Are You Helping to Create Hollywood Moments With Your Members

So this week I had one of those just can’t win moments. You know one of those moments in which no matter how hard you try to explain your reaction you still end up looking lame. My wife and daughter had just left the house to go school supply shopping (apparently when your daughter is 15 this also includes new shoes). When suddenly my daughter came racing back into the house holding a letter in her hand.

It was a special invitation to be a student ambassador! To spend 20 days in Europe!! To visit historic old places in the Old World!!! 

Now blog readers you can see where this going. One of those perfect Hollywood moments you see on some lifestyle movie of the week in which I say all the right things. Now in my defense I really do think a great deal of my daughter so my initial reaction of seeing only the words, “TWENTY DAYS IN EUROPE” sort of created a tunnel vision moment for me. So while my daughter was looking for that Hollywood picture perfect daughter father moment of “ Oh daughter, this is amazing…of course you can go” Instead she got my eyes popping out of my head and a panicked shout of, “Twenty Days…are you crazy !!!”

All of which brings me to my point. When I woke up that morning I had no intention of sending my teenager to Europe for twenty days and as such had not really planned for it. The lack of planning created a sense of panic as I suddenly found myself financially not prepared to spend that kind of money. The same thing could happen to all of us if we do not do something about it.

All of us know the day will come when we are no longer going to want to work. Notice that I said “want to work” and not “have to work”. But what is the plan to actually get there? Too often we think planning is something for the rich and famous. Yet, that is simply not true. If you actually sit down and talk to someone about what you want to accomplish (retirement, vacation, kids to college) and then work with them on creating the action steps needed you are 250 percent more likely to achieve that goal.

Practical Application:

• Have you educated your members or customers that they don’t have to start big to start?
• Are they aware that the first step of sitting down and talking to your local branch manager can start them on the path of getting in front of the right person?
• For those who don’t live close to a branch do you have an alternative delivery channel solution to help them identify practical steps regarding goals? 
• Has your marketing department communicated that solution?
• What opportunities are you missing by not helping your consumers consider the perfect movie moments they could achieve by simply creating a plan?

Breakfast With World's Largest Bank and World's Coolest Credit Union

So a friend and I were sitting and enjoying breakfast together talking about kids, our wives, and work. What is interesting is that he works for one of the world’s largest banks and I work for one of the world’s coolest credit unions. Much of what we talked about was easily transferable between the two of us. We both had teenagers and both of us agreed it was so much simpler when they were just five years old. We talked the old days when we had worked at some other place together and how much fun we had (ah yes…the sense of nostalgia was deep.)

As things always do we talked about work but in a guarded manner (after all he is with the world’s largest bank and I am with the worlds coolest credit union.) But as we talked I could not help but notice how all of his points seemed to focus on the sheer scale of the operation and on the numerous levels of management in multiple cities needed to operate on that scale. On the other hand I had just spent my prior afternoon helping a call center agent who had a member who needed some help with a bill pay question. The agent had done all she could do to help the person and needed to see if there was more that she could do. So she took it to her manager and within two minutes I was involved and within five minutes the issue was resolved and the member was thrilled.

Now as I thought about the contrast of my friends workplace and my own my first thought was that our workplaces are simply the result of the type of financial institutions we work for. He worked for a company that has over 280,000 employees (more than the whole Marine Corps) while I worked for a company with less than 450 people. Yet, as a member owner I have never noticed the difference in the level of service provided to me. I realized it was because of the cooperative nature of credit unions as a whole. We share resources like ATM networks and branch networks. So imagine my surprise when I did some research and came across the following numbers: 10,000, 34%, 12.3 %, 7,200,000,000. 

I did some quick research and came across the following on the blog http://giraphcu.wordpress.com

• 10,000 equals the number of ATMs credit unions have over the world’s largest bank.
• 34% is how much higher typical CU savings accounts are over banks.
• 12.3% increase in business lending credit unions made in 2008 when many other financial institutions stopped lending to small businesses.
• $7,200,000,000 is the amount of money saved by members last year by simply using credit unions.

So what does this all mean ? To me it is being part of something that is closer to me while not having to give up the benefits of being part of something bigger. It's about being an owner of something that fits me and my needs and not the needs of some distant executive who doesn’t even know what the weather is like where I live.

Raising the Cap on Small Business Lending For Credit Unions -What's Not to Love ?

Have you ever had someone make a decision and as you watch it unfold you can’t help but wonder, “What are they thinking?” Well, I had that same thought as I was reading the paper about how 130,000 people lost their jobs in July and we are still arguing over wither credit unions should be allowed to lend more to small businesses. This seems like a no brainer as some experts believe that improved business lending potential for credit unions could create more than 100,000 new jobs, and inject $10 billion into the economy, and all at NO cost to taxpayers.


Now, I understand that if someone works for a bank they might object. I mean I get that…they are thinking about their piece of the “turf” but that type of thinking is short sighted and they are missing the big picture on this. Each dollar that is spent in helping small businesses has a multiplier effect.


For example, we give 50,000 to a small landscaping company. They hire two workers who then take their next paycheck and start to do the things we all do. They take their families to the movies (movie theater owner is happier) then go get hot dogs (hot dog stand owner is happy) and money flows into our local community. As businesses bring back workers it enables others to benefit from the dollars that are spent in the community. Even banks themselves would benefit as new workers look to refinance existing debt or make new purchases which the banks could compete for. Everyone wins.


This has to be a new concept that bankers are not aware of, right? Actually this is old news. Credit Uunions were authorized under federal law more than 75 years ago in the crucible of the Great Depression. Back then the solution was to get people back to work. Get businesses growing? The same solution holds true today. If you look at the big picture there is no public policy reason not to permit credit unions to do more lending to their members who own or want to start small-businesses.


In fact, credit unions have proven for years they are capable of making these types of loans safely and soundly. During this latest "Great Recession," while BigBanks took millions of dollars in TARP money they also contracted their business lending. Meanwhile, credit unions have continued to serve their member owners (those that work for small businesses and those who own small businesses). The value of being a member owner and in having a choice between some large bank and your locally credit union should not come down to the fact that small business owners are left to the mercy of some large national bank.


Practical Application:


If you own a small business, or if you want to start one, and you agree that credit unions should have more capacity to help you, call your senator and urge him or her to support Sen. Mark Udall's amendment to H.R. 5297, the Small Business Job and Credit Act of 2010.

Providing Direction to Members To Avoid Financial Tombstones

I Take the Silver Miner Pancakes ...Please


After eight days, one airplane ride, and a 915 mile trek through the desert my family and I sat somewhat comatose in a breakfast grill a block from the OK Corral in Tombstone AZ. We had seen the natural arches of Moab, sailed down the Colorado River, walked the rim of the Grand Canyon, driven down the mountain pass in Sedona and now just wanted the “Silver Miner” pancakes for breakfast.


Our waitress could probably sense our weariness and spent the majority of her time talking to the table next to us. As my family and I sat and waited for our order I could not help but listen in on the conversation she was engaged in with the next table. This was not as easy as you think as I had a ten year old asking me who I would rather have a gunfight with-Wyatt Earp or Doc Holiday.


The waitress explained to the other table that she had been in the town for a year and had moved with her family from another state. Now after a year they were stuck in the town. They had used what money they had to move here and employment was not what she thought. So they were trying to save money to get enough to move to someplace cooler and more populated like Flagstaff.


For those of you who have never been to Tombstone the town is about 1500 people. Other than one or two city blocks there that looks like an old time western town from the 1890’s there isn’t much to see or do. The name kind of says it all.


When our food came I still could not help but think about the plight our waitress had found herself in. While the city name and the individual circumstances varied a little the core issue she faced was one that many people face. A well intentioned decision leads to an unintended consequence. Like the waitress many of us find ourselves stuck in places and we are unsure how to exit. Money is tight, options are limited, and the horizon seems to move further and further away.


That feeling of not knowing your next step can be paralyzing. It can create a sort of tunnel vision that can blind us to those around us who are willing to help us back on our way. I have listened to numerous phone calls in which a member calls in for one option and by the end of the conversation we have helped them see other options available to them. This is especially true with debt and credit.


I truly can’t count the number of times when one of our loan officers or branch managers has helped someone restructure their debt, freed up equity, and lowered the amount of interest the member is paying. Typically this results in more cash flow into the home.


Practical Application:


For those of us who work in financial services this is the opportunity to make an incredible impact in the lives of those who do business with us each day. This is the chance to execute a strategy that moves beyond selling product. Now don’t get me wrong there will always, one can assume, be need for some selling of products or services. 


When the strategy moves from the "selling of product" to the "matching of needs" then the aim of the organization is to make selling superfluous. The new aim of the organization is to know and understand the member so well that the product or service fits him or her and sells itself. Sometimes people just need a direction to move in with their financial lives. Shouldn't that be us with the compass in our hand point out a direction for our members ?

What Business is Your Bank In ?

I recall being in a class with other business leaders and the instructor stated, “Character is what you do when no one else is looking.” In the aftermath of the Wall Street meltdown and corporate bailouts I wonder if that definition is still appropriate. What exactly is the character of a company? It has to be something beyond the corporate spin and public relations messages that are broadcasted to the masses.


I mean prior to “The Spill” in the Gulf of Mexico one would have thought that some oil companies were anything but oil companies. One oil company had launched a 200 million dollar public relations campaign designed to position its brand as “Beyond Petroleum” with a new sun burst logo. It focused consumer attention on the output of its small solar operation while it appears to have cut corners in other more less obvious places.


The same thing happens in banking. Already Wall Street firms are back at making record numbers while Main Street America and small business owners find themselves frozen out of services and loan opportunities. This week a large BigBank announced that it was closing its subprime sales channel and eliminating thousands of jobs. The question is why did they have that sales channel to begin with? We can all understand why they should close it; nobody should build a sales channel that focuses on making risky loans for high interest return.


Today much of the media is focused on consumer advocacy and many BigBanks are scrambling to reposition themselves. There is a saying that I had heard that Joe Frazier had once stated, “You can map out a fight plan or a life plan. When the action starts your down to your reflexes. That’s where your road work shows. If you cheated on that in the dark of the morning, you’re getting found out now under the bright lights.”


Financial institutions are like people they do have a character or culture. They either are truly consumer focused or not. If they fake it when no one is looking they are discovered under the bright lights. Great financial institutions go beyond profit margins and balance sheets. They create and sustain positive impact in the lives of the people they serve. They are more than slick ad campaigns.


Practical Application:


What business is your financial institution in?
Are they in the business of improving members financial lives? 
If not isn’t it time your members belonged to an institution that was in the business of helping them become more financially secure?

Big Bank Credit Card Rewards and Slick Ads

Ever wonder if everyone has a favorite commercial? I remember having a favorite commercial many years ago when my wife and I were searching for a name for our first child. It was during the time when the Pantene Shampoo commercials were on the air with the super attractive actress or model doing the Hollywood hair swoosh. Did the commercials work? Actually,I would say, "Yes" as they had an interesting effect on our family.

One model stood out and like many people we asked, “Oh, who is she?” [Interesting note: over a decade later you can Google Pantene commercials and still see questions posted of people asking, “who was the actress in the Pantene commercials?”]As it turns out the actress was named Hunter Tylo and we decided that Hunter would be the name of our soon to be born daughter. Luckily, time allowed for some additional perspective and “Hunter” became her middle name.

Today as consumers watch commercials on financial institutions we often see humor or lifestyle commercials aimed at getting our attention. The goal is to paint a picture they want us to see. Consider credit card reward programs. Why are they giving us something additional? Is it because they have decided that they make too much on the card and want to give you something back? No. BigBanks aren't giving you rewards because they like you. With one hand they give you small rewards while their other hand is collecting much more through fees and interest.

Many people sign up for rewards programs thinking that they will just pay off their balance each month and then sit back and enjoy the “free” stuff that will be coming their way. A small percent of reward program users don’t carry a balance each month and reap the perks of the program. However, another significant portion of the program users do carry a balance and that is where “free” no longer remains “free”. The lesson that “free” doesn’t always mean “free” is a lesson that I can attest to from my own personal experience.

I recall years ago as a newly married couple my wife and I belonged to card reward program. Like many young married couples we had no real clue of how to manage our personal finances. So a reward program seemed like a fantastic idea. We consolidated all our cards onto one card…triple points for balance transfer! 

We made the monthly payment each month and when the statement arrived we went straight to the points section to see how many points we had received for the prior month. I recall us being so excited when we had reached ten thousand points. We were now 2^nd tier on the rewards grid. We huddled around the computer looking at all the “free” things we could get. We were practically dancing as we ordered a phone with a build in answering machine! [note: in 1993 that was a cool thing to own]

A few months later I switched jobs and started working at a BigBank. I learned about interest rates and the impact of compounding interest. I realized ten thousand points was a ten thousand dollar balance! I looked at how much interest we were paying each month and realized I could have bought three or four phones for what we were paying. Now after almost two decades of working in financial services I think the ad tag line, “what’s in your wallet” is probably one of the saddest inside industry jokes out there. How much are you paying in interest? Paying over 15 percent, 19 percent, 30 percent? 


Practical Application:

Don’t let your members be fooled by slick ads shot in black and white, with an attractive and financially successful looking middle-aged couple. Don’t let your members buy the lifestyle hook being presented that suggests, "If you bank with Big Bank, your life could be like this." We all know that the odds are banking with Big Bank will not make your member look good in an open backed dress. However, I do agree your members should know exactly what’s in their wallet.

Hollywood Make Over for Big Banks

It was one of those moments in which you just groan inside. I had insisted on going to see a new movie that was based off of a cartoon my children and I watched together. I can’t be the only parent who uses their kids to justify the shows they watch…ahem all the dads who take their kids to Hannah Montana or Moms taking their daughters to Justin Bieber concerts. I digress.

Sadly, though in the case of the movie the director had taken the superficial elements of the TV show and added millions of dollars to amp them up. So the movie had tons of special effects, panoramic vistas…and none of the dialog or humor of the TV show. Let’s just say it lacked "substance".

Recently with all the regulation changes that have taken place in financial services many large banks are trying to remake themselves as well. Like a bunch of wolfs that are all reaching for a new sheep costume they have grabbed at the superficial and thrown big marketing budgets into special effects while ignoring the "substance" of the dialog itself.


Why did we have financial reform in the first place? Anyone remember headlines of billion dollar credit unions threatening the global economy? No…odd me neither. I find it sad that in the passing of new legislation the new rally cry from large banks is that they are going to do away with free checking. It reminds me of someone not liking the rules and deciding that since the rules are changed they are going to take their stuff and not play anymore.


I think one of the most blatant examples of this has been the commercials from a recently converted bank that show a TV announcer talking to a child sitting at a table.
“Would you like a pony?”  the "TV announcer"man asks her innocently.
"Yeah,” she replies.
The man then hands her a small toy pony and she bursts into a giant smile.
The "TV announcer" then turns to a second little girl, asks if she wants a pony, and she says yes.
The man then clicks his tongue and a real pony comes out.
The first little girl gives a look that could kill and says, “You didn’t say you could have a real one.”
“You didn’t ask,” the TV announcer man replies smugly.


The irony ...the bank converted to bank status to receive TARP money after booking billions of dollars in sub prime mortgages. Like the girl in the commercial many people will not realize exactly what questions they should be asking of their banks.  


Practical Application:

As more “Big Banks” look at the new legislative landscape they are going to try and do a Hollywood makeover.
They will add more of one thing (wow…nice dividend for your shareholders…38 cents for preferred share) but it will be at the expense of something else… yep, that "Stagecoach from the West" is leaving and is taking your free checking with it.
At the end of the day a Big Bank can’t remake itself into anything other than a Big Bank…lots of hype…little substance.