Fintech: Friend or Foe?
Over the last several years, credit unions have shown tremendous growth, even alongside the uprising of many “fintech” companies. In the last number of years, credit union membership has experienced robust growth, with this year exhibiting the fastest member growth in more than 25 years, as measured from October of 2016 to that point in 20171; meanwhile, fintech companies have seen a 778% increase in funding in the last 5 years2. As the buzz around fintech continues, much attention is given to the market share these early-stage companies were actively seeking within the credit union space. However, at an age of nearly infinite resources and technology right at our fingertips, consumers aren’t specifically looking to do business with a “fintech”; but rather, consumers are simply looking for businesses to meet their needs in a convenient and trustworthy manner. Credit unions continue to meet this need, but as the industry changes, credit unions will need to embrace technology and innovation to build for the future.
Financial Institutions are facing a choice: spend a significant amount of time and money developing their own capabilities to meet the changing market, or pursue partnerships with fintech companies that are disrupting this space. Even the major financial institutions are facing this dilemma, and many are choosing to partner with fintech companies to bring in new technology, products, and channels. Since 2012, the top 10 major financial institutions have invested approximately $3.6B in fintech companies.3
According to a recent study done by Accenture, more than 40% of consumers would be more loyal to their credit union or bank if they simplified the car or home buying process, and 39% would like their financial institution to proactively provide real-time, actionable financial advice.4 For each credit union, partnering with fintech companies can look drastically different, however there are some commonalities that a credit union can explore now. Here are a few examples of ways fintech companies can bring added innovation and value to credit unions:
- End-to-end digital loans: providing loans at the convenience and control of the member, so that they can apply anywhere at any time from their mobile device or laptop.
- Reaching underserved markets: Data continues to be one of the most critical elements to identifying and serving new market segments. For example, the “thin file” consumer who does not have an established credit score has in the past received limited financial options, whereas with new developments, credit unions can now offer comprehensive financial services despite their lack of traditional financial data.
- Use new marketing channels: technology such as mobile platforms or non-traditional distribution partnerships can help reach new customers and offer credit union products in more convenient ways for the member.
Partnering with fintech companies can have the potential to combine cost efficiency with more comprehensive services for credit union members. In a recent study done by global law firm Mayer Brown, 87% of Financial Institution-Fintech partnerships cut costs, and 54% of these partnerships boost revenue.5
So how should credit unions respond?
1) Get educated and seek out potential mutually beneficial strategic relationships between incumbents and startups.
2) Keep an open mind to the new and sometimes intimidating or crazy sounding ideas of startups.
3) Use caution when negotiating agreements with eager young companies, and seek validation from industry experts, startup customers, other credit unions, and CMFG Ventures.
1Credit Union Trends Report (Pg 5); CUNA Mutual Group – Economics; December 2017 (October 2017 Data)
2Fintech’s Golden Age (Pg 1); Accenture; 2016
3Visualizing Where Major US Banks have Invested in Fintech (Pg 1); CB Insights; June 2017
4Banking on Value (Pg 5); Accenture; 2016
5The ABC of Fintech: Acquisitions, Brexit and Collaboration (Pg 12); Mayer Brown; November 2016
Help Members Understand How Tax Reform Affects Their Refund Next Year & TurboTax Marketing Updates
Your members work hard for their money and often a tax refund may be the biggest check your members get all year. TurboTax is here to let you know how the new tax reform legislation may affect your tax refund next year. Read the full story here.
TurboTax Program Marketing Updates
Tax season is in full swing! We are in the middle of peak filing weeks when many of your members will be starting their taxes. Please remember to keep the TurboTax discount information front and center for your members, so they don’t miss out on the savings. Free marketing materials to help you promote the discount to your members are available in the Partner Center.
As a reminder, when your members access TurboTax from your co-branded microsite the product prices on the microsite will reflect the credit union member discount. Once the member has finished their taxes and is ready to pay, the price that will be presented on the payment screen will include the discount. There is no service code or coupon needed to receive the discount.
Top Marketing Recommendations to Build Member Awareness:
- Send dedicated tax emails to your members – if you missed the January email requirements it’s not too late, you can send emails on Feb 15 and April 12
- Include a TurboTax article in your newsletter promoting the member discount
- Display the TurboTax video in your branches
- Use social media to keep members in the know about the TurboTax discount
- Place a TurboTax banner on your e-statements
- Place a TurboTax banner on your mobile banking app
2017 Sprint Revenue Payments
Your 2017 marketing efforts are paying off! The 2017 Sprint revenue payments will be delivered by the end of February via ACH deposit. Every credit union will need to have an ACH registration on file to receive their Sprint revenue payments.
To submit an ACH Registration, or to update ACH account information that has already been submitted, fill out the ACH form in the Partner Center.
Every credit union will need to complete and submit the form in order to get paid. It is a secure site and the account number will be encrypted. Your credit union will simply need to provide your:
- Routing and transit number
- Account number
- Type of account (checking, savings or GL)
Renew for the 2018 Sprint Contract Year!
If your credit union is enrolled in Sprint or the All Bundle program and has not renewed for the 2018 Sprint contract year, please visit the Partner Center Dashboard and click on the "Renew for Sprint" button.
The Evolution of Auto & Home Insurance in 2018
From Amazon and Alexa to Uber and Zillow, we don’t need to look far to see how technology and connectivity have changed our way of life, how we communicate, and how we do business. The auto and home (A&H) insurance industry is no exception. Regardless of whether your credit union currently offers A&H insurance, trends in the marketplace can help you evaluate, update, or implement new insurance offerings
The biggest trend to watch in 2018 will be continued direct channel growth. Whether researching or purchasing insurance online or through a call center, a consumer’s desire to instantly fulfill their needs is driving the rapid and continued rise of direct channels. Access to smartphones is one factor driving this desire. As of today, 77 percent of adults in the United States now use a smartphone, a significant increase from just 35 percent in 2011.1 Geico and Progressive, two profit leaders that only sell in direct channels, are proof that the strategy works.
In addition to the direct channel growth, five other trends that will drive the evolution of A&H insurance in 2018 include:
- The prevalence of web and mobile as a research platform. Statistics show that 74 percent of insurance shoppers research online before they buy, yet only about 25 percent actually close the deal online.2 This gap signifies an opportunity for credit unions to better enable purchase completion.
- A continued desire to shop around. Better technology, like safety sensors in bumpers and windshields, and an increase in the frequency and severity of accidents are driving insurance prices up. A recent review found the cost to fix a fender bender of the same make and model almost doubled over just two years due to these additional sensors3. Consumers are very price sensitive, and when premiums increase, the shopping starts. So, expect the year ahead to be a busy one for comparison shopping.
- Creating a one-stop member experience. Best practices generally recommend that drivers review their car insurance policy whenever it’s up for renewal (typically every six months to one year), and consumers typically compare quotes from at least three companies. The ability to provide comparison quotes for your members within a single experience delivers increased value to those you serve and helps them find the best product to meet their needs.
- The “Internet of Things” will further personalize pricing. In our data-driven world, anything and everything that tracks personal data could affect insurance. Smart devices have the potential to record data about everything from miles driven to acceleration and braking rates. New smart devices for the home, including thermostats and fire detection devices, could help decrease risk of serious damage, thereby offering insurers the opportunity to personalize pricing for policyholders.
- Momentum for ride sharing and autonomous cars will continue. Major shifts in how we approach transportation—either due to increases in ride sharing or the advancements of autonomous cars—have already created a demand for insurance products to meet these changes. As a result, we’ve seen insurance companies begin to innovate their products. One example is insurance that covers only the number of miles you drive or ride. You can expect continued innovation in auto insurance as this trend progresses.
Credit union members have many choices for how, when, and where they shop for insurance, in addition to many reasons why. Therefore, it’s vital for credit unions to stay relevant with their members’ insurance needs. From increasing your insurance marketing efforts to align with high comparison shopping rates, to improving your online content to ensure it’s easy to use on any device and creating stronger sales propositions and multiple channel choices for your members to use, the time is now to take another look at your A&H offering and how it can help you capitalize on these trends.
- Pew Research Center, “Record shares of Americans now own smartphones, have home broadband,” January 12, 2017.
- J.D. Power, “2016 U.S. Insurance Shopping Study: Insurers Lean on Online Presence to Grow Premiums,” May 1, 2016.
- Moody’s Investors Services, Insurance Industry Overview, October 2017.
Love My Credit Union Rewards is Becoming ADA Compliant
Love My Credit Union Rewards is pleased to announce that they are incorporating ADA digital compliance to their member-facing website, LoveMyCreditUnion.org. The project has officially entered phase one and enables Love My Credit Union Rewards to achieve and maintain digital accessibility in alignment with ADA requirements. The Love My Credit Union Rewards partner web banners are available in the Partner Center and have been modified to be ADA compliant. You can continue to feature them on your site and link to the Love My Credit Union Rewards website without concern or risk of noncompliance to ADA requirements.
Through the offering provided by CU Solutions Group and AudioEye, a leading-edge technology company that identifies and resolves issues of accessibility and enhances the user experience, the Love My Credit Union Rewards website will undergo and receive:
- Advanced, automated auditing to identify all issues and risks of accessibility and detection of WCAG 2.0 success criteria
- Manual technical analysis and functional usability testing conducted by users with assistive technology
- Ongoing compliance monitoring and remediation, including manual testing and testing with assistive technology
- Automated and manually generated remediation of errors and risks in alignment with WCAG 2.0 success criteria
- AudioEye certification of the credit union's commitment to accessibility
BACK TO TOP
CO-OP Processes 6.6 Billion Transactions in 2017, Saves Credit Unions $131 Million in Potential Fraud Losses
CO-OP Financial Services established a new annual record by processing more than 6.6 billion credit, debit, electronic funds transfer (EFT) and shared branch transactions on behalf of its credit union clients in 2017.
The 6.6 billion transactions doubles last year’s total of 3.3 billion transactions, with much of the growth attributable to the acquisition of TMG. Full-service credit transactions from clients previously serviced by TMG accounted for 2.2 billion transactions.
“Payments are becoming a foundational part of the member-credit union relationship,” said Todd Clark, President/CEO of CO-OP. “As omni-digital engagement becomes more of a reality for credit unions and their members, CO-OP’s in-branch, online, mobile and digital channels will continue to advance. Our mission is to help the movement’s cooperatives offer the kinds of fast, agile and frictionless payment experiences that earn loyalty and grow income.”
Central to the modern member experience is security, as consumers grow increasingly concerned about the safety and privacy of their personal and financial data, and expectations rise for their credit unions to protect it. CO-OP’s fraud detection and prevention teams saved its credit union clients more than $131 million in potential fraud losses in 2017, according to the company. CO-OP’s fraud-detection system combines technology with the skill and experience of fraud analysts, and the company is in the process of introducing even more advanced technology via machine learning and artificial intelligence to this effort.
In addition to the transaction and fraud savings totals, CO-OP hit several additional corporate milestones in 2017, including:
- CO-OP acquired long-time strategic partner TMG for $100 million. As a combined company, the two firms bring greater bandwidth for research and development to the movement. Existing credit union partners now have access to a full range of products on one streamlined platform.
- A new executive team deepens management expertise. CO-OP added Nick Calcanes as Chief Information Officer, Matt Kardell as Chief Revenue Officer, Paul Love as Chief Information Security Officer, Matt Maguire as Chief Data Officer, Shazia Manus as Chief Product and Strategy Officer and Dean Michaels as Head of Corporate Development and Strategic Partnerships.
- CO-OP Shared Branching becomes second-largest U.S. network. CO-OP Shared Branch now totals 5,671 physical locations, making it second only to No. 1 Wells Fargo, which has 6,150 branches. Credit union members have greater access and simplified transactions from more locations.
- New and enhanced digital products rolled out to credit union members. In 2017, CO-OP launched an enhanced Mobile Locator App complete with rideshare-app integration; announced support for Fitbit and Garmin wearable payments; introduced Mobile Banking 3.0; and is incorporating machine learning into its fraud-fighting system.
- CO-OP announced $26.1 Million patronage to shareholding credit unions. In spite of significant research and development commitments, CO-OP provided a patronage (shareholder dividend) pool of $26.1 million for fiscal year 2016, raising to $393.7 million the total patronage amount made available by CO-OP since becoming a cooperative in 1996.
“One of the more exciting components to our story has been the enthusiastic participation of our credit union partners,” said Clark. “Reimagining the payments experience is something we are doing right alongside some of the most progressive, forward-thinking credit unions in the movement. We’re honored they have chosen to co-create the future of banking with CO-OP.”
For more information, visit www.co-opfs.org.
Amid Change and Uncertainty, CBSI Remains Strong
There’s a lot of change happening in the Wealth Management industry. In particular, the Department of Labor’s Fiduciary Rule continues to drive uncertainty in the marketplace. As broker-dealers look to navigate this new environment, we are seeing significant consolidation including the acquisition of CUSO Financial Services, L.P. (CFS) by Atria Wealth Solutions late last year.
Amid this change and uncertainty, CUNA Brokerage Services, Inc. (CBSI) is committed to serving credit unions. They’re reaffirming their strategy in the Wealth Management business and sharing their optimism about the future.
• CBSI and its programs are bucking the industry trend and growing. Recently, large broker-dealers have realized stagnant or negative revenue growth and smaller ones struggle to compete. Last year, CBSI achieved 8.8% YOY revenue growth (as of Nov 2017) during a year when many broker-dealers were stagnant or underperforming in the marketplace. It’s clear that their value proposition - breaking down barriers to financial security for all - is resonating in the marketplace.
• CBSI’s manufactured annuity products are achieving record levels of growth. They reached $6 billion AUM (assets under management) in MEMBERS annuities in 2017 while the industry overall continues to see a decline in sales. They’re excited that consumers are choosing their straight-forward products to help them achieve their retirement goals. Ultimately, their annuity sales strengthen their ability to do business and invest in the future.
• CUNA Mutual Group’s commitment to Wealth Management has never been stronger. The long-term success of CBSI and their annuity products are fundamental to CUNA Mutual Group’s corporate strategy. With record levels of capital, CUNA Mutual Group provides a strong foundation to continue to invest and grow CUNA Mutual Group.
• CBSI remains squarely focused on serving credit unions. The investments CBSI makes in technology, platforms, and enhancing the advisor experience will continue to be focused entirely on the needs of credit unions and their members. As they leverage enterprise-level initiatives in data analytics and consumer research, their focus will be sharpened and enable them to deliver unmatched value to credit unions in the broker-dealer space.
While others may find it difficult to adapt to change and uncertainty, CUNA Mutual Group’s wealth management business will continue to help people achieve financial security by doing what’s right. They find ourselves well-positioned for continued growth and success, and hope you share in their excitement about the future.
If you’d like to have a conversation about how CBSI can help you enhance and solidify your program, please contact your CBSI Representative at 800.356.2644.
Come learn with us and jump-start your success with interactive webinars featuring cutting-edge information from experienced facilitators that help you understand not only product details but how to achieve financial success, reduce your risks, and better serve your members.
To register for any of these webinars, please go to https://www.cunamutual.com/resource-library/webinars.
3/6/2018 12:00 PM (CT)
When employees know and use their strengths, they're more engaged and have higher performance. Increase employee performance through the use of targeted recognition strategies.
3/8/2018 12:00 PM (CT)
Ever wonder why your employees are performing below expectations? Analyze the situation to close the performance gap and identify solutions to positively impact behavior.
3/13/2018 10:00 AM, 2:00 PM (CT)
Member Focused Conversations: Guide with Confidence, PART 1
Members are looking for someone to provide financial guidance. Even if your members are doing well right now, the unexpected can have an immediate impact on their financial well-being. Part 1 focuses on helping your member feel the impact through a Money Game as they make difficult decisions during an already tough time.
3/14/2018 10:00 AM, 2:00 PM (CT)
Member Focused Conversations: Guide with Confidence, PART 2
Go the extra mile. Part 2 focuses on using consultative questions and a consistent process to provide your members with personalized solutions. Be committed to being your members' trusted financial consultant. If you don't take the opportunity to guide your members, they will look elsewhere for the guidance they need.*
3/15/2018 10:00 AM, 2:00 PM (CT)
Member Focused Conversations: Guide with Confidence, PART 3
Part 3 builds on what you learned about a member-focused conversation and takes it to a new level. You won't simply present benefits, you'll personalize them, helping your members to see the value and why payment protection is so important...to them! Go the extra mile.*
3/22/2018 10:00 AM, 2:00 PM (CT)
Addressing Concerns: Close the Case
What if the member asks a question or raises a concern? Don't let this question stop you any longer from educating your members on payment protection. Confidently address four common member questions and concerns related to payment protection.*