“Providing Strategies for Success”
Growing Against the Grain:
Best Practice Credit Union Thrival
Strategies
Utah League Annual Meeting
March 14-15th, 2014
Presented By: John A. Vardallas CAE,CUDE
Professional Speaker/Business Strategist
Founder/CEO TheAmericanBoomeR Group
www.theamericanboomer.com
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Welcome Utah Credit Union
Leaders!
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My First Car…….
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My Team…….
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My Credit Unions…
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UW Credit
Union
($1.7 Billion)
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Summit
Credit Union
($1.9 Billion)
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Today s Program Objectives
This session will focus on how CU s can position
themselves for future growth….
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To identify and assess the new financial services
marketplace competition.
To utilize the Credit Union Competitive Advantage
in telling our story to members and the community.
To explore Strategies for Thriving not just
Surviving for using our competitive advantages in
increasing loan volume and market/wallet share.
To review some “Best Practice” Credit Unions for
Ideas on utilizing sound Business Growth
Strategies.
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Today We Will Discuss
CU Growth During
Uncertain Future Times
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Credit Union Metrics for 2013…
Total Credit Unions: 6,500+
Total CU Branches: 21,000 +
Total Membership: 96,000,000+
Total Assets: Surpassed $1 Trillion
Milestone
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Stronger Member Activity in 2013
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Loan/Share Ratio 70.9%
Loan Growth Up 6.9%
New/Used Autos grew 11.2 %/9.8%
Share Growth 2.8%
Consumer Lending Up 8.5%
Net Worth Ratio: 10.7%
2.3 + Nationwide Average Accounts Per
Member
(Callahan)
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Why this Resurgence in 2013?
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Improving economy?
Better pricing?
Lingering Bank Transfer Day effect?
Pull back by the competition?
Competitor missteps?
Credit unions’ approach to serving their
member owners?
Consumers using different criteria when
selecting a different kind of financial
institution?
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Key Factor 4 Why Growth in 2014: Net Interest Margins Are
Not Cover Operating expenses!
Data as of December 31
Sponsored by:
Source: Callahan’s Peer-to-Peer Analytics
The 2014 Economic “New Normal”
Trends…
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Slow Economic Growth
Weak Demand for Goods
New Era of “Consumer Thrift”
Higher Unemployment
Tighter Underwriting Standards
Loan/Savings Growth (7%/4%)
Stagnant Household Income
Higher Tax Levels
(CUNA E-SCAN)
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Lets Look at Why Credit Unions Need
to Continue Our Growth Strategies…
LETS TRAVEL DOWN THE COMPETITIVE
FINANCIAL SERVICES HIGHWAY
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The New Competition…
10%
Market
Share out
of $63
Trillion
Total Fin
Services
Industry
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The Competition: Who Are They?
-- Banks/Prosper.com/Lending Club/KEVA.com
(PTP online lending/borrowing .coms)
Western Sky Financial/Cash Net.com
-- Finance/Insurance Companies (GM/Ford/State Farm
Bank/Allstate/USAA).
-- Mutual Funds/Brokerage Houses/H&R Block.
-- Retailers/Card Companies/Wall Mart/Home Depot.
-- .com Orgs (Lending Tree, National Mortgage, Car Quest,
My Card.com, ING Direct, etc).
-- Pawn Shops/Quick Cash/Pay Day Lenders/Campus
Cash/ Check Cashers/Money Stores.
What Do They Want? Your Members Business!
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How Can A Credit Union Grow?
Let us Count the Ways….
1)
More Members (Market Share)
2)
More Product/Service Usage
by Members (Wallet Share)
3) Mergers
4)
Fees/Investments
5)
Non Interest Income (Interchange)
(Sales from Insurance/Fin Products)
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We Must Think “Outside the Box”
and Look to Create Our
“Blue Ocean”…
Our Leaders must Embrace
Change and the New Normal:
More Emphasis on Innova-Shun-Less on Tradi-shun.
Creativity is thinking up new
things.
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Innovation is doing new things.
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Theodore Levitt management expert
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Ideas for How We Can Create Our
“CU Blue Ocean”
Can we create our “Blue Ocean” for…..
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Small Businesses by being the Financial
Institution of Choice in our community?
Can we create our Blue Ocean for
Serving the Underserved?
Can we create our Blue Ocean by helping
Immigrants (the New Americans) get
established in our communities?
Can we create our Blue Ocean by being a
Trusted Financial Advocate/Advisor for
our members/offering the best Financial
Education programs to consumers?
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The Lifeblood
of
Credit Unions
Focus on being a Member Centric CU because
Members are the Source of All Prosperity
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What Will It Take To Keep Me A
Member in the Future….
More Customized Products– I want to see products
designed/crafted to my needs!
Personalized Marketing– I’ am tired of zapping through the
same old information. Send info about products I want
via e-mail, web site,cross sell, newsletter, I don’t care. If
its news I can use I’ll pay attention.
No Excuse Service– Train your people to respond to my
concerns as if they were the most important things in
the world. Ban the phrase “Its not my dept”. Wow me at
every chance you get to serve me.
One Stop Shopping– Make it easy for me to interact and do
business with you in person and online 24/7/365.
Rapid Change– Don’t wait to make these shifts….
I’ am already shopping your competition!
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When We Bring in A
“New Member”…
Offer A “CU Welcome On-Boarding Packet”:
-- Welcome to Our CU Family Letter signed by
CEO/Chairman (Member Advocates Connect with new
members First 90 days)
-- Product/Service Information Brochures
-- Hours of Operation (7x24x365)/Web Site info
-- Member Card/Discloser Forms
-- All in One Member/Loan Application
-- Department/Staff Listing/Concierge Services
-- Certificate of Member Ownership/Member Care 800#
-- Teach Members to Self Serve Themselves via Tech
-- Set up Outbound Call Center/ follow up personalized
calls to build more profitable relationships with
members who join through remote channels.
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Note: Tips 4 Connecting With
Different Gen Members
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Greatest Generation (Pre WW2)
Write Me!
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Baby Boomers (1946-1964)
Call Me!
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Generation X (1965-1981)
E-mail Me!
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Generation Y-Z (1982-1995) (1996-ON)
Text/FB/Tweet Me!
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Thoughts on Fees….
2 FEE or NOT 2 FEE?
Fee, Fy
Fo, Fum
We Need Some Income!
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Review Your “FEE” Structure
Why?
With Tight Margins/Flat Yields in Financial
Institutions… we need to consider:
Fee Income as offsetting this situation.
40% of Banking Income is from Fees
CU Fee Income Up 30% last ten years.
10% of Credit Union Income is from Fees
Strategic Q: Are you leaving $ on the table?
Suggestion: Have Good Waiver Policies
(Loose approach leads to missed $)
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New Business Growth
Opportunities Abound !…
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Serving New Americans/The Underserved (Hispanics)
(30+ million immigrants in USA/$Bill Remittances)
Offer Risk Based Pricing/Debit Cards for Interchange $
Check Cashing/Business Services/Lending/E-Car Lot
Offer Burial/Will/Tax Services
Lifestyle/New Image Lending (Nip & Tuck Services)
$12 billion spent on Cosmetic Procedures in USA
Health Savings Accounts/Better Pay Day Loan Programs
Get to Love Boomers/Women/SBO s More
Capitalize on Bank Vulnerability: Occupy CUs/Recapture
Checking Business (Utilize Switch Kits More)
Other Non Interest Income via CUSO (Insurance/Travel)
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Some Divide & Conquer:
“Work the Street Growth Strategies”…
Break Down Members into Cluster Groups and
Market to those needs
 Youth/Young Adults
 Single/Married
 Baby Boomers
 Seniors
 The Underserved
 Small Business Sector
3 Key Groups/Areas to Focus on:
1) Young Adults 2) Boomers 3) Small Business
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1) Divide & Conquer Example:
The Gens Y&X (“The Utes”)
(They are the Next Gen of Borrowers)…
Age Demographic: Born After 1980
Characteristics: Born with Internet, experiences beyond their
years, older parents, may not have to work, independent
earlier .
(80% unaware they can join a CU)
Looking to Credit Union for help with:
Getting started, establishing credit, checking acct, education
loans, first car, credit/debit cards
Reach Them By: Clubs, Student CUs, I-pods/phones/I-app
with Loans, Kool cu web page, put on Youth Task
Force/Committees, Provide Scholarships/Offer Brass
Magazine .com
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2) Americans Over 50… the New 30!
“A BIG MARKET”…
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70% OF WEALTH
77% OF FINANCIAL ASSETS
50% OF IRAs/KEOGHS
40% MUTUAL FUNDS
66% OF STOCK MARKET
46% OF HOME EQUITY LOANS
40 MILLION CREDIT CARD USERS
41% OF NEW CAR PURCHASES
50% OF DISCRETIONARY SPENDING
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Divide & Conquer Example:
Your “Boomer” Members
(They Have/Will Have the $)
Age Demographic: Born 1945-1965
Characteristic: Known as “Sandwich”, Me Generation
(Stand to Inherit $10 Trillion/ Will Pass On $30 Trillion 2
Gens X/Y)
Looking to the Credit Union For help with:
--Trusts, Luxury Cars, RV/SUVs?/Harleys?
-- New Image (Nip & Tuck Lifestyle Loans)
-- College Fund/Bill Pay/Reverse Mortgages
-- IRA/Business Loan/Long Term Health Care
-- RETIREMENT PLANNING/Wealth Transfer Management
(Pensions Declining trend, shift to Personal responsibility)
Have Other Influences on their Kids/Parents
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What Can Your Do to Make Your
Credit Union More Appealing to
Boomers…
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Make information Simple and in larger type fonts
Have Carpeting in the CU for a more quiet area
Use soft Retro Musak/Make literature racks eye
level/Have staff use Direct eye contact with Boomers
Use warmer Paint/Tone colors in your CU
Go Green, use plants soft white lights
Make Parking spaces/drives through a bit wider
Omit the using Senior when addressing Boomers
(they consider themselves mid lifers)
Set up a “Retirement Planning Education Center”– Offer
Special on setting up a SS Direct Deposit Acct since
now all Retiree checks from GOV will be direct deposit
Bring back the “Toaster” as a premium giveaway!
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3) The Small Business Sector…
Is the Growing Small Business sector in Your
Community an opportunity for your CU ?
-- 5 Million Small Businesses in US (companies less the
500
employees/45 % of private payrolls/created
60-80% of US JOBS the last decade)
-- 10 Million self employed persons +
(Restaurants/Salons/MDs/Dentists/Service
Companies/Retail Stores/Consultants)
-- Loans
-- Deposits
-- Fee Income/Merchant – Funded Rewards
-- Potential Employee Membership
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Common Strengths & Practices of
Successful CUs in 2013….
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A Good/Improving Sales Culture.
Consistent Underwriting/Good Standards.
Market Power - 1st Choice Community Lenders.
Symbiotic Product Lines -Cross selling from each
other- auto and credit cards.
Direct/Indirect Lending -To Existing Members and
Branch Traffic/Strong Dealership Relations.
Make Bank Transfer Day Everyday! Keep Fanning
the Flames of New Member Fans!
Offer Incentives– Lifetime Free Checking/Debit
Rewards/Cash Backs/Convert Credit Cards/EStatements/Mobil Apps/Groupon.
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A Look @ Some Recent Best
Practice Growth Credit Unions…
1) Alabama Telco CU ($450M+) Birmingham AL
Deposit/Loan Balances up to 20%
New Loans/ New Households Up 60%
CU Strategy: How Did they do it?
-- Took A Strategic Marketing Approach
-- Use MCIF Analyzer (pull demographics/break down
accts into profitability and trigger follow up calls/mail
campaigns)
-- Sell more to each Member Household
-- Created Member On Boarding program for New
accounts / Contact prospects into Members
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Best Practice Credit Unions (cont)
2) Brewton Mill FCU ($21M) Brewton, Alabama
Five Year Average Annual Growth: 10%+
Five Year Average Membership Growth: 20%
CU Strategy: How Did they do it!
-- Moved to Community Charter, expand CU services,
adding debit, share drafts, and CDs
-- Immersing CU in the Community Sponsoring local
events/charities.
-- Converting Bank Customers focusing on CU Safety
-- Increasing Advertising activities/Re-Branding the CU
with message CU is for Everybody
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Best Practice Credit Unions…
3) United Labor Credit Union
($9.7 M) Kansas City MO
Primary Membership: Construction workers
Auto Loan Growth Up 9%
CU Strategy: How Did They Do It!
-- Improving Relations with SEG/Get out in Front of
People/Build Trust.
-- Go after Pent up Demand for Vehicles.
-- Less emphasis on Credit Score/Offer “Empower Hour”
to learn more about members financial needs.
-- Offers regular Financial Education/Retirement Planning
Seminars and looks for opportunities how the CU can
help members.
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More Best Practice
Credit Unions…
4) Upper Cumberland Credit Union ($30M) Crossville, TN
Achieved a 7%+ Membership growth/30% Loan growth.
CU Strategy: How Did They Do It?
All staff carry the title Member Advisor/All take time with
members to cross sell/ all trained to contribute to the
success of the CU has a institution –wide sales emphasis.
Rewards/Bonuses are spread across all CU business units.
5) Randolph-Brooks FCU ($5.3B) San Antonio, TX
witnessed a 10%+ Real Estate Lending, 10% Auto Lending
and 20% Credit Card Growth.
CU Strategy: How Did They Do It? Increased Marketing,
Shorter term loans focusing on members in their 20/30s
who need Core services, first home/car/checking account.
Non interest income driven & diversifying income streams.
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My Top 13 in 14
“CU Thrival” Growth Strategies…
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Work Your CU Back Yard (wallet share) Focus on
Deepening Relationships by promoting we have $ to
Lend with your current Members. Lending is still King!
Review Your Fee Structures- for market place
adjustments and to offset decline in NIM.
Have a Merger/Alliance/Collaboration Strategy- be
prepared for the potential of taking in another CU.
Train staff to Cross Sell and Wow members at every
Touch Point opportunity 7x24x365.
Create Best Value Proposition for Members.
Reconnect with Current/New Members. Keep the CU
Transfer On Going. Show Membership has privileges
offer Incentives: Groupon/Free Credit Report/Prepaid
Gift Cards/Cash Backs/Miles
Member Care 800#/Certificate of Membership.
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Top 13 (cont)…
6) Offer Relationship Pricing—the more members use the
CU s services, the better the deal. Bundle products
(checking/debit cards) to maximize income.
7) Reach out to Boomers/Women via Small
Business Services/Lifestyle Lending products.
8) Exploit Cost Efficiencies/Control Expenses via
Technology (E-Channels/Online/Mobile/Remote).
Eliminate waste: Practice “Kaizen”
“Process Improvement” Activities.
9) Make it a Strategic Imperative to Reach Out to
Youth/Young Adults (focus on Financial Literacy ) via
their means: Schools/ I-Phone/Soc Networks. The under
30 demographic is your next generation of business for
your CU.
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Top 13 in 14…
10) Consider starting a CUSO offering DP/HR/IT/Travel
Products and Services.
11) Focus more on Non Interest Income: Debit Cards,
(Insurance Products (Pet) GAP Coverage, Credit Protection)
(Interchange/Over draft Fees) Investments/Brokerage
Services.
12) Embrace Mobile/Tablet Technology and Social Media.
Utilize innovative ideas to create Apps for this and that and
do not Fear Facebook (1 Billion Members Worldwide!)
(7 Billion Smart Phones/70 Million Tablets Worldwide)
Consumers/Members are a Mobile Branch!
13) Get the Right Staff in the Right seats on your CU Bus and
lead them in the Right direction to Serve Members more
effectively and Teach members How 2 Serve Themselves. 41
Transform Your CU Into A
Benchmark Consumer “Wow”
Brand Organization
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Disney (Customers are Guests)
Lands End (Satisfaction GTD)
Starbucks (Taste the Sensory Experience)
Ritz Carlton Hotels (5 Star Service)
Nordstrom’s (Lifetime WRTY)
Southwest Airlines (Fun & Cheap)
Your Credit Union (Member Centric Service?)
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For Future Growth--I would like to see CU
s Include Performance Measures to Be
More Member Focused…
Traditional:
“Institutional”
 Capital/Assets
 ROA
 Delinquency
 Charge-Offs
New:
“Member Focused”
 Average Member
Balances
 Product/Service
Usage
 Market Share
 Member Return
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And Finally…As we
“Think Outside the Box” and
“Grow Against the Grain”…
Remember
“Its not the strongest of
the species that
survives, nor the
most intelligent, it’s
the one that is most
adaptable to
Change”
Charles Darwin
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Thank You For Your Attention
& Input…..
I wish you Personal
and Professional Success!
jvardallas@aol.com
www.theamericanboomer.com
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About John A. Vardallas CAE,CUDE
“Providing Strategies for Success”
John A. Vardallas is an International Credit Union Business
Consultant and Founder/CEO of TheAmericanBoomeR
Group, a Madison Wisconsin based Speaking and
Consulting Business. His work focuses on helping credit
union leaders and organizations increase productivity and
profitability.He conducts High Performance Leadership &
Management Development, World Class Service, Change
and Growth programs for staff and directors. He also
facilitates Strategic Planning sessions for a variety of credit
unions throughout the US each year.
For a free E-Catalogue of Programs & Services you may contact John/
Office (608) 221-4621 Cell (608) 577-8707/e-mail jvardallas@aol.com/
www.theamericanboomer.com
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Lets Keep the Conversation Going…
Check out Johnny V s Blog/Website @
www.theamericanboomer.com
Leadership Development/Strategic
Planning/World Class Service/Subscribe
Free to “Today s BoomeR”
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 E-mail John Vardallas: jvardallas@aol.com
 Check out TheAmericanBoomeR on
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@theamericanboomer

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