Does Your Credit Union Have a Robust Disaster Recovery Strategy?
By: Nicola Foggie, NJCUL Vice President, Compliance and Regulatory Affairs

Are you ready for an unexpected event? A large-scale natural disaster like a hurricane, earthquake or flood may lead to hardware failure, network outage or a total shutdown of credit union facilities.  Even a small scale event could shut down a credit union for hours and serve to shake member’s confidence in you.  Recent natural disasters have illustrated the importance of effective contingency planning to ensure that all credit unions are able to fulfill their missions and obligations to their members during natural disasters or other disruptions in their operations. Effective business continuity planning and disaster recovery practices were discussed Thursday during a free compliance webinar, “Credit Union Disaster Preparedness and Business Continuity”, offered by the New Jersey Credit Union League. Those at a credit union who should be addressing the disaster recovery and business continuity strategy and plan include board directors, senior management, and those responsible for execution. Speaker, Nicola Foggie, VP of Compliance and Regulatory Affairs with NJCUL, provided a high-level overview to effective continuity planning and practices for credit unions, including answering questions and addressing necessary actions like:

  • Why have a plan?
  • Objectives of a plan?
  • Key components of a plan
  • How to customize your plan
  • Steps for Recovery

Working through creating and updating plans, as well as ongoing work with the right business continuity and disaster recovery standards can have the side benefit of getting your organization on the path to continued compliance. A well-planned and regularly tested business continuity and disaster recovery strategy often goes way beyond the typical DR plan.  Usually put together by an internal team, then put away in a drawer and maybe revisited once a year.  Sometimes a plan is not looked at until an actual disaster or significant disruptive event occurs.  Only one thing worse than not having a well-thought out Disaster Preparedness & Business Continuity Plan and that’s having an outdated, ineffective one.

Click here to check out NJCUL Business Continuity and Disaster Planning resources and information.

Compliance & Regulatory
Why You Must be in the Mortgage Business (And How)

There are plenty of metrics available to define and measure what it means to be the Primary Financial Institution (PFI) for a consumer. For example, you can look at a number of solutions that are proxies for wallet share, like loans, checking, savings, CDs, credit cards, etc., or even volume of dollars transacted for any one of those relationships.

But nothing defines PFI like a mortgage relationship.

It is imprinted on our psyche – go back to Maslow’s Hierarchy of Needs. The most basic needs are physiological – food, water, warmth, rest, which are then followed by security and safety. All of those are arguably related to having someplace to live.

Of course, there is always the option of renting – but homeownership is the proverbial American dream.

If you’re not already offering mortgages, then the strategic question is whether you should be offering members the opportunity for a mortgage relationship with your credit union. I’m willing to bet for those of you that aren’t already offering mortgages, the question is more basic, i.e., how can you offer them, given limited resources and limited deal flow?

It is easy to see how building a mortgage capability can seem daunting, especially to a smaller credit union without high volumes of potential borrowers.  But developing a mortgage offering doesn’t always mean that you need to hire staff to handle these mortgages, to ensure compliance and meet complex regulatory and licensing requirements.

Since mortgages are a well-established business process, they readily lend themselves to outsourcing. Which means that a credit union can leverage the work of others and create a robust mortgage solution for their members, with a fraction of the effort, cost and risk to build one from scratch.

Which also means that there are viable options out there for smaller credit unions with low volume of potential mortgage activity.

We’re hosting a one-day workshop on November 7th focused specifically on this question – how a credit union can get into the mortgage business quickly and efficiently, by outsourcing and relying on third-party providers. We’ll cover topics like –

  • Getting started as an Mortgage Loan MLO (NMLS# Requirements)
  • Build versus partner versus outsource
  • What to look for in a contract
  • Attorney Review considerations and guidelines
  • Marketing and education
  • Participation loans
  • Credit union panel discussion: successful strategies

Whether you are new to first mortgages, have just a toe in the water or want to educate staff, this workshop is for you. This one-day deep dive will feature Lucy Forte from NJCUL Business Partner Symbionce, attorney Peter Liska, and Jeffrey Miller from LoanStreet. And thanks to our sponsors Symbionce and MGIC Mortgage Insurance, the registration fee is just $75. 

DETAILS: November 7th from 8:30 AM - 4 PM, at the East Windsor Holiday Inn. For more information and to register, click here

Blog
3 Ways to Convince Your Board to Upgrade Credit Union Technology
By: FLEX

Credit union board members are not only responsible for the financial security of their institution, but also the proper safeguarding of member's sensitive information. Proper safeguards ensure a credit union's ability to serve its membership, tasks that are accomplished through the adoption of technology as member behavior changes. The best way to ensure your board of directors understands the importance of technology is to remind them of this responsibility and build the business case to make the decisions easier.

Preston Packer, Director of Sales & Marketing for FLEX, helps credit unions achieve operational efficiencies through the adoption of the FLEX core system offerings. He’ll be presenting on “Maintaining a Common Sense Approach to Core System Reviews” at the League’s Core Processing Workshop on October 11th.

According to FLEX, there are 3 main reasons why your board should consider technology upgrades to be a major priority as you plan for 2018:

1. Cost. Technology is not cheap. The upfront costs of changing and updating core systems can seem insurmountable when looking at the short term. It is important to not be shortsighted, instead look at the costs vs. risks for the future growth and sustainability of your CU. In order to expand product offerings, engage your existing membership and acquire new members, you must be able to pivot and adopt new technologies as they emerge. For example, enhancement of your mobile banking app, internet banking portal, and e-signature capabilities are investments into making your members' lives easier. If you are offering member services that are hitting the mark, you will not only increase member satisfaction, you will also achieve credit union efficiency.

2. Business Case with Key Performance Indicators (KPIs). The business case is intended to convince your board of the merits of an upgrade or core conversion. It is a key part of your project documentation and sets out to explain why the project is necessary. It will take some time to compile, but time that is well worth taking. Therefore, it is crucial to do the research and determine the KPI's your core conversion will look to improve, including:

  • Return on Assets
  • Net worth Ratio
  • Efficiency Ratio
  • Loan to Share Ratio
  • Loan Originations
  • Members per Employee

3. Security. The landscape of business in the 21st century has dramatically changed due to technology. And for every new advancement that makes our lives easier, there are people who want to exploit it. Cybersecurity (protecting your member data) is more important now than ever before. If your credit union technology is outdated, your member data could be at risk. Without properly managing technology, board members and directors often misunderstand their culpability and responsibility to safely chaperon their financial institution into the future. Cybersecurity attacks only need one weakness to exploit your network. Educate your board about protecting your credit union data and how technology upgrades, or investment in updating your credit union core system software may be necessary.

Join the League, FLEX, and other industry experts for an informative and affordable (cost is only $75 per person) Core Processing Workshop on Wednesday, October 11th at the Ramada Plaza Conference Center in Monroe Township to delve into these issues and more. 

Blog
Cores Aren’t Just for Apples ….Let the Core Processor Experts Help You Make the Right Decision
By: Marissa Anema, NJCUL Vice President, Marketing and Communications

Core processors are aptly named. They are literally the “core” of our business, through which all “processes” take place. It’s arguably the most important piece of equipment/software we invest in.

Whether you are happy with your current core processor, don’t know if you’re happy (there’s always room for improvement, right?), want to explore other options, need an update as your old system is becoming antiquated, are completely fed up with what you have now, or just want to learn how to work better with your existing provider…it’s important to always keep your finger on the pulse of what’s out there.

….that’s not so simple. Assessing your current core, gathering peer reviews of what others are using, putting out RFPs to see what they can offer…these are big, daunting, time-consuming tasks.

But with many conversions taking two years, start to finish, you have to ask yourself…am I willing to stay with what we’ve got for another year, or two, or three? And by then, will it be too late to start the exploratory process from scratch?

That’s where we come in, your League. To help mitigate the time and effort that this process takes, we’ve put together another Core Processing workshop (our first held in March was well-received) titled “Making the Right Decision” taking place on Wednesday, October 11th at the Ramada Plaza Conference Center in Monroe Township.

The sessions will be led by experts in the field. Two—Joe Riccardo of MSS and Amber Harsin of CU Prodigy—worked for credit unions once upon a time, navigated them through core conversions successfully, and now work for core processors themselves. (Side note: Read how Joe considers core conversions “fun” on our blog. Yes, fun!) Two others—Preston Packer of FLEX CU Technology and Joe Grauwels of AMI—have worked for their core processing companies for years, and their main focus is to help CUs achieve operational efficiencies using their technology.

The only thing these folks will be selling you on is the idea that a core conversion isn’t as overwhelming as you think (that’s actually the name of Amber’s session). They will help you establish a common sense approach to core system reviews, show you how to conduct a core conversion readiness assessment, and demonstrate how the right core processor becomes part of your conversion team.

This workshop is meant to be interactive and helpful to all credit unions, no matter where they land in the spectrum of assessing/keeping/updating/dumping their core.

Come get your hands dirty, pose the questions you’ve been dying to ask, and, ultimately, get to a point where you feel more comfortable—and confidant—in the decision-making process.

Click here for more information and to register – as always, our workshops are affordably priced at just $75 per attendee.

League Initiatives
Consider a Core Conversion a 'System Upgrade' and the Process Can Be...Fun?
B: Joe Riccardo, Member Support Services (MSS) President/CEO 

In the land of financial institutions, hearing the word “conversion”, one begins to get very nervous. I am sure there have been a fair share of stories around how difficult and stressful they can be and just simply, not fun. Well, I happen to have a different opinion.

Firstly, I always refer to a change in technology as an “upgrade." In this case, a core system technology upgrade.

Secondly, I have found throughout my career in working on system upgrades that they can be fun. Yes, fun! I can still hear the voice of a former colleague as she made a statement to me prior to one of the projects she was leading. She stated, and I quote, “There is nothing like the rush you get in the early morning hours prior to cutting over to the new technology.” Are we different or do we just take a whole different approach to the event? If you guessed the latter, you are correct! We take a whole different approach, and it’s evident in my colleague’s view point. Exciting!

I will not deny the fact that system upgrades are challenging and require a great deal of time, commitment and work, over and above your normal role at the credit union. They are; but, if you are prepared, it can be one of the most enjoyable and rewarding events in your career.

The New Jersey Credit Union League is hosting workshops that give you the opportunity to learn and understand the framework around planning and managing such an event on your own. If a technology change and upgrade is being considered by your credit union, I know you will benefit greatly by attending the upcoming Core Processing Workshop.

Click here to learn more about the Core Processing Workshop: How to Make the Right Decision being held on October 11th at the Ramada Plaza Conference Center. I'll see you there! 

 

Blog
Not Again?! Merging the TCCUSF and NCUSIF…a Good Idea, But Not at Credit Union Members’ Expense
By: David Frankil, NJCUL President/CEO

What is the difference between May, 2009 and September, 2017?

In 2009, the markets were plunging, the economy was in crisis, the Corporate system was failing – and credit unions across the country were asked to make "temporary" contributions to stabilize the entire system.

In 2017, the economy is stable and growing (albeit more slowly than desired), there is no systemic crisis in the credit union system – and NCUA is trying to convert those "temporary" contributions into permanent contributions.

Something is wrong with this picture.

The NCUA Board is seeking comment on a proposed plan to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) and to concurrently raise the equity ratio of the National Credit Union Share Insurance Fund (NCUSIF) Normal Operating Level (NOL) from 1.30 percent to 1.39 percent of insured shares, with planned Equity Distributions.

This seemingly innocuous change in an obscure operating ratio would allow NCUA to retain a significant percentage of the “temporary” stabilization fees that credit unions paid into the Fund. Although the NCUA estimates that credit unions will receive an NCUSIF distribution (dividend payment) between $600 million and $800 million for 2018, the increased operating ratio would mean that NCUA would retain as much as $1 billion by some estimates. Some New Jersey credit unions have reported that their equity distributions would be reduced by more than 50%.

NCUA is justifying this capital grab under the guise of “risk management.” Currently, NCUA’s process is that the money in excess of the 1.30% equity ratio the regulator uses as its NCUSIF NOL must be paid back to credit unions in the form of a dividend. NCUA is proposing to raise that ratio to 1.39%, to hold back $1 billion dollars in case the original assets of the TCCUSF (which would now be a liability of the NCUSIF due to the merger) do not perform as expected. 

On the surface this may seem reasonable, until you look at the Board’s justification for the increase, which is based on the same selective modeling that resulted in billions of excess reserves, unnecessary premiums, and overestimates of losses on legacy assets over the past seven years. 

Let’s think about this. Given the restructured corporate system that exists today, much of "yesterday's" risk has been eliminated. If a comparatively larger rebate is made to credit unions and its members by NCUA today, which ends up being premature, the fund can always be recapitalized at a later date. In the interim, absent a crisis, I would suggest that credit unions could do a much better job of managing those assets for themselves than will the regulator.

We can expect that the closure of the TCCUSF will reduce expenses, add sorely needed transparency by simplifying the NCUA’s reporting, and so, in general, it’s a good idea. It should also enable the NCUA to tie financial results of the NCUSIF to real-world credit union events rather than its current practice involving projecting long-term scenarios to justify current expenditures — scenarios that often don’t hold up over time. Credit union members are the ones that send one cent of every insured share to fund the NCUSIF. NCUA is the “steward” for those interests and credit unions have a responsibility to speak up on behalf of their members’ interests.

The current plan to close the TCCUSF is long overdue and the NCUA board should be commended for doing so, but I think the action steps are based on past intricate models that have been shown over the past half dozen years to underestimate the value of the assets taken and overestimate the losses. By closing the TCCUSF and transferring those funds to NCUSIF, the equity ratio of the NCUSIF could be as high as 1.47%.

CUNA and NJCUL have argued the NCUA’s proposed increase in the NOL (to 1.39%) is absolutely unnecessary and are urging the agency to increase no more than 1.34%, temporarily, to offset the risk of underlying legacy assets, if at all. We make it clear that we expect the NCUA to publicly reaffirm the 1.30% NOL as an appropriate upper bound for the NCUSIF’s capital level (given favorable historical performance) and we ask that the agency specifically document plans for the orderly and expeditious return of the NOL from 1.34% to 1.30%. 

The challenge to credit unions today is to take action on your and your members’ behalf by responding to the NCUA Board’s request for comments. Merging the TCCUSF and NCUSIF will place a spotlight on NCUA’s management of future corporate resolution transactions and end a stabilization work out that has now gone on for nearly nine years.

Make your voice heard! Click here for NJCUL’s Stabilization Fund Resources, access to PowerComment and a Comment Letter Template. Comments are due by September 5.

Additional Resources:

 

Compliance & Regulatory
Innovative Ways to Fund Branches
By: David Frankil, NJCUL President/CEO

For those of you who may not be familiar, the Federal Home Loan Bank of NY (FHLBNY) is a Government-Sponsored Enterprise (GSE) chartered by Congress in 1932, with a cooperative member-owned structure. They are a low-cost provider of liquidity for their members to lend into their communities. Among their programs to help credit unions achieve their goals is an innovative branch pre-funding program, which turned out to be a great fit as we were thinking through the content for our Sept 13th "Drive Profit and Improve Engagement at the Branch" workshop. 

Our FHLBNY speaker is Adam Goldstein, Senior Vice President/Chief Business Officer, with over 20 years of experience there helping financial institutions accomplish their goals. We caught up with Adam to get a preview of his presentation.

Frankil: As we have talked about your pre-funding program, you’ve started nearly every conversation with an overview of trends in the deposit environment. So let’s start with that here – what is FHLBNY seeing in terms of deposit trends at financial institutions?

Goldstein: We have the largest generation in history now entering the workforce, and these digital natives have an affinity for technology that shapes how they respond to the financial environment. In particular, the key issues we see are -

Technology, in particular accessibility to various online/mobile platforms and apps are leading to a shift towards new financial institutions such as NeoBanks.

Financial institutions working with FinTech through acquisitions, strategic partnerships with peer-to-peer lenders, digital money transfer platforms, and other firms are reshaping the business of money.

Non-traditional competitors entering the playing field, in part to combat low-interest rates and post-financial-crisis regulations that limit trading activity, large investment banks have started competing in the deposit gathering space. This includes the potential for Special Purpose Charters being granted to FinTech companies.

New Liquidity Regulations for large banking institutions incentivizes them to compete for retail deposits like never before.

Frankil: Help us understand what that means for credit unions.

Goldstein: The deposit gathering environment is evolving, and rather rapidly in some areas. But the basics still hold – focus on evolutionary changes such as multi-channel distribution and other ideas, which I will cover at the workshop. We also surveyed our FHLBNY members to get their perspective on the changing deposit environment, and they outlined a series of strategic initiatives that they’re deploying to compete for core deposits. I’ll be presenting more detailed findings as well.

Frankil: I assume at least some of those strategies involve online and/or direct banking channels?

Goldstein: That’s correct, but it’s really only part of the story. Credit unions focused on their members have significant competitive advantages – if they are leveraged effectively.

Frankil: So what does this evolution mean for branches?

Goldstein: Credit unions should consider viewing their branches through the lens of their primary target audiences. We all know that younger generations prefer technology-based branches – so not just deploying innovative technologies, but partnering with market-leading technology companies to heavily innovate their branches. We’re also seeing the rate of innovation at the ATM proceed at a rapid pace – these innovations will continue to evolve and become a channel in their own right. Technology-based branches also allow credit unions to decrease staff and have a smaller footprint per location, which leads to lower overhead costs over the course of time – this is an important consideration when embarking on technological infrastructure investment.

Frankil: All these innovations sound expensive – let me circle back to the where we started, the FHLBNY branch pre-funding program. How does that work?

Goldstein: FHLBNY member institutions can take advantage of a low-cost advance program that, in essence allows members to obtain wholesale funding at desired deposit projections rather than waiting for the deposits to materialize. By borrowing from the FHLBNY, credit unions can immediately begin investing the money that they plan to acquire with expected new branch deposits. In essence, we are providing liquidity based on a pro forma of expected revenues and return, which reduces the time to break-even versus other more traditional approaches.

We work with members on the process, which includes background research, looking at the historical growth of deposits, and forecasting existing branch deposit growth using a compounded annual growth rate. It is a collaborative process, we even do a “Reality Check” to determine if the new branch growth is obtainable. It is really quite similar to the process any credit union would be walking through to assess potential for a new branch, and we’ll spend some time on how best to do this analysis.

 

To learn more about how branches are evolving, the strategies your peers are using to capture core deposits, what this means for your branches, and the innovative FHLBNY branch pre-funding program, join us on Wednesday, September 13th at the Renaissance Woodbridge, in Iselin, New Jersey. As always, cost is just $75 per person.

Register for the "Drive Profit and Improve Engagement at the Branch" workshop here.

League Initiatives
Trust: Turn The Other Cheek or the Golden Rule?
By: David Frankil, NJCUL President/CEO

How does trust evolve? Or just as important, how does distrust become the norm?

The concept of trust is what makes collaborative efforts and relationships work, whether between credit unions, between credit union leagues, and even nations. Consider how important trust is to the business of financial services – one of the hallmarks of our credit union/member relationship is trust. Also consider how some businesses have found it very easy to build up trust (Uber, Lyft, AirBnB) – and how easy it is to destroy it (Uber, Wells Fargo, VW). 

But it sometimes seems as though the environment within which we operate and most of the tools we have at our disposal make it hard to build and maintain trust. It is easy to miscommunicate and create distrust in today’s digital environment. The full nuance of language is never captured in emails, or even worse, with tweets.

All of which suggests that it is worthwhile to spend some time understanding strategies around building trust.

I came across an interesting illustration of the challenge in building trusting relationships, a web site (http://ncase.me/trust/) with a graphical simulation of the application of game theory to various trust scenarios. It starts with the real-world example of the spontaneous World War I Christmas truce, where enemies up and down the line defied direct orders and implemented a cease fire during Christmas, even celebrating with their opposite numbers.

The trust game itself is nominally about two individuals and a coin machine, acting and reacting under different behavioral scenarios – real or expected. You find out which strategies are more effective, and when certain strategies can be less effective – for example, when to turn the other cheek, or treat people like they treat you. Fair warning, it takes about 30 minutes to work through – but trust me, it’s worth it :) 

Blog
Calling All Policy Wonks
By: Nicola L. Foggie, CUCE, BSACS, NJCUL Vice President, Compliance & Regulatory Affairs

My name is Nicola, and I’m a policy wonk (and proud of it!)

That’s true for the rest of the NJCUL compliance team too – Donna, Sabrina, and Evelyn. But there is a very good reason why we wear the policy wonk label as a badge of honor – it is a core part of the value we provide to NJCUL members, with free use of CUPolicyPro.

Compliance & Regulatory
Drive Profit and Improve Engagement at the Branch

Back in March, we hosted an intensive, one-day workshop on Branch Transformation, which was very well-received. The topic almost seems timeless.  Despite the focus on online transactions, we’re always looking for ways to better understand how members interact with the branch, and how key physical components need to reinforce the member journey. 

Based on the great response to that initial topic, we’ve scheduled another workshop to drill down into two specific challenges we all face – how to drive profit and improve engagement at our branches.  As you’ve probably guessed, those two objectives are critically related.

We recently caught up with Sundeep Kapur, who will be presenting at the session, to learn a bit more about the upcoming workshop.

Frankil:  We could probably spend an entire week talking about branches and their evolving role in financial services. The first workshop talked about the how – how members interact with the branch, and how the physical environment reinforces their behavior.  What will this session focus on? 

Kapur: We need to see the branch as an essential component of our brand – we stand out in the community as organizations dedicated to driving financial wellness for our members. Members visit the branch for three primary transactions – they have a deposit/withdrawal, they want to resolve a problem, or they are looking for advice (loans/financial planning/wealth management/other related solutions). Our first workshop outlined journeys around these three key behaviors – now we turn our focus to the tactical, on how credit union executives can map actual member journeys and techniques for shifting member behavior across channels.

Frankil: I know we touched on this briefly at the first session, but what is journey mapping?

Kapur: Simply stated it is how any member transaction should/could flow. Ideally, the journey should be mapped from the members’ perspective. Too many times, journeys are mapped on our stated objectives without looking at the journey from the members’ perspective. Our workshop will focus on how to identify key member needs and blend the journey to map the needs. The focus will be experiential, based on journey mapping conducted at over 100 institutions. Perhaps even more important, we’re bringing lessons drawn from consumer behavior across industries, not just financial services. There are plenty of best practices from outside our financial services world that can and should be adapted to our business model.

Frankil: Let’s make sure we’re using terms in the same way – what does it mean to transform a branch?

Kapur: I know people often think of construction when talking about branch transformation, but I can assure you it doesn’t even require a hammer or a nail. To make improvements – bring people in for advisory services, reduce the cost per transaction, increase the number of products per member – we want to create a dynamic environment where the credit union is looked upon as a place that can mentor members. Transforming the branch also means that we have the right skillsets in place, and are continuing to enhance our capabilities to serve members.

Frankil: Why is journey mapping important to branch transformation?

Kapur: You know the old saying – you can never be too close to your member. Three things to consider – start by knowing what the member wants to do, next align this with the infrastructure we have, and finally look to adjust the journey. Going through this process diligently will give us a clearer path on improvement opportunities. Do this well and you are well on your way to a successful branch transformation experience.

Frankil: If you poll credit union executives, you’d probably find an even split between those that think the branch is essential to growth, and others that are following a more digital strategy. What is the value of a branch in today’s – and tomorrow’s – member experience?

Kapur: PSECU, Ally Bank, and Simple have no branches and a completely digital presence. They can compete effectively because of their digital infrastructure and associated advertising, and national versus local focus. As multi-channel financial institutions focused on our specific constituencies, we have to leverage the branch to build up our brand, serve members with improved ROI, and provide for an effective digital environment. Long-term, we want to embrace an omni-channel approach, which is probably a topic for another day. If I were a credit union investing in the future, the branch still provides a sustainable competitive advantage. This is especially true when you understand the value of advisory services consistent with improving profitability and member engagement – then the challenge becomes changing the transactional mix to provide more advisory services.

Frankil: Is that answer the same for all credit unions, of all sizes and with all fields of membership?

Kapur: One opportunity that transcends what are normally seen as key strategic differences lies in bringing members in for a financial checkup once or twice a year, and staying in touch with them digitally for the duration. We should measure success through enhanced engagement, reduced costs, and improved revenue – a proper mix of omni-channel services. Members should also be able to continue transactions across channel – for example, starting online and completing (not restarting) in the branch, being a primary one to pay attention to. This is one of the many journeys we will be mapping during the workshop.

Frankil: If I am a CEO looking five years over the horizon, how do I assess the value of the branch in the context of my business strategy?

Kapur: Start by looking at the business strategy. If you are delivering on a portfolio of products/services – deposits, loans (small to large), wealth management – you need to consider an enhanced branch interaction strategy. Wealth management and payday loan companies – two complete ends of the spectrum - are continuing to invest in a future branch strategy. We will discuss this during our workshop as well.

Frankil: What kind of data and analytics do I need to make that assessment?

Kapur: Look at five key numbers:

  1. Branch traffic
  2. Transactional mix within the branch
  3. Last member visit to the branch
  4. Last member transactional channel
  5. Number of products per member

We have an opportunity to improve every one of the above with a focus of increasing number of products per member. The correct approach to branch transformation is to leverage this insight to make improvements.

Frankil: Does maximizing the value of the branch always require a transformation?

Kapur: You can achieve so much with simple steps. The first three case studies we are planning to share are based on recommendations that can drive change quickly and inexpensively. Transformation is a journey – we cannot stop while trying to achieve success.

 

If you want to learn how to apply these and other concepts at your credit union, join us on Wednesday, September 13th at the Renaissance Woodbridge, in Iselin, New Jersey. As always, cost is just $75 per person. Topics will include -

  • Improving Member Engagement to Drive Business
  • Branching Trends, Risks in Deposit Balances & Funding Your Expansion Strategy
  • Journey Mapping to Uncover More Branch Value

Register for the "Drive Profit and Improve Engagement at the Branch" workshop here.

 

League Initiatives
We’re #1 Nationwide for Making a Difference in New Jersey with Reality Fairs!
By: David Frankil, NJCUL President/CEO

I don’t know how many of you saw the article in today’s Daily Exchange about the award the NJ CU Foundation’s Reality Fair program received, but I wanted to highlight it – we’re really proud of our accomplishment. Reality Fairs improve financial literacy by providing a hands-on, interactive budgeting exercise modeled on the issues and experiences students will face in the real world.

Our Reality Fair program was recognized by the National Youth Involvement Board (NYIB) for reaching the most students as a team in the less than $150 million category – 2,418 students, to be precise, at a record 18 Reality Fairs held at schools throughout the state this past school year.

Let me repeat that – #1 team program in the entire country in that category!

Kudos to Marissa Anema, NJCUL VP of Marketing and Communications and the Foundation’s Executive Director, for all of her hard work in making this happen.

Thanks are also due to the credit unions that hosted Reality Fairs this school year in New Jersey, for educating the next generation of credit union members, and for having an impact in their local communities –

  • ABCO FCU
  • Bay Atlantic FCU
  • Bridgeton Onized FCU
  • Credit Union of New Jersey
  • Hamilton Horizons FCU
  • Jersey Shore FCU
  • Members 1st of NJ FCU
  • Rutgers FCU
  • South Jersey FCU
  • Thunderbolt Area FCU
  • Visions FCU

And let me also express my appreciation for the hard-working Foundation Board, for the volunteers that work the Fairs, and for all those credit unions and other supporters that have contributed financially.  None of this would be possible without your support.

Help us break the record again next year – if you’re interested in getting involved, please contact Marissa Anema at manema@njcul.org.

League Initiatives
Evelyn Loves Audits
By: David Frankil, NJCUL President/CEO

Most of us consider audits to be a necessary evil, a view which is reinforced by the Cambridge English Dictionary definition of necessary evil as "something unpleasant that must be accepted in order to achieve a particular result."

I think doing your income taxes also falls into that necessary evil category. If you’ve ever seen the Odd Couple, recall Felix Unger, who so enjoyed doing his taxes that he always submitted his return on the first possible day in January. There was an episode where Felix panicked when he was summoned to the IRS, thinking the worst – only to find out they just wanted to meet the person who submitted his taxes so early and organized so neatly, with tabs and color-coded sheets.

For any business, audits are part of a system of checks and balances that –

  • Confirm the validity and reliability of various kinds of information
  • Uncover mistakes
  • Review internal controls
  • Flag issues for Board and management review
  • Make recommendations for process improvements

Of course, credit unions also face a host of additional audit requirements set by our regulators that go beyond good business practice.

Well, I’m proud to say that we have our very own Felix Unger at NJCUL – Evelyn Shyposh. 

But we’re not talking taxes, it’s for audits – Evelyn loves audits.

Evelyn has over 20 years of experience in financial services, and specifically over 10 years of experience in compliance and internal audit. Evelyn joined NJCUL at the beginning of 2016, as part of our Shared Compliance team.

For those of you that might not be familiar, we rolled out a menu of specific audit solutions for NJCUL members in January, 2017.  The value drivers are the same as for our Shared Compliance Program - top-notch people and below-market prices for a mission-critical activity, as a benefit of NJCUL membership.

A sampling of the audits available from NJCUL (really, just the tip of the iceberg):

  • Bank Secrecy Act Risk Assessment
  • Enterprise Wide Risk Assessment
  • Scope of Annual Supervisory Committee Audit
  • BIA/Risk Assessment
  • Web site Review
  • BCP/Disaster Recovery
  • 'Red Flag' - Identity Theft
  • Data Security Program
  • Network Review
  • And more!

As you look to budgeting for 2018, please take a look at our audit solutions – the odds are that we can reduce your costs and still provide great service. Plus you’d make Evelyn’s day!

For more information on the NJCUL audit solutions, click here or contact Nicola Foggie, Vice President, Compliance & Regulatory Affairs, at nfoggie@njcul.org

League Initiatives
When Will We Know Who Could Be A Heartbeat Away in NJ?

Something is happening in New Jersey for just the third time in our history - our gubernatorial candidates will have running mates.

Before 2009 New Jersey was one of only a few states that didn’t have a lieutenant governor to succeed to the governorship in the event of a vacancy. Only two individuals had previously held the title, both in the Colonial times.

For most of the state's history, a vacancy in the position of governor was filled by the president of the State Senate.

After episodes where the state had multiple "acting governors" in the span of a few years following the resignations of Governor Christie Whitman in 2001 and Governor Jim McGreevey in 2004, pressure mounted for a better solution to gubernatorial succession. After all, the senate president/acting governor, or “SPAG” as it became known, was inherently a violation of the separation of powers doctrine. 

In 2006 a referendum was put before the voters to amend the state's constitution to provide for a lieutenant governor to be elected on a ticket with the governor to serve a concurrent a four-year term. Incumbent lieutenant governor and current GOP gubernatorial nominee Kim Guadagno was elected the state’s first lieutenant governor on a ticket with Governor Chris Christie in 2009, and re-elected with him in 2013.

New Jersey doesn’t have the equivalent of the national conventions where party standard-bearers and their running mates are formally nominated. Here in New Jersey voters select their party’s nominee in a statewide primary election and the nominees select who they want to be their running mate. 

So when might New Jersey voters know who’ll be running for lieutenant governor?

The answer rests on two factors; when the primary election results are officially certified, and when the candidates feel they can get the most political bang for their buck.

Officially, a nominee has thirty days to name their running mate once the Division of Elections certifies the primary results.  Because that can take about two months, the June 6 primary results might be certified as late as say mid-August. That would leave the potential window for announcing a running mate open until mid-September. 

Timing of any announcement is critical, to maximize exposure and momentum. For practical purposes, Labor Day weekend is the traditional start of political campaign season in the state.  Unless one of the candidates can do something wildly attention-getting with their pick, it’s going to be hard to get any attention before the end of the summer season. In fact, I’d argue that few other than reporters, pundits and outright political junkies are more than slightly aware there’s even a gubernatorial election this year

I’m betting we won’t know who might be a heartbeat away in New Jersey until after Labor Day. But, in the words of Yogi Berra, “It's tough to make predictions, especially about the future.”

Political & Legislative
Halftime Report: Promises Made, Promises Kept
By: David Frankil, NJCUL President/CEO

Last year, our Annual Convention in October came at about the 100-day mark of my tenure here at the New Jersey Credit Union League. The event also represented a golden opportunity to unveil our new strategic focus, and describe how we were going to translate it into concrete initiatives in 2017. 

NJCUL is being re-positioned as a true strategic partner, serving as a catalyst for our members' success. Our mission is to help you meet both your immediate needs and longer term goals for growth and productivity. That focus came from you: grounded in direct feedback from more than 130 conversations with CEOs, Board Chairs, volunteers, senior staff, consultants, lawyers, vendors, and many others in the NJCUL value chain. As we’ll discuss in a future blog post, it was also confirmed with our more recent strategic alignment survey, and significantly refined by the NJCUL Board in our strategic planning session.

Our strategy for translating that focus into reality entails:

  • Providing solutions, information, programs, and relationships that offer compelling value and which are directly relevant to the challenges you face and opportunities you see
  • Building on the Banking You Can Trust foundation with fresh approaches to building consumer awareness – call it Banking You Can Trust 2.0

We rolled out a new, comprehensive set of initiatives to implement the strategy, touching nearly every aspect of what the League does. Everything we pledged to do on your behalf was well-received at Convention, but there were attendees who expressed skepticism that we would be able to accomplish it all – the phrase "very ambitious" was uttered more than a few times. Which is accurate – it was (and is) an ambitious agenda.

Nothing makes me happier than proving skeptics wrong– we kept nearly every one of those promises.

We’re now six months into 2017 – call it halftime – and it’s timely to provide a status update on all those new programs (and two bonus additions too):

  • Banking You Can Trust 2.0 – Launched new awareness campaigns focused on:
    • Phase III – Service – amazing member service stories from long-tenured employees and Board members – kicking off in August
  • CUJobs4Vets – Statewide initiative to connect veterans in need of jobs to credit unions and business that have them – delayed by technology issues, currently in soft launch phase.
  • Upgraded CU Reality Check – Thanks to the support of CUNA Mutual Group, we were able to book top-tier speakers at the first-ever Reality Check collaboration between NJCUL and the MD|DC and Pennsylvania Credit Union Associations. Among them:
    • CUNA Mutual Group Keynote speaker Jeffrey Hayzlett, author of the 2015 Forbes top 10 business book "Think Big, Act Bigger"
    • Wharton Marketing Professor Jonah Berger, author of the NY Times Best-Seller "Invisible Influence: The Hidden Forces that Shape Behavior"
    • Doug Duncan, SVP/Chief Economist at Fannie Mae, and one of Bloomberg Businessweek’s 50 Most Influential People in Real Estate
    • David Peterson, author of "Grounded Anchor Management for Strategic Leadership and Effective Decision-Making"
  • A new series of affordable, one-day, hands-on workshops focused on critical operational needs:
    • NCUA Field of Membership Rules – Jan 17
    • Branch Transformation – Feb 7
    • Core Processing I – March 7
    • HMDA Compliance – May 25
    • Marketing Workshop – June 21
    • Core Processing II– Education/Showcase – Fall 2017
    • Drive Profit and Improve Engagement at the Branch – September 13
    • All About Mortgages – Getting in the Game – September 19
    • Cybersecurity – November 2
    • All About Mortgages – Stepping Up your Game – November 7
  • Free customized performance reports to enable benchmarking against peers for key performance metrics – distributed each quarter since 4Q 2016. Based on demand, we’re also looking at some training and consulting options to help CEOs and Boards use the reports.
  • Building the next generation of leaders – successful in obtaining a NJ State training grant in conjunction with Rutgers University that will enable us to provide 48 hours of small group professional managerial development training to over 300 NJCUL member employees, at locations throughout the State. The three, two-day, 16-hour courses are:
    • Becoming a Better Manager
    • Supervisor Symposium, and
    • Human Resource Management
  • Free monthly compliance and regulatory call-ins for members:
    • Jan 12 – How to Apply for a Low Income Designation
    • Feb 9 – Risk Based Lending – Randy Thompson, CEO TCT Risk Solutions
    • Feb 17 – Regulatory Update: Compliance Outlook
    • Mar 9 – Stump Nicola!
    • Apr 13 – Succession Planning
    • Apr 21 – Future of NUCA Exams and Call Reports
    • May 11 – Regulatory Update
    • June 16 – Comment Letter Writing Process
    • July 13 – Establishing and Execution of Estate Accounts – Michael DuPont, Attorney at McKenna, Dupont, Higgins and Stone
    • Jul 21– Regulatory Update: BSA Awareness
  • Expanded access to NJCUL compliance solutions – In addition to our Shared Compliance program, members can now show an immediate ROI on their dues investment by taking advantage of below-market rates for a variety of audits (BSA, CIP, OFAC, ACH, CAT, Quality Review, Website, and more) and training (BSA, Board Governance, Supervisory Committee Duties and Responsibilities, and more)
  • Free marketing collateral for small credit unions – free member benefit provided by YourMarketingCo on a quarterly basis
  • MBL opportunities in energy loans – on hold, awaiting policy decisions from the State

We even added two new programs that we didn’t talk about in October.

  • A new home improvement loan participation program that enables credit unions to deploy capital and receive a higher return, through an innovative participation program leveraging our partner LendKey’s national network of contractors.
  • ULEND Academy – developed by CUNA Mutual Group, ULEND Academy is a compressed 2-day version of week-long lending training programs, offered locally on a more cost-effective basis. We will be one of the first three Leagues to offer the program, with our first sessions being held August 22 & 23 at North Jersey FCU and August 24 & 25 at ABCO FCU. 

2017 has been a busy year, as you can tell – and I can’t wait to tell you about all the new programs coming in 2018 at this year’s Annual Convention.

Thank you for all of your support, and as always please contact me directly at dfrankil@njcul.org if you have questions, comments, and/or suggestions for new programs and activities that meet member needs.

League Initiatives
Four Years to Uncover a Title Fraud Ring?
By: Chris Abeel, Vice President, Corporate & Governmental Affairs

Every so often, a story comes across the wire that just makes you shake your head. In this case, a tale of fraud that is not only easily preventable but would not occur in any state in the nation that has implemented electronic lien and titling (ELT) technology.

Unfortunately, New Jersey is not one of those states.

NJ Attorney General Christopher Porrino recently announced the indictment of five individuals on various first-degree charges for a scheme in which they financed car purchases and then resold the vehicles after fraudulently removing the liens.

The five enterprising individuals, now defendants, apparently purchased or had others purchase vehicles on credit. They then forged letters purporting to be from the lender stating that the loan had been satisfied, and used those letters to get clear titles from the MVC. The vehicles were subsequently flipped for cash, involving at least 25 vehicles over a four-year period “with a total value of well over half a million dollars.”

Who does this hurt the most? Whose pocket did that half a million dollars come out of? The poor consumers who now “own” cars without proper title, and are on the hook for the lien. I doubt the MVC is going to make lenders or unsuspecting consumers whole. And, of course, taxpayers have to pay for the investigation, a trial, and presumably future lodging with the Department of Corrections.

If this doesn’t make the case for ELT, I don’t know what does, and you can bet we’re telling Trenton lawmakers at every turn.

What I find most ironic is that our state regulators are saying all the right things. “This investigation reaffirms the value of motor vehicle documents and the need for the MVC to maintain the security and integrity of its operations,” MVC Chairman and Chief Administrator Raymond Martinez was quoted in the attorney general’s press release announcing the indictments. “Complacency is not an option, which is why we continue to invest in technology, training and internal controls that help us to identify and crack down on criminal activity.” 

The current investment in “technology, training and internal controls” allowed this fraud to run for some four years. So may we respectfully suggest implementing ELT, something we began asking for more than five years ago.   

ELT can significantly reduce if not eliminate altogether this type of fraud. ELT is a closed looped system, meaning only the lienholder can issue a release through the system, and access is controlled by a user authentication protocol. Is it perfect? No. But it sure is a lot harder to beat than simply cutting and pasting a letterhead!

Apart from fraud prevention, ELT benefits consumers who would no longer have to worry about lost titles, or delays in issuing a title, or getting a lien released. ELT benefits lenders because it helps reduce the cost and time associated with paper liens and titles, including filing, handling, mailing, and, perhaps most cumbersome, going physically to MVC offices with batches of paper forms to be processed.

And, ELT can be outsourced and implemented at no extra cost to the state. 

Because the MVC has refused to move forward on an administrative level, we’ve been actively supporting legislation (A1943/S2968) that would mandate ELT and we’re grateful to the sponsors, Senators Joe Vitale (D-19) and Linda Greenstein (D-14), and Assemblymen Craig Coughlin (D-19) and John Wisniewski (D-19), for their support and leadership on this issue.

Political & Legislative
NJCUL Annual Convention 2017: Innovate, Collaborate, Succeed
By: David Frankil, NJCUL President/CEO

Curating content for our Annual Convention (taking place this year October 22-24, at the Golden Nugget in Atlantic City) is exciting, yet challenging. Our audience is diverse – CEOs and other Executives, Board Chairs, Supervisory Committee Members, and Volunteers. Just to complicate things further, the CEOs and  Executives range from more  senior  to those just starting their career – and with functional responsibilities from lending to marketing to operations to HR, and everything in-between. 

Factor in the diversity in credit union size and their differing needs, and you can see why crafting great content for Annual Convention takes a concerted effort by our entire team.

Luckily,  our team is diverse in their specialty areas (legislative affairs, compliance issues, marketing, member experience, etc.) , so it made sense to take an all-hands-on-deck approach to our initial Convention planning.

At our first “whiteboard” meeting, before we even glanced at speakers and topics, we spent a considerable amount of time talking about our mission at NJCUL – to be a catalyst for our members’ success. As we work through our strategic plan, we’re looking at every activity to make sure it is consistent with that mission – and that applies to Annual Convention, too. Hence the change in theme from the previous two years’ “Inspire” to this year’s “Innovate, Collaborate, Succeed!.”

League Initiatives
Two Calls to Action in Two Weeks is a New Record for Me!
By: Chris Abeel, Vice President, Corporate & Governmental Affairs

The Financial CHOICE Act (H.R. 10) and other potential regulatory relief measures have been center stage for most of us in the credit union movement since the new administration took office. But two congressional appropriations issues related to community development funding surfaced requiring our attention, hence the back-to-back alerts.

Political & Legislative
Foreclosure Filing Surcharge Bill Moving in New Jersey
By: Chris Abeel, Vice President, Corporate & Governmental Affairs

As if foreclosures aren’t already costly enough here in New Jersey, buckle your seat belt because some lawmakers want to tack on an $800 surcharge for each filing, at least for the foreseeable future.

Legislation (A2036; S2344) has begun to move in Trenton to create a Foreclosure Prevention and Neighborhood Stabilization Trust Fund.

Political & Legislative
When I Grow Up…I Want to Be a Salesperson
By: David Frankil, NJCUL President/CEO

We all knew someone like this growing up. They had two paper routes. In the summer, split time between cutting grass for neighbors and manning a lemonade stand right by the bike path. A couple of years later in high school, they learned to do magic tricks, performing at kids’ parties to save money for a car.

Those friends were born salespeople, which sometimes carries a negative connotation, especially from people that have never been in a sales role. The very best salespeople are those that take the time to understand what a prospect needs, and then work like the dickens to meet those needs – or walks away if they can’t. That is the definition of consultative selling, and it is a perfect fit for the credit union ethos.

But how many people with this skill set work at credit unions?

League Initiatives
Changes to the HMDA Act: What Do You Need to Know?
By: Nicola L. Foggie, CUCE, BSACS, NJCUL Vice President, Compliance & Regulatory Affairs

The Home Mortgage Disclosure Act (HMDA) has undergone several changes, since it was first enacted in 1975. The most recent changes, which went into effect on October 15, 2015, are just the beginning of reporting modifications set to roll out in the coming years.

What are the changes and what does your financial institution need to do to prepare?

Compliance & Regulatory
Would You Want to Live in a Risk-Free Society?
By: David Frankil, NJCUL President/CEO

Think about it – there is literally no human activity that occurs without some degree of risk.  Walking on the street, riding a bike, driving a car, flying in an airplane, even getting a meal in a restaurant all pose some degree of risk. 

The question we face as individuals is the same we face as leaders of financial institutions – how much risk are we willing to accept, and how do we manage it.  But to re-state the obvious, without risk, there is no return....

Compliance & Regulatory
What Do Mobile Payment Apps and Fax Machines Have in Common?
By: David Frankil, NJCUL President/CEO

A recent CU Times article reported on a survey of U.S. millennials that showed they are using third-party solutions like Venmo for mobile payments, instead of a mobile app provided by any individual financial institution. The study of 2,170 U.S. millennials, done by education loan company LendEDU, found that 44% of people born between 1981 and 1997 say PayPal-run Venmo is the mobile payment app they use most often. 

I’d describe this as demonstrating that mobile payment apps are evolving into a classic network effect business model. 

Blog
VantageScore: Updates in Calculation Methods

Earlier this month, it was announced the VantageScore will be rolling out a new formula.  The new calculation will be based on borrowing behavior over time instead of a snapshot of credit usage at time of credit pull.  Your credit union might be using FICO today, but with this information be widely circulated, which way will the consumer go in attempting to improve their credit score?  If they listen to the guidance for the new rules of VantageScore, they could adversely affect their FICO.

What does VantageScore for the member?

Blog
Risk vs. Member Value

Taking risks sometimes might be worth the reward of creating value for your members.  Do you believe that risk in your organization manages risk too operationally to adhere to compliance issues rather than the long-term strategic risks?  Enterprise Risk Management (ERM) is not a ONE time event and not a ONE SIZE FITS ALL approach.   But, where is the balance between taking risks and creating member value?  ERM is applicable to ALL areas of the organization, including Human Resources - 5 Reasons HR departments need ERM.

Blog
Unclaimed Property Roundtable Informs Many
By: Barbara Agin, NJCUL Vice President, Member Experience & Education

Live from Hightstown and delivered virtually to FOUR locations, attorney Peter J. Liska, informed attendees on both the legislation and many provisions of the New Jersey Uniform Unclaimed Property Act.  Liska reviewed the 10 page operations guide providing examples and fielding questions.  

Pictures in addition the attendees at the League (minus {me} photographer ) include our virtual attendees from Atlantic FCU, Members 1st of NJ FCU, Campbell Employees FCU and Rutgers FCU.

Learn more about our virtual capabilities and check out our upcoming Regulatory Update Webinar.  Looking for the full calendar?  Click here.

League Initiatives
NJCUL Upgrades: Educational Content that Comes To You!
By: Barbara Agin, NJCUL Vice President, Member Experience & Education

When you look at New Jersey on the map, you would think travel would not be an issue for such a small state. Not so! While Hightstown makes sense as a central location, it isn’t necessarily convenient or conducive for our members given the travel time and/or overall time out of the office.

The League first introduced a video conferencing solution in 2010 with the assistance of two credit unions: Atlantic FCU in Kenilworth and Members 1st of NJ FCU in Vineland. This helped some but still left many unreachable.

Blog
Mission Accomplished: ROI with Free Rutgers Training for NJCUL Members
By: David Frankil, NJCUL President/CEO

I heard two things consistently from CEOs in my initial round of visits and phone calls back in July.

One was that the League needed to demonstrate a more quantifiable ROI on their dues investment.

The second was the need for cost-effective and local professional development programs. Not that CUNA, CUES, and others don’t offer solid options, but the fees, travel expenses, and total time out of office make it difficult for many of our members to take advantage of them.

I’m proud to say we’ve killed two birds with one stone.

League Initiatives
Media, Myself, and I
By: Marissa Anema, NJCUL Vice President, Marketing and Communications

Think back to the early hours of the day when you were just waking up. What is the first thing you see? The first thing you come into contact with?

Your significant other? Your pet? Your kids? Your alarm clock? Your phone? Alexa, Echo, or Siri?

It may be eye-opening to assess your morning routine and how those things listed above rank in order of engagement as you crack open your eyes to new day. (If you’re wondering who Alexa, Echo, or Siri is, then we need to talk.)

For me, it’s either my cat, Nola, acting as an unwelcome alarm clock, or—more often than not— it’s my phone, which is my alarm clock. It’s also my Weather Channel, my pocket schedule, my stereo (remember those?!), my rolodex (remember those, too?!), and much more.

The point is that our phones have become a HUGE part of our daily lives, and, thus, media consumption has as well. From social media to the news media, with our eyes glued to computer screens at our desks and in our hands (let’s face it, these are not “phones” they are “computers”) we’re consuming hours upon hours of media a day.

Consumer Awareness & Advocacy
Black Swans and The Credit Union Ethos
By: David Frankil, NJCUL President/CEO

The latest installment of our Banking You Can Trust Legacy Series – which demonstrates the credit union difference by telling the powerful origin stories of our credit unions – is about Central Jersey Police & Fire FCU.

Consumer Awareness & Advocacy
Leading the Way: NJCUL Named One of Five National Providers of ComplySight Compliance Consulting Services
By: David Frankil, NJCUL President/CEO

Many of you are familiar with ComplySight, the all-in-one Web-based compliance tool offered by NJCUL in partnership with League InfoSight and CUSolutions Group (NJCUL serves on the League InfoSight Board). It provides everything from content, tracking, reports, regulatory alerts, and more— basically everything you need to organize a comprehensive compliance program.

League Initiatives
Q&A: Branch Transformation Doesn’t Always Mean Construction

Sundeep Kapur, an expert in digital, branch, and engagement strategies, will be presenting a one-day NJCUL Workshop on Branch Transformation, on Tuesday, February 7. The session is designed for anyone that has ever wondered how they can make their investment in a branch, its people, and all the associated technologies more productive for the credit union, and more valuable to members as well.

League Initiatives
One Step Closer to Bringing Electronic Lien and Titling to New Jersey
By: Chris Abeel, NJCUL Vice President, Corporate and Governmental Affairs

Almost everything we do today—from paying for a cup of coffee to hailing a “cab” to booking a flight or hotel—has gone digital. These processes are quick and simple. No paperwork, no paper receipts—or statements even.

Political & Legislative
Court Dismisses Bankers’ Frivolous MBL Lawsuit
By: Nicola Foggie, NJCUL Vice President, Compliance and Regulatory Affairs

Yesterday, the NCUA and credit unions won a huge victory! U.S. District Court Judge James Cacheris dismissed a lawsuit brought by the Independent Community Bankers of America (ICBA) against the National Credit Union Administration (NCUA), this past September. The Banker’s suit against the agency challenged NCUA’s 2016 member business lending rule (MBL). The American Bankers Association supported the ICBA litigation that challenged the MBL rule and amendments that changed the statutory MBL cap, including making it easier to exclude nonmember loans from the cap calculation. According to the court’s opinion, the lawsuit was dismissed based on ICBA’s lack of standing and timeliness. In his opinion, Judge Cacheris stated that even if the ICBA had established standing and timeliness, the court said it still would have found that the rules satisfied the requirements established by the Administrative Procedures Act and existing case law.

Compliance & Regulatory
Building Brand Awareness The Leaders Series
By: David Frankil, NJCUL President/CEO

You may have seen an article in the Daily Exchange yesterday about XCEL CEO Linda McFadden’s upcoming live appearance on 101.5 FM, January 31st at 8:00 AM, as part of our new Leaders Series. I wanted to provide more background on how this fits with our other brand awareness initiatives, unveiled formally at the NJCUL Annual Convention last year.

If you recall, revamping our brand awareness campaign is a priority 2017 strategic initiative for the League. We started with the Legacy Series, which uses the power of story-telling and unique credit union origin stories to show how credit unions are different from banks. It has been very successful, with pick-up by local media outlets and broad exposure via social media.

The Leaders Series shares the same objective of highlighting the credit union difference, but with a twist. It is focused on showing how our leadership—CEOs of credit unions—truly cares about the financial well-being of their members by offering financial advice to consumers. This accentuates the contrast with how bank CEOs see their customers, as a source of profit.

Consumer Awareness & Advocacy
Q&A: The Three Most Common Mistakes Credit Unions Make in Branch Design

Sundeep Kapur, digital and consumer engagement strategist, will be presenting a one-day NJCUL Workshop on Branch Transformation, on Tuesday, February 7. The session is designed for anyone that has ever wondered how they can make their investment in a branch, its people, and all the associated technologies more productive for the credit union, and more valuable to members as well.

League Initiatives
Q&A: The Secret to Doubling Products Per Member

Sundeep Kapur, digital and consumer engagement strategist, will be presenting a one-day NJCUL Workshop on Branch Transformation, on Tuesday, February 7. The session is designed for anyone that has ever wondered how they can make their investment in a branch, its people, and all the associated technologies more productive for the credit union, and more valuable to members as well. 

This is the first of a two-part interview with Sundeep, where he discusses with NJCUL President/CEO David Frankil the potential gains from thinking about your branch in a different way.

League Initiatives
Branch Transformation George Jetson, Meet Joseph Schumpeter
By: David Frankil, NJCUL President/CEO

As a kid, the Jetsons were my favorite cartoon. There was just something about how easily futuristic technologies were magically integrated into daily life without any issues in Orbit City. George Jetson even walked their dog Astro on a treadmill without the inconvenient detail of dealing with what always occurs when you walk your dog. That clearly only works in cartoons.

Financial services has also become a mix of the traditional and the cutting edge, as disruptive, game-changing innovations are developed and make their way into our business. Except we don’t have that luxury of glossing over all the challenges of integration. 

League Initiatives
Santa’s Workshops May Be Closed, But Ours are Now Open for Business
By: David Frankil, NJCUL President/CEO

When I ask CEOs what they want from the League, the most frequent response has been “more”—more content, more training, more relevance, more value. Which is exactly where we want to take the League, re-positioning it as a true strategic partner, helping members grow and be more productive.

As part of this process, we’ve created a new series of one-day workshops focused on critical credit union operational issues. The name “workshop” was chosen deliberately—these are not symposia, or discussion groups, or academic seminars. They are workshops—come spend a day, roll up your sleeves, and dig into the nitty-gritty of a topic and walk away with valuable, actionable information.

League Initiatives
Why You Want a Low-Income Designation from NCUA (And How to Get It)
By: David Frankil, NJCUL President/CEO

The conclusion of nearly every article about the benefits of credit union membership is that you can join a credit union, and you should do it as soon as possible.

I’m telling you the same thing about the low-income designation (LID) from NCUA—if you meet the criteria, you should work through the process as soon as you can. A federal credit union qualifies for LID when a majority of its membership (50% + one member) qualifies as low-income. It’s as simple as that. 

League Initiatives
Loan Pricing Ought to be More Scientific Than Just Checking Out the Competition
By: David Frankil, NJCUL President/CEO

Setting the right price for a product or service is a challenge for any business. Set prices too low, and you negatively impact margins and starve the business of capital – in the extreme, fixed and variable costs might not be covered. Set prices too high, and sales suffer and the business itself might be threatened.

Discuss prices with your competitors, and you might become a long-term guest at a Federal institution not of your own choosing.

Understanding price elasticity of demand – the relationship between price and quantity – is a challenge that many large companies spend millions of dollars trying to understand.

For credit unions, there is an added component that comes with the financial services territory – risk. The risk that a member might default on a loan plays (or should play) a role in determining the interest rate that borrower should pay, which is just as important as understanding the true cost of capital in making pricing decisions.

League Initiatives
Incoming NJCUL Chairman Andy Jaeger: A Fresh Outlook and Direction for 2017
By: Andy Jaeger, NJCUL Chairman and CUNJ President/CEO

It is no surprise that the last few years have been challenging for the League, between the turnover at the top to the impact of an ever-so-slowly improving economy and persistent low-rate environment on New Jersey credit unions. 

League Initiatives
New Member Benefit - An Early Holiday Gift for NJCUL Member Small Credit Unions
By: David Frankil, NJCUL President/CEO

Smaller credit unions face many challenges in marketing their products and services effectively, but the most basic is developing professional collateral material to promote solutions…without spending a fortune. A crisp, clean look and feel is critical to communicating the value of our solutions, and that doesn’t come with bargain-basement design efforts.

To help jump-start the process for small credit unions without the hefty price tag, Bo McDonald, CEO of Your Marketing Company (one of our partners), has stepped up to provide high-quality, professional promotional pieces that small NJCUL member credit unions can use completely free of charge—or with a modest fee for customization. The first in the series is an eye-catching promotion of holiday loans (see graphic below).

League Initiatives
82nd Annual Convention and Meeting Recap: Successful and Inspiring
By: David Frankil, NJCUL President/CEO

Our Annual Meeting and Convention took place this week in Atlantic City, and it was very successful, due to the outstanding efforts of the entire team here at NJCUL, specifically including Yvette Segarra – who I am never going to let retire; she just adds too much value. Please give her and the rest of the team a virtual round of applause. 

This year was a bit different than prior years, in part because of my presentation on Monday morning. It dispensed with the usual formalities and got right down to business.

The focus was the first 100 days, and the over 100 conversations I’ve had with member and non-member CEOs, Board members, senior executives, our team, and vendors as well. The goal: to assess whether our internal perception of value matched up with what our target audience (you) needed.

Blog
Strategic Use of Children’s Accounts to Reach Millennials
By: David Frankil, NJCUL President/CEO

Last week we published a Legacy Series blog post on United Poles FCU highlighting how they were founded by thirteen members of the local Polish community to help recent immigrants and residents overcome language and other barriers impeding access to basic financial services. That fits perfectly with the goal of the Legacy Series, communicating how credit unions are different than banks by telling origin stories.

The idea for the blog post came from a meeting with Iwona Karpeta, their CEO, who told us how United Poles FCU was founded.  But it wasn’t the only interesting idea to come from the meeting.

Iwona talked about how important children’s accounts were to their overall growth and engagement strategies.  Children’s accounts are not exactly a new concept in banking, but what struck me was the way Iwona talked about leveraging them to reach Millennials as an overt part of their engagement and growth strategy.

Saving is a strong part of the Polish cultural heritage, and United Poles FCU leverages that to reach younger generations. It is typical to see accounts established when a child is born and children being encouraged to save from their earliest days.  Families bring kids into the credit union where they get to know the tellers and other executives, make deposits – and get lollipops and other treats, too.  By the time they grow up, they are a part of the family, and the credit union is their natural choice of financial institution.

Consumer Awareness & Advocacy
Focusing on Young Professionals and Millennials
By: David Frankil, NJCUL President/CEO

I’m guessing that every generation has had some sort of conversation about the younger generation that goes a little something like this: We don’t understand them or their behaviors, what motivates them, how to manage them, or how to market to them.

You know, all those old sayings like… 

Kids, you can talk and talk till your face is blue
Kids, but they still just do what they want to do
Why can’t they be like we were, perfect in every way
What’s the matter with kids today?

The song is at the end of the clip: https://www.youtube.com/watch?v=1wCXr_6wgns
(for those of you that are classic movie buffs). 

Whether the digital revolution has made the challenge of comprehending millennials more difficult than other eras is a topic for others to tackle, but we do need to address two key questions –

  1. How do we attract young professionals to credit unions as future leaders, and what is the best way to both develop their skills and motivate them?
  2. How do we need to adapt our marketing and other strategies to focus on the millennial segment of our members and prospective members?
League Initiatives
Value and Relevance: Walking the Walk
By: David Frankil, NJCUL President/CEO

I’ve written about how we are transforming the League for 2017 to be more valuable and relevant. But what does that really mean?

This week we made the first in what will be a series of announcements that offer up examples of steps the League is taking towards this transformation.

Peer group benchmarking is a great management tool to highlight opportunities, whether for productivity improvements, greater leverage, and/or for growth. You all have the ability to access your own Call Report data – what is harder is to see how you compare with your peer groups on key performance parameters for growth and productivity.  

With enough time and enough resources you could do the analysis yourself – after all, Call Report data is available on the NCUA website. But who has the time to identify who should be in your peer group, download their Call Report data, crunch the numbers, and analyze the results?

To me, this is exactly what a League focused on value and relevance should be doing for its members. 

League Initiatives
Did You Know that NJCUL was Founded in 77 BC?
By: David Frankil, NJCUL President/CEO

That would be “Before CFPB.”

And odds are that your credit union was also born in the BC era.

Few new financial services regulatory agencies have had the fast start and wide-ranging impact of the Consumer Financial Protection Bureau (CFPB). For anyone charged with tracking and complying with their rules, the last five years probably seem like dog years.

This all came to mind this week with the Wells Fargo debacle, and the role that the CFPB played in bringing those practices to light and to an end. The CFPB vision and values statements provide the foundation upon which they acted – but what is most interesting is how consistent they are with what you’d see at a credit union:

Compliance & Regulatory
Marketing MRI: Finding and Bridging Value Gaps
By: David Frankil, NJCUL President/CEO

I recently sent a note to the entire membership with a preview of some of our 2017 initiatives, noting that they were developed from conversations with over 60 CEOs, and were part of our philosophy of market-led growth.

The process is actually more strategic than just having a good chat with a CEO. The question we’re answering is how to ensure that the value you’re providing actually matches up with what the market needs.

Let me use a case study with a gaping value gap from a consulting engagement I finished just before joining NJCUL to illustrate the approach we’ve taken with the League.

The client was a midsize general contractor (~$10M in revenue) offering integrated architectural design and construction services, focused primarily on office buildings, warehouses, and distribution centers. They wanted to know why they weren’t growing faster, especially when they saw new competitors winning jobs they thought should be theirs.

They thought the problem was a bad salesperson – but the engagement quickly evolved into a more extensive assessment of their fundamental value drivers.

We used an active listening process I call a “Marketing MRI,” and it has two components – internal and external. The first step is to interview employees at all levels of the company to understand their perception of key value drivers and what they see as the issues impeding growth.

League Initiatives