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CO-OP Financial Services Blog: Insight Vault

Archive for January, 2010

Credit Union Opportunities in 2010

General / by President/CEO

As a movement, we have much to be proud of as we look back on 2009. In spite of a difficult year, we lived up to our mission of uplifting communities. As we look ahead to 2010, we may have another difficult year ahead of us characterized by slower organic loan growth, increases in loan delinquencies and losses, downward pressure on net income and falling net worth ratios.

In spite of these issues, I believe we have three outstanding opportunities before us to:

  • Boost fee income
  • Contain costs
  • Increase relevance

Boosting fee income can include increasing payments as a source of non-interest income; adding membership by reaching out to new demographics; retaining and cross-selling existing member relationships through superior service; capitalizing on interchange; evaluating your networks for operational efficiencies and access and convenience for your members; and investing in analytics and portfolio optimization so that you can influence card members’ behavior, boosting card usage and interchange income.

After a year in which Congress was distracted by the economy and health care, it can truly be said of interchange that the future is now. It is not clear how or if interchange rates will change, but CO-OP Financial Services encourages all institutions to continue supporting organizations such as the Electronic Payments Coalition (EPC) to protect fair interchange income for credit unions.

Cost containment can be found in enhancing fraud loss prevention measures through greater data security, improved controls and card reissuance, all of which will build cardholder confidence and increased usage. Secondly, contain costs by protecting your relationships with your existing members. Focusing on member service, such as 7×24 call center support, will reduce costly member turnover.

Credit unions also have an unprecedented opportunity to increase relevance. Compete head to head with every large financial institution in your field of membership.  Find the most appropriate trends for credit union relevance.  For instance, many banks are turning their backs on small business customers. This provides a source for members and is a great business opportunity. Finally, provide products and services that are innovative, promote a bigger geographic footprint and access ubiquity and cost efficiency, all with an eye for membership stickiness and retention.

The advantages of credit unions over banks as primary financial institutions has never been more compelling, or more widely reported by personal finance gurus and columnists. Among these have been Suze Orman (here), Liz Pullman Weston of MSN Money (here), Gerri Willis of CNN (here), Vera Gibbons of CBS News (here) and Bob Trebilcock of CBS MoneyWatch.com (here).

These three opportunities constitute a stand out and stay ahead strategy for the credit union industry in 2010 and beyond.

Fraud Watch: Remember the “P” in PIN Means “Personal”

Fraud and Risk / by Manager, Risk

Your card has been deactivated. Please contact us at 222-555-1001 to reactivate your card.”

If you received this text message, what would you do?

Over the last few months, there has been a recent trend where individuals are receiving this message or one very similar. The message does not go out to just customers of the financial institution possibly referenced in the text, but is rather spammed to thousands, possibly millions of random individuals in the hopes that even a small percentage will respond and provide their banking information to someone with less than honorable intentions in mind.

Unfortunately many bank customers and credit union members, fearful of the status of their card, will quickly respond to the message, provide the information requested only to have second thoughts afterward. It’s essential to remember that while a financial institution asks for a PIN at an ATM or possibly at a teller counter to verify a person’s identity, they will not ask for a PIN via SMS text message.

One particular vulnerable target audience is the age 18-25 demographic that thrives on using their cell phones as a means to quickly communicate in short sound bites to others. In some cases, many now prefer this method of communication over actually speaking to others on the phone. This becomes a problem when they go into “auto-pilot” and immediately provide the information requested. This can really be dangerous when one of those items provided is a card’s accompanying Personal Identification Number (PIN).

Even more unfortunate is when this information is used to create counterfeit cards, access funds with the PIN and drain bank accounts at a teller machine.

Individuals should never provide their PIN to unknown individuals. If it is not commonly known, people should be aware that financial institutions do not even know the individual PINs of their customers whether it is assigned by a financial institution or chosen by the card holder. Unfortunately, many people have become very casual with PINs and do not keep them a closely guarded secret as they were intended. PIN has become such a common part of our communication vernacular that many people have forgotten that the P in PIN stands for personal.  Because a PIN is personal, it should always be kept confidential.

If a random person, email or SMS text asked you for your age, your weight or your original hair color, would you freely provide this “personal” information? Of course you wouldn’t. This casual reminder could spare you from an unexpected depletion of your bank account.

Welcome to Insight Vault

General / by President/CEO

CO-OP Financial Services exists to serve its client credit unions and the movement as a whole. This incorporates a wide variety of products and services facilitate convenient access to accounts for credit union members.

We have also sought to help the movement as a source of strategic advice. This is why we host our annual THINK conference, provide dozens of training Webinars and, of course, offer our nationwide network of National Relationship Managers to help you.

This is also why we are unveiling Insight Vault, a weekly blog that we have added to our Web site. Each week, thought leaders and subject matter experts within CO-OP Financial Services will be offering information on issues important to all of us in the credit union industry.

As we establish our blog, we invite your comments on each week’s entry. In this way, we can not only dialogue with you on leading industry issues, but we can make sure that future entries are addressing topics that are the most important to you.

My own hope for this blog is that it will, as already stated, provide you with one more resource to help you operate your credit union more efficiently and profitably. Beyond that, I hope we will grow closer as industry colleagues, get to know each other better; and in this way, better serve the movement to which we are equally dedicated.

Let me – and our other authors – hear from you regularly.