Filene Research Institute Articles

Articulating the Co-op Difference

benrogers@filene.org (Benjamin Rogers) — Thu, 02 Jul 2009 00:00:00 -0400

In response to an excellent post over at CUES Skybox.

I was at a meeting of cooperative grocers a few weeks back, and there were a lot more young’ens in the crowd than at a typical credit union meeting. When asked to defend the cooperative model, most of them didn’t do it on the basis of cost (apparently co-op groceries are often comparable or more expensive) or participation, even though the ones in the room participated heavily. The default defense was that it was “the right way to buy.”

They pointed to worker rights, environmental concerns, local produce and products, sustainability, and community empowerment. All of these are pretty shaky as purely economic values, but much more powerful as pieces of a moral argument. Granted, the people in the room were true believers of a certain political persuasion, but I didn’t doubt that they represented a certain segment of the population.

The challenge with the credit union co-op difference is that it’s been demonstrated to death that nationwide – and usually local – credit union rates are (a little) better than bank rates. But that’s a miniscule motivator, especially for prospective members. And it’s often trumped by bank convenience and product range.

Articulating those normative values – sustainability, community empowerment, and so on – can be powerful in a community where concern about those issues is important. Props to early leaders like Vancity, Seattle Metro, and Santa Cruz Community, which are all doing this in their own ways … and in communities with many members of a certain political persuasion.

Humphrey Bogart vs The Credit Union Industry

mayabourdeau@gmail.com (Maya Bourdeau) — Mon, 29 Jun 2009 00:00:00 -0400

What makes a story, brand or company ‘real’ to members? It takes more than simply personifying your concept.

The most memorable, ‘real’ characters – Humphrey Bogart as the lovesick lone wolf in Casablanca, James Dean as the rebel without a cause, Hilary Swank as the tough yet vulnerable Million Dollar Baby – are all paradoxical and yet make sense. Their conflicting facets give us uniqueness and depth.

Even if we don’t position the credit union industry as a seedy bar owner with a heart of gold, there is something to be said about adding a little depth to one’s character. The Humphrey Bogarts of the world are the talk of the town – how many people draw a blank for credit unions?

Currently, the industry defines itself as a friendly neighbor type looking out for the little guy, which, even if truthful, hits one note. With a character too consistent and plastic, especially in these economic times, people might wonder what he’s hiding.

Many authentic brands embrace and manage, rather than diminish, their paradoxes. Coca Cola both energizes and relaxes, and remains the ‘real’ coke. Dove both beautifies and embraces traditional beauty ‘flaws.’ Harley Davidson is ridden by the rugged road warrior, and yet is a premium brand.

So don’t be afraid of a little paradox. You may be the slightly wimpy friendly neighborhood type, but you’re not afraid to stick to your guns – you kept going to the salad bar while the banks raided the desserts (see Ben Roger’s blog on credit union cards). You’re the trustworthy partner, yes, but maybe with more streets smarts than MBAs…and proud of it.

However you define the credit union industry, with a twist of well managed paradox, you can create a character that is more unique, memorable, and real – to you as well as your audience.

Maya Bourdeau is Filene’s new Innovator in Residence and an expert in psychological marketing. Interested in collaborating with Filene and Maya? Email us or call (608) 231-8550 for more information.

Three Credit Union Leaders on the Opportunities for Young Professionals

benrogers@filene.org (Benjamin Rogers) — Wed, 24 Jun 2009 00:00:00 -0400

Credit Unions and Social Responsibility

Steve Delfin, National Credit Union Foundation

For the past two summers Filene has been placing MBA and college interns at credit unions around the country. For their benefit, we recorded and posted these videos of:

Steve Delfin (Executive Director of the National Credit Union Foundation) discussing how credit unions are socially responsible
Pete Crear (CEO of the World Council of Credit Unions) on the development and role of credit unions outside the U.S. and Canada
Fred Johnson (CEO of CUES) on advancement opportunities for young professionals

Credit union employees: This is the view from the top of the system. What does your view look like?

Credit Unions in the World

Pete Crear, World Council of Credit Unions

Leadership Challenges at Credit Unions

Fred Johnson, CUES (Credit Union Executives Society)

Credit union plastic undermines card industry complaints

benrogers@filene.org (Benjamin Rogers) — Tue, 23 Jun 2009 00:00:00 -0400

The CARD Act has set off an epidemic of hand-wringing, ulcers, and night sweats (PDF download) at big financial institutions. But large credit card banks are unlikely to carry through on threats of cutting grace periods, jacking up rates, or razing reward programs. Why? Credit unions.

While credit unions themselves will also have to worry about the new limits on what they can do with their credit cards, a NY Times op-ed from Harvard’s Ryan Bubb and Alex Kaufman argues that credit union cards – which already largely comply with the new rules – prove that financial institutions can offer competitive cards without all the onerous fees.

The difference, they say, is that credit unions aren’t driven by shareholders to extract outsize profits on their portfolios, so they haven’t. The profits are already in the pudding. Even if large banks wanted to do all the things they’re threatening, competitive pressures are unlikely to allow it.

I know this is small consolation for the credit unions wrestling with scary credit card delinquencies, but it’s nice recognition in an influential corner.

Which Image Doubled the Rate of New Share Accounts?

denisegabel@filene.org (Denise Gabel) — Fri, 19 Jun 2009 00:00:00 -0400

The one on the left. Why? According to Filene’s new Innovator in Residence, Maya Bourdeau, it used the right imagery with the right emotional hook for members in a particular income category. The image empathized with mothers lost in a financial jungle, while the tagline supported their ability to make the right decisions by saying, “We Believe in You.”

The advertisement was based upon imagery and insights revealed in the Filene study Does Imagery Matter: Delving into the Mind of Low- to Moderate-Income Savers. By taking research to results, CEFCU was able to increase new share accounts by 104% (based on a year-over-year comparison).

As part of Filene Research Institute’s commitment to bringing insights to application, we are pleased to announce a new partnership with the key marketer in the study, Maya Bourdeau. As the former Managing Director of Olson Zaltman Associates, Maya has extensive experience developing marketing strategies for Fortune 500 companies.

Now as Filene’s new Innovator in Residence, Maya will be applying her unique insight and expertise to the credit union industry – helping us engage our members with the right imagery and emotional insights. Look out for Maya’s posts on FRI, as well as her upcoming marketing webinars. Want to engage with Filene and Maya? Email us or call (608) 231-8550 for more information.

Debt in Focus Gathers Momentum

denisegabel@filene.org (Denise Gabel) — Wed, 17 Jun 2009 00:00:00 -0400

Q: What do you get when you cross a great idea with passionate credit union leaders eager to help their members?

A: The Debt in Focus snowball that is getting bigger and bigger each day!

Debt in Focus is an anonymous, debt management tool for credit union members that delivers an actionable plan to help improve their credit profiles and reduce debt. Since the product was launched in March, over 300 credit unions have inquired about it and over 100 credit unions are already signed up to offer a version on their Websites. Based on this unprecedented interest, we are now making available two additional Webinars for credit unions to learn more. Register today for either the June 30 at 11 a.m. CDT or July 7 at 1 p.m. CDT free informational session.

If you are not able to attend one of the Webinars, you can learn more about Debt in Focus. At the bottom of the page under Marketing Materials, you’ll find PowerPoint slides from a recent Webinar as well as an idea brief that gives a good overview. Please contact us for more information.

Foreclosure Idea ... Approved

georgeh@filene.org (George Hofheimer) — Mon, 15 Jun 2009 00:00:00 -0400

Earlier this year, we teamed with the Michigan Credit Union League to explore a critical issue facing all consumer finance organizations: home foreclosures. The results of this work were two reports: one which outlined ten policy recommendations to decrease the number of foreclosures and another which focused on the concept of shared-equity loan modifications.

Recently the National Credit Union Administration deemed the shared appreciation loan modification approach permissible.

The Michigan Credit Union League and Filene are interested in knowing if credit unions would be willing and interested in piloting the shared appreciation loan modification idea. If so, please contact me directly for details on this pilot project.

Our research indicates the current approaches to home foreclosure mitigation may be ignoring a growing portion of the population: those who are underwater on their mortgages. Shared appreciation loan modifications may be an innovative way to deal with this problem.

Regulatory Debate Afoot

georgeh@filene.org (George Hofheimer) — Thu, 11 Jun 2009 00:00:00 -0400

We recently released a paper examining the single financial services regulator question . This paper summarized existing research and viewpoints on a hot button issue for the credit union system. On June 17 the U.S. Treasury Department will unveil their regulatory plan which is receiving conflicting reports about the direction this plan will take. There seem to be two distinct possibilities: modest re-organization or massive consolidation of banking regulatory bodies.

Of course, the Treasury’s plan will be opined on by trade and consumer groups, debated by Congress, and, if passed, signed into law by President Obama. CUNA, NAFCU and the state leagues are ably preparing for this debate on behalf the U.S. credit union system. In addition to these resources, you may also want to tune your antennae to the following:

Behaviorally Informed Financial Services Regulation was co-authored by now Assistant Treasury Secretary for Financial Institutions and former professor of law at the University of Michigan, Michael Barr. As I cataloged in a previous post regulatory proposals may begin to take on a behavioral economist bent.

The Committee on Capital Markets Regulation is a non-profit, non-partisan group of 25 leading academics and financial services executives, including Filene Fellow and Harvard Business School professor Peter Tufano, which recently came forward with a proposal for financial regulatory reform.

As the debate evolves we will attempt to add useful information and resources on this critically important public policy topic.

Filene’s Membership Event at ACUC: Prospects for Universal Savings Accounts.

danielhoover@filene.org (Dan Hoover) — Tue, 09 Jun 2009 00:00:00 -0400

Join Us at Filene’s 2009 Membership Luncheon and Annual Meeting to hear more about Universal Savings Accounts from our guest speaker, Fred Goldberg, partner, Skadden, Arps, Slate, Meagher & Flom, and special guest, Tim Flacke, executive director, D2D Fund. This must-attend event is our way of saying ‘thanks’ to the supporters of Filene and is also an introduction to those considering supporting the Institute.

Held in conjunction with CUNA’s America’s Credit Union Conference (ACUC), the Filene Luncheon will take place on Monday, June 22, 2009, from 11:30am to 1:00pm, at the Hynes Convention Center, Boston, Massachusetts, Room 205.

We kindly ask that Filene members and those interested in learning more about the Institute register here so that we may get an accurate count for lunch.

In addition to the luncheon, Filene is co-sponsoring the opening reception on Sunday, June 21, beginning at 4:00pm, with the theme of honoring the credit union revolutionaries.

Session

Proposals for universal, progressive, life-long savings accounts have been around for more than 15 years and are now part of the “political mainstream.” Such accounts could be used for a variety of life’s milestones: securing post-secondary education and life-long learning, purchasing a first home, making investments, starting a small business, and building a nest-egg for retirement.

For all Americans, these savings accounts will provide a means to develop savings and assets, as well as longer term wealth and related opportunities. Great Britain implemented a similar program in 2005 for each of its 700,000 children born every year that has already resulted in a dramatic increase in savings rates among poor families.

Credit unions are ideally suited to help make this vision a reality and Universal Savings Accounts are the perfect connection to a critical savings challenge for all Americans.

Questions? Contact Dan Hoover, or 608-231-8550.

Click here for more information on the ACUC, including conference registration, and lodging.

Reaching Generation Debt: New Products and Services

joseysiegenthaler@filene.org (Josey Siegenthaler) — Fri, 05 Jun 2009 00:00:00 -0400

In Filene’s final CU Tomorrow brief we invite Anya Kamenetz, a staff writer at Fast Company magazine and the author of Generation Debt, to address the question: How can credit unions better serve young adults?

Included is Kamenetz’s take on the core financial issues facing young adults in America and how credit unions, as innovative member-owned cooperatives, can ease young adults into the financial mainstream while acting in their best interests.

Kamenetz notes that the millennial generation is simultaneously one of the most discussed and least understood generations on the American scene. This generation differs from the past because:

They carry unprecedented levels of student and consumer debt.
They face stagnating or declining income compared to their parents’ generation, are the largest and fastest-growing segment of the population without health insurance, and compared to older generations they lack access to pensions and other benefits.
This generation has little knowledge of financial management even as they navigate an increasingly complex financial world. They need help with the basics of savings, credit management, and budgeting

In response to these challenges, Kamenetz advocates that credit unions offer the following:

Low-cost credit products.
Responsible use of credit.
Helping young people start to save.
Educating the community with relevant topics and themes.
Simple and relevant financial planning tools.

Listen to an exclusive interview with the Pulitzer-nominated author Anya Kamenetz

DOWNLOAD MP3

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Filene Turns 20!

danielhoover@filene.org (Dan Hoover) — Tue, 02 Jun 2009 00:00:00 -0400

The Filene Research Institute is 20 years old. The Institute was founded May 31, 1989, as credit union system leaders sought a new outlet for academic and forward-looking research focused on the specific needs of credit unions. Filene has grown with the times and today offers consumer finance research, innovation, and thought leadership to all credit unions.

“Today’s leaders are so busy running our credit unions that it’s hard to be as forward thinking as we should be,” says Patsy Van Ouwerkerk, chairman of the Filene Research Institute and CEO of $1.6 billion Travis Credit Union, Vacaville, California. “Filene research forces us to look ahead. That’s a real benefit,” she says.

Since 1989, Filene has published nearly 250 academic monographs, white papers, innovation briefs, and policy documents from prominent researchers at Harvard, Cornell, Stanford, Oxford, and dozens of other world-class universities and institutions. Seminal works include: Field of Membership: An Evolving Concept, which helped lay the groundwork for the Credit Union Membership Access Act; Taxation of Credit Unions, which examines the actual numbers behind a charged issue; and several recent works on alternative capital.

“Everyone wins with this system of research: the researcher, the readership, the consumers, the regulators, and the public as a whole including the credit unions themselves and other players in the field,” says Richard “Dick” Heins, retired CEO of CUNA Mutual Group who, himself a former professor, was instrumental in founding the Institute. “Nothing remains the same, especially in the financial services industry, and the needs of consumers will dictate where financial institutions must modify or change their approach,” Heins adds.

In 2000, Filene added credit union innovation to its portfolio. “The board wanted Filene to be a place where credit unions could test new and even far-out ideas without fear of failure,” says the Institute’s executive director, Mark Meyer, who first came to Filene as innovation director in 2003. Since then, Filene piloted REAL Solutions®, to explore credit union services for modest-means and low-wealth households. REAL Solutions has since become the flagship program for the National Credit Union Foundation. And since 2007, Filene has been driving CU Tomorrow, a collaborative nationwide effort for helping credit unions make themselves more relevant to a rising next generation of members.

The Filene Research Institute also launched the prestigious i3 group in 2004; i3 stands for: ideas, innovation, and implementation. Today the group has 22 active members and 64 alumni innovating in credit unions across North America, 14 of whom have since become CEOs. Noteworthy i3 projects include, Prize-Linked Savings, MatriMoney®, Lifestyle Lending, the Savings Revolution, Smart Score, and more than two dozen more.

“Twenty years ago, the Institute’s founders could not have foreseen the world credit unions would be facing. But that’s precisely the reason for an organization like Filene: to think and to prepare credit unions for futures we can’t yet see,” Meyer says.

Filene Research Institute – 20-year Timeline

1989 – Filene incorporates with support from charter members CUNA Mutual Group, CUNA, and state credit union leagues; David Chatfield, a former NCUA board member, hired as first Executive Director and goes on to become President of the California Credit Union League.

1991 – Bob Hoel, a Colorado State University marketing professor becomes Executive Director, serving until his retirement in 2006.

1993 – Publication of Field of Membership: An Evolving Concept, an important milestone on the path to the Credit Union Membership Access Act.

1999 – Filene branches into applied research by studying opportunities for serving low-income individuals, building the intellectual basis for REAL Solutions®.

2004 – i3 group is launched; Filene also launches REAL Solutions® for Low Wealth Households.

2005 – George Hofheimer joins the Institute as Chief Research Officer, initiates Filene Fellows model with participants from world-class universities and consulting firms.

2006 – Mark Meyer becomes Executive Director; Denise Gabel, a member of the original i3 group, replaces him as Chief Innovation Officer.

2007 – Filene pilots CU Tomorrow project for young adults.

2008-2009 – Filene celebrates a record year of output, publishing more than 35 research and innovation projects.

The Mind of Low to Moderate Income Savers-Phase 1 and 2

joseysiegenthaler@filene.org (Josey Siegenthaler) — Mon, 01 Jun 2009 12:27:45 -0400

LMI families are finding it increasingly difficult to save money. In Does Imagery Matter: Delving into the Mind of Low- to Moderate-Income Savers, the Doorways to Dreams Fund (D2D) and the Filene Research Institute partnered to analyze how marketing images influence LMI families’ likelihood of saving.

Researchers used the Zaltman Metaphor Elicitation Technique (ZMET), a groundbreaking research methodology that elicits insights about human decision making through metaphors and storytelling. The results demonstrate a useful tool for marketing professionals to tap into consumers’ subconscious thoughts with compelling messages and metaphors in financial services. Thank you to the National Credit Union Foundation for funding this research as part of its REAL Solutions program

After evaluating these credit unions’ marketing materials and results, the researchers found the following:

While risky, choosing more emotionally provocative images could connect more successfully with LMI consumers.
ZMET-influenced marketing can be implemented on different scales, from small to substantial.
ZMET-based imagery and messaging may be most effective when targeted at specific segments within the LMI market (e.g., single moms).
Credit unions should consider the value of community outreach as a complement to new marketing images and messages.

Download additional information about the CEFCU ads.

Interested in applying these techniques at your credit union? Learn more about Filene’s new Applied Research Advisory Services.

Save to Win Road Trip Day 5: That's a Wrap

denisegabel@filene.org (Denise Gabel) — Thu, 28 May 2009 00:00:00 -0400

We ended day four with fireworks…and started day five with a bang at the Option 1 all staff rally. The folks were sporting orange beads and chanting “bring it.” Word travels fast in Michigan, as these folks already knew about the eight credit union Coop-etition to open the most Save to Win accounts before the 4th of July. They already had a banner up on their break room wall saying “bring it.”

Day Five, Friday, May 22, 2009

We wanted to light a sparkler in their phone center as we witnessed Jenn Evans landing a new account over the phone. Cheer. Yikes. We forgot that others were serving members—sorry for the outburst!

Off to visit a branch where we were greeted by a Branch Manager with a broom! These folks also take “other duties as assigned” to an all new level. It turns out that she was redirecting a bird. Her staff took the time to pose for a photo in front of their bragging board. Staff stepped up to take a pop quiz around the research results that have been collected on the project thus far. And the answer is…only 7% of the nearly 6,000 Save to Win account holders say they had a regular savings plan prior to opening this account. That certainly leaves plenty of room to help consumers build good savings habits.

Option 1 staffers Kris, Tim, and Margaretmary

We closed out the day (and the road trip) with a final Starbucks chai in the Grand Rapids airport.

Next stop, a project update to our current project funder, CFSI. And let’s not forget our trip back to Michigan in July for the Michigan Credit Union League’s Annual Convention and Expo where one credit union will take home their prize. We’ll bring the bottle rockets!

Flint, Frankenmuth, and fireworks..the road trip was worth the time. Thank you, credit unions, for all that you do to help members improve their financial lives.

Readers, what would you do with $100,000?

Interview: Addison Avenue FCU on finding new targets

benrogers@filene.org (Benjamin Rogers) — Tue, 26 May 2009 00:00:00 -0400

Addison Avenue FCU gets it. Strong products. Good online delivery. They tested out the Zopa model in 2007. They’re offering high-interest checking. Their forays into social media have been modest but stable.

I spoke with Jonathan Gowins, Addison Avenue’s ecommerce, social media manager about approaching young adults and about one improvement in particular.

For more than a year, Addison Avenue has offered a separate microsite, called The Addison Cafe. The site still exists, but a month ago the banner ad on the credit union’s home page started promoting the new Family Center with a similar look and feel but a new target: parents. The newer site advertises:

Educational articles crafted by the credit union
A page that touts an Addison Avenue scholarship while offering information on student loans
A ‘Starter Package’ that offers ‘Checking Plus’ with a debit card, a Visa Classic card for building credit, and a first-time auto loan—products that match up with a young adults desires, not just an ascetic need to save.

It’s no secret that parents make most of the financial decisions for children and teenagers under their roof, Gowins says. Getting an adult to switch financial institutions takes a lot of work, but getting the children of loyal members as loyal members themselves is a lot easier.

The Addison Cafe didn’t introduce any new products to young adults; it just brought relevant products under the same marketing roof. In that vein, the new Family Center’s only actual innovation is a modest scholarship. The real value comes in having an excuse to show members that the credit union is available and doing the right things for their children. Addison Avenue launched the site with direct mail and e-mail targeted at 35- to 50-year-olds with children in the home. A follow-up note reminded members about the resource, and Gowins expects to send out reminders highlighting Addison Avenue as a responsible place for parents to direct their kids.

For all the talk that credit unions (and I include myself) have done about capturing young adult members, there’s a dearth of well-considered programs aimed specifically at parents who want to open good accounts for their kids. The Family Center is welcome evidence of progress.

Save to Win Road Trip Day 4: Cruising Along

denisegabel@filene.org (Denise Gabel) — Fri, 22 May 2009 00:00:00 -0400

The Save to Win road trip team logged a lot of miles on day four. Their journey took them from Frankenmuth to Lansing, and finally to Grand Rapids. Unfortunately, shortly after tucking in their rooms for some well-deserved shut-eye, they were awakened with a BOOM! as the Amway company celebrated its 50th anniversary with an eight-minute, 4,500 shell private firework display on the bridge crossing the river by the hotel. This was the grand finale for a long day that started at the crack of dawn.

Day Four, Thursday, May 21, 2009:

5:00 a.m. shock when the alarm sounded. Off to the Frankenmuth Credit Union for an early visit with their branch champions. Clear example of distributed innovation where the marketing department used an idea contest to ask staffers to generate low-cost ideas that would help promote the Save to Win account. Two ideas were generated: 1) Using big, $100,000 oversized check cutouts in their lobbies, and 2) Asking members what they would do with $100,000. Both ideas were low-cost and have proven to be very effective.

Frankenmuth accepted the Co-opetition Challenge to open the most Save to Win accounts (beating the other seven credit unions). And, they sweetened the deal by offering brats for every branch WHEN they win!

Frankmuth Staff chanting “We Will Rock You”

No time for chai before heading down the road to NuUnion Credit Union in Lansing, which is the largest of the eight participants with 90,000 members. Mike Dittenber orchestrated branch visits with their top performers. These folks are competitive…three challenges are now underway there: 1) Teller Virginia said NuUnion would beat Option1 (her husband Basil works at Option1); 2) Loan Officer Liberty said she would open five new accounts by Friday, June 5; and 3) They would love to win the July 3 Co-opetition.

Stephanie Shepard of NuUnion

Liberty McPike of NuUnion

We decided to test delivering $100,000 Grand candy bars through the drive-up tubes…it works. But the staffers asked for more pens instead—go figure—smile.

View from the drive up.

Down the street to the Michigan Credit Union League (MCUL) office to say hello to CEO Dave Adams and thank him for his terrific support. We need to give a shout out to call out two MCUL staffers who have done so much heavy lifting on this project to date—Lee Ann Mares and Maureen Lafrinere. Actually, Maureen spent a few days on the road with us and we were sorry to see her pull away today…

Maureen Lafrinere

Back in the car headed 60 miles to Grand Rapids where we’ll finish up our final credit union visit and wrap up this road trip.