (even if it looks that way)
  • Make it ok to mute or turn off video during conversations. It’s like casually looking away in-person; not a bad thing. If someone stares you in the eyes constantly in-person, it’s uncomfortable.
  • Don’t force video chats to be “casual”. It feels weird. Empower your team to set up one-on-one or group conversations in the same vein as they would just meet up in the kitchen or hallway. Business meetings match your culture now as before.
  • Of course, also…use it like kids in remote schooling; to let your team express themselves and show off (if they want) part of what makes them happy. (Every kid wants to share their toys, bedroom, and walk the class through their house.)
  • Sometimes, audio is enough. Just because you can use video doesn’t mean you must. Recognize the potential for personal intrusion it has over audio-only.

Staring Isn’t Caring

The bottom line on keeping team engagement going is to help it be as close to organic as it would be in an office. And you can carry this over to members as well!

For member interactions which previously happened in-person, provide the option for them to use a video chat. Offer a simple video guide on your app or website to get them going. Sure, this is a rip-off of your ITM video tellers, but members don’t have to go somewhere.

See? That you already have or are considering them means you’re on your digital transformation journey! We’ll make it all as good as in-person, you just watch!

Except for that shaking hands thing.

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