Archive for category Lending

Loans and LPs: Turning Credit Unions into Sold-Out Shows

Posted by on Friday, 22 March, 2013

The opening keynote of the 2013 CUNA Consumer & Residential Mortgage Lending School will be delivered by best-selling author and popular solutions presenter, Lee Silber. His presentation, titled Credit Union Rock Stars: Lending a Hand, will discuss the life and business lessons to be learned from rock stars and their careers.

Lee Silber, as the  King of Rock 'n Roll,  Elvis Presley

Lee Silber, as the
King of Rock ‘n Roll,
Elvis Presley

Lee was kind enough to sit down with us and answer a few of the questions regarding his unconventional plans for this conference’s opening session.

You’ll be presenting on the lifestyle of rock stars and applying that lifestyle to credit union lending practices. Can you fill us in on the connection there?

You’d be surprised what you can learn from rock stars. Really. Okay, there is the “what NOT to do stuff” (bad habits) to not emulate, but there are some valuable lessons we can use in our daily lives to be better at what we do at home and on the job. Let me give you one example off the top of my head. Credit unions would not exist without their members, which are a lot like fans of a band. Those of us who have been members of a credit union for a long time (I’ve been a member since 1985) are passionate, devoted, and excited to be a part of something special. Banks are huge (like a super group) and almost everyone has heard of them, but credit unions are more like that band that is popular, but a little less mainstream–which is cool because not everyone is into them and that makes us feel a little smarter for being a fan. Maybe we can connect a little better because the band isn’t as popular and answers their own fan mail or plays smaller venues so we can get up close and personal. Our small, but awesome band (Read: credit union) hasn’t sold out, is in it for the long haul, and does it right–and does right by us. We’re loyal and love them for what they do . . . and do for us. See, the analogy works. We become “Dead Heads” (Grateful Dead followers) or “Parrot Heads” (fans of Jimmy Buffett) because we identify with what these acts stand for. Those of us who have a special place in our hearts for credit unions are “Member Heads” for a good reason; the people at our branch are like rocks stars to us when we make an important financial transaction.

In your opinion, what is the most valuable mindset to embrace when approaching a conference designed to open up new perspectives for attendees, like this year’s school?

I could try and equate the conference with a rock concert, but that would be a stretch. That’s not to say it won’t be awesome in its own way, but you won’t need to hold your lighter up to get a speaker to do an encore–but if you want to do that for me when I speak, I would be stoked. Okay, back to the question. In the music business there are several conferences (NAMM and South by Southwest to name two) where musicians meet to connect, learn, and find out what’s what in the industry. If there is any business model that has been turned upside down, it’s the music business. Everything from the way music is made and recorded (analog to digital) to how it is sold (albums in music stores to digital downloads on iTunes) and enjoyed (from cassettes played in cars to satellite radio and smart phones) has changed and the smart people are willing and able to change with it–and get ahead. If we look at the school as a chance to see what’s happening and how it can help us do what we do better, we will be much more engaged in what we will learn. There are plenty of parameters that control what can be done in the music business just like there are when writing loans, and music executives know they must find creative and innovative ways to work within the rules (if you are thinking about the payola scandal of the past and other record label tricks, it’s much less prevalent today) and adapt in order to get the music into the hands of those who want and need it. Sound familiar?

Followers and loyalty: definitely as important in credit unions as in the rock world. What advantages do you see in a credit union striving to build fandom rather than indifferent memberships?

A large and loyal following is the key to longevity in the music business. There are many bands that alienated their core fan base by trying to please the masses when their “members” were happy with what they had been doing previous to their attempts to be something they were not just because it was trending–and tempting. They lose the true fans of the band and after (maybe) a short bump in sales and popularity are dismayed when the fickle fans leave for the next big thing.

Fans for life are what credit unions want. A good example is a band like the Eagles where you will have three and four generations at a concert all singing along to the old songs. If we can create the kind of loyalty where credit union membership passes from generation to generation, we have the same kind of “sales” for our greatest hits album that bands do with theirs. Today, music is promoted primarily using social media which is, in essence, word-of-mouth marketing. When we do our jobs right and make sure our members’ expectations are exceeded, they will do the rest for us by posting positive comments on Facebook, in person and in passing, to other people.

Some might argue that rock stars live irresponsibly. Do you think there’s something to be said for calculated irresponsibility that a lending professional could embrace?

If rock stars were perfect, they would be far less interesting. Yes, it’s about the music, but we also like to see something and someone special out there doing things we can’t (or won’t because we’ll be arrested . . . or worse) so we live vicariously through our flawed heroes. At this point you are probably thinking, ‘There is no way he can tie this in to this conference and credit unions’–and you would be right . . . and wrong. We need to be shining examples of fiscal responsibility, be trustworthy, and know what we are talking about. Aha, here is the part you didn’t see coming. Nobody likes a know it all. Nobody is expecting a robot to help them with their loan. Nobody wants to be judged. If we can be empathetic, understanding, and non-judgmental by sharing our own personal experiences (good or bad) to help a member make the right decision, we should. If we leased when we should have bought a car and learned a valuable lesson from it, why not share it? If we bought a boat and realized “b-o-a-t” stands for “bring on another thousand” and maybe encouraged a member to make sure the boat is checked and double checked before buying it, what’s wrong with that? Be real so that members know you know what you are talking about because you have been in their shoes.

LEE SILBER is the best selling author of 19 books including “Rock To Riches”. He will be presenting the opening keynote about the connection between credit unions and rocks stars.

Coalition Building: Collaboration in Advocacy

Posted by on Tuesday, 17 July, 2012

When I present advocacy training seminars or teach my class at CUNA Management School, I usually talk about the ten basic lobbying principles:  unity, clarity of objectives, discipline, subject matter expertise/preparation, perseverance, adaptation, opposition research, credibility/trust, key actors and coalition building.  I intend to discuss each of these principles in future blog posts; this installment is dedicated to coalition building and published in conjunction with a presentation that I am giving to the World Council of Credit Unions Conference in Gdansk, Poland.

If you attend any credit union system conference, I can guarantee you that someone will talk about collaboration – working with others to accomplish a specific task.  Collaboration occurs in just about every aspect of the credit union movement, even in the way we approach advocacy.  In fact, given how challenging it has become to get Congress to move even the most basic piece of legislation, collaborations with other interested parties – coalition building – is an essential part of a successful advocacy plan.

At a basic level, there are a lot of advantages to working with other groups that share our interests in an issue. 

  • A coordinated approach is almost always more effective than two parties with similar interests working on their own.  Multiple parties mean additional resources can be brought to bear to fight what may be an expensive and long battle.  Working together allows each group to bring their strengths to the table, whether they are financial, access, knowledge or grassroots. 
  • Joining forces also brings together additional perspectives.  Coalition members may want to see a policy advanced for different reasons.  Having advocates that approach the issue from a different perspective can be valuable as long as the end goal is truly the same for all involved.  In fact, multiple perspectives can help policymakers draw the logical conclusion that the impact of the proposal is broader than if just one group was pushing for the bill. 

However, there are also risks associated with being a part of a coalition.

  • Being a part of a coalition may mean partnering with groups that oppose your efforts on other, unrelated issues.  On several issues, CUNA has partnered with groups, like banking trade associations and retail trade groups, which oppose significant aspects of the credit union legislative agenda.  We work together when we can, and we find we are more successful when we do.
  • Participating in a coalition requires the surrender of a degree of autonomy.  Group deliberations lead to group decisions; the path the coalition decides to take may not have been the path an individual participant would have followed.  However, this risk can be managed by leveraging the strengths you bring to the table.   
  • What is more challenging and more important to manage is the exposure of an organization’s credibility, resources, strengths and weaknesses.  Part of the decision matrix when joining the coalition has to be answering the question, “How will this make us look?”  Another important question to consider is whether the effort is worth the cost, actual and reputational.  This is especially important on peripheral issues that may be more important to the other coalition members than they are to your group. 
  • Finally, it is also important to keep in mind that when you are a part of a coalition, your partners get an insight on your strengths and weaknesses, which could help them in a future legislative battle. 

Coalitions are not a new phenomenon in credit union advocacy – the Campaign for Consumer Choice is a good example of the effectiveness of a broad coalition effort led by CUNA.  I remember this effort because, as a Congressional staffer, I was on its receiving end.  In fact, my perspective on coalition building has been shaped significantly by the time that I spent on Capitol Hill and the number of times that I saw coalition efforts work.  If you can manage the risks, there are often many good reasons to join or try to form a coalition on many issues. 

A Coalition Needs to Be More Than a List of Names:  The MBL Experience

One of the most important legislative issues for credit unions is, of course, the effort to enact legislation allowing well-capitalized credit unions with significant business lending experience to lend beyond an arbitrary statutory cap imposed in 1998.  The beneficiaries of this legislation will not only be the credit unions that engaged in this additional lending but also the small business-owning credit union members that are able to receive funding and the people they hire as a result.  We estimate that credit unions could lend an additional $13 billion to small businesses in the first year, helping them to create at least 140,000 new jobs.  This legislation (S. 2231 / H.R. 1418) is fiercely opposed by the banking sector, and has historically been viewed by many in Congress as a bank versus credit union issue.  But really, it’s about small businesses. 

In an effort to not only change the conversation but also demonstrate the impact of the bill, we organized a coalition of interested parties to help achieve its enactment.  At first, the goal was to put together a diverse and growing list of organization names to show there was support outside the credit unions system.  Today, there are over 30 organizations which have publicly supported our efforts to enact this legislation – conservative and progressive think tanks, small business organizations and cooperative organizations.

Over the past few years, we have been able to develop our coalition into something more than just a list of names; but it did not happen through a flip of a switch.  Building a strong coalition requires a dedication of resources.  It involves recruiting members, educating them, keeping them informed and urging them to take action at the appropriate time. 

In the beginning, we did not ask much of these groups, only that they allow us to use their name in support of the bill.  We were seeking to broaden our base of support.  Over time, however, we found we needed more from our coalition partners; and we found they were all willing to give more to the effort!  We first asked our coalition partners to engage in blog posts and media opportunities touting the importance of credit unions as part of the solution to the small business credit crunch.  Then, we encouraged the groups to include information about our legislation in their talking points on Capitol Hill.  In February, we organized a “Small Business Hike the Hill” where credit unions and our coalition partners brought small business owners to Washington to speak with lawmakers about the legislation.  And, when Senate Majority Leader Harry Reid announced his intention to call a vote on the MBL legislation, our coalition partners responded by asking their members to call on Congress to pass the bill.  This response would not have been possible without the effort we’ve put into developing the coalition over the last three or four years. 

Just as the ability of our coalition to take action did not develop overnight, the size and composition of the coalition did not develop immediately.  It took a lot of time to get to 30 members.  I can remember when we used say we had “over a dozen,” and meant 13!  The size of our coalition grew as we perfected our alliance, and this process continues. 

In general, more partners are better – we’re continuing to seek additional partners – but it is also important to have the right partners.  Our coalition includes a number of very large and reputable organizations; their participation has helped us attract additional partners. However, absent from our coalition are two of the biggest small businesses groups in the United States.  The primary reason these groups have not weighed in on our behalf is the influence the banks have on their membership.  Were they to join the coalition, the credibility of the group would surely increase.  Fortunately, the coalition has not been hindered by their absence.

Thanks in large part to the active participation of our coalition partners, we were able to secure our first conservative Senate cosponsor; we added a dozen House cosponsors to the bill after our Small Business Hike; and during our major advocacy push in the spring, we added 16 new cosponsors bringing our total to 140.  All of this has well positioned us to win a vote on the MBL legislation later this year.

The Challenge of Working With Competitors:  The Interchange Fees Experience

Before the MBL coalition was formed, we joined the Electronic Payments Coalition (EPC), the financial industry coalition to combat interchange fee legislation.  The debate over debit interchange fee regulation ended up being the fiercest trade association battle fought before Congress in years, pitting the financial services sector against the retail sector.  An unprecedented amount of resources were applied over what was essentially a battle over pennies on debit card transactions.  But, of course, those pennies add up very quickly.

The EPC is a full time coalition, comprised of the payment card networks, the six major financial services trade associations, several large banks, and at least three credit union service organizations.  It is managed by an outside lobbying firm and also retains a communications firm.  The participants in this coalition have the same goal: opposition to the regulation of interchange fee rates.

As with any coalition, each of the major participants in the EPC brought strengths and weaknesses to the table.  The payment card networks, big banks and their trade associations brought significant financial resources and invaluable legal and technical expertise.  However, they also brought baggage; coming out of the financial crisis, the big banks did not have a stellar reputation, and few on the Hill were looking to do them any favors.  The payment card networks had similar reputational issues, and they were the main targets of the merchants’ legal and legislative campaigns.  This is why the members of the EPC needed credit unions and small banks as part of the coalition.  While we did not have the financial resources to match the larger partners, we had a reputation of treating our members well, performing admirably throughout history, and, most importantly, we brought significant grassroots capability to the table.  Between the credit unions and small banks, there were financial institutions in every state and every Congressional district that would be adversely affected by the interchange amendment (notwithstanding the small issuer “exemption”), and our job was to make sure that story was told.

Over time, the members of the coalition naturally played to their strengths, but one of the significant challenges to success was the fact that many of the partners were competitors in the marketplace; many of the partners operated in different parts of the market; and some of the partners (ie. credit unions) had completely different business models.  As a result, there was a level of natural wariness that could never be displaced.  Unfortunately, this contributed to inefficiencies in the exchange of information and intelligence and may have ultimately hampered strategic execution. 

We and the small banks probably came the closest to overcoming these challenges, for we truly were in the same boat – seemingly beneficiaries of a meaningless exemption that complicated our efforts to defeat (and then repeal) bad public policy.  We met frequently with the small bank lobby – in our offices and theirs – and our staff spent countless hours working closely together developing lobbying strategies, organizing Hill meetings and considering legislative alternatives. A year removed from the major vote on the interchange amendment in the Senate, I’m am still pleased with the working relationship we developed with our small bank counterparts on interchange. 

What we learned from the interchange process is that sometimes circumstances force you into alliance with groups that have similar but somewhat competing interests.  In these situations, it is important to do everything within your power to manage those challenges, maintain credibility and play to your strengths.

Sometimes You Need a Coalition But Cannot Form It Yourself:  The ATM Fee Disclosures Experience

In the summer of 2011, I was approached by a credit union CEO on a Hike the Hill in Washington regarding an issue with ATM fee disclosures.  After learning more about the issue and what credit unions were doing to comply with the regulation, we decided that the best remedy was to try to get Congress to remove the statutory requirement while at the same time to seek relief from the Consumer Financial Protection Bureau.  Since this was an issue that did not only affect credit unions but also any ATM operator, we recognized early that we would be more successful if we tried to bring together a coalition of affected parties. 

We also felt that we would probably have greater success in building the coalition if we were not perceived as the leader of the coalition, so we identified an intermediary group that represented a significant part of the ATM industry and worked with them to form a coalition of banking trades, merchant groups and other ATM operators.  Many of the groups that fought with each other over interchange united to try to attempt to remove this obsolete regulatory requirement.

In contrast to the interchange coalition, the participants had incentive to trust each other because for all intents and purposes they were in the same boat.  The members of this coalition leveraged their contacts on the Hill to generate broad-based bipartisan support for the legislation.  We were able to develop and execute a strategy that resulted in the House of Representatives approving the legislation we supported (H.R. 4367) by a vote of 371-0.  Thanks to the coalition’s efforts, not a single member of the House of Representatives articulated opposition to the bill during its consideration in the Financial Services Committee or on the House Floor.

The ATM issue is an example of coalition building in the financial services sector at its best.  We worked together to generate broad bipartisan support, and played to our strengths to neutralize potential opposition.  And today, we find ourselves working on moving this bill through the Senate.


The framers of our Constitution purposefully made it difficult to enact legislation.  Even though the modern Congresses have turned what should be difficult into something that is nearly impossible, it is probably a good thing that it isn’t easy to change public policy.  There is a strong argument that we are better served by consistent policy that changes in moderation over time than legislative changes enacted with unpredictable fluidity.  But for individuals and organizations charged with affecting change to public policy, throwing up one’s hands and saying that it is too difficult therefore it should not be attempted is not an option.  We must find a way forward, and coalitions are important part of an overall lobbying strategy.   

When engaging in coalitions, it is important that each of the participants plays to their strengths, that your actions maintain and advance your credibility, that you take steps to manage the challenges presented by the coalition, you take time to perfect and build the alliance, and that you do what you can to deflect controversy by remaining actively engaged in the coalition’s strategic direction.

Smartphone Apps, Mobile Trends and Credit Unions

Posted by on Thursday, 31 May, 2012

Did you catch this infographic about smartphone app use on Mashable a couple of weeks ago? New research from Nielsen has revealed just how much app use has skyrocketed from 2011 to 2012. Among the findings:

  • The average number of apps per smartphone has increased from 32 to 41.
  • Time spent on apps vs. the Web has jumped from 73% to 81%.
  • The number of Android and iOS users has taken a huge leap, from 38 million to 84 million.

How do these findings affect the credit union industry? Some CU-specific research provides more insight into the increase in smartphone app and mobile use and the implications this has for credit unions.

According to the “Measuring Social Media Success in Credit Unions” report from the Filene Research Institute:

  • Overall, 15.5% of credit unions report that they have developed a smartphone app.
  • About 21.3% of credit unions that use social media use smartphone apps.
  • App use has increased throughout the year, with 13.9% of all credit unions developing apps.

And from CUNA’s 2012-2013 Credit Union Environmental Scan (E-Scan) Report:

  • More consumers will use mobile devices to obtain loans, particularly younger members. The average age of a credit union member is 47, but the average age of users of CUNA Mutual’s Smartphone Loan technology is 29. In addition, completion rates for CUNA Mutual’s mobile loan application are more than 50%, compared to 40% to 50% for all Internet loan applications.
  • In a survey of 450 credit union CEOs and senior executives, 48% listed mobile banking as one of their top tech projects for 2012. In addition, 39% prioritized mobile payments.
  • While mobile payment transactions already total $240 billion annually, the market is expected to double or triple in the next five years, according to Juniper Research. By 2013, one in five cellphones worldwide will use near field communication (NFC) technology; by 2014, Google estimates that 50% of cellphones will use NFC technology.

It’s clear that mobile technology is booming, and an increasing number of credit unions are diving into the world of smartphone applications, mobile lending and mobile payments. Is your credit union developing new mobile technology or experiencing success with mobile tools? Let us know in the comments!

Member Business Lending in the Spotlight

Posted by on Friday, 9 March, 2012

Open for business?

Member Business Lending (MBL) is a topic that continues to generate a lot of buzz. Considering our current economic state, why are MBLs getting so much attention? Because they are one of the fastest-growing segments of credit union loan portfolios,  with an average loan growth rate of 4%*. Some credit unions are reporting even higher rates. CUNA’s News Now recently reported that in 2011, Michigan credit unions increased their MBLs  by 21.7%!

Other statistics to note:

  • The number of credit unions offering MBLs: 2,233
  • Average size of  credit union MBLs: $219,120

“While we know that MBLs may not be for every credit union, CUNA’s goal is to provide the most comprehensive information possible to help credit unions make an educated decision on whether to offer these services,” says Doug Benzine, Vice President of CUNA’s Advisory Services. To that end, we present a number of resources for credit unions currently offering or considering adding MBLs to their portfolio including (but not limited to):

1. Member Business Lending Resources;

2. CUNA’s Business Lending Institutes: Fundamentals, Credit Analysis and Advanced Credit Analysis; and

3. Consulting services.

Currently the cap on MBLs is 12.25% of a credit union’s total assets. As the national trade association, CUNA is advocating Congress to enact legislation which would  increase the  cap to 27.5% for well-capitalized credit unions.

Participate NOW in our Call to Action to increase the MBL cap, by contacting your  state representatives and urging them to include Small Business Lending Enhancement Act in the small business jobs bill.

*Source: FDIC, NCUA and CUNA E&S

Do you have the guts?

Posted by on Wednesday, 23 February, 2011

Bill Merrick

From Bill Merrick:

Bill Vogeney poses a timely question: Does your credit union have the guts to forego some loan business now to help members make smart long-term financial decisions?

Vogeney, Ent Federal Credit Union’s senior vice president/chief lending officer and CUNA Lending Council vice chair, believes both credit unions and members often would be well-served by one word: No.

Vogeney writes on Credit Union Magazine’s website that, despite the many hard lessons learned from the Great Recession, members are still making poor financial decisions.

And he cringes when he hears phrases such as, “There’s never been a better time to buy a new house or car!”

“That’s not advice,” Vogeney says. “It’s sales puffery. Today may not be the best time to buy a house for many first-time buyers, regardless of the near-historically low mortgage rates.”

That’s because unemployment nationwide remains at 9%, new job creation lags the economic recovery, and many housing markets continue to experience declines.

The long-term path to success, Vogeney believes, is offering unbiased financial education and advice to build long-term member loyalty—and create smart consumers.

That’s a bold, refreshing view given many credit unions’ shrinking spreads and declining loan volume.

Do you have the guts to forego loans that aren’t in members’ best long-term interests? Cast your vote on Credit Union Magazine’s website and leave a comment on this post to share ways your credit union is helping members become smarter consumers.   

Bill Merrick is the Senior Managing Editor for Credit Union Magazine at the Credit Union National Association.

Credit Union Business Lending in the News

Posted by on Friday, 7 May, 2010

If credit union business lending has been the subject of stories and opinion pieces in your local newspaper – or even in the national papers you read or the local radio stations you listen to – it’s no accident.

It’s the result of a coordinated effort by the Leagues – working with CUNA – to get out the word through local media that credit unions are helping the economy, and want to do more. And pressing the point that they could do more if Congress would allow credit unions greater capacity to make member business loans.

Which would pump $10 billion into the economy and create 108,000 new jobs at no cost to the taxpayer.

News stories and op-eds have appeared from Maine to California. News stories typically feature local business owners singing the praises of their credit unions.

“Community Choice (Credit Union) has been a godsend for us,” Christy Drake told the Des Moines (Iowa) Business Record. Drake, with her husband, owns and operates two small businesses in Greater Des Moines; a bank had recently called their loan. “I never missed a payment, and I was never late; that was the shocker,” she said.

“We have had a very pleasant experience (dealing with the credit union) compared to the similar challenge facing traditional banks,” Mike Cahill told the Arizona Capitol Times. Cahill owns seven Phoenix-area car wash locations.

The Las Vegas Business Press wrote that local business owner Curtis Wells “is the kind of customer community bankers dream of, but he is committed to Boulder Dam Credit Union, which gave him his first loan and all the loans since.”

These items – and more – are on the CUNA website; click on Member Business Lending under CUNA Initiatives.