Top 3 Things Credit Unions Need To Know About Gamification

By: Patrick McElhenie, Director, Product Management, CUNA Mutual Group.

Engagement is the name of the game for gamification. Nearly 70% of US employees report that they are not engaged or are actively disengaged at work.i With disengagement costing US employers $550 billion per year, having engaged employees is key for your credit union’s success.ii For the in-depth conversation about how much disengaged employees cost your credit union, listen to the podcast in full here

 What is gamification?

Gamification is the use of game-thinking and game mechanics in non-game situations to engage audiences and solve problems. It’s not creating a game, but rather, looking at the elements of a game structure and applying them to the real world.

Gamification is all around us. A popular example of gamification is Fitbit fitness trackers. Fitbit users can check in on their goals, their activities, and their progress at any time, receiving instant feedback about their performance. Another example is loyalty programs in which customers earn points for their interactions with a company. Customers acquire points through purchases which they can then exchange for a reward after they meet a certain threshold.

How does gamification create engagement?

Engagement is a key component of the game structure. Games are extremely engaging and can hold a player’s attention for a long time. Engagement is created through clear objectives, scores, and rules. The player is never confused about what they have to do or how well they are doing.

Games avoid predictability and monotony while maintaining the element of surprise. There are also often social elements and competition. These elements are translated to the workplace in gamification. The goal is to get employees ultra-engaged and having fun by working to solve problems and achieve objectives.

What are the benefits of using gamification?

Gamification utilizes both intrinsic and extrinsic motivation methods to create engagement in the workplace. Extrinsic motivation speaks to a hierarchy of motivators, such as stuff, power, access, and status. Status is the most effective reward because it is cheapest to fulfill and “sticky”. An example of status would be publicly recognizing an employee as a top performer.

Intrinsic motivation is all about driving an internal desire to be better or to be recognized for being better. It’s all about autonomy, the feeling of being able to control your own outcomes. In the workplace, there can be barriers that make employees feel they can’t control their own success. This is where gamification can help. Gamification provides near-real-time feedback, allowing employees to always know how well they are performing and what they need to do to achieve their objectives.

For more information about gamification, including how credit unions are using gamification and common pitfalls in implementing gamification, listen to How Much Are Disengaged Employees Costing Your Credit Union? the first installment in a two-part series about gamification.

CMG logoCUNA Mutual Group is the NAFCU Services Preferred Partner for TruStage® Auto & Home and Life Insurance Products and Mortgage Payment Protection. Learn more about our Preferred Partner at www.nafcu.org/cunamutualgroup.

 

i Gallup, Employee Engagement Is Stagnant in 2015, 2016
ii Glassdoor.com, The Cost of a Disengaged Employee, 2015

 

NAFCU Services Announces 2017 Innovation Award Finalists

We are proud to announce the 2017 Innovation Award finalists. An Innovation Award is the highest distinction offered to a NAFCU Services Preferred Partner. The awards honor the companies that demonstrate extraordinary creativity and commitment to solving challenges specific to credit unions. The 2017 award winners will be announced at the NAFCU 50th Annual Conference and Solutions Expo this June in Honolulu, Hawaii.

“I am proud of the unique and innovative solutions our partners bring to the credit union industry year over year,” said NAFCU Services’ President, Randy Salser. “The solutions created by these partners mean success for credit unions in the form of better bottom line, competitive advantage, and enhanced member engagement.”

Each year, a panel of judges evaluates solutions based on the degree of innovation and the impact on credit unions’ success. The judges include prominent members of the credit union media and respected industry executives. The 2017 judges are: Adele Glenn, Emerging Channels Innovation Architect at the San Antonio Federal Credit Union, Steven W. Gorrie, CPA, Chief Financial Officer, State Farm Federal Credit Union, Mike Lawson, Creator and Host of CUbroadcast, Jim Pack, Senior Vice President, Chief Member Service Officer, Coastal Federal Credit Union, and Randy Smith, Co-founder and Publisher of CUInsight.com. Learn more about our esteemed judges: Meet the 2017 judges.

Learn more about the 2017 Innovation Award Finalists by clicking here

Affinion Group for the LUX 360°℠ Analytics Package

CUNA Mutual Group for TruStage Life Insurance

DDJ Myers for the Transformative Change Model (TCM)

Geezeo for Responsive Tiles

Insuritas for +Plus Down Payment Protection

Mastercard for the Mobile Product Showcase

Pentegra Retirement Services for The Pentegra Fiduciary Outsourcing Advantage

Q2 for Q2 SMART

Quantivate for Dynamic Workflow Engine

TrueCar for Integrated Car Buying Service

Velocity Solutions for CashPlease

Vantiv for OmniShield

Vantiv for Vantiv Resolve

Wolters Kluwer for E-Sign

 

The Future of HSAs

By: Steve Christenson, Executive Vice President, Ascensus.

If there is one constant in American politics, it is that with every new administration comes change. One of the first questions that I received after the election was if I think that health savings accounts (HSAs) are at risk of being negatively affected or eliminated. My answer—absolutely not. Of all the issues discussed, it was one of the few issues both sides agreed on. Let’s take a look at why.

Momentum

HSAs became available in January 2004, at a time employers were actively seeking to lower health care expenses for their employees. Hence, the growth of high-deductible health plans (HDHPs) emerged. By the end of 2007, approximately 10 percent of employers offered an HDHP. The key driver clearly was economics. For early adopters, acceptance of these high deductible plans required education and support of HSAs. Learn more from an in-depth conversation with Steve in Using HSAs To Attract New Members-Part 1 podcast.

HSA Growth Continued

HSAs and the dollars invested continued to grow at an accelerate rate. At the end of 2007, there were an estimated 3 million HSAs holding approximately $3.4 billion in assets. By year-end 2012, HSAs grew to 8.2 million with $15.5 billion in assets, and year-end 2015, 16.7 million with $30.2 billion in assets. And at year-end 2015, $4.2 billion of that $30.2 billion was held in investment accounts.

In 2016, Ascensus witnessed an 18 percent growth rate in HSAs at the banks and credit unions that they support. Devenir estimates that at year-end 2016, HSA assets will reach $36 billion with $5.4 billion in investments.2 Regardless of the legislation, economics will drive employers and consumers to the most effective use of their dollars. That has been proven since the inception of HSAs and will remain so with the new administration. Steve shared his insights about challenges and opportunities facing credit unions that look to their HSA products as a benefit to retaining existing members and attracting new ones. Listen to the full conversation.

A Solid Future

For the first time in many years, consumers frequently will see health care and HSAs in the headlines in the foreseeable future. Consumers who have had HSAs and understand their benefits will continue to move HSA dollars into investments and see these as part of their retirement package. Consumers who have been shifted to an HDHP but are not educated on how to open and manage HSA will seek those answers on a larger scale than at any time before in history. Consumers of all generations will seek HSA information from sources they trust. So as a financial services organization, ask yourself if you can afford to not be that trusted source and not participate in the HSA market. Those that do will benefit from this renewed momentum.

 

Ascensus Logo NewAscensus is the NAFCU Services Preferred Partner for IRA, Retirement Plan, and Health Savings Account (HSA) Solutions Software, Training, Documents and Consulting. More educational resources and contact information are available at nafcu.org/Ascensus.





Prepare Now for Future Mortgage Production

Mortgage lenders with strong deposit bases may not face many challenges funding mortgage production, but those that hold long-term loans in portfolio still face interest-rate risk. Given the historically low interest-rate environment and recent volatility in the markets, now may be a good time to lock in an interest rate for term funding. How can a lender that’s flush with retail deposits balance its liquidity and interest-rate risk management needs?

Prepare and Compete Later

  • Goal: Introduce new 10-year and 15-year fixed-rate mortgage portfolio product while managing interest-rate risk.
  • Solution: Forward Starting advance with two-year forward starting period and three-year fixed-rate period. Fund loans off deposits for first two years and take on advance funding at year three.
  • Result: Savings of $337,000 in interest expense on a $10 million advance compared to a traditional five-year Fixed Rate Credit Hybrid advance.

Case Study:
A small community bank in Athens, GA, has built a deposit base from its local municipality, as well as from individuals in the surrounding counties. It has a strong market presence that has allowed it to gather deposits and provide banking services to its clients. It has offered 3/1 and 5/1 ARMs, along with HELOCs, to meet the residential mortgage needs of its customers. With rates at historically low levels over the past several years, several of the institution’s competitors began offering 10-year and 15-year residential mortgage loans.

In 2014, the community bank’s management decided that it needed to revamp its mortgage loan offerings to retain existing customers and add new ones. To offer the longer-term loans that its residential customers were seeking, management had to become comfortable with a portfolio mortgage strategy.

While funding the loans was not a significant concern due to its strong depositor base, the interest-rate risk that these loans would generate was an issue. How could the bank offer competitively-priced term mortgage loans without exposing itself to a significant increase in interest-rate risk?

The management team decided to use a Forward Starting advance from FHLBank Atlanta to help offset the interest-rate risk generated by the pool of longer-term loans. They identified the interest-rate exposure of this new loan program to be at the five-year mark. Instead of borrowing a traditional five-year Fixed Rate Credit advance and placing the funds on its balance sheet today, the bank borrowed $10 million using a two-year forward starting, three-year Fixed Rate Credit Hybrid advance. This gave their management team the ability to lock in a three-year fixed-rate advance at today’s funding costs, but not actually place the funds on the balance sheet – or incur interest costs – for two years.

The community bank will fund the pool of fixed-rate mortgages for the first two years from its robust deposit base, and then at the end of the two-year mark, will automatically receive the advance funds at a rate negotiated up front with FHLBank Atlanta. The rate on the Forward Starting advance is 2.46 percent, which is 31 basis points above the rate on a five-year Fixed Rate Credit Hybrid advance. However, since the Forward Starting advance is only funded for the last three years, the total interest cost is $738,000, which represents a $337,000 savings over a five-year Fixed Rate Credit Hybrid advance.

Strategic Benefits of Forward Starting Advance

  • Compete for Members: Offering an intermediate-term fixed-rate portfolio product for which the funding and pricing are fixed for a known time provides loan officers the opportunity to retain existing customers and attract new ones.
  • Keep Costs Low: The forward starting feature enables institutions to leverage a strong deposit base to fund the first three years of the pool, then use an advance negotiated at today’s low rates to fund the next two years. Because the advance is on the balance sheet for less time than a traditional advance carrying the same term, total interest cost is significantly lower.
  • Lock in Interest Rate Protection at Today’s Lower Rates: Locking in funding at today’s lower rates can potentially help mitigate interest-rate risk at the five-year mark when management was most concerned about its exposure.
  • Achieve Portfolio Growth: The bank has the opportunity to grow its loan portfolio by attracting high-quality mortgage business from both existing and new clients at yields more attractive than other investment alternatives.
  • Easy to Explain: The strategy is easy to explain to regulators, ALCO, or the board of directors.

FHLBank Atlanta is the NAFCU Services Preferred Partner for Credit Union Liquidity and Financing Services. Learn more about our Preferred Partner by visiting nafcu.org/FHLBank_Atlanta

 

Creating a Collaborative Fraud Prevention Program

By: Ann Davidson, VP of Risk Consulting at Allied Solutions.

Many financial institutions in 2016 began picking up their efforts to build more robust risk management strategies. Creating a collaborative, cross-departmental risk strategy has proven to be a great way to manage fraud risk. Watch the full webinar to learn more: Collaboration is Key to Manage Fraud Risk.

One strategy your credit union may want to adopt is to create a risk culture awareness program that will help your financial institution better monitor, identify, and manage potential fraud activity.

What is a Risk Culture Awareness Program?

A risk culture awareness program is an ongoing initiative managed by leaders within your credit union to encourage enterprise-wide awareness of fraud and financial loss threats, so every member of your staff is better equipped to quickly and effectively detect and address these threats. Such programs include creating a fraud investigation unit to centralize the management of these risks, or adopting an enterprise risk management strategy that includes fraud mitigation.

What are the steps an organization should take to implement a risk culture awareness program?

1. Develop the foundational changes that will encourage this new culture of risk awareness.
2. Apply these new organizational changes and the risk culture awareness program.
3. Measure the impact of these changes to determine if they were effective.
4. Apply any necessary changes to the risk culture awareness program.
5. Adjust your risk culture awareness program as needed to meet the evolving needs of your organization and address current risks.

There is something to say about knowing your entire staff is doing their best to help ward-off fraud before it happens. There is also the added bonus of being able to tell your account holders all the hard work you are putting in to help keep their information and money protected – which will inevitably lead to good things for your organization. No matter where 2017 takes you, know that there is much to offer in the way of risk awareness and prevention.

Listen to a more in-depth discussion about how your compliance team and your risk management teams can work together to mitigate risk by watching the full webinar here: Collaboration is Key to Manage Fraud Risk 

 

Allied Solutions is the NAFCU Preferred Partner for Insurance—Bond, Creditor Placed (CPI), Guaranteed Asset Protection (GAP), and Mechanical Breakdown Protection (MBP); and rateGenius. Learn more at www.nafcu.org/allied.