“A NEW APPROVAL POLL of INSTITUTIONS SHOWS Banks

Tools and Resources for Credit Unions • DECEMBER 2013

Trends and Topics Co n t r a r y t o Ru m o r s , Br a n c h Tr a n s a c t i o n s of the Month Ar e In c r e a s i n g While consumers are increasingly “A Ne w Ap p r o v a l Po l l Of using mobile and other e-services to check account balances, transfer In s t i t u t i o n s Sh o w s Ban k s funds, or pay bills, they still over- r e e c o n d r o m h e o t t o m ” whelmingly prefer getting financial A S F T B advice and making deposits at their The results of a new poll have just branch. That’s according to a new been released. study from the Filene Research It lists the approval ratings for most Institute and the Pennsylvania Credit Union Association. major institutions. There’s no question that the mobile The next to lowest approval rating option is becoming increasingly went to banks — only slightly above popular. The study found that mobile the rating for Congress. activity grew more than 90 percent in 2012 and may soon account for Yes, people strongly feel they cannot the majority trust banks. of balance inquiries, Consequently, one of our biggest challenges is to prove bank trans- to our Members that their Credit Union can be trusted. fers, and No tricks … no deceptions … no undercover tactics. check That’s the way many successful Credit Unions have shown deposits. how we differ from banks. We can be trusted. No gimmicks. However, the research And these CUs have found that this is the major factor for cited 2011 increasing Member loyalty. Filene study findings that Consequently, is it “Caveat Emptor” (Let the Buyer Beware) continued on page 2 or the assurance that the Credit Union can be trusted? In s i d e Th i s Is s u e This month’s American Income Life Blue Paper discusses this decision. It’s titled,“A Ne w Ap p r o v a l Po l l Of 2 Trends & Topics In s t i t u t i o n s Sh o w s Ban k s Ar e Se c o n d Fr o m technology Report Th e Bo t t o m .” ◆ 3 Legislative Dispatch For your complimentary copy, just contact your AIL representative or call the 4 Marketing Tips AIL Credit Union Center at 800-278-6661. Serving the Community

Published as a public service by the Credit Union Center of American Income Life Insurance Company, P.O. Box 2608, Waco, TX 76797. Call The Credit Union Center Hotline at 1-800-278-6661 with suggestions, questions and requests. Visit our website at: www.ailife.com 2 • December 2013 • Credit Union Lines

Trends and Topics As critical as digital is, the report says, “branches remain continued from page 1 important for establishing member relationships and 74 percent of banking consumers handling high-value transactions.” The report concludes opened their most recent account at that for more complex activities, such as opening an a branch, 59 percent had performed account, applying for a loan, and seeking financial advice, a branch transaction in the past the “payoff for getting them right is large in terms of month, and 52 percent said their branch location was the trust, loyalty, and cross-selling opportunities” — making top reason they selected their financial institution. branches a critical component of CU services. ◆ Ca s h , Ch e c k , o r Te x t ? St u d y Lo o k s a t Pe r s o n -t o -Pe r s o n Pay m e n t The results of Fiserv’s 2013 “How Americans Pay Each Other” national survey show that, overall, digital payments have hit a critical mass. Nearly 50 percent of respondents reported making a payment at least once a month using a laptop or desktop computer; 30 percent have made a payment via their mobile phone and 22 percent using their tablet. In addition, according to the survey, 88 percent of U.S. consumers have sent money to another person in the last 12 months. Among those, 56 percent used cash, 41 percent used a check, and 31 percent used an online method, such as a bank-based person-to-person payment service or PayPal. Although the single most common way to exchange funds was by giving cash in person, nearly one-third of respondents said they never have enough cash on hand to pay someone back. (That number rose to 39 percent among 18 to 24 year-olds.) Seventy-nine percent said they would be open to using a digital person-to-person payment service from their bank. “While digital payments are now common for such things as paying bills, there has not really been a practical way to send money to another person electronically,” said Tom Roberts, Senior Vice President of Marketing, Electronic Payments, Fiserv. “Services like Popmoney, which allows users to send or receive money using an email address or mobile number, are changing that. Just as ways people communicate with each other have become more digital, their payments to each other are becoming more digital as well.”◆

Technology Report Ma k i n g t h e Sw i t c h t o EMV Te c h n o l o g y CU Wa ll e t Bu i l d i n g Ne t w o r k o f Cr e d i t Un i o n s NAFCU’s Economic and CU Monitor for In preparation for its product launch, expected by the November reports that technology is on end of this year, CU Wallet had added 25 new credit the front burner for credit unions as they union partners as of the end of October, representing consider the technological savvy of their 3 million members across 17 states. members and make plans for complying with CU Wallet is the industry’s first credit union centric mobile EMV technology requirements by 2015. EMV (Europay, payments initiative. Founded in 2013 by financial services MasterCard, and Visa) features payment instruments, entrepreneurs Paul Fiore and Kirk Drake, CU Wallet is a such as credit cards or cell phones, with embedded highly differentiated mobile payments infrastructure microprocessor chips that store and protect cardholder designed for credit unions by credit unions. According to data. The technology is set to replace magnetic stripe cards. its founders, “The CU Wallet platform helps overcome One-fourth of credit union respondents to the NAFCU major industry hurdles to mobile payments adoption, survey said they believe their members are “above average” allowing credit unions to better serve current account or extremely proficient in their knowledge of new tech- holders, attract a new generation of tech-dependent mem- nology. Nearly half rated themselves as above average or bers, and better compete amongst increased competitive “very high” on the technological competitiveness scale, and pressure from non-bank mobile payment ventures.” more than half plan to be at that stage within five years. Fiore says credit unions that adopt CU Wallet will The chip technology standard for payment was first used be able to offer their in France in 1992. Today, there are more than 1 billion chip members a common cards used around the world. The United States is one of way to access offers and the few industrialized nations that have not fully transi- execute mobile pay- tioned to this technology standard. ments from across the entire network of participants, State Department Federal Credit enabling both national offers through the network and Union in Alexandria, Virginia is among local campaigns through individual credit unions. the few U.S. financial institutions to “Mobile wallets are inevitable,” said Fiore. “By joining offer the chip. Last year, the credit union rolled out new forces in a collaborative initiative, credit unions have a credit cards equipped with both a standard magnetic unique opportunity to define the future of mobile pay- stripe and an EMV chip that can be used domestically or ments, while preserving the core values that define the abroad. The CU first had its CEO and a board member credit union movement. CU Wallet offers credit unions an take the card for a test drive while traveling overseas. alternative to current third-party applications, a credit Then it launched a full-scale media blitz to alert members union controlled solution.” ◆ to the coming changes. ◆

Marketing Tips of the Month The website promises: “In just 15 minutes, we CU’s Re f i n a n c i n g Pr o g r a m will review your credit card and auto loan rates Hi t s Mi ll i o n Do ll a r Mi l e s t o n e to see if we can beat them. If you’re approved but we can’t lower at least Patelco Credit Union in Pleasanton, California, says its one, you’ll walk away with $25. “Switch to Save” loan refinance program hit a milestone This includes credit cards from other with participating members saving more than a million financial institutions, department dollars. Patelco launched the program earlier this year as a stores, and gas stations. We’ll even pilot in a small number of branches and recently extended waive the balance transfer fee; that’s up it to all its locations. to a $75 value per transfer.” Switch to Save offers to pay participants $25 if refinancing “We are really proud of this milestone,” said Ryan Misasi, their auto loans or switching their credit cards to Patelco Patelco’s Chief Retail Officer. “The success of this program does not save them money. According to the CU, however, shows that Patelco truly is in a position to improve the most people who go through the program save a financial lives of a great number of people. We look “significant” amount. forward to sharing the program with many more people Approximately 1,000 throughout the Bay Area and Sacramento.” early participants The program is available to members of the community as achieved more than $1 well as current credit union members. ◆ million in savings. continued on page 4

information about consumers without their knowledge or consent. n H.R. 3183, introduced by Rep. Lynn Westmoreland Ho u s e Fi n a n c i a l Se r v i c e s Co m m i t t e e (R-GA) and approved 32 to 25, would provide consumers with free annual disclosure of information the CFPB pp r o v e s i ll s A CFPB B maintains on them. ◆ On November 21, the House Financial Services Committee passed six bills to make changes in the Se n a t e Ho l d s He a r i n g Consumer Financial Protection Bureau: o n Ho u s i n g Fi n a n c e Re f o r m n H.R. 2446, the Responsible Consumer Financial On November 5, the Senate Banking Committee held a Protection Regulations Act, introduced by Rep. Spencer hearing on “Housing Finance Reform: Protecting Small Bachus (R-AL) and approved 31 to 21, would replace Lender Access to the Secondary Mortgage Market.” the CFPB’s director with a five-member commission Financial services representatives testifying at the hearing appointed by the president. responded favorably to a proposal by Sens. Bob Corker n H.R. 3519, the Bureau of Consumer Financial (R-TN) and Mark Warner (D-VA) to overhaul Fannie Protection Accountability and Transparency Act, intro- Mae and Freddie Mac and set up a new secondary duced by Rep. Randy Neugebauer (R-TX) and approved market that would also provide for the participation of 32 to 24, would subject CFPB to congressional oversight smaller institutions through an expanded Federal Home through the regular appropriations process and make it Loan Bank system and other means. a stand-alone independent agency rather than an inde- Bill Hampel, a Senior Vice President and Chief pendent bureau within the Federal Reserve system. Economist at NCUA said, “What credit unions would n H.R. 2385, the CFPB Pay Fairness Act, introduced by hope for is that the mutual would be substantial enough Rep. Sean Duffy (R-WI) and approved 21 to 23, sets the to serve their needs and it would be stable enough for basic rates of pay for CFPB employees on the General them to be able to count on it for the long run — with a Services scale, instead of allowing the CFPB director to standardized set of processes that they can always go to set and adjust the rates. regardless of the amount of volume that they bring in.” n H.R. 3193, the Consumer Financial Protection Senate Banking Committee Chair Tim Johnson (D-SD) Safety and Soundness Act, introduced by Rep. Duffy and ranking minority member Sen. Mike Crapo (R-ID) and approved 32 to 25, requires the CFPB to consider are drafting their own bill, which may include elements the safety and soundness of financial institutions in its of the Corker-Warner plan. rulemaking. It also streamlines the Financial Stability Hample said that if the mutual is structured properly, Oversight Council’s review and oversight of CFPB rules participation by larger institutions shouldn’t be a problem. and regulations. “We think if you provide smaller lenders the opportunity n H.R. 2571, the Consumer Right to Financial Privacy to pool their resources to create a utility large enough to Act, introduced by Rep. Duffy and approved 32 to 26, meet their needs, then it wouldn’t really be necessary to prohibits the bureau from collecting personal financial restrict the size of any other players.” ◆

Marketing Tips of the Month The Notre Dame FCU continued from page 3 website tells visitors not to assume that the credit Fo u r CU’s Un i t e d t o Se n d Me s s a g e : union is only open to Do n ’t Ba n k o n It individuals associated with the Four credit unions, two in northern Indiana and two name, adding, “You owe it to in southwest Michigan, have banded together to send yourself to find out if you are eligible to the message that credit unions are a better place to bank. join and experience the difference of Honor Credit Union and United FCU, both in St. Joseph, banking at a credit union.” Michigan, and Notre Dame FCU and Teachers Credit Notre Dame FCU’s Deidre Davis says of Union in South Bend, Indiana are all telling consumers: the campaign, “This kind of collaborative “Don’t Bank On It.” The effort promotes the advantages credit union partnership, aimed ultimately at the benefit of using a credit union over a bank, including the mem- of consumers, is the perfect example of how our industry bers-first approach, competitive rates, and low fees. The cares about the greater promotion also emphasizes that it’s easy to make the good of the communities switch from a bank to a CU. we serve.” ◆

CU Hi t s t h e Pav e m e n t Serving the Community Co a t Dr i v e Ke e p s f o r Ch i l d r e n ’s Ho s p i t a l Co m m u n i t y Wa r m Before the sun rose on Sunday, October 13, Wildfire Credit Union in Saginaw, 74 Credit Union of Southern California Michigan announced that it is distribut- employees laced up their sneakers in support ing more than 300 coats to United Way of the 23rd Annual CHOC Walk in the Park agencies in Saginaw, Bay City, and at the Disneyland Resort. The employees Midland counties. Over the last several raised $14,000 in donations through months, Wildfire employees operated the credit union’s employee-inspired a Keep Our Community Warm coat drive in which charity, CU SoCal Helping Hands. members and employees brought new coats, hats, CU SoCal was one of 20 southern mittens, and snow pants to credit union branches. California credit unions that hit the Wildfire employees pavement to raise awareness and raise also hosted a clothing funds for the Children’s Hospital of drive through the Orange County, a regional pediatric health months of August and care system serving children and families in southern September, during California. Credit Unions for CHOC, the largest team which hundreds of new, with more than 825 walkers, raised more than $115,000. gently used shirts, pants, “It’s an honor to unite with the credit unions here to shoes, and other items put the credit union philosophy of ‘People Helping were collected and People’ into action. CHOC is a wonderful organization donated to the Saginaw and helps build better lives for so many,” said CU SoCal Rescue Mission, Bay Area President and CEO Dave Women’s Shelter, and Gunderson. Shelterhouse in The 2013 CHOC Walk had the largest attendance and Midland, Michigan. ◆ highest fundraising total of any CHOC Walk so far. Nearly 16,000 walkers participated in the 5K walk through Disneyland and California Adventure, and $1.9 million was raised to support the care, family services, education, and research that CHOC provides for the region's children. ◆