June 2018 News.Cuna.Org

JUNE 2018 NEWS.CUNA.ORG

Power Passion Positivity JONATHAN MILDENHALL CUNA’s America’s Credit Union Conference JEFF HENDERSON exclusive speaker interviews

WHITNEY JOHNSON

DANIEL LERNER

Published by Credit Union National Association

ORIGINATION INNOVATION FASTER LENDING TODAY. READY FOR TOMORROW.

Lending 360 is the all-in-one loan and account origination system that delivers a world-class member experience. Featuring 1,800 decision variables analyzed in seconds, Lending 360 lets you create and automate workﬂows to transform your entire lending and member process. With an ever-increasing lineup of system integrations, it has everything you need today, while positioning you for success tomorrow.

Experience the best of all worlds, where credit union insight meets transformative lending solutions.

Start the journey at CUDIRECT.com/Lending360. June 2018 Volume 84 Ñ Number 6

FEATURES 22 Power, Passion, and Positivity Play where others aren’t. Find your passion. Embrace the power of positive emotion. Take a stand with your brand. These ideas and more will move your credit union forward during CUNA’s 2018 America’s Credit Union Conference.

28 The State of P2P Person-to-person (P2P) payments are the logical next step in digital services. But first, credit unions must solve the awareness problem many believe is holding this service back.

34 Loans on the Go An increasingly mobile society requires comprehensive mobile lending solutions. After all, we’re a society of convenience: We want it when we want it and how we want it.

4 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org FEATURES • High image quality • Fast speeds • Flexible and reliable feeding • Easy to install and use

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Pg_5_Canon.indd 1 5/4/18 2:48 PM June 2018

LEADING EDGE

TWENTYFOUR/SEVEN

12 Five steps to a workforce plan.

14 PRESIDENT’S PERSPECTIVE America’s Credit Union Conference will ready 42 Listerhill Credit Union launches a new branch the leaders of tomorrow. prototype.

16 TRENDLINES 44 TOOLS OF THE TRADE A recent attack on the credit union tax status All credit unions can provide mobile technology clearly is misguided. regardless of asset size.

18 SPOTLIGHT John Ainsworth, president/CEO of CULedger, BRANCHING OUT is a member-focused technologist.

COMPLIANCE MATTERS

46 Nine types of salespeople and their “superpowers.”

8 POSTAL INFORMATION 38 FinCEN issues a new FAQ for its Customer 10 ON MY MIND Due Diligence rule. 45 ADVERTISING INDEX 45 MARKETPLACE 40 RETHINKING THE ROTH IRA The elimination of Roth IRA conversion recharacterizations creates a new set of tax considerations for investors and advisers.

6 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org NOINATE A NN

Do you know someone who embodies the credit union spirit of people helping people? Someone who is so creative, innovative and passionate that they push their entire organization forward?

If so, nominate your peer as a Credit Union Rock Star! Submit your 2018 nominations before June 15, 2018, at news.cuna.org/nominaterockstar. Those selected as Credit Union Rock Stars will be featured in the October issue of Credit Union Magazine.

SPONSORED BY

news.cuna.org/nominaterockstar

RS2018_CUMAG_NOMINATEAD.indd 1 4/9/18 1:42 PM news.cuna.org VISIT OUR WEBSITE DURING JUNE FOR THESE ONLINE EXCLUSIVES.

Special Report: America’s CU Conference CUNA’s 2018 America’s Credit Union Conference, June 28 to July 1 in Boston, will feature “experiential” sessions, an executive series, and four keynote speakers: EXECUTIVE COMMITTEE

“Chef Jeff” Henderson, author and Food Network star; MAURICE SMITH • chairman, Raleigh, N.C.

Daniel Lerner, happiness researcher; Jonathan Milden- BRETT MARTINEZ • vice chairman, Santa Rosa, Calif.

hall, former Airbnb chief marketing officer; and Whitney Johnson, disruptive TROY STANG • secretary, Seatac, Wash. innovator. BRAD GREEN • treasurer, Sheffield, Ala.

TONY BUDET • member-at-large, Austin, Texas

Practice the art of ‘tinkering’ JIM NUSSLE • president/CEO, Washington D.C./Madison, Wis.

If you’ve ever felt like you need to escape the PAT JURY • immediate past chairman, Des Moines, Iowa daily grind and make some changes in your life, try “tinkering.” This involves “repairing, adjusting, or working with something in an unskilled DIRECTORS

or experimental manner,” says Jason Kotecki, DALLAS BERGL Ind.; PAT DRENNEN Iowa author, artist, and “professional reminder-er.” SCOTT EARL Colo.; CHARLES ELLIOTT Miss. It’s also a way to break free from those rules we believe we have to follow but don’t really exist—such as not eating dessert first. “Tinkering,” Kotecki says, “is like TERESA FREEBORN Calif.; GARY FURTADO R.I. an escape hatch for someone who feels like they’re stuck. Tinker, ask questions, LISA GINTER Kan.; ROGER HEACOCK S.D. and try things.” TOM KANE Ill.; DEBIE KEESEE Wash. MARIA LAVELLE Pa.; MARIA MARTINEZ Texas

PATRICK PIERCE Minn.; FRED ROBINSON Tenn. Young professionals ‘bring the energy’ JOHN SACKETT Wis.; STEPHANIE SIEVERS La. In the early days of the credit union movement, there SCOTT SULLIVAN Neb.; JOE THOMAS Va. used to be parades celebrating the not-for-profits, says Chad Helminak, director of credit union devel- SCOTT WOODS S.C. opment and cooperative values engagement at the National Credit Union Foundation. “I think we can get back to that, or at least that ideal,” he says. “Young professionals are key to bringing that energy back to credit unions.” LEADERSHIP JIM NUSSLE • president/CEO

JILL TOMALIN • chief operating officer Unleashing a grassroots powerhouse MOLLIE BELL • chief engagement officer The overall goal of the CUNA Member Activation Program (MAP) is to inform and educate members on the credit RYAN DONOVAN • chief advocacy officer union difference, says Adam Engelman, CUNA grassroots TODD SPICZENSKI • chief products & services officer manager. MAP mobilizes credit union members as a grassroots lobbying force to call their lawmakers.

POSTAL INFORMATION

Credit Union Magazine (ISSN 0011-1066) is published monthly for $80 per year by Credit Union National Association, 5710 Mineral Point Road, Madison, WI 53705. (Multiple-copy and multiyear discounts available.) Periodical postage paid at Madison, Wis., and additional mailing office. Copyright 2018 by Credit Union National Association. Photocopying is illegal and Do you know someone who embodies excellence unethical. POSTMASTER: Send address changes to in the credit union industry? Nominate them as a Credit Union Magazine subscription department, P.O. Box Credit Union Rock Star today! 461, Annapolis Junction, MD 20701-0461. Single issues are available; call 800-348-3646. SPONSORED BY news.cuna.org/nominaterockstar

CREDIT UNION MAGAZINE u JUNE 2018 u iStock 8 news.cuna.org

ON MY MIND

MANAGEMENT ANN HAYES PETERSON vice president/editor-in-chief ‘I Love What I Do’ 608-231-4211 • [email protected] Credit Union Hero of the Year will be honored later this EDITORIAL STAFF BILL MERRICK deputy editor month at the America’s Credit Union Conference. 608-231-4076 • [email protected] MICHELLE WILLITS deputy editor 608-231-4067 • [email protected] This is the time of year our JENNIFER WOLDT senior editor two stellar programs intersect: Credit 608-231-4290 • [email protected] RON JOOSS Union Rock Stars and Credit Union senior editor 608-231-4321 • [email protected] Heroes. CRAIG SAUER senior editor Both programs—and the profes- 608-231-4918 • [email protected] sionals we meet as a result—serve ALEX McVEIGH senior editor as reminders that at our core, credit 202-508-6767 • [email protected] unions are a people movement. DESIGN & PRODUCTION Not a Wall Street movement. Not BEN TENORIO • digital media design specialist CARRIE DOYLE • graphic designer a shareholders’ movement. A people TREESA LANDRY • publishing specialist movement. ADVERTISING Later this month at CUNA’s 2018 JOE DAY vice president America’s Credit Union Conference, 608-231-5794 • [email protected] ANN HAYES PETERSON, MICHELLE DOSHER we’ll present our 2018 Credit Union 608-231-4006 • [email protected] Hero of the Year Award to Tom editor-in-chief LISA DUSHACK [email protected] 608-231-4220 • [email protected] McWilliams, senior vice president of Classified ads: THOMAS GERARD the Mississippi Credit Union Asso- 608-231-4257 [email protected] ciation. The award is sponsored by Members Credit Union, Cos Cob, fax 608-231-4263 Trellance. Conn. u EDITORIAL ADVISORY BOARD McWilliams has devoted his life Jeffrey Hayes, president/CEO, BRAD ASPGREN • American Airlines FCU, Fort Worth, Texas to developing training and education North Star Community Credit SANDI CARANGI • Mercer County Community FCU, Hermitage, Pa. MICHELLE HUNTER • CU of Southern California, Anaheim programs for credit union profession- Union, Cherokee, Iowa. KEVIN KESECKER • SECU, Linthicum, Md. als. As the chairman and education u Vicki Hoehn, vice president of STEVEN LANGLEY • Schools Financial CU, Sacramento, Calif. RICHARD S. MILLER • FeatherStone Planning and Consulting director for the Southeast CUNA community engagement, Royal PETER STEIN • Educators CU, Racine, Wis. Management School, he prepares Credit Union, Eau Claire, Wis.

the next generation of leaders for You’ll find all of their remarkable MAILING ADDRESS the future. He loves the exponential stories at news.cuna.org. CREDIT UNION MAGAZINE P.O. Box 431 impact of his work—how educating Madison, WI 53701-0431

one leader can transform a credit Rock Star season SUBSCRIPTION SERVICE union and the lives of all the mem- Through June 15, we’re calling for SUBSCRIPTION DEPARTMENT P.O. Box 461, bers it serves. nominations for our next class of Annapolis Junction, MD 20701-046 “Across the decades of my career, Credit Union Rock Stars, sponsored 800-348-3646 I have been blessed to know and by Fiserv. Submit your nominations Fax: 301-206-9789 build an amazing credit union fam- at news.cuna.org/nominaterockstar. ily,” McWilliams says. “I love what Last year, you nominated more I do, and my motivation has always than 250 credit union CEOs, execu- been simple: A desire to offer the best tives, branch officers, front-line staff, professional growth opportunities to and volunteers. We’re anxious for help others become heroes for their more. Subscribe Today own members.” When we interview our Rock Two easy ways to order We applaud this year’s Credit Stars, we see once again the heart of your subscription to Union Hero of the Year finalists: the movement: People dedicated to Credit Union Magazine: u Laura Aguirre, president/CEO, service and excellence in their cho- u Call 800-348-3646 Hawaii First Federal Credit Union, sen fields. You’ll find profiles of the Kamuela. 2018 Credit Union Rock Stars in our u Visit news.cuna.org/subscribe u Kathy Chartier, president/CEO, October issue.

10 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org Develop a roadmap for your credit union’s long-term success

CUNA STRATEGIC PLANNING ROUNDTABLE

AUGUST 18-19, 2018 // DENVER

The issues facing your credit union and the entire credit union movement are constantly evolving, and so should your strategic plan.

At CUNA Strategic Planning CUNA Strategic Planning Roundtable brings credit union leaders Roundtable, you’ll work on together to discuss the latest issues and trends most relevant to the business and not in the the credit union movement. Using credible research from the business. What we’ll focus on 2018-2019 CUNA E-Scan, you’ll discover the issues that matter at this roundtable is helping most to your credit union and: “you be a better partner with your CEO, and the ability to // Explore trends likely to affect credit unions in the coming years stay focused on the 3 or 4 // Discuss how to incorporate E-Scan trends into your strategic plan main strategic objectives that are relevant for your credit // Share your perspective, hear from your peers and discover union and its members.” innovative ideas from industry experts

-Jeff Rendel, Want to know more about CUNA E-Scan? President of Rise Above Visit cuna.org/escan for details. Enterprises

cuna.org/spr

#33343M © Credit Union National Association 2018

SPR-Flyer-Magazine.indd 1 4/9/18 11:47 PM u INNOVATION u IDEAS u INSPIRATION

5 Steps to a Workforce Plan Like any organization, credit unions your people and strategy. are constantly trying to figure out Romero says there are five steps to how to get the right people in the developing a workforce plan: right jobs at the right time. 1. Conduct a workload analysis. With baby boomers approaching This is the key starting point, Romero retirement and the growing amount says, because it creates a clear picture Jo Ann Romero of churn taking place as more of the current workload and how employees switch jobs, that task has your credit union completes that “Who are you bringing in, and never been more front of mind for work. how will you make sure you’re bring- human resource (HR) professionals. Make it a participatory exercise. ing in the right people?” she asks. Workforce planning is a tool credit That way, employees from through- 4. Identify options to address unions can use to determine how out the organization will contribute workforce needs. This is an oppor- to allocate employees in the most ideas and understand the reasoning tunity to develop a framework to efficient way possible. behind any future changes. address workload shortfalls, ineffi- “It’s the intentional union of 2. Assess your current efficiencies. cient processes, and actions needed strategy and people,” says Jo Ann This allows you to recognize where to develop a meaningful workforce Romero, president of StrategyWorks gaps exist between what you have plan and to address future gaps, Inc. She addressed the 2018 CUNA now and what you might need going Romero says. HR & Organizational Development forward. 5. Document, evaluate, and Council Conference. 3. Identify future skills. This looks revise. This ensures you have a plan Workforce planning starts with a at your workload and, based on your to manage the expected skill loss strategic plan, which provides a clear current gaps, identifies what skills in the organization and provides path of where your organization is will be needed to fill positions in the a roadmap for future recruitment, going and what priorities are driving future. development, and training needs.

Online Poll Be a Collaborative Leader How often do you talk to the board about compensation? To guide an organization through have a strong understanding of how a project that will bring change, each department works and how potential conflicts, and emotions they work together, says Green, an to the team, having a leader with a executive coach and trainer. 48% 20% collaborative mindset at the helm is These leaders also can’t be afraid Yearly Periodically the best scenario. of confrontation, she says, because 29% 3% “I like to think that a collaborative bringing together two sides in a Never Monthly leader is someone who recognizes disagreement is a vital piece in that change needs a champion,” moving an organization forward. Pamela Green tells the CUNA News “It’s often one of the least desired responsibilities of a leader,” Green Podcast. “They have to recognize Source: CUNA News monthly online poll says. “You must be able to bring there is an opportunity to bring people together and work through Next month: Does your credit union people together, but first, they have consider credit history when making conflict.” employment decisions? to know when people aren’t and know when there’s this disconnect, HEAR MORE FROM GREEN ON VOTE AT be willing to jump in.” THE CUNA NEWS PODCAST Collaborative leaders also must AT NEWS.CUNA.ORG/PODCASTS

12 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org Create ‘Re-memorable’ Experiences Create an emotional connection You.” “We are judged on how financial institutions. Do this by with members by giving them a we meet expectations, but you’re knowing your members’ names or “re-memorable experience,” a phrase evaluated by how you exceed those forming a connection with them. coined by Patrick Henry’s 9-year- expectations.” 3. Lead the way mentality. When old daughter after a family trip to a member is in an unfamiliar or Disney World. uncomfortable situation—such as Henry, who spoke at the 2018 applying for their first mortgage CUNA HR & Organizational or wanting to talk about tackling Development Council Conference, mounting debt—don’t be annoyed says a re-memorable experience is with their questions. Instead, reach how you make members feel special out to them and guide them through and valued. the process. There are three mentalities people Patrick Henry “When you point the way, you must have to build a re-memorable get one-time results. When you lead experience for members: 2. “Cheers” mentality. “Is there the way, you get lifetime results,” 1. Extra-inch mentality. Don’t a better feeling in the world than Henry says. “Credit unions create merely meet expectations at your walking in a room and everybody opportunities to serve as resources job. Go beyond the minimum. turns around and smiles because to their members.” “The extra mile is easy to identify, they’re genuinely glad you’re there?” Keeping these three mentalities in but it’s not easy to do. It’s not the Henry asks. That’s the “Cheers” mind will allow your credit union to extra mile though, it’s the extra mentality, which refers to the long- provide re-memorable experiences inch,” says Henry, author of “The running TV series. for your members. As a result, Pancake Principle: 17 Sticky Ways Interact with members in a way they’ll likely be loyal members of the to Make Your Customers Flip for that differentiates you from other credit union.

Use Coaching to Develop Leaders Coaching was once considered differences. on identifing behaviors and mak- a remedial tool to help poor Coaching involves an external ing changes that enable leaders to performers improve their work. person, and is a shorter duration become more effective at their But that’s not how human resource that focuses on developing exper- jobs. (HR) professionals view coaching ience and a greater self-awareness 2. Grow to a higher level today. of the leader’s impact on others. of responsibility. This type of “It’s how well you’re prepar- Mentoring, however, often is coaching often prepares an ing the organization and develop- ongoing or long-term, and involves individual for a new position ing the next generation of leaders,” a senior-level leader partnering that comes with more responsi- Steve Heinen told attendees at with a junior-level employee to bility and involves a different set the 2018 CUNA HR & Organi- provide perspectives or offer advice. of skills. zational Development Council Heinen, an executive coach who “Anyone can call themselves a Conference. works with leaders to reach their coach,” Heinen says. “You need to An executive coach can provide full potential, says organizations look at what the needs are of the a tailored process for leaders’ typically use coaching in two individual and what expertise a development and offer guidance situations: particular coach offers. Ultimately during that process. Coaching 1. Enhance the performance it comes down to chemistry and is like mentoring, but there are of a key employee. This focuses fit.”

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 13 PRESIDENT’S PERSPECTIVE

ACUC Delivers Ideas That Move Conference will ready the credit union leaders of tomorrow.

ion, one vital piece is to regularly doubt we’ll cultivate ideas that will invest in experiences that fire up you position credit unions as the best and your most promising staff— choice for consumers now and in the experiences that equip you with the future. tools and excitement to tackle the We may not know exactly what challenges ahead. tomorrow holds, but we can be cer- The America’s Credit Union Con- tain our core commitment to serving ference (ACUC), a CUNA signature our members will never change, and event, does just that. This year we’re that when we work together, we can shaking things up with an action- accomplish anything. packed and thought-provoking agenda to give leaders the ideas that will ready them for the future. ACUC has always been about inspiring passion for the vital work JIM NUSSLE, of credit unions and empowering its CUNA president/CEO leaders to make change. But this year in Boston we want to unpack the DON’T MISS AT ACUC When you think about the core ideas that move our industry u Our fantastic keynoters, featuring future of credit unions, what do you forward so you can return to your Jeff Henderson, Whitney Johnson, Daniel see? Strategic fintech partnerships? credit union with actionable knowl- Lerner, and Jonathan Mildenhall (“Power, Data-optimized services that antici- edge and tips that will mark you as a Passion, and Positivity,” p. 22). pate member needs? Virtual reality future-focused leader. u Credit Union Roundtable. Small branches? To that end, we’ve gathered credit unions discuss critical issues and When I spoke at CUNA’s Govern- experts from within and outside our swap insights in this facilitated session. mental Affairs Conference in Febru- industry to tackle some of the biggest uCEO’s Black Book of Secrets Re- ary, I pointed out that soon, more issues credit unions face today. vealed. Filene Research Institute’s Ryan people will learn about credit unions You’ll have the opportunity to Foss breaks down strategic leadership from personal virtual assistants like participate in diverse discussions that Amazon’s Alexa than from us. Are include the future of auto lending, into six components and shares research we ready? consumer insights, cybersecurity, showing how they’ve deployed this at 68 analytics, knowledge sharing, and credit unions. data mining to grow digital loans. u Own it. Earn it. Give it. CUNA Chief Successfully navigating We’ve also added a special three- Engagement Officer Mollie Bell will help part series for credit union leader- you connect the dots between owning change will require ship, and our unmatched exhibit hall your authentic self, understanding your and key business partners will keep values, and working smarter to enhance bold leadership. you abreast of the latest solutions to your leadership skills in this workshop- move your credit union forward. style session. Because leading your credit union, u Your Analytics Journey: Looking Look folks, no one knows exactly and the credit union movement, into Beyond Tomorrow. Learn what “best what the future holds. But it doesn’t the future is something we’re all try- in class” analytics means within the take a fortune teller to predict that ing to figure out, my thought is, let’s credit union space and leave with simple successfully navigating such rapid do it together. steps to start your credit union’s data change will require bold leadership. By bringing together credit union transformation journey. How to identify, retain, and devel- leaders from all over the country See a full list of ACUC programming at op that talent is a puzzle every credit and putting them in the same rooms cuna.org/acuc. union is trying to solve. In my opin- with cutting-edge experts, I have no

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TRENDLINES

Attacks on Tax Status Misguided We take every opportunity to remind policymakers of the benefits credit unions provide.

nal Federal Credit Union Act of 1934 of those that do so repeatedly find but has never done so. themselves embroiled in litigation Since their inception in the early brought on by bankers aggressively 1900s, a majority of credit unions seeking to limit credit union service, have operated with narrow fields of even though such expansion would membership, many based on occu- directly and significantly help disad- pational groups—therefore having no vantaged consumers. legal basis for serving low-income or Further, NTU’s myth of bank unbanked individuals. harm arising from charter differences is clearly reflected in two facts: Common bond 1. An uneven playing field, if The credit union tax status has one existed, would produce outsized MIKE SCHENK absolutely nothing to do with credit market share gains for an advantaged union common bond. The original class of institutions. However, credit In a letter delivered in role of the common bond was to union market share is essentially April to Sen. Orrin Hatch, R-Utah, control/reduce credit losses in an era unchanged over the past quarter the National Taxpayers Union when little was known about bor- century and sits at 7% of depository (NTU) urges the Senate Finance rower creditworthiness. assets today. Committee to evaluate the tax- Widespread credit reporting now exempt status for large credit unions. eliminates the fundamental need for NTU’s letter falsely characterizes that construct. More important, in The CU tax credit unions, their mission, and today’s modern and rapidly changing the statutory rationale for the credit economy, regulators have expressed exemption is one of union tax status. The group seems concern over narrow common bonds DIGITAL MEMBER unaware that Congress originally which can create safety and sound- the government’s conveyed the federal income tax ness concerns due to concentration Digital ONBOARDING exemption to credit unions because of risk in a single sector, company, best investments. of their unique ownership structure or associational group. and special mission. Still, that legacy of tightly defined solutions MONEY MOVEMENT & Credit unions of all sizes remain credit union fields of membership, 2. One of the defining charac- distinguished by member-ownership, primarily based on employer groups, teristics of the U.S. depository char- DIGITAL PAYMENTS democratic control, and not-for- means that credit unions have dis- tering system is ease of entry and profit status—a structure that hasn’t proportionately served wage-earning, exit. Banks suffering from the uphill your members changed one bit over their nearly working-class people from their battle presumed by NTU are free to DIGITAL MORTGAGE 100 years of existence. beginnings nearly a century ago. convert to a credit union charter, EXPERIENCE Further, NTU wrongly equates the Today, nearly two-thirds of credit although only two have done so. can’t resist. terms “low income” and “unbanked” unions, serving more than one-half The NTU letter also greatly over- We’re making it easy for credit unions to leverage fintech and with “modest means.” History clearly of credit union members, continue states true revenue impacts of taxa- digital for optimized member experiences. Let us help you shows the American credit union to reflect significantly restricted fields tion because the government estimate movement began as a cooperative of membership, and all credit unions of that impact NTU cites doesn’t remain a relevant and competitive financial partner in today’s effort to serve wage-earning, work- are bound by field-of-membership reflect recent changes to the U.S. tax changing marketplace. Call 866/MyCorp1 today. ing-class people, not “unbanked” or requirements. Lost in NTU claims code. The new tax law includes a per- “low income” individuals. is the fact that larger credit unions manent reduction in the statutory C This intention was broad, encom- are more likely than their smaller corporation tax rate to 21%. This will passing the masses of average work- counterparts to serve narrow fields of have the effect of reducing the rev- ing-class individuals. Congress had membership. enue impact estimates by about 40% Visit corporateone.coop/digital to register multiple opportunities to more Credit unions naturally view out- relative to NTU claims. for one of our monthly webinar demos. narrowly define the term “modest reach to unbanked or low-income Taxing credit unions would do means” since the passage of the origi- individuals as desirable. But many exceedingly little to address U.S.

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Pg_17_Corporate_One_FCU.indd 1 5/7/18 10:25 AM government budget issues. If credit local taxes in 2016 alone. Fewer credit unions also would unions had been taxed in 2017, the Credit unions’ 113 million con- result in fewer societal benefits. These receipts (according to last year’s sumer-owners are likewise saddled include reductions in billions of government estimates) would have with a substantial tax burden. Any indirect financial benefits that accrue accounted for only 0.07% of federal new tax on credit unions is an addi- to bank customers and innumerable spending—which would have funded tional direct tax on these consumers. benefits to the economy arising from federal government operations for U.S. credit union members paid an the fact that, unlike banks, credit only seven hours. Going forward, estimated $1.6 trillion in state and unions serve as a counter-cyclical lower corporate tax rates drop that to federal income taxes during the most force during economic downturns. a little over four hours. recent federal tax year. The credit union tax exemption is In a similar vein, NTU seems blind Changing the credit union tax sta- one of the best investments govern- to the fact that credit unions and tus would likely result in many credit ment makes in its citizens—and we their employees already have sub- unions converting to bank charters, take every opportunity to remind stantial tax burdens. Using IMPLAN essentially eliminating cooperative, policymakers of this important fact. modeling, CUNA finds that credit member-owned institutions from the MIKE SCHENK is CUNA’s vice president unions and their employees directly marketplace. That would eliminate of research and policy analysis. Contact paid an estimated $4.2 billion in fed- nearly $11 billion in direct financial him at 608-231-4228 or at mschenk@ eral taxes and $2.4 billion in state and benefits to credit union members. cuna.coop.

DIGITAL MEMBER Digital ONBOARDING

solutions MONEY MOVEMENT & your members DIGITAL PAYMENTS DIGITAL MORTGAGE can’t resist. EXPERIENCE We’re making it easy for credit unions to leverage fintech and digital for optimized member experiences. Let us help you remain a relevant and competitive financial partner in today’s changing marketplace. Call 866/MyCorp1 today.

Visit corporateone.coop/digital to register for one of our monthly webinar demos.

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 17

Pg_17_Corporate_One_FCU.indd 1 5/7/18 10:25 AM SPOTLIGHT

Member-Focused Technologist

John Ainsworth joined CULedger as president/CEO in December 2017 following a long career as an executive with financial services companies including MasterCard and Visa. CULedger provides distributed ledger—or blockchain—technology that allows for innovation around financial transactions. Here, Ainsworth shares his take on the technology.

Q What is blockchain? It’s for technology to him because we most noted for bitcoin and were playing around with things cryptocurrency, but it’s actually like mobile banking even before it much more than that. It’s really was well known. a network of computers that Credit unions are at a critical basically agrees on a set of data or inflection point. They’re becoming information, and in a distributed more challenged in staying in fashion. That’s where we come up touch with members and meeting with “distributed ledger.” members’ growing expectations. So as opposed to a centralized For me, CULedger is a chance source of information in one to provide a unique opportunity John Ainsworth database, it’s a series of different that could pull the credit union databases that communicate with industry together and make sure each other—thus the “chain” it stays relevant in the next digital Q What are some larger trends definition. wave that’s coming. we should watch for? The one It’s a protocol not a product, that most comes to mind concerns which allows for wide adoption loyalty. In my neck of the woods, Where do you want to take across a number of different use Q for example, Chick-fil-A has a CULedger? cases. The first mission of cult-like following, and you can order is execution: making sure we have a 20- to 30-minute wait in the Q You’ve had a long association can show not only that it works, drive-thru. Chick-fil-A introduced with technology and credit but that it has an economic benefit. a mobile app where I can preorder unions. What drew you to Initially, CULedger will benefit my food, and when I approach the CULedger? A couple of factors. credit unions and their members restaurant it picks me up on the geo When I started in payments, it was by reducing risks associated with locater which says, “Hey, it looks about the old “zip zaps”—machines cybersecurity and fraud, improving like you’re here,” and prompts me where you had a piece of paper on the member experience, and to say which car I’m driving. I then which you took a physical imprint cutting costs. drive into a mobile line where I and deposited it with the financial Following that are extended use wait for them to bring out my food. institution. cases around smart contracts and For me, loyalty is not about Now, with mobile commerce and then payments. It’s really about the getting 30 cents off a chicken the evolution of technology, we’re broader digital landscape and how sandwich. It’s about “gosh, you just going to see more innovation in members will want to interact with gave me back 30 minutes of my the next five to 10 years than we’ve credit unions. time.” I’m willing to pay a premium seen in the last 50. I have a thirst for that. That kind of experienced- for emerging technology, and these Q Is a focus on members your based mentality is threading are fascinating times. top concern then? It is, and it through all loyalty efforts. Early in my career I met always has been. If we start with longtime credit union executive the voice of the member and follow LISTEN TO A CUNA NEWS PODCAST Tom Sargent. I would attribute that, we’ll always have a high INTERVIEW WITH AINSWORTH AT some of my nuttiness and passion percentage of success. NEWS.CUNA.ORG/PODCASTS

18 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org CUNA COUNCILS SYNERGY

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CUNA Councils connects you to conferences, discussions, networking and resources to advance your career — but to see it all, you have to get involved.

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Disruptive Community Building Allegacy Federal Credit Union’s partnership fosters financial and physical well-being.

Allegacy Federal Credit Union in Winston-Salem, N.C., has entered into a partnership— believed to be the first of its kind in the country—to improve both the physical and financial well- being of its community. The partnership with Wake Forest Baptist Medical Center has resulted in the creation of WellQ, a membership-based service that provides access to convenient, high-quality health care for everyday illnesses and wellness needs, along with financial coaching and education. Cathy J. Pace, president/CEO of Allegacy FCU (left), and Dr. Julie Ann “There is a strong correlation Freischlag, CEO of Wake Forest Baptist Medical Center and interim dean of between people’s physical and Wake Forest School of Medicine, stand in the WellQ lobby. financial well-being because financial stress can negatively impact their physical health and valuable financial education and Medical Center CEO and interim vice versa,” says Cathy J. Pace, planning assistance.” dean of Wake Forest School of president/CEO of the $1.3 billion Insurance isn’t accepted for Medicine. “The Allegacy-Wake asset credit union. clinic appointments or visit- Forest Baptist partnership is “Health care expenses can be related prescriptions at the onsite about becoming champions for one of the top costs for families,” pharmacy. Appointments are made improving the overall health and she says. “A WellQ membership online or through a smartphone well-being of the folks who live can be a vital part of financial app. Payments are made by credit and work in our community.” planning for those who need an or debit cards—including those Wellness is in Allegacy Federal’s affordable, convenient place to attached to health savings accounts DNA, as Pace likes to say. The go for minor illnesses, as well as and flexible spending accounts. credit union was named one of “The clinic the 2017 Healthiest Workplaces in at WellQ is not America by Healthiest Employers designed to be LLC, an organization that evaluates a substitute for employers’ corporate health. a primary care Wake Forest Baptist Medical provider, but rather Center is a longtime Allegacy as a convenience Federal select employee group, and that complements it co-sponsors the annual Susan G. a person’s existing Komen Northwest NC Race for the primary care Cure with the credit union. provider and “Together we found something supports the that truly differentiates us,” Pace physical and says. “Today everyone wants to financial well- be a disruptor, and I think we’ve being of members,” truly achieved that. At the same The rooms at WellQ are designed to treat everyday illnesses says Dr. Julie Ann time, we’ve found a way to be good and promote wellness. Freischlag, Wake partners in the community. That’s Forest Baptist what makes this so exciting.”

20 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org Current, reliable and comprehensive compensation data

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Ron Jooss, Bill Merrick, Craig Sauer, and Jennifer Woldt

Play where others aren’t. Find your passion. Embrace the power of positive emotion. Take a stand with your brand. These ideas and more will move your credit union forward during CUNA’s 2018 America’s Credit Union Conference, June 28 to July 1 in Boston. Keynote speakers Jeff Henderson, Whitney Johnson, Daniel Lerner, and Jonathan Mildenhall will show attendees how to reach their potential, the importance of innovative disruption, the link between happiness and success, and the power of purpose.

22 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org whitney PASSION, johnson ind a way to play where others aren’t.’

Innovative disruptor Whitney Johnson have all the money or time we want. That makes us play ‘Fencourages business leaders to “play where others aren’t.” to our strengths. One way we can find places where no one Imagine yourself as a kid in the sandbox or maybe with else is playing is to recognize the constraints that are built a pile of Legos playing alone, deeply connected to your own into any situation. That forces us to find a work-around. world of possibilities. Your ideas aren’t subject to critique, but In finding that work-around, we find a way to play where rather are building blocks to shape something truly your own. others aren’t.” That simple act of creativity, “finding a way to play Johnson adds that women are natural disruptors. where others aren’t,” is one key to innovative disruption, Research shows that women historically built networks says Whitney Johnson, named one of the world’s 50 most outside of organizations because internal networks weren’t influential management thinkers by Thinkers50 in 2017 and available to them. “They had to go and play where no one 2015. Through speaking, writing, coaching, and consulting, else was playing.” Johnson synthesizes the key levers of change and how to use Ultimately, people, not companies, are disruptive: those them effectively. who work hard and come up with smart ideas that no one Through her work at Harvard Business School, Johnson else has been able to divine. has learned that those who are willing to wade into their Johnson’s mission is to cultivate that environment. own mental territory “like a kid in grade school” are more “Every person wants to be a great leader,” she explains. likely to be creative and innovative. “People who are able to “They want to be a part of that place where people want be innovative are willing to play where no one else is playing,” to come to work. At the same time, we all have that day- she says. to-day tension of reports and deadlines. At some point you Ironically, today’s business environment is ripe for creativity have to let go—I call it ‘learn, leap and repeat.’ because of the constraints companies face. Virtually every “You have to help others do that as well because they will business process naturally imposes constraints, whether it’s be more engaged with you and with the whole process,” she time, money, or resources, she says. continues. “They will be all in, and because they’re all in, “We should embrace those constraints because that’s what they’re going to be even more productive. And you become gets our creative juices flowing,” Johnson says. “We rarely that boss who people love and want to work for.”

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 23 JONATHAN MILDENHALL

urpose is an absolute mandate.’

‘PDon’t be afraid to take a stand with of the cultural power of that brand.” your brand, says Jonathan Mildenhall, an internation- When a brand takes on a cultural position generation ally renowned thought leader in the worlds of business after generation, teenagers in particular flock to it, he strategy and creative excellence. says. “Coke taught me about the power of purpose and Mildenhall defined his career connecting brands like how putting the purpose into marketing messages can Coca-Cola and Airbnb to social purpose. create significant value.” The standout campaign of his career, Mildenhall says, Mildenhall also used this purpose playbook when he is Coca-Cola’s 2014 Super Bowl campaign featuring the developed Airbnb’s “Is Mankind” campaign, which con- song “America the Beautiful” sung in many languages, nected the company’s brand to discovery of the world and the faces of Americans with varied religious beliefs, and humankind. sexual orientation, skin color, and age. In that campaign, Airbnb was one of the first advertis- “It was tough getting that campaign through the Coca- ers to recognize the transgender community. Cola Company because we were taking a very progres- “It was right around the time that Caitlyn Jenner sive stance on what the American family looked like, and was receiving the Arthur Ashe Award for Bravery, we were taking a very progressive stance on the history and there was a huge, polarizing narrative about the of American culture,” he says. “It was brave in 2014, but I was so proud.” transgender community in the U.S.,” he says. “But because Coca-Cola ran the ad again during the Super Bowl a Airbnb is purpose-driven and believes in a world where few years later despite complaints from some consumers. anyone can belong anywhere, it was important that Mildenhall credits spending time in Coca-Cola’s rich we stood up and defended the transgender community.” commercial archives for much of his success at the soft The campaign didn’t cost Airbnb much money, but the drink company. impact was “phenomenal,” Mildenhall says. “It helped me appreciate those moments when Coca- “I’d like everybody to understand that purpose-driven Cola stood up as a significant cultural icon that was companies outperform their competitors,” Mildenhall pressing up against tensions of the time,” he says. “And says. “Especially for younger consumers, purpose isn’t I realized that all I had to do was to remind Coca-Cola an option, it’s an absolute mandate.”

24 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org JEFF HENDERSON

hen other inmates saw punishment, I saw opportunity.’

‘WChef Jeff Henderson didn’t find his passion son and steam food and how to tell if the food was done by for food in the kitchens of a prestigious culinary school. appearance and scent. “I didn’t find food, food found me,” Henderson says. “And His aunt sent him cookbooks that he studied. Henderson food found me in one of the darkest places on earth: prison.” eventually worked his way up to head inmate cook and baker. Henderson grew up in the inner cities of Southern Cali- “When other inmates saw punishment, I saw opportunity,” fornia, made “poor choices,” got involved in drugs, and spent he says. nearly a decade in federal prison following a conviction for Henderson capitalized on that opportunity following his selling drugs. release from prison in 1996. For Henderson, prison was an opportunity to fix his He became the first African-American chef de cuisine at wrongs. He earned his high school diploma, read his first Caesars Palace in Las Vegas. He was also the first African- book cover-to-cover, and was told he was smart. American executive chef to run a restaurant at the Bellagio He was also assigned to a job in the kitchen. That’s where before writing his first book, “Cooked: From the Streets to he found his connection to food. the Stove.” “In the pots and pans room, the connection came,” he Eventually, Henderson became the host of four cooking says. “The connection was smelling all the food that was shows on Food Network. being cooked. In prison they give you three meals a day, When he’s not in the kitchen, Henderson travels the world and you don’t get extra. So food is one of the most important inspiring people and arming them with the tools they need moments of the day.” to reach their goals. Being in the kitchen provided access to more food, says “I use food as a teaching component to help young people Henderson, who was known for his prison fried chicken and understand they have the power of potential,” he says. “And cinnamon rolls. “So the idea that I could eat extra food every these are the strategies people need to become the best ver- day because I worked in the kitchen was the hook to keep sions of themselves.” me there.” In the kitchen he helped the head inmate cook, Friendly LEARN MORE ABOUT CUNA’S 2018 AMERICA’S Womack Jr., serve 1,100 prisoners—plus staff—each day. In CREDIT UNION CONFERENCE AT CUNA.ORG/ACUC the process, he learned skills such as how to properly sea-

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 25 HEAR MORE FROM THE KEYNOTE SPEAKERS ON THE CUNA NEWS PODCAST AT NEWS.CUNA.ORG/PODCASTS

DANIEL LERNER

hen you’re stressed out, run toward ‘Wyour friends and family.’ If you want to have a successful surgery, Too often, our culture looks for the negative, he says. give your doctor candy before the operation. “We celebrate the Jim Morrisons, the Janis Joplins, the That’s because doctors who are happy outperform Steve Jobs—the folks who suffer for their art. We often those who aren’t, says Daniel Lerner, citing a study where don’t see the folks who are great because they’re happy doctors who received a bag of candy before diagnosing and who take pleasure in their work.” 50 symptoms made 20% more correct diagnoses than Like other skills, creating positive emotion takes work. those who instead read a medical journal or received Lerner cites four “interventions” that foster happiness nothing. and well-being: “Across the board, people who are primed with positive u Keeping a gratitude journal. Take five or 10 minutes emotion achieve at a higher level, whether they’re each day to write down three things for which you’re students, doctors, or other professionals,” says Lerner, grateful, and why. co-author of “U Thrive: How to Succeed in College (and “When we do this every night, we see after 30 days Life),” and professor at New York University, where he that our levels of positive emotions rise,” Lerner says. “It’s teaches a course called “Science of Happiness.” not just because we’ve found a few things to be grateful Traditionally, people think they’ll find happiness when for. It’s because we’re reprogramming our brain to see they’re successful: “When I get the job, the promotion, the world differently and to find things to be grateful the raise, the car—whatever it is you’re looking for—then for. In doing so, this becomes much more natural, and I’ll be happy,” he says. “But research shows that when we our levels of positive emotions rise.” have higher levels of positive emotion, we perform in a u Mindfulness and meditation. These are positively way that’s more efficient and more effective.” associated with higher levels of life satisfaction, vitality, Of course, not all successful people are happy. “But and optimism, and lower levels of depression and social there are potential advantages to raising our levels of anxiety. positive emotion when we’re looking to be successful as “When I maintain a consistent practice of meditation, well,” Lerner says. it changes my ability to deal with challenges, changes

26 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org HEAR MORE FROM THE KEYNOTE SPEAKERS ON THE CUNA NEWS PODCAST AT NEWS.CUNA.ORG/PODCASTS

3D Bean uses full-body, high-resolution photography to create realistic, 3D figurines.

Experiential Sessions Top ACUC Agenda

A feature at this year’s America’s Credit Union Conference in Boston will be “experiential” sessions, where attendees can venture into the city to visit some of the nation’s top companies. These sessions will allow attendees to explore: u Innovative customer experiences. u New media and technology. u Emerging markets. u Refreshing office culture. 3D Bean founder Yifei Zhang u Economics and ethics. Attendees can take advantage of experiential sessions at some of Boston’s unique companies such as:

3D Bean This startup company “breaks the barriers of the flat photo” by creating realistic, 3D photo figurines made of sandstone. Each my concept of stress, and changes my level of patience,” highly detailed color figurine is based on instant, full-body, high- Lerner says. “It helps in how I address challenging resolution 3D photography. moments in the world.” “I believe 3D photography is the next major progression of u Regular exercise. Studies show that exercise is as photography itself,” says founder Yifei Zhang. “We can cherish effective as medication in treating mild to moderate and preserve those special moments as close to how they depression, Lerner says. occurred.” “I can tell, as can my wife, if I have or have not been Participants in this session will hear the inspirational and exercising because my mood is very different,” he says. whimsical story of how this concept came about and have their “If I go for a couple of days without it, it’s far more chal- 3D poses taken. lenging for me to be relaxed.” u Quality relationships. This is the greatest indicator of Trip Advisor From plane tickets to hotel rooms, restaurants to entertainment, happiness and well-being, Lerner says. “If you don’t have Trip Advisor connects consumers with comprehensive travel positive relationships, it’s difficult to have well-being. information. Spend ample time with the people you love. Its innovation is driven by a culture where employees push “When I spend time with good friends, even if it’s themselves to work in new and exciting ways. Attendees will reaching out for a quick conversation, that really changes hear Matthew Gabree, senior director of global office experience, my level of happiness,” he continues. describe a workplace with an energetic, positive atmosphere. Too often, people isolate themselves when they’re stressed out. “They hide or clam up,” Lerner says. “That’s The Envoy Hotel akin to running away from the hospital when your The Envoy is part of Autograph Collection hotels that celebrates appendix is about to burst. When you’re stressed out, independent leaders in film, art, design, and literature by curating run toward your friends and family. one-of-a-kind travel experiences. The Boston hotel has close “There are plenty of interventions,” he adds. “Part of ties with local businesses that provide it with food, beverages, the journey is finding the one that’s right for you.” toiletries, and artwork.

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 27 28 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org (Illustration: Scott Khail) THE STATE OF P2P RON JOOSS

Person-to-person payments are the logical progression in digital services.

In an age when the one-click ease of Market Force Information reveals that nearly 80% of Amazon Prime sets the standard for retail respondents had downloaded their primary financial institution’s mobile app. And a 2017 report from convenience and mobile devices can Fiserv reveals that 19% of consumers have used P2P deliver virtually any form of data, it’s a bit in the past 30 days, up from 14% in 2015 (“Top uses of a wonder that person-to-person (P2P) of P2P,” p. 31). payments haven’t gained more traction. “As P2P becomes more a part of the mobile The capability and convenience of P2P is well banking experience, consumers will find a certain established, and it seems like a natural way for comfort level with it,” says Michelle Lemieux, senior friends and family to pay each other for meals, rent, product manager at CO-OP Financial Services. and gifts. But despite steady growth, P2P statistics remain “We do a lot of research about that very topic, and relatively anemic compared with other payment it always seems to come back to consumer awareness,” types. eMarketer estimates the transaction value of says Steve Shaw, vice president, strategic marketing, U.S. mobile P2P payments grew 55% in 2017—to at Fiserv. “Consumers just don’t know that they can $120.4 billion. transfer money to someone from a different financial In 2016, the last year data was available from the institution from their mobile phone, and how simple Federal Reserve, credit card payments grew 10.2% to it can be. There’s a little bit of a disconnect there.” $37.3 billion with a total value of $3.3 trillion. But Shaw and others believe P2P payments are a Success is relative, however, according to Brian natural next step in evolving credit unions’ online and mobile banking strategies. A key driver Focus One of the key factors to drive P2P payment adoption u Mobile channels will be the key drivers in P2P will be the mobile channel. “Where P2P really works adoption. with consumers is in the mobile world,” says Doug u Security and convenience are the two most Marshall, senior vice president of retail at $18 billion important features of P2P. asset BECU in Tukwila, Wash. “You make payments when you’re out in the world. That’s where mobile u Board focus: Offering P2P can make credit unions P2P is a perfect fit.” more relevant in their local marketplace. An August 2017 poll of U.S. internet users by

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 29 (Illustration: Scott Khail) LEARN ABOUT ZELLE’S “PAY BACK A FRIEND DAY” AT

White, senior vice president of information services However, another major, more financial institution- and technology at $1.1 billion asset Hiway Federal centric P2P player has emerged in the past year to Credit Union, St. Paul, Minn., which offers P2P rival Venmo. Instead of being a standalone mobile through Payzur by Acculynk. app, financial institutions can integrate Zelle within White says P2P accounts for 200 to 250 transactions their mobile banking apps. Zelle accounted for a month—and he’s fine with that. “Offering P2P $75 billion in P2P payments in 2017, more than makes us more relevant in our local marketplace. double the $35 billion Venmo moved in the same The members who use it find it easy to use, and that’s period, according to CNBC. a win for us. That’s how you create organic growth and word-of-mouth marketing: by offering products that members like and make their lives easier.” ‘ Venmo gains traction OFFERING P2P MAKES The first P2P solution to gain traction with the general public was Venmo, which is owned by PayPal. us more relevant While PayPal includes capabilities for people to send money to each other, it was primarily designed to IN OUR LOCAL facilitate e-commerce, such as eBay. PayPal launched Venmo in 2009 for the express marketplace . purpose of P2P payments, and it incorporates BRIAN WHITE elements of social media. Venmo has even gained verb status among many users, as in, “Venmo me.” Many, however, don’t consider Venmo to be financial institution-friendly. Customers link their Venmo Zelle traces its roots to a joint venture called accounts to a financial institution account or plastic clearXchange, formed in 2011 when Bank ’of card, but the Venmo app stands alone. America, Wells Fargo, and JPMorgan Chase teamed

DO-IT-YOURSELF P2P Despite having multiple options for providers, $4 bil- that what we were developing was the right solution,” lion asset Redwood Credit Union in Santa Rosa, Calif., Felder says. “Although it required more time and cost opted to develop its person-to-person payments (P2P) upfront, I think it’s going to pay dividends for us down the solution in-house. road.” “We looked at a number of third-party applications RCUPay is integrated with the credit union’s mobile before deciding that developing a solution ourselves banking app. Users must be members to initiate would be, in the long run, a better option for us,” says payments, but members can send money to friends and Ron Felder, Redwood’s executive vice president and family who bank with other financial institutions. chief lending officer. “It would allow us to fully customize “It’s cool because even if you’re not a member, if you delivery for our members and deliver a more seamless receive money it’s a good experience,” Felder says. “That experience.” generates word-of-mouth marketing, so I think we’ll Redwood did hire a consultant to assist with the get some organic growth from that. About 64% of our development of RCUPay. “We also did a lot work on the transactions so far are member to member, so almost a security side, a lot of code review, really just making sure third go from members to nonmembers.”

30 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org up to work on a digital payments solution that would “We have clients interested in Zelle because of the allow their customers to send money to each other. momentum behind it,” Shaw says. “We always want to In 2016, Early Warning, a fraud prevention and risk give our clients choice, and ultimately the consumer management firm, purchased clearXchange. will determine the market.” Among the credit unions that have signed on with Industry offerings Zelle is $10 billion asset First Tech Credit Union Credit union service providers have also been in Mountain View, Calif. Brian Ziff-Levine, senior proactive in providing P2P solutions. CO-OP director of payments strategy and support at First Financial Services offers RealPay, which allows Tech, says the credit union based its decision to offer members to pay anyone via mobile or online. Credit Zelle on two factors: security and convenience. union members can send money to consumers in continued u real time, including to account holders at other financial institutions. Lemieux says the market for RealPay has been “steady, but not explosive.” Top Uses of P2P Fiserv offers Popmoney, which allows consumers to send money with an account number, email address, or mobile phone number regardless of where the other person banks. About 2,400 credit unions and banks currently offer Popmoney, Shaw says. Google and Apple also offer P2P solutions, and Facebook offers P2P payments through its Messenger function. Keeping track of the P2P players literally requires a scorecard—and that’s one of the roadblocks 9% 7% to wider consumer adoption, experts say. “Supposedly, one of the critical lessons that Zelle espoused at the time of their rollout was the need for a common brand,” says Glen Sarvady, managing Sharing household Repaying a loan or debt to a principal at 154 Advisors. expenses friend or famly member Sarvady specializes in online payments, digital wallets, customer segmentation, and consumer behavior. “If a Bank of America customer makes a transfer to a credit union member and they have two different solutions, they might think the solutions don’t work together. If it’s called the same thing on both sides, you know it works together.” To that end, Zelle has shown a willingness to work 6% 5% with financial institutions, including credit unions. With more than 60 partner banks, Zelle has taken significant steps toward its common brand concept. “There’s a lot of momentum there,” says Lemieux. Paying for rent or Purchasing goods portion of rent or services Adding Zelle to the mix Both Fiserv and CO-OP offer Zelle to their clients, with no plans to sunset their existing P2P products. Source: Fiserv

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 31 He believes Zelle is a more convenient solution “Our member base on average tends to be a little than Venmo for consumers. One inconvenience with more technically demanding,” Marshall says. “The Venmo is that users must carry a secondary balance expectations are on us to always offer the latest in the Venmo app. digital solution.” He says there’s not a typical P2P user profile. “We see a mix. In some cases, we have members who use it literally once a year. They might make a holiday gift ‘ payment to a family member or some other annual THE KEY TO payment. “Other members,” Marshall adds, “use it on a SUCCESS IS relatively frequent basis; maybe five to 10 times a month. The amounts also vary widely. You’ll have e aS E O F U S E . the people who send their friends $5 for coffee and RON FELDER others who will send up to $1,000.” Larger amounts tend to be for rent payments, says Ziff-Levine. “If you’re a small-time landlord who owns a property or two and wants to do away “Eventually, the consumer has to transfer funds with having checks mailed, Zelle is an easy, fast, and from that Venmo balance into their financial’ convenient way to get money from a tenant. You institution accounts,” Ziff-Levine explains. “With also have a couple of roommates paying another Zelle, it goes straight into my account—no middle roommate for a single rent payment.” man, no intermediary. And so the ease for our White sees potential for growth in the business-to- members to send money to one another was the consumer space. “There’s a cost for a sole proprietor driving force behind our decision to go with Zelle. to process checks and credit cards,” he says. “But if We’re all about innovation, but we don’t want to they can accept P2P payments, it’s going to work innovate if it’s not actually going to bring any better for them, and it’s probably easier to manage.” convenience to our members.” While P2P isn’t yet a core product, it’s important As for security, Zelle’s integration with mobile to keep an eye on. As the Venmos and Zelles of the banking was important, he says. “Venmo works world continue to gain traction, more members likely through PayPal, but it’s not a financial institution,” will want it. he explains. “The credentials that you use to log on Shaw says P2P can also be a retention tool, and may be secure, but they might not be. You’re up to encouraging members to use it introduces them to the whim and whimsy of that organization. That’s a another valuable credit union service. “It’s on us to critical consideration for consumers today. educate consumers.” “With Zelle,” Ziff-Levine continues, “you gain access through your financial institution’s mobile banking app. So all the security that we bring to the table for keeping your money secure also keeps your Resources P2P payments secure.” uCUNA Technology Council: cunacouncils.org u154 Advisors: twitter.com/154advisors Popmoney u BECU has offered its members P2P payments since CO-OP Financial Services: co-opfs.org 2009. While it currently offers Popmoney, the credit u Fiserv: fiserv.com union will soon introduce Zelle.

32 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org Get Integrated. Get Uniﬁ ed. Get Results.

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Dennis Chaptman

GO iStock

An increasingly mobile society requires comprehensive mobile lending solutions.

Everybody wants a piece of mobile lend- take time and planning to overcome,” says Willis ing. The saturation marketing of Rocket Chang, vice president of innovation and application delivery at $4 billion asset Kinecta Federal Credit Union Mortgage, along with popular lending in Manhattan Beach, Calif. apps like Kabbage, and the growing appe- But, Chang adds, the importance of deploying mobile tite of credit union members for con- lending technology is increasingly apparent at Kinecta. venient, tech-based services have made “Based on the marketing campaigns to our members, we’re able to see about 65% of loan application traffic mobile lending a required offering for coming from mobile devices.” many credit unions. Adopting new technologies like mobile lending “Mobile lending is a must,” says Stephanie Zuleger, vice solutions can be fraught with practical, political, and president and chief lending officer at $1.2 billion asset technical pitfalls. These traps can cost your credit union Y-12 Federal Credit Union in Oak Ridge, Tenn. “We are time, money, employee morale, and member loyalty. in a society of convenience. We want it when we want it It’s one thing to say you’re serving members’ technology and how we want it.” needs but quite another to move seamlessly from concept Behind the ease with which members can access to execution. services with a few clicks on a cellphone or Sidestepping the obstacles through careful planning tablet, however, lies a thicket of head- and far-sighted strategy allows credit unions to work splitting complexity, cost, and planning. more seamlessly toward helping their members get their “The challenges can be nuanced and hands on the convenient mobile access they demand.

34 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org iStock

And the planning, like the information technology (IT) customers are more profitable than their nonmobile elements, can greatly benefit from being integrated and counterparts, NCUA reports. Consider that: forward looking. u Members who used mobile banking brought in 36% Working with a mobile solution, vendors and legacy more revenue than branch-only members, and were less systems can become a challenge. Do you try to find ways than half as likely to leave their credit unions. to make your core system perform the new tasks or u Within three months of adopting mobile banking, the choose a third-party vendor and try to get their software average number of monthly point-of-sale transactions to talk with your legacy system? for credit union members rose by 19%, their ATM “The keys are to ask the right questions upfront, get transactions increased 25%, and their bill-pay transactions things in writing, get references, and ensure your IT increased 13%. team is involved, capable, and can support the need of u The attrition rate for members of large credit unions technology integration,” Zuleger says. who used mobile banking was just 4.9% compared Another key vendor consideration is support, she says. with 13.4% for members who weren’t enrolled. Among Implementation can be labor-intensive with providers medium and small credit unions, the attrition rates were whose idea of support is providing manuals and videos. even lower: 2.8% for mobile bankers. u Some companies go above and beyond with a project continued team and project plan. “It varies greatly,” Zuleger says. Benefits of mobile Focus Overall, 47% of credit unions offer mobile banking services, according to the NCUA report, “Going Digital: u Adopting technologies, such as mobile Strategies for Providing Digital Services.” That ranges lending solutions, can be fraught with pitfalls. from 4.4% of credit unions with less than $10 million u Offering mobile lending and other services in assets to 95.7% of credit unions with more than can have many benefits. $150 million in assets. u Board focus: A growing number of members Not only are mobile transactions less expensive obtain loans on mobile devices. than in-branch transactions ($0.19 versus $4), mobile

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 35 BE ‘SCRAPPY AND BOLD’ Cisco Malpartida Smith’s small credit union is leveraging technology one bit at a time, substituting resourcefulness for resources. “We needed to project bigger than what we were,” says Smith, president/CEO of $10 million asset Florist Federal Credit Union in Roswell, N.M. “And technology is helping us accomplish that.” Since assuming the helm at Florist Federal in 2016, Smith u More than half (53%) of mobile banking users were used professional ties to upgrade its digital presence. younger than 55 years. A group of students he once mentored at $17 million Although mobile bankers can be found in every asset Georgetown University Alumni and Student Federal generation, use skews younger—with millennials and Credit Union in Washington, D.C., went off to start a New Generation X leading the way. York-based firm called Narmi Tech, a financial technology company which offers affordable digital solutions for small Integration issues credit unions. Chang says Kinecta’s digital transformation started several Smith used the firm to rebuild the credit union’s website years ago and has led to the credit union developing a and provide online banking for the first time. custom solution for mobile lending. While this requires “In about 60 days, we had the website and online banking Kinecta to apply more effort and resources, it also gains up and running. That’s really fast. It could take two or three flexibility, he says. years for some shops,” says Smith. “One of the biggest benefits was being able to This year, the credit union—which serves florists nation- control the end-user experience and not be held back ally—is working to implement a mobile video application that by vendors’ limitations,” Chang says. “If we want to use allows members to speak with staff about loans, member- selfie technology to perform the Know Your Customer ship, and other financial issues. process, we have that option. If we want to leverage a Because of its size and modest resources, Florist Federal payment service like Venmo or PayPal or Apple Pay, we has not been able to deploy a mobile lending system. But have choices.” Smith is again using resourcefulness to compensate. There’s also a danger in adopting too many high- Because a large part of the credit union’s loan business tech systems because that can ratchet up the complexity involves lending for floral delivery vans, he is working on involved in getting your systems to multitask and talk to a product concept that would entail working with an auto one another—and to your members. manufacturer to get discounts on a number of vans, and then Alex Barker, senior vice president and chief information offering 100% financing to members along with a free vinyl marketing wrap for the vehicles. officer at $7 billion asset Mountain America Credit Union “Even if we don’t have a full-service lending mechanism on in West Jordan, Utah, says his credit union wrestles with mobile, here’s a creative way to differentiate our products adopting voice authentication. without making a heavy investment,” Smith says. “We like “Identification is getting harder for us to get right and to think of ourselves as scrappy and bold, and that requires not make it painful,” says Barker, a member of the CUNA thinking outside the box.” Technology Council executive committee. “Does your voice authentication work at the drive-up, at the teller line, on your mobile app, and in the call center?” Barker says Mountain America is weighing the integration problems the new technology poses and identify ways to leverage the service across all platforms. “It becomes difficult to integrate because, in most cases, they’re different systems,” he says. “We could go live today with voice authentication in the call center, but it’s an island, and nothing else can talk to it.”

36 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org MOBILE

LENDING IS conferencing service called Vidyo, a CUNA Strategic Services alliance provider. And, lending never drives A MUST. members to a call center or branches. “Our marketing drives people to mobile efforts,” STEPHANIE ZULEGER Zuleger says. “Any sales or promotions that we do are only available online in all areas of lending—no exceptions. People get used to mobile lending and see the efficiencies, and then they feel comfortable.” Integrating systems can also become a divisive NCUA’s “Going Digital” report suggests: issue inside the credit union, stalling or sidetracking u Offering incentives to migrate current members to implementation, says Joe Brancucci, president of CU mobile channels, or disincentives (such as fees for paper RateReset, a CUNA Strategic Services alliance provider statements) to stay in the old channels. that offers preapproved refinancing solutions. u Training staff to help members make the switch. Staff “If I have a lending solution and I want to integrate must become promoters of the new channels. it into the core, I don’t own the core,” he says. “IT owns u Reducing resources, where appropriate, that are the core, so I’ve got to convince them that the integration committed to old channels. Otherwise, savings may never and interface is something they want to do. Once you be realized. get through the noise and political maneuvering, and get Chang says that timing marketing campaigns can also to the fact that we’re creating a frictionless solution for help with member expectations. For example, instead of members, then everyone gets in line and we get quick emailing a loan promotion on a Friday night that can’t implementation.” be auto-decisioned, he suggests sending the promotion Brancucci’s experience shows that credit unions that on Sunday night. have the most success with digital change develop a digital “Let’s say they view it and fill it out, then first thing in transformation group headed by a C-suite executive to the morning somebody’s already working on it,” he says. leverage resources, and implement and develop strategy. Analyzing data generated from mobile lending and “It’s like an office project on steroids,” he says. “It’s adjusting processes accordingly is also crucial, Chang says. focused on innovation and digital transformation. “From getting the email, how many viewed or opened it?” Because if we stay in the traditional manner of delivering he asks. “How many clicked into the application? And them, we will be the Blockbuster Video of the financial what was the drop off at specific steps? And what were world. You have to re-imagine products and services.” the actual outcomes from a decisioning and funding The transition also has to account for how to manage standpoint?” the operational results after moving to mobile lending Because of the pace at which new technologies roll out, solutions. experts urge planning for continual digital evolution. Get “You need sufficient staffing to handle any manual ready to dig in and plan for the long haul. underwriting—to match consumer expectations around time-to-decision when it cannot be auto-decisioned,” Chang says. “People want instant gratification.”

Mobile marketing Resources Moving to mobile lending should also change how u CUNA Technology Council: cunacouncils.org a credit union markets itself. Zuleger says all of Y-12 u CU RateReset, a CUNA Strategic Services Federal’s loan marketing has gone digital in an effort to alliance provider: curatereset.com drive adoption of other digital solutions. u Vidyo, a CUNA Strategic Services alliance The credit union does not take applications for home provider: vidyo.com equity lines of credit in its branches, and soon members will be able to originate and sign documents via a video

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 37 u RULES u REGULATIONS u DEADLINES

FAQ Available for Customer Due Diligence Rule The Treasury’s Financial Crimes of questions and answers. CUNA’s rolled over, the bank establishes Enforcement Network (FinCEN) compliance staff notes that Ques- another formal banking relationship issued a new FAQ for its Customer tion 12 is particularly interesting for and a new account is established. Due Diligence (CDD) rule, which credit unions. Covered financial institutions are went into effect May 11. This FAQ It addresses whether renew- required to obtain information on is in addition to the set FinCEN able share certificates/certificates the beneficial owners of a legal enti- published in July 2016, and the of deposit (CD) constitute new ty that opens a new account, mean- agency says it may issue additional accounts under the rule. ing (in the case of a bank) for each FAQs and guidance or grant excep- Financial institutions are new formal banking relationship tive relief as appropriate. required to have their legal entity established, even if the legal entity The document contains 37 sets customers certify the beneficial is an existing customer. owners for existing customers dur- Additional information on the ing the course of a financial prod- answer can be found on pages nine uct renewal (e.g., a loan renewal and 10 of the FAQ. or CD). The FAQ also covers: Consistent with the definition of u Beneficial ownership threshold. “account” in the customer identi- u Identification and verification. fication program rules and subse- u Collection and retention of ben- quent interagency guidance, each eficial ownership information. iStock time a loan is renewed or a CD is u Other definitions.

NCUA Issues Legal Opinion on Loan Participation NCUA General Counsel Michael McKenna said the answer is “These requirements support McKenna recently issued a legal “yes” as well. Section 701.22(d)(4) the underlying principle that the opinion letter (18-0133) from the requires a loan participation agree- purchase or sale of a loan partici- agency on loan participations. An ment to identify each participated pation represents an interest in a inquiry was made about whether loan, enumerate servicing respon- single loan. This principle must be a loan participation must meet the maintained throughout the life of requirements of NCUA’s loan par- a participated loan, including ser- ticipations regulation throughout vicing,” McKenna wrote. “There- the life of the transaction. fore, a servicer generally cannot “Yes, certain provisions of the deduct a servicing fee related to a loan participation must be met nonperforming loan participation throughout the life of the transac- from the principal and interest tion,” McKenna wrote. received from a performing loan Another part of the inquiry participation, even when many asked if a participated loan must loan participations are sold to the be identified and treated indepen- same purchasing credit union.” dently of all other participated sibilities for that loan, and include He also noted that NCUA’s loan loans, even when many partici- disclosure requirements regarding participation regulation does not pated loans are sold to the same the ongoing financial condition of prohibit servicing practices that purchasing credit union at the that loan, the borrower, and the may make administering multiple same time. servicer. loan participations more efficient.

38 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org u RULES u REGULATIONS u DEADLINES

Reg CC Creates Remote Deposit Capture Indemnity The 2017 Regulation CC final rule institution that accepted the original ensure the language in your remote becomes effective on July 1. It cre- check incurred a loss because the deposit capture agreement requires ates a new Remote Deposit Capture check had already been paid. your member to add a restrictive Indemnity in Section 229.34(f) to The final rule added an excep- indorsement to the check such address the allocation of liability tion to the indemnity, and associ- as “For Mobile Deposit Only,” or when a depository institution, such ated commentary, which would similar endorsement. as a credit union accepts deposit prevent a bank from making an of a check through remote deposit indemnity claim if it accepted the capture. original check containing a restric- In other words, when the deposi- tive indorsement inconsistent with tor/member sends the credit union the means of deposit, such as “for electronic information about a mobile deposit only.” check—such as a photographic The Federal Reserve Board image—the credit union uses it to believed that providing this excep- create an electronic check or substi- tion could reduce accidental double tute check for collection. deposits and could provide incen- The proposed indemnity would tives for financial institutions that be provided by a credit union that receive remote deposit capture accepted a check via remote deposit deposits to take steps to minimize capture to a financial institution intentionally fraudulent deposits. that accepted the original check for If you accept checks via remote deposit, in the event the financial deposit capture, you may want to iStock

Compliance Q&A by CUNA’s Compliance Team

Q Do we have to now report all home purchase loans. even though these requests may consti- mortgage preapproval requests under Preapproval requests for open-end tute applications under Regulation B for the Home Mortgage Disclosure Act lines of credit, reverse mortgages, and purposes of adverse action notices. (HMDA)? What about prequalification home purchase loans to be secured Be careful that your credit union is requests? by multifamily dwellings aren’t cov- using the terminology correctly and the ered transactions under the new rule. prequalification isn’t actually a preap- A The collection, recording, and The appendix to the rule states that proval under the rule. reporting of preapproval requests that incomplete preapprovals should not be The important factors are whether a full are approved but not accepted used reported. credit underwriting with a commitment to be optional under Regulation C. As However, prequalification requests are to lend takes place or if the approval is of Jan. 1, 2018, covered institutions treated differently under the rule. Regu- an informal estimate of an amount for are now required to collect, record, lation C doesn’t require an institution to which an applicant “might” qualify. What and report information for approved but report prequalification requests on the the credit union calls the approval is not not accepted preapproval requests for HMDA loan application register (LAR), the controlling factor.

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 39 COMPLIANCE

Rethinking the Roth IRA Elimination of recharacterizations creates new tax considerations.

Dennis Zuehlke

Congress has eliminated the the advantage of tax-free growth point may become unaffordable by ability to reverse a Roth individual in a Roth IRA, and you will avoid tax time. retirement account (IRA) conver- required minimum distributions Investors who underestimate the sion—known as a recharacteriza- during your lifetime—allowing you cost of the conversion often dis- tion—as part of the recently passed to pass along tax-free IRA assets to cover at tax time that they do not tax-reform bill. your heirs. have the money to pay the taxes As a result, IRA owners who on the conversion. Congress recog- made a Roth IRA conversion contri- Important decisions nized this when it created the abil- bution on or after Jan. 1, 2018, and The advantages make Roth IRA ity to convert assets to a Roth IRA, later suffer buyers’ remorse will no conversions attractive, but investors and created recharacterization as a longer be able to reverse the trans- often have a difficult time deciding way to reverse the transaction and action and the tax consequences whether to convert, because they the tax outcome that it creates. In associated with it. are unable to determine the tax other words, if you are unpleasantly A Roth IRA conversion allows impact of the conversion until long surprised at tax time and want to you to convert traditional IRA after the transaction occurs. Any change your mind, you get a “do- assets to a Roth IRA or roll over number of events during the year ove r.” employer-sponsored retirement of conversion, including the sale of While it may not have been Con- plan assets to a Roth IRA. You pay securities, purchase of a home, new gress’ intention, recharacterization taxes on all pre-tax assets that you job, or a salary increase can affect also is used by individuals as a way convert—but not the 10% early- taxable income. to reduce the cost of a Roth IRA distribution penalty tax—regardless A Roth IRA conversion transac- conversion in cases where the value of your age at the time of conver- tion early in the year that looked of the converted assets declines sion. Once you convert, you have manageable from a taxation stand- sharply after the conversion. An individual who converted assets to a Roth IRA, only to see the value of the assets decline sub- stantially, can recharacterize the transaction up to Oct. 15 of the year following the year of conversion. After a mandatory waiting period, the individual can then reconvert the assets to a Roth IRA, and pay taxes based on the lower value of the assets at the time of the reconversion. For example, if an individual converted $100,000 in pre-tax traditional IRA assets to a Roth IRA, and the value of the converted assets fell to $50,000, the individual could recharacterize the assets back to the traditional IRA. If, after the waiting period, the recharacterized assets are worth $60,000, and the individual recon- iStock verts the assets to a Roth IRA,

40 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org the individual will pay taxes on annual IRA contribution. paying the taxes associated with $60,000, the value of the assets at For example, individuals who the conversion. The change in the time of reconversion, rather than contribute to a Roth IRA and later tax law should not dissuade credit $100,000, the value of the assets at discover that their income exceeds union members from converting the time of the original conversion. the income thresholds can rechar- assets to a Roth IRA. Converting acterize their contribution to a to a Roth IRA may be advanta- Reconversion considerations traditional IRA. Contributions to a geous for credit union members This use of recharacterization fol- Roth IRA can be recharacterized to who believe that their tax rate in lowed by reconversion allows indi- a traditional IRA, and contributions retirement will be higher than their viduals to move the same assets to a traditional IRA can be rechar- current tax rate, or want to avoid from a traditional IRA to a Roth acterized to a Roth IRA under the required minimum distributions IRA and pay taxes on the reduced current recharacterization rules. and pass along tax-free IRA assets value of the assets at the time of to their heirs. reconversion. Most individuals who recharacter- A trusted adviser ize for this reason fully intend to If members can’t Survey after survey affirms that reconvert to a Roth IRA, but they members view their credit unions want the tax benefit associated with pay the taxes as trusted sources of financial the reduced value of the assets. information and advice, and with Some members of Congress viewed and still want this new change in the tax law, this use of recharacterization as members may look to their credit inconsistent with the original pur- to convert, they unions for assistance with Roth pose of recharacterization. IRA conversions. But now that Congress has elimi- should seek tax In situations where members nated the ability to recharacterize a inquire about converting to a Roth IRA conversion, once you con- advice. Roth IRA, credit unions should vert, you have no way to reverse the encourage the member to seek tax transaction and are stuck with the advice and carefully consider the tax consequences. tax consequences, including This change in the tax law elimi- This little-noticed change in the any potential changes to the mem- nates the ability to recharacterize a tax-reform bill that eliminates the ber’s income and the member’s abil- Roth IRA conversion made on or ability to recharacterize a Roth IRA ity to pay the taxes on the after Jan. 1, 2018. However, the IRS conversion sets up a tax trap for the conversion. has clarified that a Roth IRA con- unwary. Individuals who convert If a member cannot pay the taxes version made in 2017 can still be and do not seek tax advice may not and still wants to convert, then recharacterized. Under current law, be aware of the tax impact until they should seek tax advice, and individuals who made a Roth IRA they file their federal tax return may want to consider spreading out conversion in 2017 have until Oct. months later. If they converted the conversion over a number of 15, 2018, to recharacterize the con- assets and do not have the money years. The member can convert a tribution to a traditional IRA. to pay the taxes, they are now stuck portion of the assets to a Roth IRA Although recharacterization is no with their decision and can’t reverse each year and pay taxes only on the longer permitted for Roth IRA con- the transaction or the tax conse- amount of pre-tax assets that they versions, it is permissible for annual quences associated with it. convert each year. IRA contributions. Individuals can However, converting to a Roth continue to use recharacterization IRA offers substantial tax advan- DENNIS ZUEHLKE is compliance manager to correct an error in making an tages for many investors, even after for Ascensus. Contact him at 608-229-1875.

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 41 u OPERATIONS u TRENDS u SOLUTIONS

A New Branch Prototype While many financial institutions struggle to find a happy medium between their digital and physical presence, Listerhill Credit Union in Muscle Shoals, Ala., has planted a flag into the financial services landscape by opening a state-of-the art facility that also expands services to members. “The expectations of what a branch is are changing,” says Brad Green, president/CEO of the $755 mil- Listerhill CU’s new prototype branch features a “community wall” that allows lion asset credit union. “Of utmost members to see the local impact of the CU’s footprint. concern to us is the value, the convenience, and the experience that we payments, or withdrawals anytime, wall” that displays Listerhill’s local provide our members.” even without a debit card. impact. The 4,000-square-foot financial The ATM offers members an “This office is the culmination of center introduces a new concept of optional video link to connect with a many years of work,” says Kristen Listerhill’s enhanced retail model, member advocate. Mashburn, Listerhill’s chief of staff, which includes an open floor plan Inside the branch, members can retail. “From surveys, workshops and and employees who are able to assist grab a cup of locally roasted coffee or credit union visits to constructing, members with any financial needs. a chilled bottle of water while chil- training, and testing, our team made The branch also includes a tube- dren have access to iPads with finan- sure that our members’ needs were less drive-thru area with new ATMs cially themed games. The member considered first in every decision that allow members to make deposits, waiting area features a “community we made.”

Text Messaging as a Lending Tool Text messaging is fast becoming says. “With text messaging, members the communication method of are picking the channel they use to choice for consumers. Educators learn from Educators Credit Union. Credit Union in Mount Pleasant, At the same time, they can engage Wis., uses it to engage members in with us. It’s exciting to open the door the loan process. for these educational conversations.” The $2 billion asset credit union Indeed, using the Elle system, employs Elle, a conversational text- iStock the text-message reply rate among messaging platform from the fintech to scale its operations. members and nonmembers company Shastic. When members “From an organizational stand- applying for loans is 70%, with more begin the online vehicle loan or point we are always looking for ways than half responding by text in 90 credit card application process, to offer new channels to extend our seconds. Nearly 1 in 3 text messages they’re given the option to receive conversation with members,” says received were from nonmembers. text messages from the Educators Emily Olson, marketing development “This gives us the ability to help loan engagement team. specialist. members through the loan process The credit union sees text mes- The credit union also employs text in a way that’s convenient for them,” saging as a more cost-effective way messaging as a marketing tool, Olson says Olson.

42 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org u OPERATIONS u TRENDS u SOLUTIONS

Best: Member Data Should Drive Strategy Members’ data should drive millennials, all millennials use must recognize new disciplines strategy at your credit union, mobile services, only 25% of your sooner rather than later, and give according to John Best, CEO of members use branches, and that them a seat at the table.” Best Innovation Group. checks are dying. Best addressed the 2018 “You’ve got to trust the data,” he “This is conventional wisdom CUNA HR & Organizational says. that I’m sure you hear every day,” Development Council Conference To take full advantage of that Best says. “Things are changing.” in Fort Lauderdale, Fla. data, Best says credit unions must: 2. Create a data-driven 1. Challenge conventional culture. Assumptions won’t move wisdom. Revisit the beliefs you your credit union forward, Best hold true, including that bill says. Challenge people to back up Snapshot pay is a sticky feature, digital their statements with data. transactions are always cheaper 3. Measure your strategies. Hispanic Housing than in-person transactions, Use data to improve processes at Growth mobile members are mostly your credit union. And don’t be afraid to fail. “Failure is a symptom of two things: trying and innovation,” Best says. “When we don’t try things, we fall behind.” 52% 4. Be predictive. Use data to try to predict member behavior or find answers to your biggest problems. While credit unions’ use of data analytics is still somewhat Hispanics will account for 52% in its infant stage, Best says of new homeowners between credit unions must recognize the important role it has in 2010 and 2030. determining results. “You will have a chief analytics Source: Urban Institute John Best officer someday,” he says. “We iStock

Ward Off Wage Lawsuits: Six Steps While a federal overtime rule that unions to reduce the risk of wage them a specific procedure to follow was slated to take effect in late 2016 lawsuits by taking six steps: and put it in writing,” Gobeo says. was put on hold, the Department of 1. Require all employees, even 4. Have employees and super- Labor (DOL) is expected to revisit exempt staff, to record their time. visors sign off on pay and time the issue in the future, says David 2. Audit job descriptions for records, and any changes made to Gobeo, an employment attorney exempt positions to determine if them. with Ford & Harrison LLP. they match the actual duties those 5. Train managers on lawful pay Gobeo expects DOL to revisit employees perform. practices. the minimum salary for exempt 3. Implement safe-harbor polices 6. Put any policies and pro- employees. He encourages credit to correct payroll mistakes. “Give cedures regarding pay in writing.

cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 43 TOOLS OF THE TRADE

No Barriers to Developing a Mobile Strategy All credit unions can provide mobile technology regardless of asset size. Patrick Totty

“Younger members,” Collins submit them, Narmi will negotiate says, “expect digital tools and access with Comcast for a $30 reduction in across channels, including call center their monthly bills. availability at off hours. What I’m u If a credit union wants to describing here is a level of service encourage members to use direct that small credit unions would have deposit, Narmi can offer one year’s considered unobtainable just a few worth of Amazon Prime to those who iStock years ago.” make that switch as an incentive. One plus of modern tech- Collins says “our mobile solutions There’s an educational aspect to nology is that credit unions of any are the great equalizer with regard to mobile apps that vendors gladly take size can access tools that allow them the comparative size of all financial on, Lotz says. to compete with big banks when it institutions.” CU*Answers offers “We’ll tell a client how to com- comes to mobile strategy. mobile features that are equal to what mercialize mobile,” he says. “We’ll “As long as small credit unions larger financial institutions offer. say, ‘Here’s a product and why it’s have the right attitude, which is to “The size of the credit union should useful. Here’s how to approach your be aggressive in giving good service, be of no consequence,” he says. members with it. Here’s what other there is technology available to them There’s also the element of vendor financial institutions in your space are to compete with far larger financial willingness to front-load a mobile app doing with it. Here are studies about institutions,” says Nikhil Lakanpal, with some potent capabilities. this approach to mobile.’ ” co-founder of Narmi. “We call it the ‘kitchen sink’ There have been vast changes in concept,” says Collins. “Mobile Mobile means self-service what mobile offerings are available— banking tools do not make money in “Mobile and online capabilities are and what people expect—compared general, they simply transfer banking basically a self-serve approach to with five years ago, says Jeremiah from one channel to another. members’ financial management,” Lotz, vice president of product “That means all of a credit union’s says Lotz. “Members no longer need management at PSCU. That’s partly mobile app capabilities are folded into to walk into a branch to perform because large companies like Amazon their core processor,” he continues. sophisticated transactions like and Samsung have created some high- “Any credit union that uses our balance consolidation or document tech capabilities for consumers. core will be getting free mobile apps origination. That removes the higher- “Originally, mobile offered basic fore ve r.” cost, face-to-face transactions from services such as account balances and “We’re bringing a different the mix. Digital payment capabilities transfers,” Lotz says. “But as services technology to the table,” says allow credit unions to more effectively have evolved, credit union members Lakanpal. “We are more than a compete with big banks.” now expect almost continuous change software product supplier; we’re out Sophisticated mobile apps aren’t just in what it can do. So their question there looking for the latest fintech for large credit unions, says Collins. becomes: ‘We can get these services innovations—like our Billshark and “No one can be left behind, or our at Bank X, how about with you?’ Lemonade partnerships—and will industry is in trouble,” he says. “Every Providing a good answer is the role integrate them into our platform on credit union needs a mobile strategy. we p l ay.” behalf of credit unions.” It should be embedded in its DNA.” Scott Collins, executive vice Not only does Narmi’s app offer president of national sales and the quickness and simplicity that marketplace relationships at users expect, Lakanpal says, it also CU*Answers, says the most sought- provides some capabilities—such Resources after type of services that smaller as negotiating discounts or offering u credit unions seek when it comes incentives—that larger financial CU*Answers: cuanswers.com to mobile apps are remote deposit institutions don’t. For example: u Narmi: narmitech.com capture, API-based bill pay, and u If credit union members take u PSCU: pscu.com multifactor authentication. pictures of their Comcast bills and

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cuna.orgt JUNE 2018t CREDIT UNION MAGAZINE 45 BRANCHING OUT

Know Your Salesperson Nine types of vendor reps and their ‘superpowers.’

James Collins Vendors. We all deal with thing from an ATM in them—and we all need them. on up as a “bank,” no Vendors do things you can’t, matter how many times such as bringing expertise you don’t you correct them. have or performing duties beyond u The talker. Basically, (or beneath) what your staff can do. what just walked They’re as integral to your into your office isn’t business as your most trusted a salesperson but a employee—and can be as walking Facebook checking accounts would destroy problematic as your worst. update. the industry. Quite often, the primary face Prepare for the first 30 minutes of Superpower: They have a hard- your meeting to focus on everything of the vendor relationship is a shelled briefcase and know how to from the weather to pet pictures. salesperson. While these folks open it. come in more flavors than Baskin Superpower: Compressing an u Doomsdayer. Their one and Robbins, they do fall into broad hour-long strategy meeting into the only goal is to put the fear of God categorizations: five minutes left over at the end. u u into each and every participant. The LinkedIn guy. After PowerPointer: Their specialty The reason is irrelevant: Cash is badgering you to connect on social isn’t the product, the service, or going away, financial institutions media, he instantly launches into a the company. They excel at one will dissolve into a series of mobile long-winded online/email pitch on thing: Clicking their way through a phone apps, or a Spice Girls reunion whatever he’s representing. PowerPoint presentation so full of tour is imminent. Superpower: They can fill up your slides it could double as the wiring Salvation is at hand, however, for email box faster than a foreign manual for a Boeing 747. only a three-year, auto-renewing dignitary. Superpower: Maintaining sanity contract. u ‘I was in the neighborhood.’ as they start each presentation with Superpower: They smile a lot for Unannounced, they stop by the a 15-minute history lesson on their someone predicting the end of the office to drop off some literature, all company. world. the while hoping for a meeting. The u ‘I brought food.’ Some of the u The Brady Bunch. You don’t get more aggressive types camp out for nicest, most generous, and kindest a salesperson, you get a sales team. a while. The very aggressive bring people fall into this category—at Your first clue is that your largest a tent. least until the food is gone. boardroom suddenly runs out of Superpower: They can live for days Superpower: Everybody has a chairs. on lobby coffee. price, and they know yours is Each person in this group knows u Cross-industry dude. The Starbucks coffee and a Danish. exactly one thing. Put it together, company’s product is for a u The experienced veteran. After and you have a presentation. completely different industry. But tying up their steady horse to the Superpower: You can play a if you squint your eyes, turn your post out front, they come in and pickup game of basketball on the head, and take antihistamines you bring you—get this—binders. Then fly. may kind of see where they’re they begin their pitch, which is coming from and how their product partly a story of how they sold their JAMES COLLINS is president/CEO at might be used in the credit union. first widget to Alphonse Desjardins O Bee CU, Tumwater, Wash. Contact him Superpower: They refer to any- and how they predicted that at 360-943-0740 or at [email protected].

46 CREDIT UNION MAGAZINE u JUNE 2018 u news.cuna.org

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