Developing the Right Strategy to Engage Millennials

By: April Lewis-Parks, Director of Education and Corporate Communications, KOFE.

Millennials (generally defined as age 18 to 34) are quickly becoming the largest consumer segment in the U.S. They outnumber baby boomers by 11 people. However, despite their numbers, Millennials struggle to achieve financial independence. They are among the least likely to engage with traditional financial products and services. So, what can credit unions do to bring this generation into the financial fold?

The financial experts at KOFE: Knowledge of Financial Education captured this dilemma in a new infographic, “Millennial Money: Banking and Credit Fear.” As you can see, it details the challenges facing credit unions that are eager to engage America’s largest consumer segment.

The biggest roadblock to millennial product engagement is the inherent mistrust of financial institutions. Many believe big banks played the largest role in causing the Great Recession, and they don’t have the knowledge to differentiate those organizations from smarter alternatives, like credit unions. As a result, they lack an understanding of how traditional financial products improve their ability to manage money effectively.

Nowhere is this more apparent than with millennials use of basic checking accounts. Nearly one in four millennials say they will never open a bank account. However, more than half that number say it’s because they don’t have enough money to keep the account open. That points to a lack of knowledge about accounts that offer no minimum balance requirement and protections to avoid overdrafts.

Education is often the key to fostering more engagement. By increasing awareness of credit unions’ member-centric culture and educating consumers on the benefits offered by traditional financial products, credit unions can overcome millennials’ reticence.

This is the driving principle that led the certified credit counselors of Consolidated Credit to create KOFE, developing an out-the-box platform that can be used by partners, such as credit unions, to educate unbanked and underbanked individuals, particularly millennials. Using a third-party platform allows credit unions to engage in effective outreach, without diverting revenue into developing in-house education systems.

For an in-depth conversation about how to use financial education to capture your members’ attention watch KOFE’s webinar on demand now.

KOFE Logo 117

KOFE (Knowledge of Financial Education) is the NAFCU Services Preferred Partner for Financial Literacy. More educational resources and contact information are available at www.nafcu.org/KOFE.

 

The 3 Most Effective Methods for Managing the Equifax Breach

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

The enormity of the Equifax® data breach has left a wake of fear and frustration among businesses and consumers alike. Names, social security numbers, birth dates, addresses, driver’s license numbers, and other pieces of private data were stolen from an estimated 143 million American consumers earlier this year.

Below are a number of things you can do to better protect your business and consumers from potential fraud exposures in the wake of this massive data breach:

1. PlanImplement rigorous security measures to better catch fraud attempts before they occur

  • When authenticating an account user, require personal information (i.e. high school crush, best friend from childhood, pet’s name) along with identifying information for access to the account to help prevent the identity theft of your consumers.
  • Require that the account holders have a password or passcode to access their account
  • Use multi-factor authentication:
    • Who you are: Inherence factors, such as biometric methods
    • What you have: Possession factors, such as ATM card numbers
    • What you know: Knowledge factors, such as password, pin or secret question
  • Don’t just rely on SSNs, birth dates, home addresses or driver’s license numbers for granting account access.
  • Adopt advanced tools, like biometric authentication, for verifying the identity of account holders.
  • Verify you have up-to-date contact information for all of your members’ accounts, including consumer cards and online accounts.
  • Set up a website with information regarding how you plan to communicate with your account holders about updates related to the Equifax cybersecurity breach.
  • Post and share contact resources and information for consumers so they know where to go to have their questions or concerns addressed.
  • Share educational resources and tools with your account holders that aim to help them prevent and manage identity theft and fraud.
  • Train staff on fraud warning signs and job-relevant fraud prevention/response procedures.
  • Proactively build a response plan, so you can swiftly implement the plan should any fraud exposures occur. See our Data Breach Preparedness Checklist for recommendations on building a strong plan.
  • Monitor likely points of entry for fraud, such as:
    • New membership requests
    • New products or services requests
    • Change of account holder information for existing members, such as change of address
  • Purchase institutional coverage that ensures your financial institution should a cyber attack occur.
  • Consider partnering with an identity theft vendor that offers “deeper” fraud monitoring services for consumers, namely:
    • Dark web monitoring
    • Social security monitoring
    • Address change monitoring

2. RespondAct swiftly and efficiently to help protect your business’s finances and brand, should an exposure occur

  • Set-up a designated resource or hotline for handling account holders’ concerns and questions related to the breach, such as:
    • Answering questions about fraud and identity theft
    • Assisting with credit and other monitoring services enrollment
    • Assisting with placement of fraud alerts
  • Offer professional identity fraud investigation and fraud remediation services.
  • Consider providing credit/other monitoring services at no-cost for consumers.
  • Contact Allied Solutions’ risk consultants if you are experiencing an uptick in identity fraud so we can help you to minimize the fraud exposure.
  • Notify law enforcement and regulators about the exposure.
  • Work with internal or external resources to notify your members about the breach:
    • Draft notification letters
    • Distribute employee scripts
    • Create FAQs for website
    • Write and send press releases
  • Contract with external resources to provide printing and mailing services for notification letters.
  • Contract with external resources to provide specialized legal assistance and forensic investigative services, if necessary.
  • Send out educational information to your consumers, about recommended steps they should be taking to protect themselves from identity theft, such as:
    • Monitoring accounts daily
    • Registering for free fraud monitoring services
    • Purchasing comprehensive identity theft protection
  • Use multiple channels to communicate with account holders – email, direct mail, text, etc. – so you are reaching them through their preferred channel and device.

3. Recover: Evaluate fraud damage and response effectiveness so you can modify your breach prevention and response measures accordingly

  • Evaluative questions to ask:
    1. Where did the fraud occur, and what could you have done to better protect that point of compromise
    2. Are there security tools you need to purchase or replace to more effectively prevent breach exposures?
    3. Where were critical errors made in following the plan’s procedures?
    4. Where did the procedures come up short in providing the direction that the team needed?
    5. What steps/issues could have been avoided with proper pre-planning or different procedures?
  • Once you have answered all of these questions:
    1. Prioritize next steps for improving your breach prevention and/or response processes.
    2. Implement prioritized changes immediately.
    3. Train employees on lessons learned and new processes.
    4. Set-up a timeline for adopting all other changes.

As you work to mitigate the impact of the Equifax breach, we strongly urge you to also share breach information and updates with your consumers, while also educating them about how they can prevent and manage the risk of identity theft. Watch Allied’s recent webinar for more best practices for educating and protecting your members in light of the Equifax breach.

Also, for a dive into the root causes of fraud and for advice and tools on how to prevent future attacks listen to our fraud series webinar here.

Sign up for Allied’s Risk Alert newsletter if you are interested in receiving regular fraud and security related insights and education.

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.

Delivering Convenience Is Anything But Easy

By: Mark T. Nelson, CUNA Mutual Group.

Meeting your members’ demand for convenience is changing the dynamic of the credit union/member relationship. Members want to do business when, where and how it best suits their lives, and that may not be around your office hours or locations.

You may believe you know your members better than anyone. You may think the loyalty your relationship is based on is stronger than the appeal of competitors. And, you may think you’re already meeting their expectations and delivering a member-friendly customer experience.

But, there are a few problems with those assumptions. Loyalty only gets you so far. At some point, convenience becomes more important. As technology empowers people to manage their busy lives, they’ll inevitably gravitate to the path of least resistance as long as it delivers value and meets their needs.

In fact, a Chief Retail Officer at a large credit union recently said, “Most members are loyal to their credit unions. They want to do business with them, but convenience trumps that.”

Also, don’t confuse your vision of convenience with your members’ vision. According to an IBM study, 62 percent of retail banking executives surveyed said they deliver an excellent customer experience. But, just 35 percent of their customers agreed.

As a credit union, your challenge is how to compete in today’s technology-driven world. You need to adapt quickly and often to satisfy changing consumer demands and deliver a convenient experience. As a result, you may have to divert time and resources from other priorities.

For example, providing a new digital product or channel involves a number of considerations, including:

  • Technology expertise
  • Financial investment
  • Data security
  • Compliance issues
  • Ongoing maintenance

And of course, you must address these issues while meeting the ultimate objective – making it easy for your members to do business with you.

While delivering convenience is vital to meeting your members’ expectations, it’s a never-ending process. With the technology revolution continuing to pick up speed, you can feel caught between a sense of urgency and taking a measured approach.

Overshadowing everything is the need to get it right.Your members trust you to get it right. If you don’t, it’s now easier than ever for them to take their business to a competitor who does.

Click here to watch our recent webinar to learn how your members are driving innovation and changing your world.

CMG logoCUNA Mutual Group is the NAFCU Services Preferred Partner for TruStage® Auto & Home and Life Insurance Products and Mortgage Payment Protection.
More information and educational materials are available at nafcu.org/CUNAMutualGroup 

Determining the Loan Purpose:  The New Challenges [Part 1]

By Cathy Brown, Wolters Kluwer

One of the common threads running across the new Uniform Residential Loan Application (“URLA”), the disclosure requirements of Regulations X and Z (“TRID”), and the reporting requirements of Regulation C (“HMDA”) is the requirement that the lender identifies the loan purpose.[1]  It is possible for the loan purpose to be the same for the new URLA and under TRID and HMDA.  This blog examines the need to recognize that the loan purpose may be different for each and what lenders can do to prepare for that eventuality.

Can there be more than one loan purpose choice for a single-purpose loan?

Consider the following single-purpose loan.  A prospective borrower takes title to a dwelling with an existing loan as a successor-in-interest.  The loan is assumable with the lender’s approval but the prospective borrower only seeks approval after taking the title.  The prospective borrower selects “Purchase” for the loan purpose on the new URLA. But is that it—is the loan purpose “Purchase” for the URLA and under TRID and HMDA?

In order to answer the question with certainty, lenders may wish to start with a review of the possible choices.  Those choices vary.  The bare choices follow.

It is also helpful to recognize why the loan purpose choices are different between TRID and HMDA.  The choices under TRID are intended “to aid consumers’ understanding of their loan transactions.”  See Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z).
Notice that the new URLA no longer contains choices for Construction or Construction-Permanent.  Also, there are two new choices under HMDA; those new choices are “Cash-Out Refinancing”[2] and “Other.”

By contrast, the choices under HMDA are intended to aid regulatory agencies and the public when analyzing the mortgage market.  An obvious difference is that “Construction” is a loan purpose choice under TRID, but not under HMDA.  “Construction” is an important category from a customer perspective.  For covered loans under HMDA, “Construction” is primarily absorbed into the “Home Purchase” and “Home Improvement” choices.  Presumably, that approach aids analysis and it does avoid double-counting when there are separate construction and permanent loans.

Going back to our example, there is a prospective borrower seeking approval to assume an existing loan after taking title to the property, and that prospective borrower selects “Purchase” on the URLA.  See the following analysis showing how one single-purpose loan may have three different loan purposes.

Although the example transaction may not occur with great frequency, it is just one loan purpose question that lenders should be prepared to answer.

The first question above was whether there can be more than one loan purpose choice for one loan.  The answer is a qualified yes for the example given, but an unqualified yes for other loans because the available choices are different between the URLA, TRID, and HMDA.

In Part Two of this blog series, Wolters Kluwer discusses the HMDA Loan Purpose “waterfall” methodology and other requirements your credit union needs to know. They also share hidden requirements and next steps.

Wolters Kluwer LogoWolters Kluwer is the NAFCU Services Preferred Partner for Consumer and Member Business Lending & Deposit Services. More educational resources and partner contact information are available at www.nafcu.org/wolterskluwer/.

[1] For purposes of this article and for simplicity, use of the regulatory acronyms URLA, TRID, and HMDA include the full regulations when applicable. [2] References to a lender’s separate cash-out refinancing product includes those products that are intended to meet investor guidelines.

Equifax Data Breach: What to do now to Safeguard Your Information and Avoid Being Scammed

By: April Lewis-Parks, Director of Education and Corporate Communications, KOFE

The latest big data breach has been reported all over the news and you might be wondering what to do or how it may affect you.

Equifax has been breached and it’s said that 143 million U.S. consumers could be affected.  Cybercrime is becoming more prolific and you need to protect yourself.  We strongly suggest that you consider freezing your credit as a precaution.  Contact each of the credit reporting agencies individually. Their contact information is:

Equifax — 1-800-349-9960 or https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp

Experian — 1-888-397-3742 or https://www.experian.com/freeze/center.html

TransUnion — 1-888-909-8872 or https://www.transunion.com/freeze

You’ll have to provide your personal information and pay a small fee, except from Equifax who is providing the freeze for free since they were breached.

After they receive your freeze request, each agency will send you a confirmation letter containing a unique PIN (personal identification number) or password. Keep the PIN or password in a safe place as you will need it if you choose to lift the freeze, for example, to refinance your mortgage or take out an auto loan, etc.

By freezing your credit, you will block anyone from accessing your credit, which should prevent thieves from taking out credit cards in your name.

Freezing your credit will not prevent all identity theft.  You may also want to consider subscribing to a trusted company that specializes in protecting identity. For example, LifeLock is currently offering a 10% discount in addition to a 30 day trial on their Identity Protection products.

Precaution is the best way to approach these uncertain times and it is important to take control of what you can.

And be wary of scams connected to the Equifax breach.  People have been calling consumers trying to trick them into giving them their personal information. Here are tips for recognizing imposter scams and things to do if you are called:

  • Don’t give out personal information. Don’t provide any personal or financial information unless you have initiated the call and it’s a phone number you know is correct.
  • Don’t trust caller ID. Scammers can spoof their numbers so it looks like they are calling from a particular company, even when they’re not.
  • If you get a robocall, hang up. Don’t press 1 to speak to a live operator or any other key to take your number off the list. If you respond by pressing any number, it will probably just lead to more robocalls.
  • If you’ve already received a call that you think is fake, report it to the FTC.

The KOFE financial wellness portal has additional information to help you prevent identity theft and learn how to protect yourself.  www.kofetime.com

KOFE Logo 117

KOFE (Knowledge of Financial Education) is the NAFCU Services Preferred Partner for Financial Literacy. More educational resources and contact information are available at www.nafcu.org/KOFE.