Top Drivers of Change Important to CUs

By: Stacy Styles, Vice President and Senior Business Leader, Mastercard.

Technology and other drivers of change are dramatically reshaping consumers’ lives and the environment in which we – and they – operate.  As a result, we face a future that challenges us with ever-growing complexity.

To better anticipate and shape that future, Mastercard partnered with Kantar Futures to identify and analyze the changes taking place over the next 4- 5 years.  Our approach was a combination of proprietary research (consumers, financial institutions, and merchants), expert interviews, and desktop research, workshopped with a team of accomplished futurists.

Our objective was simple: to explore specific opportunities for ourselves and our partners, so we can better prepare for and shape this future. Learn more about Mastercard’s research by listening to this insightful podcast. Click here to listen.

Through this work, we identified 40 drivers of change in areas such as demographics, values and attitudes, technology, consumer experience, macroeconomics, and much more.  We grouped these drivers into three critical areas:

  • Relationships: Reimagining how to define, connect and build relationships with consumers
  • Technology: Harnessing the power of technology to establish responsive, seamless, and secure consumer experiences
  • Standing for something: Recognizing the growing importance of embedding greater purpose in the corporate charter

Credit union leaders should focus on these drivers of change:

  1. Emerging entrants in the financial services landscape: Smartphones and digital tech are enabling mobile operators, tech giants, and startups to jockey for position in the financial services industry.  FinTech firms are unburdened by regulators, legacy IT systems, branch networks, and the need to protect existing businesses; and some, like Venmo, have become quite successful.  Where they are vulnerable, and credit unions are strong, is security.
  2. Rising member service expectations: People’s expectations for more efficient, enhanced, and human-centric member services are growing as consumer choice proliferates, access to information increases, and it becomes easier to communicate via online platforms.  Creating a culture of service will help establish the long-term relationships critical to success. Learn more in Mastercard’s podcast series. Click here to listen
  3. Increasing expectations for anything on demand: Companies are providing more on-demand solutions, whether through same-day deliveries or via mobile apps. This is altering baseline consumer expectations: they can get whatever they want whenever they want it. Financial services companies with Big Data will continue to play an important role in enabling us to meet people’s desires and expectations and to recognize them as individuals, not just accounts.
  4. Growing desire for customized and tailored products: There is a rise in demand for personalized products that fit not only the individualized tastes of consumers but also begin to anticipate their needs. As one credit union executive we interviewed said, “People aren’t looking for individual items anymore; they want to have a full-service experience that will not only solve their problem but excite and delight them at the same time.” Learn more in Mastercard’s podcast series. Click here to listen.
  5. Ubiquitous and constant social connectivity: The integration of mobile devices into Americans’ daily lives is leading to continuous, seamless, and instant social connection. 66% of Americans agree that they could not get by without their smartphone. Mobile needs to be at the heart of everything we do.
  6. The social path to purchase: The center of social trust has moved from large, stable, corporate brands to peer-to-peer networks. Due to social media and online ratings, consumers feel comfortable trusting their peers, despite the fact that they may be strangers. They are quick to share what they love – and what they don’t – about any interaction they have with a business.

For a more in-depth conversation about these trends, listen to the podcast series with Stacy by clicking the links below: 

The World in 2020: Part 1

The World in 2020: Part 2

Mastercard is the NAFCU Services Preferred Partner for Credit, Debit, and Prepaid Branded Products. More educational resources and contact information are available at www.nafcu.org/Mastercard.

 

Key Insights Credit Unions Need to Know about the Nation’s Underbanked

By: Bryan Clagett, CMO at Geezeo, and Adele Glenn, Emerging Channels Innovation Architect at San Antonio Federal Credit Union (SACU).

According to experts, one in four American households is considered unbanked or underbanked. That’s approximately 50 million individuals.* Credit unions are uniquely positioned to tackle the toughest issues facing these individuals and make a positive impact on their quality of life.

Two experts who have dedicated their careers to researching and creating tools to serve these segments: Bryan Clagett, CMO at Geezeo, and Adele Glenn, Emerging Channels Innovation Architect at San Antonio Federal Credit Union (SACU), shared some key insights with us.

What are the demographic and psychographic characteristics of the financially underserved?

Adele:

The behavioral data shows that whether these members are unbanked, underbanked, or financially struggling, they exist across all age groups and all demographic groups.
We refer to the unbanked as living in a “prepaid economy” because they are reliant on using prepaid cards with no traditional account structure. Psychographic data shows that those who are financially struggling have difficulty managing their finances from day to day. The inability to build a financial cushion leads to not having access to affordable credit; which ultimately inhibits them from building up the long-term savings necessary to achieving their aspirational goals.

Bryan: There are places in the United States where roughly 20% of residences have no bank accounts. Some examples of the regions are: Miami, Florida; Detroit, Michigan; the Bronx in New York, and several counties in Texas. It seems that urban areas and areas in the mid-south are the geographic regions with the highest percentage of unbanked.

Why are so many people in the United States outside of traditional banking channels in 2017?

Bryan: There are several reasons, but if we were to boil it down I’d start with:

  • Many immigrants, millennials, and others do not trust financial institutions, including credit unions.
  • Credit unions need to be more proactive when it comes to educating their members on financial literacy and actually show members the opportunities/options credit unions have available.
  • The typical underbanked consumer is working long hours with long commutes and often lives paycheck to paycheck.
  • They do not have the time or money to wait for checks to clear nor are they able to visit the brick-and-mortar branches.
  • The hard reality is that payday lenders exist because some financial institutions do not offer affordable products to consumers with limited resources.

For a more in-depth conversation, listen to the first podcast in this series with Bryan and Adele: “Key Issues Credit Unions Need to Know about the Nation’s Underbanked – Part 1 (Podcast)”

Geezeo A-Z LogoGeezeo is the NAFCU Services Preferred Partner for Personal Financial Management (PFM). More educational resources and contact information are available at www.nafcu.org/Geezeo.

Image source: FDIC July 2014 The Financial Brand

5 Emerging Risks and How to Mitigate Them

By Joe Luedke, Risk Consultant – Emerging Risks, Risk & Compliance Solutions, CUNA Mutual Group.

With each technological advance emerges new risk. Think about it: Every technology upgrade, new mobile device and new payment method brings exposure that wasn’t identified previously.

The real threat occurs when these risks aren’t anticipated or communicated within your organization.

Here are five emerging risks every credit union should have on their radar right now:

  1. Social media. Employees posting comments on social media that are inaccurate or appear incomplete or disparaging can threaten your organization’s reputation. Be careful when taking disciplinary action, as the National Labor Relations Board can classify social media activity as “protected concerted activity.” Mistakes here can lead to retaliation, wrongful termination claims and expensive litigation.
  2. Internet of Things (IoT) era. The IoT offers new tools and technologies that provide constant connectivity. It also creates new opportunities for data compromises. Workplace devices – like printers, clocks, break room appliances and TV – and employee devices – like watches, Bluetooth headsets and fitness trackers – are all susceptible to hacking, which can lead to unauthorized access to your network.
  3. Bitcoin and blockchain. Members may already use bitcoin and blockchain for fast and unregulated transactions, sometimes associated with nefarious activity. Unfortunately, about a third of bitcoin trading platforms are hacked.
  4. Ransomware. Today’s phishing attacks can restrict access to files and threaten disruption or permanent destruction of sensitive information unless a ransom is paid. Ransoms can range from hundreds to thousands of dollars, and they are typically payable in bitcoin.
  5. SMiSHing and website spoofing. As demand for mobile access grows, members don’t think twice when they receive texts claiming to be from their credit union. These fraudulent texts can infuse malware or redirect members to spoofed websites that allow fraudsters to capture or confirm personal or account information.

Credit unions must be ready to deal with emerging risks like these, while still tending to familiar threats. So, the bottom line is, don’t be complacent. Start implementing basic steps – like the following – today, so you don’t fall victim:

  • Educate staff and members about spam, shams and other scams. Ensure they understand how to identify fraud. Teach them what to click and what not to click and how to use proper technology etiquette to keep themselves – and your credit union – out of harm’s way.
  • Stay in the loop, as executive involvement is critical to success. Remember, when risk management is effective, nothing bad typically happens and the status quo is maintained. But, when you’re blindsided by a problem, poor risk management usually takes the blame.
  • Follow a process that includes risk mapping matrices, risk heat maps and process mapping to help uncover potential risks, quantify their potential impact and keep leadership aware.
  • Implement risk and compliance best practices, including policies and procedures to reduce potential loss. A number of great resources in the credit union marketplace are available to help, including those in CUNA Mutual Group’s Protection Resource Center.

As technology continues to evolve, risks will continue to emerge. So, do your best to visualize, track and communicate risk at your credit union. Once you identify an emerging risk, you can begin taking action to mitigate it.

Learn more about emerging risks by watching our recent webinar “Emerging Risks on the Radar.”

CMG logoCUNA Mutual Group is the NAFCU Services Preferred Partner Mortgage Payment Protection. Learn more about our Preferred Partner at www.nafcu.org/cunamutualgroup.

 

How to Resonate with Today’s Up-and-Comers

By: Stacy Styles, Vice President and Senior Business Leader at Mastercard.

Marketing to Millennials

The myth of the millennial as the perpetual adolescent has finally been put to rest. Adult millennials, meaning those in the 28 to 37-year-old age bracket, are today’s adults with families, homes, careers, and most importantly to credit unions, money. In fact, older millennials are really the sweet spot for credit unions. They are growing in affluence, accounting for a third of adults earning more than half a million a year and more than 6 million of them earning six figures.

Play to their Passions

In a recent webinar, Key Ingredients—Resonating with Millennials and a Sneak Peek at Centennials, we discussed how to capture millennials’ business. The key is to understand what drives them. This group is making money and they are not afraid to spend it on things they care about such as travel, golf, and cuisine. These three areas differentiate affluent millennials from other generations.

Travel:  Nearly three-quarters value travel for entertainment. More than half have traveled outside the country in the last year which sets them apart from other adults.

Golf: 22 percent played in the last year. That’s more than double the rest of the adult population. Nearly three-quarters are willing to travel just for golf and use it for business.

Cuisine: Millennials are the true foodie generation with two-thirds saying cooking and food are a big part of their identity. They are really ready to put their money where their mouths are. A whopping 87 percent said they would splurge on a nice meal even when money is tight. They are willing to spend $282 per person for an extraordinary culinary experience, compared to the next highest spending group, which came in at $170.

Building the Bridge with Boomers: Community and Future Planning

A question on the minds of many is how to market to millennials while still appealing to the largest current base: the boomer generation. The answer is community.

Getting involved and making a difference locally is very important to millennials. More than three-quarters of millennials say they feel like they should be doing more to help their local communities. The same number report that when a company donates to or does something for their school or community, they try to buy things from that company as often as possible. This is a value shared by the boomer generation. It’s also a great spot for credit unions which are smaller and more personal to the communities they serve.

Both of these groups are also in stages of planning. Boomers are still planning retirement while older millennials are planning for their children’s educations. A good area to focus on that resonates with both generations is providing easy tools to create life plans.

What’s Next? The Centennial Generation

The next generation, we’ll call them centennials, would refer to those currently 19 years old and under. They are expected to be quite different from millennials as they grew up under the recession and are more cautious, are savers not spenders and are very concerned about the future. This generation wants advice and is debt adverse, so offer them educational materials including the benefits associated with accumulating debt so they can get to where they want to be in the future.

One area that bridges these generations is the digital landscape. There is no doubt this is important to millennials: 92 percent say they would make a banking choice based on digital services. Three-quarters of millennials would like to make payments by scanning with their phone, and 60 percent have already done this in a store. Mastercard did a study which indicated the only thing holding this group back from using their cell phones to make payments was availability. Not all places accommodate this, and they are waiting for it to happen.

So while it is obvious credit unions need to be offering the best possible digital services to millennials, this will be a foregone conclusion for centennials. The next generation doesn’t know anything but the digital age and they will expect everything in place, so getting up to speed now will pay off in the future.

Watch the webinar in its entirety here.

Mastercard is the NAFCU Services Preferred Partner for Credit, Debit, and Prepaid Branded Products. More educational resources and contact information are available at www.nafcu.org/Mastercard.

Image 1 Sources: Harris Poll, November 2015; eater.com research, 2015; MasterCard golf segmentation research, 2014; Yankelovich Monitor, 2016
Image 2 Source: Apptentive report “Mobile Banking Apps Not Just For Millennials,” 2015

The Most Popular Posts of 2016

2016 was an eventful year, and the experts have provided educational material you can’t miss. From card fraud to millennials, credit scores to new IRS regulations, we’ve rounded up the top 5 webinars and blogs that cover the most important topics of the year. Keep yourself in-the-know and be prepared for a strong, successful 2017.

Webinars

Card Fraud on the Rise: How Financial Institutions Can Help Prevent It
Ann Davidson, VP of Risk Consulting at Allied Solutions; Tammy Behnke, Program Executive at ProSight Specialty Insurance

Possibly the most relevant concern for financial institutions right now is costly card fraud risks. Learn the fraud prevention best practices that could save your credit union from hundreds of thousands of dollars in payment card losses.

Understanding Credit Scoring and Credit Reports
MaryKay Scully, Director of Customer Education at Genworth Mortgage Insurance

Everything you need to know about credit scoring and reports, inside and out. This webinar covers report preparation, the information contained and where it comes from, what types of reports are available, how to use the codes in each section of the report, how the scoring model works, and more.

NAFCU/BFB Gallagher 2016 Executive Compensation Survey Report
Christine Burns-Fazzi, Co-Founder of BFB Gallagher; Jack E. Clark, PhD, Clark Research Associates

Now in its 10th year, the annual NAFCU/BFB Gallagher Executive Compensation and Benefits Survey is the trusted source for comprehensive data on credit unions of all asset sizes, coast-to-coast. Get data on important topics like total executive compensation by asset size, types of nonqualified plans, demographic profiles, and more.

Top Risk Concerns: A Look Back and a Look Ahead
Ann Davidson, VP of Risk Consulting at Allied Solutions; John Buzzard, Product Manager of Network Products at FIS Global

Don’t wait until disaster strikes. Arm your credit union with the knowledge of the most prevalent risk exposures from years past, and prepare for 2017 with the best methods to mitigate these risks.

Data Breaches Continue to Rise: How Financial Institutions Can Prepare & Respond
Ann Davidson, VP of Risk Consulting at Allied Solutions; Sally King, Managing Partner and Co-Founder of NXG Strategies

Build a proactive data breach response plan that will help reduce the financial and reputational impact of an attack inside your organization or in your community. Get educated on secure policies and third-party programs, effective account holder response plans, methods for offsetting the costs of responding to an attack, and compliance with FTC regulations.

Blogs

Four Emerging Risks Challenging Credit Unions Today
Roger Nettie, Senior Risk Management Consultant at CUNA Mutual Group

Four major emerging risks at-a-glance: wire transfers and ACH, overdraft fees, collection letters, and ATMs and the Americans with Disabilities Act (ADA) compliance.

How to Speak the Millennial Language
Larry Pruss, Senior Vice President of Strategic Resource Management

Making up nearly 25% of the US population, it’s no wonder millennials were one of the hottest topics of discussion in the financial services industry this year. If you know how to connect with them, millennials represent a huge opportunity for your membership, educational content, and sales teams. Read the top five tips on how to leverage a millennial engagement strategy today.

Card Data Breach Loss Prevention Checklist
Ann Davidson, VP of Risk Consulting at Allied Solutions

Eleven key steps to ensure your credit union is doing everything possible to prevent card data breaches. From evaluating the compromised card number and determining the level of risk, to reporting the fraud to the Visa Fraud Reporting System and/or MasterCard’s Safe System (a requirement under card association rules), you can’t afford not to implement these best practices.

The 7 Most Expensive Vendor Management Mistakes
Patrick Goodwin, President of Strategic Resource Management, Inc. (SRM)

Even the wisest professionals at financial institutions overlook savings opportunities when dealing with third-party vendors. From the insidious, to the emotional, to the downright dangerous, here are the most expensive mistakes credit unions make with their vendors—and how to prevent them.

Card Fraud Lessons Exposed
Ann Davidson, VP of Risk Consulting at Allied Solutions

When Allied Solutions presented a webinar on card fraud, they conducted a poll and found that 81% of attendees had personally experienced an uptick in card fraud during the preceding 12 months. Allied reached out to individual financial institutions to perform an assessment of their risk programs and help uncover potential causes of the card fraud they were experiencing. Read on to find out what they found.