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Tag: financial empowerment

Spreading Savings Stories At Your Credit Union

Originally published on CUInsight.com

Why would someone want to join your credit union? Or keep their relationship over switching to a seamless app-based fintech (or snazzy big bank) platform?

It’s easy to talk about the mission, how members are the owners, and that the institution is not-for-profit. But these tell people nothing useful, nor do they give them a tangible reason to bank there. People think they’re making decisions rationally, but they’re really acting on emotion.

Between my business partner (who’s also my dad) and myself, we’ve dedicated over half a century to providing for credit unions. I don’t share that for accolades (applaud if you’d like), just so you can understand the perspective from which I approach this topic.

Most credit union marketing goes in one of two directions:

  1. Explains what the credit union is, making the assumption this is sufficient to convince someone to want to bank there
  2. Shares what your institution offers, and sometimes even how you do so

The first has no direct bearing on a person’s financial life (yes, I get that it’s what enables lower fees and whatnot, but that’s all abstract and intangible to your target audience). The second is what marketers call “features and benefits”.

There’s no emotional connection to either. Both assume a rational decision-making process, which we know now doesn’t exist.

“Hold up, Joe! We’re a credit union, and our mission is always about the why. We strive to help people create stronger financial lives.” I hear you, truly. But read that again. Where is the emotion focused? It’s not to the individual you’re trying to attract, but rather a “big picture” that’s hard to pin down.

Dollars and Sense

Vegetable Pizza
Well, great. Now I’m hungry.

Think of fast food and restaurant commercials. Do they spend their limited time talking about the mission of affordably satiating everyone’s hunger? No, they feature macro shots of their food items, make you hungry, and probably end with a “by the way, check out all you get for just this much money!”.

Bonus points for implying you’ll have a better social life if you choose to eat there.

So how can your credit union use this successful strategy? Focus on your members’ stories! (Chime does this ridiculously well with buyer personas.)

Our partnership with protection product providers as well as being credit union members ourselves gives us access to some compelling stories…and by stories, I mean, “big dollar numbers that will catch people’s attention”. 

Regularly, I learn about paid GAP claims of $8k, $10k, even $14,000, and more! For the average American, that kind of avoided out-of-pocket expense can be life-changing. Surely worth including in marketing efforts, don’t you think?

Our own vehicle enjoys a bit too much vacation time in the service center. Using a VSC policy purchased at a local credit union, paid warranty claims have exceeded $6000 so far. Yet when we reach out to the institution to encourage promoting their impact, it’s been radio silence.

Talking about your mission is one thing. Showing examples of how that mission of financial empowerment saves members thousands (people like you, dear viewer!) connects emotionally. Plus, choosing to save money sounds like pretty rational decision-making to me.

Make Your Credit Union An Easy Choice

Path Choice
Help more members find the rainbow.

Insurance commercials focus on the ease of filing claims, speed of payment, and how their prices are better than competitors. That’s fine when you already know their products; usually it’s homeowners insurance (basically impossible to get here in Florida) and auto insurance.

Do your members (and prospective ones) even know the insurance products you offer?

And how often is their first and last response to them, “I decline”, on the loan documents?

Instead of talking about how “credit unions are different”, share the stories that will catch people’s attention:

  • How Tasha avoided an out-of-pocket $8,400 expense after her car was totaled (with CU’s GAP)
  • When Steve could get his $3,500 car repair completed for only the $150 deductible (with CU’s VSC)
  • That time when Andy unexpectedly lost his job, but had his $545 monthly loan payment waived for 4 months, when he found another position, relieving the financial stress (with CU’s payment protection)

If your marketing simply said, “our credit union offers GAP, Payment Protection, and VSC, and they’re cheaper than the dealer”, would it generate an emotional connection?

Use your data. Surface the real stories. If you can get the members to tell them, even better.

Sure beats promoting that members get a vote in your operations.

Beyond Silicon Valley Bank Headlines

An earlier version previously published on CU Insight.

Update 3/: This article inspired an interview on the topic with Sarah Cooke of The CU Connection. Watch it here!

I love wild rides. Whether Disney or Universal, if it’s a new thrill, I’m in. But Silicon Valley Bank (and Signature Bank) failing, followed by the “will they, won’t they” of FDIC insurance?

“Excuse me, I think my Express Pass took me onto the wrong attraction.”

By the end of the weekend, we knew the FDIC wasn’t going to let depositors run dry. This was likely the correct action, given the economic dangers of lost banking confidence. I read some observers saying that without this guarantee, people would no longer trust regional banks.

Geek note: This does raise an interesting observation on the FDIC insurance limits. It seems like they only come into play if the impact isn’t considered potentially systemic. Otherwise, you are effectively insured for your entire balance.

SVB Isn’t (Wasn’t) A Typical Bank

But we have to recognize that nearly every financial institution, especially regional players, aren’t in anything close to the situation Silicon Valley Bank put themselves in. Community banks and credit unions are nearly all well capitalized.

Beyond that, they balance risk actively and regularly. I’m betting you won’t find long-term near 0% Treasury bonds composing their assets. The teams which handle these challenges have my applause, as it’s a thankless job, but also essential.

Granted, you’re not also managing accounts with tens or hundreds of millions of dollars, with some over $1B. This is a completely different banking environment. To me, such an institution should be subject to regular stress-testing.

Geek note: Of course, such regulatory requirements were eliminated a few years back under the previous administration. Could this have been prevented had those still been in effect? Who’s to say, but it may have been caught earlier.

In discussing our own services with clients, this focus on institution risk and member opportunity is always at the forefront. I’ve never spoken with a credit union which made a decision “willy-nilly”. Have you?

It might interest you to know that SVB didn’t even have a Chief Risk Officer during an enormous rising rate environment (while knowing they held now-diminishing value assets). I mean, the CEO also sold $3.6M in stocks a few weeks ago, so…

Venture Capital Has Issues, Too

Eggs in One Basket - DALL-E
Questionable for eggs. Unwise for funds.

We can spend weeks diving into the poor decision-making by the SVB leadership. It’s ok, we won’t (others surely will!). But we will take a quick look at their questionable relationship with venture capital.

I originally asked why SVB was the preferred lender for most Silicon Valley startups. Turns out, VCs often required companies to use them exclusively in their funding contracts. That doesn’t seem to have any conflicts of interest or red flags, no sir-ee.

This was the literal definition of putting all your eggs in one basket, a practice the Easter Bunny is famously known for doing. Hey, you stuff all you can into the basket you have!

Geek note: A kids plastic egg hunt shouldn’t be the model for billions of dollars in startup funding. But what do I know?

Moving forward, I think it’s essential we take a close look at the relationships between venture capital and financial institutions. Should this come through new regulations? Oh no! However you feel, it’s clear the current practice doesn’t work.

If only one bank is willing (or allowed) to hold your funds and extend you a line of credit, well, I know some risk people who would have something to say about that.

Credit Unions Are Fine And Also Impacted

Plenty of credit unions serve the tech community. None of them failed. To my knowledge, none are in any danger whatsoever. Since the news broke, I continue seeing announcements of how well-capitalized credit unions are, like this one from Dort Financial CU.

This comes as no surprise to me, and likely to you as well, dear reader.

Yet reality is only a part of risk. The other component is perception. That’s why financial institutions, regulators, and even the President came out with a unified message: The banking system is solvent. Your money is safe. The issues can be managed.


(As you know, the survival of the financial system is partially based on people believing the financial system is safe. If everyone withdrew their funds at the same time, you have a problem a la Bailey Building and Loan.)


Risk Management Beyond Survival

Person Looking Over Water BW - DALL-E

However you feel about the bail-outs, it’s apparent this will have a passthrough effect on regulatory behaviors towards all insured institutions. Are you managing all your risk today, while planning for potential challenges tomorrow?

Thinking bigger, this will have an effect on how startups behave, or even their initial creation. Entrepreneurship is a keystone of American economic progress, and while you could say VC funded efforts are their own category, the moods flow downstream.

While existing depositors have secure funds, their lines of credit are now dry. Can they continue operating? Startups are cash-flow heavy and revenue light (hence the funding). Can they meet payroll, or even want to hire for growth?

Does this affect the Silicon Valley mantra of “move fast and break things” (on its own, maybe not a bad idea)?

Does it have a cascading impact on economic activity from startups to larger corporations reducing funding in their “moonshot” divisions?

Will this have any effect on inflationary pressures?

I…have no idea. But it’s important to ask these questions. And beyond those, this is the perfect time to reiterate how credit unions operate, why they exist, and what you provide for members to protect their own financial security.

Credit Unions (And Community Banks) Have An Opportunity

People want security in uncertain times. Sure, Bank of America and Capital One will be fine no matter what happens, but do they also have your best individual interests at heart? The value of credit unions comes from their community connection.

In the words of one of my favorite Jimmy Buffett songs, “It’s My Job”:

I got an uncle who owns a bank, he’s a self-made millionaire
He never had anyone to love, never had no one to care
He always seemed kinda sad to me and I asked him why that was
And he told me it’s because in my contract there’s this clause
That says, “It’s my job to be worried half to death”
And that’s the thing people respect in me
It’s my job but without it I’d be less
Than what I expect from me.

Mac McAnally, “It’s My Job”
From a live Mac concert

Our industry consistently shows this concern, and we’ve got one bonus his uncle did not: Plenty of people in the credit union world to love and care.

Since 2014, I have used this persona to help enhance CU member connection and community empowerment through barely-recognized sci-fi and Disney references. Ok, and also tangible recommendations.

A few banks and a bunch of venture capitalists did dumb things for a while. The consequences have arrived for some. Unfortunately, we’re all going to pay in some form.

This is where credit unions shine the brightest. Find your North Star and make sure members can see how it lights their way.

Climate Change & Your Credit Union [Video]

If you’re new here, let me share a quick introduction. Hi, I’m Joe Winn, also known as the Credit Union Geek. And also, “the environment guy”. My background is in marine and environmental science, and it’s a passion of mine as well.

For my regular readers, this is no surprise. My company came out of our environmental sustainability efforts, and the shift into working with credit unions was due to their community focus. You see, community & environment are two sides of the same coin.

And if you want to jump straight to the video, go right here.

People, Planet, Prosperity – The Triple Bottom Line

In the world of sustainability, there’s a term called the “Triple Bottom Line”. It’s pretty simple: We can only thrive when each point on the triangle is equally served.

People

People At Farmers Market

This can have many definitions, but for now, let’s stick with “members of the community have their basic needs met and are treated with respect by others”. In the business world, “others” means “your company”.

Fair wages, Fair Trade practices, DEI, women’s rights, universal healthcare, and financial equity all play a role in the People category.

Planet

Kids Pointing at Wind Turbines in Field

Just like the people around us, we have to treat our planet with compassion, empathy, and respect. Shifting our energy production to cleaner sources, along with avoiding investments in polluting companies, is a business component.

A company which achieves the Planet component is “green” without greenwashing. Their practices are truthful, meaningful, and impactful. And they expand this to their staff, customers (members), and the communities they serve.

Prosperity

Characters Helping One Another Up Bar Graph

“A rising tide raises all ships.” You know that a company which doesn’t bring in income cannot be in business for long. Even not-for-profit financial cooperatives need to make money. Yes, I said credit unions should make money.

However, those funds must come in through mindful and empowering ways. That means, say goodbye to punitive fees (especially those which affect your most financially vulnerable members the most). Consider value over punishment.

Living the Triple Bottom Line

Achieving these goals is a continuous effort. There’s no “done!” moment, only another layer to discover and improve. It stretches across your entire organization, leaving no area untouched. It’s your mission…expanded.

By now, it’s pretty obvious how passionate I am about this topic. Thus, you can imagine how excited I was to discover that Filene and Ceres worked together to create a document helping credit unions understand how climate change impacts them.

I strongly recommend reading it. Yes, it’s long, but worth your time and energy. They did an incredible job including a wide range of recommendations, with clearly actionable suggestions. Your credit union and community will be better for you following the report.

Of course, I couldn’t just share that and be done. This is my thing! So I expanded on their report and answered a number of questions credit union leaders like you have.

“Why should we consider climate change impacts?” “How can we help?”

And many more. In lieu of additional detail, I strongly recommend you watch the whole 22-minute interview. Divide it up over segments or view in one sitting. Either way, make it a priority to brush up on what is among the top issues of our age.

A Credit Union & Climate Change Discussion

Once again, I’d like to thank the teams at Filene and Ceres for putting together this amazing report. And please comment below or @ me on Twitter with questions, input, or for more information!

Photo credits: Mark Dalton, Peggy und Marco Lachmann-Anke

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