Navigating ACA

Before we knew it, the January 1, 2014, Affordable Care Act (ACA) deadlines were upon us.  Then, there was a reprieve with a delay in employer penalties until January 1, 2015.  With the first round of employer mandates required by the ACA set to begin in 2015, the results of a new survey find that larger employers (those with 50 or more employees) appear more informed about their company’s options for providing health insurance. Sixty-nine percent of U.S. employers report being “very informed” about their options under the ACA in 2014, as compared to only 37 percent in 2013. The results come by way of the nonprofit, Transamerica Center for Health Studies’ annual survey of employee benefits decision-makers. The 2014 survey was conducted in March and April, with the findings report, Pulse Check on Employer Preparedness for the ACA, released in May.

Comparatively speaking, the awareness statistics among smaller businesses are not as positive. Among small businesses, the survey revealed that only six in 10 (59 percent) of those with fewer than 50 full-time equivalent employees are aware of the new Small Business Health Options Program (SHOP), compared to eight of 10 businesses overall (79 percent).  “This may be an area where more education is needed,” Hector De La Torre, executive director of the Transamerica Center, said in a media release. “Small businesses with fewer than 50 full-time equivalent employees are currently the only businesses eligible to participate in SHOP, yet four in 10 do not even know about it.” Businesses of this size employ nearly 34 million workers, according to the Small Business Administration, so it’s a significant gap to address.  The survey found that most employers (64 percent) plan on taking some action to comply with the ACA, with 19 percent planning to change plan options and 17 percent planning to change insurers.

Other key findings from the study include:

Employers are researching alternative options. More than a quarter (29 percent) of employers are researching actions that may avoid the need to comply with some ACA mandates, with 23 percent researching reductions in employees and 15 percent calculating the cost of paying the tax penalty. Among large businesses with 100-plus employees, 33 percent are researching workforce reductions.

Small businesses are less informed than large employers. Just 56 percent of small employers feel very informed on their company’s options for health insurance, compared to 78 percent of large employers.

Effect on dependent coverage.  Ten (10) percent of companies reported that they plan to eliminate coverage of dependents from their health plans, but 9 percent said they plan to add dependent coverage as a result of the ACA. There is no requirement that employer plans cover spouses and children, but plans that include children must allow them to maintain coverage up to age 26. For more information regarding ACA and Employer timelines, visit: http://www.unum.com/healthcarereform/timeline

Here are some key numbers concerning  the ACA:

• 50 – All businesses with more than 50 full-time-equivalent workers are required to offer “minimal essential” coverage.
• 30/130 – Employees with more than 30 hours of service per week or 130 hours of service per month must be offered health care benefits.
• 90 – Employers have 90 days to offer eligible employees health care benefits.
• 60 – Employers have to pay at least 60% of health care benefit costs in order for the plan to be deemed “affordable.”
• $2,000 – This is the penalty for NOT offering health care benefits to an eligible employee.
• $3,000 – This is the penalty for not offering “affordable” health care benefits. Benefits cost more than 9.5% of an employee’s annual income.

Even though there has been a lot of controversy with the Affordable Care Act, businesses are trying to figure out for their employees, customers, and bottom lines the best course to navigate. It’s going to be interesting over time to see how it affects the health of companies working to comply with it.

Cathy Hulsey

Chief of Staff/CHRO

EPL, Inc.

 

Behavioral disruption – part 3

There was a time when the bank was a destination. You’d straighten your tie, smooth your coat collar and put on your hat … wanting to look your best before you’d head to the bank. Well, you can hang up your coat and hat my friends! Those days are over.

Consumer behaviors are changing – never more so than in the last 20 years. These changes are due to four behavioral disruption phases, and each phase is disruptive enough to be a game changer.

 

• Phase One - Arrival of the Internet and social media – control and choice

• 10 years ago, 60% of all transactions where conducted in a branch. Today, 95% of all transactions are done through an ATM, call center, Internet and mobile phone. In summary, 60% of transactions “back then” were done in-person compared with a stunning 5% today.

• Phase Two - Arrival of smart devices and apps – anytime anywhere

• U.S. market has over 100% adoption rate of mobile phones.

• As of December 2011, smartphone users average 94 minutes a day using apps compared to 72 minutes using web browsers.

• 99% of mobile banking users view balances.

• 90% of mobile banking users view transactions.

•  10 billion dollars have been moved using mobile transfer/bill pay.

• More than 50% of iPhone users have used mobile banking within the last 30 days.

• 33% of mobile banking users monitor accounts daily, 80% weekly. 

• Phase Three – Arrival of the mobile wallet – cardless and cashless

• Mobile payments on a broad scale including near-field contactless mobile wallets, micropayments, convergence of the mobile phone with credit/debit cards.

• If only 50% of cash transactions are replaced by electronic stored value cards, debitcards and mobile wallets, the FI branch infrastructure becomes cost prohibitive.

•  In 2000, 59.5% retail payments were made by checks. In 2010 it was 4.3%.

• Phase Four – Anyone is a bank – pervasive and ubiquitous

• Banking is no longer somewhere we go, but something we do.

• Banking services and products are delivered wherever and whenever a customer needs the utility of a financial transaction.

• Banks and CUs do not have the ubiquitous coverage to deliver these products and services in the new world.

• New partnerships will be required.

•  Non-traditional value chains will meet banking needs.

• This phase will produce a fundamental split between banking as distribution and banking as a product/manufacturing or credit granting capability.

As I mentioned in Part 1 of this series, large credit unions are getting larger, the smaller credit unions are getting smaller and being merged into larger credit unions. When the dust settles, that means fewer credit unions overall. And the one’s that succeed will be the ones who not only keep up with, but stay ahead of consumer demands as defined by the behavior disruption phases above.

EPL, Inc.

It takes a community to maximize your core

Much like the customers of big brand banks, who often feel alone and unwanted, we often hear stories all the time about customers of big name, big box core processors who feel like Tom Hanks in Castaway: stranded and all alone on an island. A major factor in their feeling abandoned is that many of these large core processor companies provide no “community” for customers to rely on for support.

Your core system is the lifeblood of your credit union. It manages every single member transaction, is at the heart of every member relationship you have, and is also one of your credit union’s largest investments. But it’s also a very complex system, and can be a real challenge to figure out on your own. That’s where the value of a “community” comes in. You only strengthen your core (and peace of mind) when you have a reliable community that helps you:

• Connect to and collaborate with other credit union peers on your platform in user groups.
• Access content with a rich knowledgebase and training videos.
• Find standardized answers to efficiently answer inquiries.
• Rate and comment on content, tightly link case.
• Solve issues that other users have experienced by accessing the solutions in a knowledge base.
• Access training videos and documentation in an on-demand fashion.
• Get 24/7 access to submit ideas, access knowledge, submit cases to agents and see progress of those issues.

While online communities are a valuable tool, it’s important to remember that customers also want the ability to be able to navigate between channels (phone, email and online community) to get the appropriate level of service. Your core provider should provide those levels of service and personalized service.  For instance, at EPL our phone channel is still the primary communication channel used, but it is quickly followed in popularity by our self-service channels.  Our customers are asking for this and we want to provide a collaborative community of engagement—and answers! Also, we know many of our customers are on the go so we are working to go mobile with our support channel in the next few months.

We’ve seen increased adoption of collaboration since we started our e3 Community Support online channel last year. (e3 stands for Extension, Exploration, Evolution.) Trends we are seeing within the community include: greater adoption of customer service and idea submission for our software which helps increase our agent productivity and customer satisfaction. Also, as a result, we have better agent-to-agent collaboration by breaking down structures in favor for a more collaborative environment with subject-matter experts to increase first-contact resolution rates. We are ensuring that collaboration and customer service is becoming a corporate mindset for EPL.

As a cooperative, we know the value of community, and you can expect EPL to adopt best practices in knowledge management to make locating the right content or people easier vs. leaving you stranded on a remote island with nothing but a volley ball to talk to. At EPL, e3 stands for:  Extension * Exploration * Evolution (e3).  To learn more about the e3 Community Support program, click here

Rhiannon Stone

VP, Solutions Delivery

EPL, Inc.

Banking in the Information Age – part 2

Banking is undergoing a metamorphosis that started with the mass consumer adoption of the Internet. As the chart below shows, more and more people are opting to conduct their day-to-day transactions online and steering clear of the branches – even for ATMs

When it comes to basic transactions, convenience is the name of the game. Members want to conduct business on their time – not your branch hours. Credit unions must effectively respond to this trend or potentially face irrelevance, replaced by financial service providers (traditional and/or non-traditional) that fill the void. 

In view of these statistics, it is conceivable a member might interact with a credit union 500 times a year through mobile, web, tablet, and ATM and fewer than 5 times with a person. Which raises the burning question:

How are credit unions to respond if their future hinges on a member experience, loyalty and relationship that is defined by just a few annual branch visits?

We need to maximize every single in-person interaction and position the branch experience around providing expertise and advice rather than focusing on routine transactions. As I see it, two major factors driving this trend and creating behavioral change:

One: Psychological impact of the Information Age

• I am in control
• I am better informed
• I get better deals
• I get a better quality solution

Two: Process of diffusion – increased acceptance of technology & innovation

• Moore's law – technology innovation doubles every two years
• Diffusion is the rate of speed which new ideas are spread from one consumer to the next. We are accepting new technology at a much faster rate.
• Telephone – 50 years to achieve mass adoption.
• Television – 25 years to achieve mass adoption.
• PCs and cell phones – 12 to 14 years to achieve
  mass adoption.
• Internet – 7 years to achieve mass adoption.

The disruption that is occurring stems from removing friction in outmoded or outdated processes so that the consumer can do business on their terms, time and conditions.

In Part 3 of this series, we will focus on the 4 phases of behavioral disruption affecting credit unions.

EPL, Inc.

 

The e-access features members want most.

According to a J.D. Power and Associates “2014 U.S. Retail Banking Customer Satisfaction Study,” the recently released findings tell us consumers whose banks offer innovative mobile banking are significantly more satisfied than those whose banks do not.  Also from the report: the innovative mobile banking features that show the greatest positive impact on satisfaction are, in order:

• Person to person payments.
• Mobile bill pay.
• Mobile funds transfer.
• Mobile deposits.

Let’s expand that list, though. (The more the merrier, right?) Based on conversations we’ve been having with our many credit union customers throughout the industry, here are the main reasons members are expecting to have mobile banking with their credit union:

• Members are Seeking Complete Self Service, including;  Ordering checks
• Opening new accounts
  ◦ Getting a loan, from the application to signing papers electronically, to getting
     access to the funds
  ◦ Doing Stop Payments
  ◦ Credit and Debit card information and changes

• Detailed access to account information and transactions.
• Access to Statements, both current and past.
• Access to check images.
• 24-hour access.
• Access via PC, Tablet, or any mobile device
• Ability to perform transactions, like transfers, and check deposits.
• Access to all services offered by the credit union.
• Ability to move freely around the world without having to change financial institutions.
• Quick, easy, and secure communication with the credit union via the different devices.
• Ability to easily use account information to include them in the PFM of their choice, such as Mint and Quicken.
• Pay their bills.
• Notification of important account and credit union information.           
• Stay up to date on the happenings at their Credit Union.

That said, it’s important to remember this is not a “one size fits all” proposition. You should find out what your members want and value most, and then create and execute a plan to deliver the desired functionality.

Lastly, don’t fall for the old “if you build it they will come” myth. Even if you have innovative mobile banking in place or plan to put it in place, most members won’t just stumble upon your mobile banking on their own. CU marketers need to promote the availability of these great innovative features to members, educate them regarding how they work, and promptly promote new features as they come out.

David McCullough

Senior Solutions Manager

EPL, Inc. 

The evolution of credit unions – part 1

“We opened this credit union out of a shoebox in the break room of this factory.”
 You’ve all heard the story … heck, many of you still tell it. And while it is a great story, the days of the shoebox and the loan on a handshake are past.  The credit union movement is evolving at light speed.

In this 3-part series, we will examine the evolution of credit unions from consolidation and growth to the impact of the information age.

First, let’s look at the numbers. Credit unions are declining in numbers but growing in assets and membership:

•  Number of CUs decline 15.2% since 2009.
• Assets increase by 20.1%
• Membership increases by 7.4%

Credit unions in the US are healthy but for how long?

In short: large credit unions are getting larger, smaller and mid-size credit unions are merging or being merged into larger credit unions. Forecasts suggest that within the next 20 years, one-third to one half of credit unions that exist today will no longer exist as a result of mergers, regulations, compliance, competition, a lack of management expertise and poor succession planning. What is your plan to effectively address the rapidly changing credit union environment? How will your credit union complete and thrive or are you on of the casualties of change?

Consolidation, however, is not the only major factor driving this evolution. Credit unions are also expanding their field of membership) to be able to attract more members to achieve economies of scale to more effectively compete against community, regional and national banks, and non-traditional financial service providers to satisfy their member’s expectations. These member’s expect to be able to access all the products and services a credit union offers electronically 24/7, 365 days a year with real time and immediate completion of the transaction. They want answer and they want it now!

Collectively, consolidations and evolved member expectations in the “e-banking” age are driving rapid-fire change in the financial services industry. To embrace and manage this change, credit unions must quickly adapt by increasing capital, reducing costs, become more efficient and attract and retain highly skilled management.

In Part 2 of our series, we will focus on how the Information Age has impacted banking and  help fuel members’ expectations to do banking on their time.

Rhiannon Stone

VP, Solutions Delivery

EPL, Inc.

A changing world

The world is constantly changing and calls on us to change with it or, to put it bluntly, be left behind. Maintaining the status quo and holding too fiercely to a “but that’s how we’ve always done it” mentality is not going to get it done.

Major changes in the financial industry as a whole, such as Reg E (itself a gray area of “responsibility”) and tighter federal regulations in banking reform create new challenges that push us toward change. Also, consider some of the major changes in consumer behavior. As a result of smartphones, customers can do nearly everything remotely: mobile banking, remote deposit capture, etc. This behavior is on the rise. Recent studies report that about 9% of bank’s check transactions during Q4 2013 were conducted with a mobile device like a tablet or smartphone (that's up 2% from the previous quarter). Only 20% (roughly) of all banking transactions are conducted with paper checks (down from 60% in early 2000).

The future is taking shape right in front of us. Branch activity is becoming less transaction-based (deposits and withdrawals) and more relationship-based (loans and investments). People don’t want people to help them with their day-to-day banking, but they still want “people helping people” when there is a problem or when they have a major life-stage need. In short, these e-delivery solutions will not replace our branches  but they definitely challenge us to evolve around them to become a more relationship-based partner.

How then, can credit unions make the transition from transactional organizations to true relationship organizations? How can they strategically connect people, processes and technology to not only embrace change, but also lead the change?

Branch transformation.
Consider, for example, the innovative 3D branch technology by Buffalo Pacific that some credit unions are just starting to adopt. When a member needs to interface with one a credit union expert, the Omni Suite system can allow one of your knowledge experts to have face-to-face, 3D interaction (with full eye contact) with a customer in any of your branches … without having to travel to that location. It has a very futuristic aura about it that members delight in experiencing, and after all that is what we’re talking about. The future.

Role transformation.
The writing is on the proverbial wall. With consumers migrating more toward mobile and online applications, branches are being pushed to become less transaction-focused. That said, credit unions need to shift their focus to building deeper, stronger relationships. To that end, your core’s the key: the ultimate Member Relationship Management tool.

As it is the center of all member transactions and interactions with your credit union, the data it provides can be used to provide strong, need-focused member solutions that help you transform your core from a transaction-focused expense into a strategic, data-driven profit center. Imagine being able to approach members with what they might need before they even ask for it!

All you need is a Member Relationship Management tool that converts the transaction data into actionable, strategic knowledge and the support of a marketing professional whoknows how to use that data to reach the right member with the right message at the right time.

In all this change, there are seemingly boundless opportunities for credit unions to potentially blaze some new trails with respect to how member interactions occur: by transforming their role in consumers’ lives, but also by changing the classic model of the branch itself.

How will you embrace and drive the changes going on around us? The role of tomorrow’s credit union is shaping up to be dramatically different than its role today. What changes are you employing to reinvent and reposition your credit union? Again, leaning on the status quo is a wobbly proposition. Moving forward, give yourself the benefit of a stronger foundation -- one based on stronger connections and relationships with members. The kind of relationship they’re telling us they want.

Wayne Benson

President & CEO

EPL, Inc.

Are you leveraging your core system?

Well, you might say, “Of course we have a core system.” But just having a core system doesn’t mean that it’s being fully leveraged. The deeper question is this: are you truly engaged with your core processor? Are you keeping up with new software updates, participating in training offered, or are you on autopilot? 

Over time core systems change, grow and evolve, offering benefits to your staff and most importantly to your members in the form of increased efficiencies or cost savings.  In the end you are paying for those features in your monthly invoice, but are you taking advantage of all that your core system has to offer? 

Typically, here’s what happens at the beginning of a new core relationship (in other words a conversion.) Everything is looked at from a macro and micro view. You go through your current capabilities, learn of the capabilities of your new core, and at that point in time you “leverage” your core to provide maximum benefit and you vow to stay on top of keeping it leveraged. But over time, you get behind on reading system updates, thinking you’ll circle back when you have more time. Then you don’t make it to training offered. You don’t attend client conferences. It all just kind of slowly snowballs and before you know it, you are years into the relationship and slowly but surely leaving feature functionality on the table that could be benefitting you and your members. 

While there are a numbers of ways to prevent this lag from happening, here’s one way in particular that I have seen work wonders: Designate a person in your credit union as “the” go to person whose job duties require being responsible for the relationship between the core and the credit union. This Core Captain is the information conduit from the core to your credit union. He or she attends the training and the conferences. He or she also combs through the system updates to ensure the credit union is getting the most out of the core. 

If this sounds all too familiar, but you worry you have fallen too far behind to ever “catch up” don’t worry. If you want an evaluation of how you are using the core compared to what the core has to offer (is it being fully leveraged?), then ask for a system utilization audit or a demo just as if you were a prospect.  Bottom line: take action! It’s your system and you are paying for functionality you may not even be using that would make a difference. It’s like leaving money on the table that’s yours, so why not take it?

Wayne Benson

President & CEO

EPL, Inc.