CU Lunch Local aims to raise awareness about the importance of supporting local small businesses across Michigan. Studies show that money spent at local businesses tend to stay in the community and a greater percentage of every dollar spent is recirculated at the local level when compared with non-local businesses. CU Lunch Local was founded in 2011 in collaboration with Michigan Business Connection, a commercial lending CUSO.
When I was the VP Marketing for First Tech Credit Union I was in charge of the website. This is back in 1997 when websites were in their infancy. We paid an inordinate amount of money for the first one to be built (read, as much as my first home). My job was to keep the content fresh. We had pages and pages of marketing copy. But I wondered, was anyone reading it? When they land on the home page, where do they go next? Is our navigation working?
Microsoft (who was one of our SEGs) had just come out with some fancy software that could tell us just that. The guy in IT described it to me in this way “Imagine a field of freshly fallen snow, this software is going to show you the footprints in that snow so you can see the “path” people take when they go to your website. Yay! I couldn’t wait to see the results. I never could have imagined it at the time. There was a muddy trough directly to the home banking login. The majority of the pages were not visited even ONCE!
What an eye opener. Fast forward 20 years and here we have Kirk’s book telling us that members are probably still doing the same thing. That’s why most of us don’t dare bury the login to home banking for fear of losing them entirely. So how do we get our members to read our stuff? It’s so simple, make it relevant and compelling and local! Yes local.
Last week we talked about how the Google machine rules the world. If you want to be found you need to know how Google sees the world. Google loves local. Create local content that is hyper-targeted at an age group, a population, an experience or a region – whatever it is, target it in a way that Bank of America or other big banks can’t. I just looked at several credit union websites and few even have “content.” Most have copy, which isn’t the same thing. Here’s the difference.
More Than 1,800 Different Credit Unions Unite to Form Seamless and Secure Cooperative for In-branch Personal Banking
RANCHO CUCAMONGA, Calif. – The CO-OP Shared Branch network has passed Chase in number of branch offices, making the credit union cooperative the second largest network of financial institution branches in the country.
I get it. You want to merge with a peer sized credit union. Together you will have more scale, twice the number of branches, twice the membership size, twice the assets…twice, twice, twice. Having all things twice should create the golden ticket of economies of scale. But after the merger you seem to have twice the payroll but not twice the benefits. What happened? The dirty little details get in the way.
- If you don’t trim the payroll, you don’t save money. People are the highest cost of operations. Unless you have fewer employees after the merger, you are not going to save money. Are you willing to make those decisions?
- If you don’t trim the vendors, you don’t save money. The continuing credit union needs to quickly decide what vendor to use for each service. Having multiple vendors for a service within a credit union does not create efficiencies.
- Be ruthless in you vendor selection. Past relationships with vendors are great but that is not a reason to keep a vendor if the vendor is not competitive on price and quality. Buying a foursome at your credit union golf outing is not a sufficient reason to keep a vendor.
- The cost of terminating vendor relationships is a cost of the merger and should be calculated into the decision. This is especially true for core IT services where the termination fees can be excessive.
- The staff expertise needed to run a credit union of X size is not the same as running a credit union of 2X size. The general level of expertise has to increase significantly if the size and complexity of the operation increases significantly. There are all-star employees working at smaller credit union who could work at any sized credit union but the overall expertise level at smaller credit unions is not equal to the overall expertise required at larger more complex credit unions. If the merger puts you in a peer class that is significantly larger, are you willing to make the necessary changes in staff? That is a significant hidden merger cost.
- Larger credit unions tend to have different operational processes and a more formalized protocol and policy structure, which is often required to ensure consistency in member loans and regulatory compliance. Are you ready for that?
- The technology tools in a larger credit union tend to be more extensive and expensive than in a smaller credit union. Do you understand that cost and has that been a part of the analysis?
- If the merger puts your credit union within the jurisdiction of the CFPB, are you ready for the enormous costs of that oversight?
- Do you have the attitude to analyze the profitability of services and cut services that cannot be self-sustaining?
- Have you gotten past the post-merger identity of the CEO and directors? Does the board have the vision and talent for a larger, more complicated organization?
- How are you dealing with the staff issues? What will be the organizational structure and who is in each of the slots? How are those decisions being made…by unemotional analysis or by cutting internal deals to be “fair”?
- How are you dealing with different salary levels and employee benefits? Do you have to pay retention bonuses to keep key employees around for the transition?
- Can you close branches? Do you have keep unprofitable branches open?
- Is there a strategy to tear down the “us vs. them” walls and tribe-like behavior that sometimes occurs post-merger?
- Do you have the metrics to measure the success of the merger?
After last week’s interview with Kirk Drake, CEO of Ongoing Operations I bought a copy of his new book, CU 2.0: A Guide for Credit Unions Competing in the Digital Age. We are truly fortunate to have this book in our industry. How often do you see a “Credit Union” book on amazon.com?
We give it two-thumbs up, a gold star, the credit union Pulitzer prize.
In the beginning of the book Kirk makes a very valid point. in 2008, just 9 years ago, we were handed the financial world on a silver platter. Massive bank failures, mortgage loan foreclosures, customers struggling to get credit they needed while the banks raised fees. And yet credit unions market share soared from 7% to 8%. We can probably contribute some of that to the “Bank Transfer Day” Movement led by a non-credit union member in response to her frustrating relationship with B of A. We treated it as a one and done instead of seeing it as the re-charge of the credit union movement.
Why did that happen? Because we continue to operate in the old model which is ripe with over compliance and risk aversion. Credit unions are not known for being innovators. At our very best we are fast-followers. My favorite chapter is “Death by a Thousand Cuts” where Kirk describes the Finctech world in a way that I actually kind of understand Bitcoin now. We are in the business of moving money and yet these Fintech players like PayPal, Apply Pay, Venmo, even Starbucks are “using” our member’s money with little or no regulation to provide the level of service they have come to expect. Right now, in the click of a button or a swipe of my phone I can pay for something or buy something. In the meantime many credit unions still require a “wet signature” on a loan application.