Posts Tagged ‘credit unions’

Social Media Marketing

Many banks and credit unions have been slow to adopt to Social Media. In talking with CEO’s and Branch Managers, the common reason seems to be that we are regulated, and the fear of negative criticism. Unfortunately neither one hold much water. Throughout the course of our history, we’ve had satisfied and unsatisfied customers. These customers have always spread the word to their friends and associates. What has changed…is the platform in allowing you to do this more quickly and effectively.

I ask one simple question for those who are not out on social media. If someone has a negative experience with your company, and they spread this via Social Media, how will you respond?

Think of Dell, Nestle, Domino’s Pizza. They all got blasted by their customers in Social Media, yet none of the companies had a presence in social media.  Those companies got creamed, lost millions of dollars in sales. Michael Dell when it happened, called an immediate weekend meeting of all his top executives. Today, they are a great example of how to conduct Social Media. One of their division sells $7 million dollars worth of computers via their Twitter account.

Other banks and credit unions have been doing social media successfully for the past couple of years. They recognize that the younger demographics they are trying to attract are on Social Media daily. As more and more people have smartphones, more are accessing their financial institutions via their smartphone.

How will you keep up? At what point will it be too late to get in the Social Media Game? The key is to develop a solid social media policy. Here are some tips.

1. All policies need to address what’s in it for the reader/user

What should the reader take away after reading the policy? One of the common themes I kept coming across in introductions to social media policies is the idea that the policy should focus on the things that employees can rather than what they can’t do. For those of us who have experience writing policies, this is a real paradigm shift.

But that’s the spirit of social media — it’s all about leveraging the positive.

2. Who is responsible for conducting Social Media?

Clearly define this persons role in Social Media. Be sure that you monitor what they do, how they are doing it. Have a secondary backup for usernames and passwords. I can’t tell you how many times I work with companies who had an employee leave, and the user name and password went with them, locking them out of ALL their Social Media accounts.

3. What Social Media platforms work best?

Assess what Social Media platforms like Facebook, Twitter, LinkedIn, Blogs, YouTube, and Google+ that your customers are best reached. Then lay out a clear goals/objectives strategy to move forward and monitor. Be very clear about your goals/objectives, but be Flexible about the process to get you there.

4. Respect copyrights and fair use

This should be a no-brainer, but just in case: always give people proper credit for their work, and make sure you have the right to use something with attribution before you publish.

5. Protect confidential & proprietary info

Being transparent doesn’t mean giving out Coca Colas recipe or the recipe for McDonald’s Big Mac special sauce.

“Employers may fail to make employees aware of any obligation they may have to protect confidential or proprietary information.” Transparency doesn’t give employees free rein to share just anything.

Therefore, employees who share confidential or proprietary information do so at the risk of losing their job and possibly even ending up a defendant in a civil lawsuit. At the very least, companies will seriously question the judgment of an employee who shares confidential or proprietary information via social media. It’s a good idea to make sure all of this is clearly laid out in your social media policy.

6. Assess time commitment

Current research shows that it takes at least 1 to 1 1/2 hours per day to make it effective. It is not a silver bullet. Although these platforms are free, the time spent by an employee or employees costs money. In the future, it will be the responsibility of ALL employees to implement Social Media. Zappos the shoe and clothing online company has all 1,000+ employees out on twitter. They are obsessed with Customer Service and it shows in their Social Media efforts across all platforms.

7. Be authentic

Include your name and, when appropriate, your company name and your title. Consumers buy from people that they know and trust, so let people know who you are.

Your thoughts on why banks, credit unions and financial institutions are slow to adopt to Social Media?

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With all the negative press in the past few years about banks by this administration, one would wonder why Credit Unions haven’t grown more. Is it because banks do a better job of marketing, and providing a wider array of products and services? Typically the Credit Unions with asset size greater than $100 Million act more like banks. Maybe that explains their size and greater percentage’s of market share in key metrics versus their smaller Credit Union brethren.

Credit Unions have been slower to adopt Social Media Marketing like their mid to small size banks. In this fast paced world in which we find ourselves, consumers are wanting more and faster services. Most small to midsize Credit Unions and Banks are challenged to spend the money and hire the skill set to keep up. Will the pace of change accelerate or slow down? Will it be harder to keep up with the competition if you don’t adapt now?

State of the Credit Union

  • The number of Credit Unions dropped by 3.5% from 2010 to 2011.
  • From 2007-2011 Credit Unions have declined by over 1000 according to CUNA.
  • The number of Credit Unions are fairly even across all asset classes.

Number of Credit Unions by Asset Size 2011

  • Credit Unions with an asset size greater than $100 Million control 81% of all members.

Credit Union Memberships versus Asset Size 2011

  • Credit Unions with an asset size greater than $100 Million control 87% of all Assets.

Credit Unions Total Assets by Size 2011

  • Credit Unions with an asset size greater than $100 Million control 89% of all loans to members.
  • Total Loans by Credit Unions by Asset Size 2011Credit Unions with an asset size greater than $100 Million control 87% of all savings by members.Total Savings of Credit Unions by Size 2011The top four banks have asset sizes larger than all the Credit Unions combined.
  1. J.P Morgan Chase leads the way with 2.3 Trillion.
  2. Bank of America with 2.1 Trillion.
  3. Citigroup with 1.9 Trillion.
  4. Wells Fargo 1.3 Trillion. 

Rounding out the top 50 in banks is Hancock Holdings with assets of $19 Billion.

There is only 1 Credit Union with an asset size greater than Hancock Holdings. The Navy Federal Credit Union is $39.6 Billion or roughly 4% of Total Credit Union Assets.

What’s your take on the state of the Credit Unions and Banks? What will the end of 2012 look like for Credit Unions and Banks?

It started as a Facebook event page on Tuesday, and now it’s grown into a national movement. Saturday (Nov. 5) was Bank Transfer Day (BTD), a deadline activists set for transferring funds from for-profit banking institutions into not-for-profit credit unions closer to home.

Bank Transfer Day

Bank Transfer Day

Organized by Kristin Christian, her Bank Transfer Day Facebook page has attracted more than 81,900 RSVPs for the event since Tuesday (Nov. 1). Why? Kristen Christian wrote on the Bank Transfer Day Facebook page’s FAQ:

Facebook Page for Bank Transfer Day

“I started this because I felt like many of you do. I was tired — tired of the fee increases, tired of not being able to access my money when I need to, tired of them using what little money I have to oppress my brothers & sisters. So I stood up. I’ve been shocked at how many people have stood up alongside me. With each person who RSVPs to this event, my heart swells. Me closing my account all on my lonesome wouldn’t have made a difference to these fat cats. But each of YOU standing up with me… they can’t drown out the noise we’ll make.”

What’s the result of these social media-fueled protests? According to the Credit Union National Association, “at least 650,000 consumers across the nation have joined credit unions in the past four weeks.” That mass influx of credit union customers was further ignited on Sept. 29, when Bank of America announced it would begin charging consumers a $5-per-month fee for debit cards. Bank of America has since retracted that rate hike because of the public outcry. November 5th has come and gone. What’s your assessment?

  • Two years ago it took 15 banks to control 50% of the asset’s in this country. Today…5 banks control 50% of the assets, while the remaining 7500 banks and 7400 credit unions control the remaining 50%.
  • The number of Credit Unions across this country continue in decline. Once peaked at 23,866 in 1969. Over the past 5 years we’ve lost over 1,000 Credit Unions. Credit Unions like banks, the big just keep getting bigger.
  • Membership among Credit Unions with less than $100 million in assets has declined according to the recent CUNA Profile. So, it will be interesting to see what asset class of Credit Union benefited from this movement.
  • In researching this issue with CUNA, here is their statement.  The growth is particularly noticeable at larger credit unions–those with $100 million or more in assets, CUNA President/CEO Bill Cheney said.  They account for about 20% of all credit unions, but serve about 80% of credit union members.

Banks hold $12,284,305 in assets according to the Federal Reserve Bank while Credit Unions hold $954,757 according to CUNA.

Total Bank & Credit Union Assets 2011

Total Bank & Credit Union Assets 2011

The beneficiary of this movement seems to be the big Credit Unions. Hopefully the small banks, and small credit unions can step up their Social Media Marketing to take advantage of this opportunity.

What do you think will happen as a result of this movement?

Debit Cards

Debit Cards

Bank of America was the last of the top five banks to rescind their debit card fee going into effect January 1.

“For a lot of consumers, this was the last straw,” said Jean Ann Fox, director of financial services for the Washington- based Consumer Federation of America. “Banks have been making a lot of changes to accounts, adding fees and raising the minimum balance needed, and consumers were clear that they objected to one more fee.”

  • Card issuers must seek other ways to replace revenue lost after the U.S. capped fees on debit-card purchases last month at about half the previous level. The limits, mandated by the Dodd- Frank Act, may cut annual revenue by $8 billion at the biggest U.S. banks, according to data compiled by Bloomberg Government.

Like any other business they need to make a profit to support their employees, and shareholders. No profit, No jobs…so as usual these are tough issues and tough decisions. Banks will seek other avenues to ensure they maintain their profitability. While the focus has been on big banks, there are numerous smaller banks who were not going to charge their customers for the use of debit cards. However, the attention from the media has highlighted this issue. This has driven customers to Credit Unions who are not for profit institutions, who typically are not as much fee driven.

Debit Cards

Debit Cards

With the new Federal Legislation now in place, Banks and Credit Unions stand to lose Billion of dollars in reduced fees. On Saturday, the Federal Reserve instituted a 24 cent cap on swipe fees, estimating that running the card costs banks and credit unions between 7 and 10 cents per swipe. The cap is roughly 20 cents lower than the average swipe fee had been previously. Better known as the Durbin Fee, named after Democrat from Illinois.

What the Feds taketh away, financial institutions giveth back in new fees.

  • Bank of America is going to start charging $5 month for debit card usage. Wells Fargo and other plan to file the same path.
  • Most major banks now are starting to charge for checking accounts, that do not maintain a high balance. Some figures range as high as having an average balance of $1500/Month.
  • Citigroup recently implemented a mid-tier package, called the Citi Account., will carry a $20/monthly fee starting Nov 1 unless customer keeps a $15,000 combined balance in checking, savings, and loans, up from $6,000.

One day before the Senate was expected to vote on delaying swipe fee reform in June, Chase went one step further: Thanks to the Durbin amendment, thousands of Chase customers were warned, your kid can forget about that trip to Disney World. “Congress recently enacted a new law known as the Durbin Amendment that significantly impacts debit cards,” reads the letter. “As a result of this law, we will be changing our debit rewards program. After July 21, 2011 you will no longer earn Disney Dream Reward Dollars when you use your Disney Rewards Debit Card.”

Senate Majority Whip Dick Durbin and Rep. Brad Miller are going on the offensive against Bank of America after the financial behemoth cited Wall Street reform in announcing a new five dollar monthly debit charge last week. Miller, a Democrat from BofA’s home state of North Carolina, plans to introduce legislation that would make it easy for consumers to switch banks and simultaneously swap their direct deposit, electronic bill paying and other automatic features that make moving money from one bank to another more hassle than it’s often worth.

Could this be a boom for smaller banks and Credit Unions?

The savvy marketers for these institutions should jump all over this.

What’s interesting about all this is that the Top 5 banks now control 50% of the assets in financial institutions, while the remaining 7500 control the other 50%. Just 2 years ago, it took the Top 15 banks to control 50% of the assets in financial institutions. So, the facts are clear, the BIG, just keep getting BIGGER.

So the message is clear, take your business elsewhere to avoid these fees.

The number of Credit Unions across this country continue in decline. Once peaked at 23,866 in 1969. Over the past 5 years we’ve lost over 1,000 Credit Unions.

Will our Credit Union Survive? If so, what is our strategic plan to grow or merge?

Number of Credit Unions 2006-2010

Asking questions can help clarify your goals, both in general terms and when you begin to examine potential partners.  CUNA has provided a guide through these questions to help in the process.

  • Number of members:What is your current membership potential? What is your membership target? Ideally, how many members should a merger partner bring to the table?
  • Assets: What is your current asset potential? What is your asset target?
  • Size of merger partners: Will you accept partners of any size, or do you want to target credit unions within a particular size range, based on membership or assets?
  • Market penetration: What are your goals for market penetration, which may be based on criteria such as SEG or community penetration, or products per household? How will a specific merger partner enhance or detract from your ability to meet these goals? An example might be adding a branch in a neighborhood that contains some existing members but has a low penetration or a low level of products per household.
  • Average age of members: What is the average age of your members? Are you actively seeking to lower it? How will a specific merger partner enhance or detract from your ability to meet these goals?
  • Other demographic factors: What demographic factors distinguish your membership base? How would you like to influence these demographics to strengthen your credit union? Again, how will a merger partner impact these demographics?
  • Charter or SEG limitations: How is your ability to grow limited by your charter and your current SEGs? How could a merger change the boundaries of your charter or field of membership?
  • Deposit composition: What deposit products are drawing members? Do you see a need to expand your deposit line-up? Do you offer deposit products that would appeal to members of the merging credit union?
  • Loan composition/loan-to-share ratio: Where are your lending strengths? Where is your portfolio lacking? How does the loan portfolio of the merger partner mesh with your strengths and needs? Is there potential to increase loans offered to members of the potential partner, based on loan-to-share ratio and other factors?
  • Products and services: Is your current lineup of products and services sufficient to meet member needs? How does it compare to the products and services offered by the potential merger partner?
  • Geographic coverage: Does your strategy call for remaining within a specific geographic or municipal area, such as the City of Utopia? Must merger partners serve a territory that is contiguous to your existing area, for example, or are you interested in partners who are based in another neighborhood, another region or even another state as a way to diversify your membership to reduce the impact of economic shifts? Should proposed merger partners already have a branch in place that would “anchor” your expansion to a new geographic territory?
  • Branch footprint: Is a lack of branches hampering your ability to grow in specific neighborhoods with high potential for growth? Does the merging credit union offer a branch footprint that will help you reach appealing areas?
  • Leadership talent: Does your succession plan reveal the need to fill executive positions in the near future, starting with the CEO? Does the potential merger partner possess talented leaders who can help the credit union continue to thrive in the future? In a tight labor market or at a credit union focused on cross-sales, this issue might extend beyond the executive branch to other areas of the credit union as well.
  • Financials: What is your level of financial strength? Do you have plenty of capital? How does this impact your ability to select merger partners? Can you afford to work with a credit union with potential loan losses, for example, as long as they meet other goals?
  • Operations: How do you approach operations issues such as staffing levels, using electronic tools at the front line, and cross-selling products? How will you introduce these concepts to your merger partners as you welcome their members and incorporate their branches into your operations?

Will the smaller credit union survive? Your thoughts?

The number of Credit Union Membership is fairly well-distributed across the various Asset Group Sizes in terms of percentage. Credit Unions have reached $926 million in total assets as of 2010. Compared to their banking brethren, it pales in comparison.

Bank of America, J.P. Morgan Chase, Wells Fargo, Citigroup, and Goldman Sachs each are larger in asset size than ALL the Credit Unions combined. The top 5 banks now control 50% of the assets in these institutions, and just two years ago it took the top 15 banks to control 50%. Banks have slightly more institutions than credit unions, however the bigger credit unions are garnering a larger % of the asset pie just like the bigger banks.

What is abundantly clear…

  • 82% of the credit unions have an asset size <$100 million.
  • 53% have asset size <$20 million.
  • The big have become too Big to Fail.
  • Both FDIC and NCUSIF funds are basically insolvent, and will have to collect for years the premiums to pay for past failures.
  • These institutions will hasten mergers and failures if we have another financial meltdown.

Credit Union Asset Group Members