Filene Research Institute Articles

Interesting

brentd@filene.org (Brent Dixon) — Mon, 08 Feb 2010 00:00:00 -0500

Don’t tell me that “credit unions and financial stuff is too boring to communicate in an interesting way.” That’s horse hockey.

How do you communicate the benefits of a web browser in a lovely, fun, and non-technical way? Like this:

How do you communicate what’s happening with the Canadian food system and why Canadians should care in a way that isn’t just mind-numbing? Like this:

Is it possible to explain the credit crunch and make it beautiful? Yes:

Work harder. Don’t settle. You are interesting. You change people’s lives. Act interesting.

$100,000 Is a Lot of Money

benrogers@filene.org (Benjamin Rogers) — Thu, 04 Feb 2010 00:00:00 -0500

Last year, Billie Smith, an extremely nice 86-year-old lady from Michigan made a few $25 deposits. Today, she won $100,000.

Billie is one of 11,666 members at eight Michigan credit unions who opened a Save to Win account in 2009. Each $25 deposit in a special savings account entered the saver in drawings for monthly prizes as well as today’s $100,000 grand prize. Altogether, they saved $8.56 million dollars.

Each $25 in Save to Win money is more than just a little savings and more than just a raffle entry. It’s a vote—a vote for personal and family improvement, a vote for stability. So congratulations, not just to Billie, but to all 11,666 credit union members and for each of their 342,400 votes.

And our special thanks to each of the Filene partners that helped Save to Win get all the way from zero to Billie. What a great ride.

The 2009 Save to Win program was made possible by a partnership among the D2D Fund, the Filene Research Institute, and the Michigan Credit Union League. The program is underwritten by a grant from the Center for Financial Services Innovation’s (CFSI) Nonprofit Opportunities Fund, which is generously supported by The Wal-Mart Foundation .

From Save to Win

From left to right: Denise Gabel, chief innovation officer of the Filene Research Institute helps present the grand prize Save to Win check to Billie Smith, of Lake, Mich., along with Mark Meyer, CEO of the Filene Research Institite.

From Save to Win

Photo: Billie Smith, of Lake, Mich., receives her $100,000 check from Steve Winninger, CEO of NuUnion Credit Union in Lansing, Mich. (Photo by Dave Trumpie of Trumpie Photography)

From Save to Win

Photo: Billie Smith of Lake, Mich., winner of the $100,000 Save to Win grand prize (Photo by Dave Trumpie of Trumpie Photography)

Customer Experience and Credit Union Opportunities: A Collaboration with McKinsey & Company

Mon, 01 Feb 2010 11:27:38 -0500

“Credit unions seem to be like the guy who’s best friends with every girl in school but can’t get a date.”

Every high school has a Tom. He’s a decent student, and he’ll attend an OK college. He’s on the cross-country team but finishes most races out of the top 10. His pants are a few years past the going style. Tom is earnest and sincere, and actually pretty fun once you get to know him. His sincerity has won him the confidence of many of the girls. But Tom has one big hang-up. When it comes to serious dating, Tom always strikes out. He can get a date to the dance, but long-term, steady relationships are where he falls short. Every girl likes Tom well enough, but none of them will commit to him. Credit unions are like Tom.

Credit Unions and Customer Experience by Mark Meyer from Josey Siegenthaler on Vimeo.

Watch the video above for a research synopsis from author, Mark Meyer .

This report, a collaboration between the Filene Research Institute and global consultancy McKinsey & Company, explores the mystery of Tom:

Why do consumers consistently give credit unions their highest satisfaction scores and yet take their business elsewhere?
And, just as importantly, what can credit unions do about it?

McKinsey relies on regular, proprietary surveys of consumers to inform its advice on a broad range of industries—from grocery stores to airlines, and from hotels to Internet service providers. The 2009 customer experience survey on which most of the report is based draws on 3,900 respondents who offered their views on retail banking. The survey measures satisfaction, asks what matters most for driving satisfaction, and seeks to validate the relationship between satisfaction and value creation.

Credit unions already score at the top in customer satisfaction, so most credit unions will find little marginal benefit in trying to improve scores even more. A more sustainable strategy for high-satisfaction credit unions is to monitor member perceptions closely while introducing high ROI initiatives like improved sales channels and streamlining delivery systems.

In other words, this report is designed to help Tom get more dates. And then maybe a steady girlfriend.

Encouraging Disruption

mattd@filene.org (Matt Davis) — Sun, 31 Jan 2010 00:00:00 -0500

The best innovations are disruptive. They change human behavior, turn status quo upside down, relieve stress for some, and increase stress for others (the competition, mainly). Interestingly, as we all reach for that game-changing, disruptive idea, we are simultaneously promoting the exact opposite within our organizations. Conformity, predictability, and normalcy are traits that make the days go by smoother. These are the traits that get you hired, promoted, and trusted.

These are also the traits that virtually guarantee that you will never disrupt the marketplace with any meaningful innovation.

Gordon MacKenzie observes this organizational disconnect in his wonderful book “Orbiting the Giant Hairball.” He points out that we have been programmed our entire lives to fit in. At very young ages, MacKenzie says, society insists children learn the meaning of the word “no,” the benefits of boundaries, and the value of our learned lessons.

The pressure is on us all to be normal, not outliers.

People don’t talk about normal. Normal doesn’t stand out. Normal doesn’t make a difference. Normal is just…normal.

Being disruptive means being ready to fail…often, even. It means taking risks that feel uncomfortable. It means following up the statement “we tried that before and it didn’t work” with “yeah, but we didn’t try it this way.” It means maybe, just maybe, you become remarkable.

How can your credit union inspire disruption, both inside and outside of your walls? In what ways are you poking and prodding the rules to find new ways to address human needs? It’s uncomfortable, but it’s worth it.

Key Findings: Blueprints for Innovation (early 2010)

karenh@filene.org (Karen Hodgkiss) — Fri, 22 Jan 2010 08:52:55 -0500

Filene’s i³ innovation program is pleased to make available to credit unions 14 new ideas in its latest innovation catalog Key Findings: Blueprints for Innovation (early 2010 edition). In addition, one idea is from a previous catalog that is now gaining national traction is featured: Prize-linked Savings.

Denise Gabel on Blueprints for Innovation from Josey Siegenthaler on Vimeo.

Author Denise R. Gabel, Filene’s chief innovation officer, discusses the art and science of innovation, and the ways that your think and do tank continues to evolve. You’ll find solutions that will help your organization connect, collaborate, and cooperate with other credit unions, in addition to helping members build wealth, navigate financial waters, meet life’s milestones, make community connections and borrow responsibly.

We encourage you to keep this catalog of ideas at hand as you develop your organization’s goals and tactics for today’s challenging times. Let us know if you move forward and implement any of the ideas, or if you’d like help in doing so.

Do

georgeh@filene.org (George Hofheimer) — Wed, 13 Jan 2010 00:00:00 -0500

In a famous academic study researchers set up two displays of jams in a grocery store. One display had 24 varieties of jam and the other display had only 6 varieties of jam. During the study, the academics (presumably in white lab coats behind a one way mirror with clipboards) observed how many consumers stopped to sample the jams and how many consumers actually bought the jam at each display. The results…

...the display with 24 varieties of jams caught the attention of ~60% of the store’s shoppers , but only 3% actually purchased the jam. The display with 6 varieties of jams caught attention of ~40% of the store’s shoppers, but a whopping 30% went on to purchase the jam.

The shorthand for this phenomenon is choice overload: more choice , contrary to conventional wisdom, is not necessarily better. Too many choices may cause consumers to feel overwhelmed and abandon making a purchase. Think about the digital camera buying decision (size, color, megapixels, memory, uggh!) for a close to home example.

At Filene we are guilty of providing too much choice when it comes to research and innovation…sorry, but we are constantly distracted by the next big, shiny idea! To overcome our transgressions we’ve made some bold choices to make our research and innovation more applicable for your credit union, NOW.

We landed on two critical credit union needs: new markets and new products. For each need we’ve priortized our research, dedicated resources and developed affordable implementation services.

New Markets: Brent Dixon will lead a project to make credit unions more relevant to young adults. If you want to ‘Rent-a- Brent’ for a few months to make your credit union more young adult-friendly, email him today

New Products: Matt Davis is in the words of one credit union league executive “dynamic, resourceful and cheap”. If you need Matt’s help to make an i³ idea shine in your credit union on a realistic budget, email him today.

The critical choice for credit unions is clear: do they hunker down and wait out the storm, or do they do something to grow? Think about this next time you feel overloaded and overwhelmed.

To Do: 2010

denisegabel@filene.org (Denise Gabel) — Tue, 29 Dec 2009 00:00:00 -0500

In my view, there is one document that holds the key to the future of credit unions…drum roll please…the credit union bylaws. Seriously. Issues related to purpose, board governance, field of membership, and cooperative principles are all illuminated there. From an innovation and growth perspective, credit unions must always keep the member in the center.

What if you added a to-do for 2010: Review the credit union bylaws and re-connect with the member/consumer.

Is the credit union’s path for the future in alignment with the bylaws?

Can every employee deliver a short elevator pitch about your credit union’s purpose and the value you provide to your members?

As we turn the page to a new year, how will credit unions renew their commitment to those they serve? Perhaps the conversation begins with the bylaws.

Helping you think _and_ do in 2010

markmeyer@filene.org (Mark Meyer) — Thu, 17 Dec 2009 00:00:00 -0500

Filene Members,

Happy Holidays! Thank you for your continued support! Research and innovation are common ingredients in any economic recovery, and our pipeline is bulging from your many requests. Among the dozens of projects underway at Filene, here is a sample of what you can expect from us in 2010:

14 new innovative ideas from Filene i³
Customer Experience and Credit Union Opportunities: A Collaboration with McKinsey & Company
Patronage Refunds for Credit Unions – Kansas State University
An Analysis of the Consumer Financial Protection Agency Act – Ben Rogers, Research Director, Filene Research Institute
Baby Boomers Pre- and Post-Retirement Asset Changes – RAND Corporation
Tracking the Relationship Between Credit Union Governance and Performance – University of Toronto
Wal-Mart’s Entry into the U.S. Financial Services Industry – Rochester Institute of Technology
Advisory Services on Young Adult Strategies and Implementation of i3 Innovations

Also, at Filene we continue to manage your resources judiciously. Recently, we received feedback from many of you to “stop sending printed reports.” We have heard you. Beginning in early 2010 the majority of Filene Research will be sent to you via a 2 page hard copy executive summary in addition to an electronic copy of the full report. This cost-saving measure will significantly reduce our printing and mailing expenses, enabling us to put more of your dollars toward high-demand research and innovation projects to help consumers.

Finally, as you reflect on 2009 with the members of your credit union you may wish to send them a simple thank you message that creates additional awareness of the value of your credit union. Below is a credit union message that owes its theme to a similar letter sent in 2008 by Chris Larsen, CEO of Prosper.com, a peer-to-peer lender.

Dear CREDIT UNION MEMBER:

In this time of economic trouble, the role of your credit union has become even more relevant to the American people. More than 94 million people have become part of the credit union community.

Your credit union. Main Street America

As consumers struggle to obtain loans from traditional lending sources funded by Wall Street shareholders at banks and credit cards companies, your credit union is of and for Americans on Main Street. We are still lending money in tight times. That’s what we do.

Your credit union. Where people are worth more than money

Despite a turbulent economy, your credit union joins everyday savers and borrowers. Saving at your credit union allows us to lend to your fellow members when so many traditional financial institutions are no longer there to assist. Our savers enjoy a safe, sound government-insured financial institution, competitive rates, and the social rewards of helping others, while expecting more from their money. Your credit union helps your neighbors, co-workers, and friends achieve their dreams. Getting out of credit card debt, improving their homes, and bridging the gap to a college education are just some of the ways your fellow members use your credit union to great advantage. Small business owners and entrepreneurs can also turn to your credit union for help in achieving their goals.

Your credit union. Encourages Good Spending Habits

While the economy and employment remain uncertain, saving money and building good credit are essential. Your credit union encourages you to be disciplined about those extra purchases. Maintain a budget, and hold frivolous spending impulses in check. Instead, we can help you eliminate high interest credit card debt, and focus on building an emergency savings account. Borrow from your IRA or 401(k) as a last resort. Check your credit report and credit score frequently.

Here at your credit union we take pride in offering a safe, easy, and responsible financial alternative. I want to thank you for your membership and your trust in your credit union, a financial services cooperative that you own.

Sincerely, CREDIT UNION CEO

We wish you the best in 2010!

Cheers from the Administrative Board and Staff of the Filene Research Institute

Ideas in Action Podcast # 2

mattd@filene.org (Matt Davis) — Tue, 15 Dec 2009 00:00:00 -0500

In the second “Ideas in Action” podcast Matt Davis interviews Hank Hubbard, President/CEO of Communicating Arts Credit Union in Detroit, Michigan. Hubbard talks about how his small, Community Development Credit Union puts ideas, no matter how big and how many associated barriers exist, into action.

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Sites mentioned in this podcast:

Save to Win

Prize-Linked Saving

The Credit C.A.R.D. Act: Opportunities and Challenges for Credit Unions

joseysiegenthaler@filene.org (Josey Siegenthaler) — Wed, 09 Dec 2009 08:46:16 -0500

How will the 2009 C.A.R.D. Act affect credit unions? The industry-wide return on assets of credit cards plunged from 3.3% in 2006 to 1.4% in 2008 and huge issuers will need to recoup those profits in the new environment. Author Adam Levitin calls the act “the most significant piece of credit card legislation in a generation” and highlights implications and strategic options for credit unions in this report:

At just 5% of overall credit union lending, credit cards are not core to most credit unions’ lending. However, members who use a credit union credit card carry higher balances and have fewer dormant accounts than bank card users.
Credit unions should focus efforts on simplicity and transparency while doubling down on collaborative credit card efforts to improve efficiencies. Doing so will allow credit unions to pick off the current and future malcontents fleeing boorish bank behavior.

Save to Win Poised for National Expansion

karenh@filene.org (Karen Hodgkiss) — Wed, 09 Dec 2009 00:00:00 -0500

As Save to Win, the exciting Prize-linked Savings pilot in Michigan, draws to a close for 2009, plans are underway to launch a bigger and better version in the state in 2010. Lesser known is that Save to Win organizers are also looking to expand to other states. Based on some groundwork laid with the Washington Credit Union League, the Evergreen State could easily be the next testing ground. Please join us for a free informational Webinar on Friday, December 18 at 10:00 a.m. PST to learn more about helping members develop savings habits through Save to Win. The target audience is credit unions, system partners, and state government officials from Washington or any other interested state. The agenda will include an overview of the program and next steps for participation. Register today or contact us for more information.

Save to Win is supported by a partnership of the D2D Fund, the Filene Research Institute, and the Michigan Credit Union League. The prize-linked savings concept on which Save to Win is based has been championed by Harvard Business School Professor Peter Tufano, co-founder of the D2D Fund. The program is underwritten by a grant from the Center for Financial Services Innovation’s Nonprofit Opportunities Fund, which is generously supported by The Walmart Foundation.

Ideas in Action Podcast # 1

mattd@filene.org (Matt Davis) — Mon, 07 Dec 2009 00:00:00 -0500

In the first “Ideas in Action” podcast Filene innovation expert Matt Davis interviews Ondine Irving, the founder of Card Analysis Solutions, and the person responsible for what could be the biggest public relations achievement for credit unions of 2009.

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Sites mentioned in this podcast:

Card Analysis Solutions

Credit Card Connection

Turkey Day Message

markmeyer@filene.org (Mark Meyer) — Wed, 25 Nov 2009 00:00:00 -0500

Happy Thanksgiving and thanks for the love! We are humbled and appreciative of your terrific support. We know 2009 has been a difficult year for your members and credit union. As your “think and do” tank we have managed your donations judiciously to ensure the value of the research and innovation pays dividends back to those in the community you serve.

Highlights from 2009 include:

Doubled production. On the same fiscal budget as 2006, Filene authored 29 new research reports, including, Characteristics of Credit Union Mergers, Comparison of Credit Union and Bank Pricing, and Evaluating the Single Financial Services Regulator Question.

Unveiled 14 new innovations, such as Debt in Focus, now in use by almost 300 credit unions and 50,000 members.

Piloted Prize-Linked Savings Accounts with Peter Tufano, Professor Harvard Business School, D2D Fund, Michigan Credit Union League and eight Michigan credit unions resulting in national attention and policy debate with the FDIC and Lottery Commission.

Championed Savings Challenges across the Country with over 60 credit unions offering debt reduction, reality-based member competitions resulting in Educators Credit Union of Racine, WI receiving the Governor’s Award for Financial Literacy.

Presented advisory engagements with dozens of Filene researchers such as Bob Manning from Rochester Institute of Technology Dorian Stone, partner, McKinsey & Company and Maya Bourdeau, psychological marketing expert.

Informed policy decisions at the U.S. Department of the Treasury and the Michigan State Senate.

Placed seven MBA students in credit unions across America.

We are approaching 2010 with measured optimism. Now more than ever, knowledge is power and forward-thinking allies are mission critical. As Filene moves forward we hope to return the love by continuing to improve our research and increase our value to you by expanding our role to include advisory services. Enjoy your holiday and thank you for the support and the work you do to serve over 100 million members.

Feel free to contact us with questions, comments, or suggestions for our research and innovation efforts.

Ideas Grow Here!

Mark

What People Pay: Deposit Account Fees at Banks and Credit Unions

joseysiegenthaler@filene.org (Josey Siegenthaler) — Fri, 20 Nov 2009 10:49:43 -0500

The financial services regulatory environment is in flux. Major proposals are being debated, marked up, and prepared for implementation even as we speak. Credit unions are rightly concerned about the development of a new regulatory agency and the consequences of regulations that would inhibit their ability to serve consumers.One approach credit unions are utilizing to mitigate this risk is illustrating to policymakers how they are different from other players in the financial services industry.

This research brief compares the fees on deposit products between credit union and bank customers. Researchers Victor Stango, a professor of economics at the University of California, Davis, and Jonathan Zinman, a professor of economics at Dartmouth College, report the following key findings:

Average annual costs on bank checking accounts are more than twice as high as those on credit union share draft accounts.
Some of the bank/credit union difference can be explained by a greater number of fee-incurring transactions on bank checking accounts.
The greatest component of annual costs of both bank and credit union accounts is the overdraft fee, which is roughly one-third lower at credit unions.

A CU Bestseller: The Breguet Code

mattd@filene.org (Matt Davis) — Fri, 20 Nov 2009 00:00:00 -0500

Innovation is crucial to the survival of credit unions, but having an idea is not enough. In 2010 credit unions would be better served to follow in the footsteps of little-known Louis Breguet than world-renowned Leonardo Da Vinci. This is the year of putting ideas into action, or risk having our ideas be shelved for centuries.

”...I have discovered that a screw-shaped device such as this, if it is wellmade from starched linen, will rise in the air if turned quickly…” Leonardo Da Vinci – Codice Atlantico

In 1483, Leonardo Da Vinci sketched his idea for the Aerial Screw, an assembly of iron wire, linen, and reed that can best be described as an early model of the modern day helicopter. Like most of Da Vinci’s ideas, he never built, or even attempted to build, this flying machine.

It was an idea. A really good one, mind you, but just an idea.

In 1907, Louis and Jacques Breguet built a helicopter model that flew every bit of two inches off of the ground. By 1930, Corradino D’Ascanio had built a helicopter that could fly 59 feet in altitude and stay in the air for nearly nine minutes. In 1932, Boris Yuriev and Alexei Cheremukhin constructed one that reached an astounding altitude of nearly 2,000 feet. By 1936 Louis Breguet oversaw the construction and testing of a machine that flew an impressive 75 miles/hour and climbed to 518 feet in altitude.

Da Vinci’s Aerial Screw? Modern engineers agree that it was a flawed design that never would have worked.

The credit union movement has its fair share of Da Vincis, who are endlessly coming up with ideas to attract new business, develop tighter relationships with members, and develop a more sustainable business model. They sketch, and they talk, and they write about some truly great ideas. We need these people.

The credit union movement is sorely lacking in the Breguet department. These people understand the value of putting ideas into action. They use their imagination to tweak existing ideas so that they can be brought to life at their credit unions. The Breguets will never ascend to the innovation credentials as the Da Vincis, but they often enjoy better results. We need these people as well.

My take? 2010 is shaping up to be a make or break year for credit unions. The time to think is not over, but the time to “do” is most certainly here. Action is what makes a difference. We need to make a difference now. I am banking on the Breguets becoming the 2010 credit union movement MVPs.