If It Looks Like a Big Bank, Acts Like a Big Bank, Then It Must Be …

In my earlier three part blog I discussed:

1. The evolution of credit unions and the direction we can expect to continue
2. Banking in the information age which revolves around concepts and data provided by Brett King. If you have not read Bank 3.0 by Brett King, I highly suggest you consider reading his book
3. Four behavioral disruption phases and each phase is disruptive enough to be a game changer in banking

I can continue to provide data, statistics and information to further support the three premises, but more importantly what are you going to do to address the new expectations on your members? Particularly those members under 40 years old, and how are you going to attract them to your credit union. 

The 18 to 35 age bracket is collectively known as the Millennials. Millennials now make-up the largest age segment of our population, passing the baby boomers. If you don’t have a plan to meet their banking needs then get ready to close the doors because there are lots of traditional and emerging non-traditional financial service providers that will. The good news, or bad news depending on how you have positioned your credit union, is the Millennials have a huge distrust of big banks and bankers. 

1. 71% would rather go to the dentist than listen to what banks are saying
2. 1 in 3 are open to switching banks in the next 90 days  
3. All 4 of the leading Banks are among the ten least loved brands by Millennials
4. 68% say that in 5 years, the way we access our money will be totally different
5. 70% say that in 5 years, the way we pay for things will be totally different
6. 33% believe they won’t need a bank at all
7. Nearly half are counting on tech start-ups to overhaul the way banks work
8. Millennials believe innovation will come from outside the industry
9. 73% would be more excited about a new offering in financial services from GOOGLE, AMAZON, APPLE, PAYPAL or SQUARE than from their own nationwide bank

How is your credit union positioned?  In the eyes of the Millennials are you a Bank or Bank Lite? 

In the next blog we will discuss how to address these issues and attract and retain Millennials, the life blood of your credit union.  

EPL Product Management

Data Source: Millennial Disruption Index study

Health Plan Overview: Important Dates & Tips

Oh what fun…it’s Benefit Review time again. Yes, it’s that time of year when Employers who sponsor or administer a health plan are taking the necessary steps to evaluate their current plan so they’re fully prepared for the legal requirements that will become effective on or before January 1, 2015. To help you through the process and avoid paying the penalty, here are few dates to keep in mind as you evaluate your plan.

For Marketplace plans like Credit Union Exchange Blueprint (CUEB), the Open Enrollment period for 2015 coverage is November 15, 2014 to February 15, 2015. If you haven’t enrolled in coverage by then,  you won’t be able to buy Marketplace health coverage for 2015 until the next Open Enrollment window for coverage opens in the following year.

For those of you who enrolled in a 2014 Marketplace plan, your benefit year ends December 31, 2014. To continue health coverage in 2015, you can renew your current health plan or choose a new health plan through the Marketplace during the 2015 Open Enrollment period. Marketplace insurance outside Open Enrollment can only be purchased if there is a “Qualified Event” such as marriage, birth or adoption of a child, or loss of other health coverage.

Keep in mind that if you don’t have health coverage during 2015 you may have to pay a fee. The fee in 2015 is higher than it was in 2014 — 2% of income or $325 per adult/$162.50 per child, whichever is more..

There is some good news.  On February 10, 2014, the Department of the Treasury issued a final rule delaying the Employer Shared Responsibility provision for businesses with 50 to 99 employees. The February 10 rule also redefines the employer requirement for businesses with 100 or more employees, requiring those companies to offer coverage to 70 percent of their employees by 2015, and to 95 percent of employees by 2016, in order to fulfill the requirement and avoid paying the penalty. The rule also clarifies that volunteers will not be considered employees.

For now, we know the ACA is here to stay.  The individual mandate (the ACA requirement that people should be insured or pay a penalty) will likely increase the number of people you cover. Talk with a CUEB broker about changes in the marketplace and how they will affect you.   Make sure your benefits strategy is aligned with your goals for attracting and keeping valuable employees.  Have fun! 

Cathy Hulsey

EPL VP-HR

Best practices: a multi-layered approach to securing your network

When it comes to preventing unauthorized access to your mission critical data, there is no one silver bullet solution. To best minimize risk, security Best Practices suggest taking a multi-layered approach that connects together LAN, WAN and Desktop protocols to create the optimum network security for your credit union.

Here are a few proven tips and tactics to employ:

Desktop:

• Insure desktops are running a supported operating system.
• Insure operating system and business application patches are kept up to date.
• Insure business applications used in the organization are current and supported by the vendor.
• Insure business applications are standardized across the organization.
• Insure virus protection software is installed, patched and you receive daily virus signature file updates.
• Establish a user authentication method such as Active Directory to centralize user and security policy administration.
• Establish strong user authentication policy enforcement.
• Establish desktop user policies.
• Business versus personal use.
• Do not open emails or attachments from unknown sources.
• Do not email unencrypted confidential data such as (account numbers, social security numbers, birth dates, etc.)
• Peripheral devices (I.E. CD-ROM, Flash Memory Drives, etc.)
• User’s password should expire periodically forcing him/her to  change it.

Local Area Network (LAN):

• Only office network data connection ports should be active when a user device is connected. Unused network data connection ports should be deactivated at the network switch to prevent an unauthorized person from capturing data packets.
• Credit union business units should be setup on separate “VLANs” to prevent employees from capturing data packets from other business units.  As an example, accounting department may be separated from tellers.
• Wireless:
• Wireless connections should be setup as encrypted using a strong encrypted protocol such as AES 256 bit WPA2 for example.
• SSID should be set not to broadcast thus minimizing an unauthorized user from determining the wireless session exists.
• Users’ authentication should be set up as part of the same centralized authentication method used for desktops such as Active Directory.

Corporate Servers:

• Servers should be physically secured from unauthorized employees and not used as a user desktop.
• Servers should be logically isolated onto their own network VLAN within the organization.
• Servers should be running supported operating systems and patched with latest patches soon after release by the vendor.

Wide Area Network (WAN):

• Firewall:
• Corporate Internet external connections that are “untrusted” should be terminated into a Firewall separated from the internal “trusted” corporate network.
• Third party network vendor connections should be placed on an individual Firewall DMZ port.   Multiple DMZ ports should be established if dealing with multiple third party network connections.
• Internet facing servers such as those used for email and web based services should be placed on a DMZ network port.
• Firewall should be physically and logically secured from unauthorized employees.
• Firewall should log all firewall administrative tasks, VPN authentication and any exceptions encountered with the security access lists.
• Firewall log should be reviewed daily to identify potential fraudulent activity.
• Firewall should alert security/network personnel if established thresholds are reached.

• Intrusion Detection System (IDS) should be deployed at a minimum on the credit union’s Internet connection between the Firewall and the Internet router/switch port. This should be monitored utilizing a third party monitoring service specializing in Firewall management.
• Intrusion Protection System (IPS) should be deployed on the Internet connection between the Firewall and Internet router/switch to mitigate suspicious activity by blocking suspicious traffic to the Firewall.
• Routers:
• Routers should be running a supported version operating system and patched as soon as the vendor releases an update.
• Routers should utilize security access lists to only allow specific data that meets the access list requirements.
• Routers should be physically and logically secured from unauthorized access.  

Connecting you with ideas to maximize your protection is one of our top goals at EPL, and together, these tips and strategies should provide you with a formidable network security solution. If you have any questions or concerns regarding your current network security solution, don’t  hesitate to contact me. 

Larry Linville

SVP of Operations

EPL, Inc. 

Mirror mirror on the wall... who are the best member of them all?

Many of our credit unions have "Member Growth" as a core objective ... which is great!  But, I'd like to make one MINOR edit.  Change that objective to:

Growth of THE RIGHT Member.

When you are focusing on the RIGHT member, your universe shrinks and you can become more efficient with your budget.  As a marketer, I would rather report to the Board that we grew our member base with slightly fewer productive and profitable folks than tons of "riff-raff" (using technical, professional vernacular).

You can acquire the very best prospects through mirror modeling.  Focus your efforts on those people who "look like" your current best members.

Identify Your Very Best Members
Pretend, for a minute, that you could take one of your members and stick them in a Xerox machine.  Who would you pick?  Someone with the highest deposits?  The most impressive loan balances?  The most services per household?  Would they have checking?  Would they religiously use their debit card? With i-KNOW, we can even track profitability.

Your answer may be different than the credit union's down the street or the community bank from across town.  You need to define exactly what kind of member you want.

Once you've identified them, pull an address file of every one of your current members who meet the criteria.

Birds of a Feather
Think of your neighborhood.  I'll bet most of your neighbors look a bit like you.  Maybe it's an area with a gaggle of young families with kids.  Or it's a flock of empty nesters.  The socio-economic law of averages says that birds of a feather tend to flock together.  And this can be a powerful tool for targeting.

By defining a narrow target and geo-focusing your marketing efforts to those zip+4s with the highest concentration of your best members, you'll have a significantly better strategic effort than if you simply target those who live within 1-2 miles of your branch network.

You can also have a message with a laser focus.  Understand your best members: What are their pain points?  Why did they choose you?  Why do they stay with you?  What life stages are they living through? What products are they most likely to have?  How are they most likely to use them?  Once you understand your best members, you'll better understand how to communicate to your most desired prospects: What products they are most likely to need with you.  How they are most likely to use them.  What their key purchase criteria is.

With a little upfront homework and a mirror modeling strategy, you can retain your best members through better understanding, you'll know where they live to find more of them and you'll know how to talk to them.  That is a powerful marketing formula that will make you the "fairest of them all."

Eric Gagliano

Marketing

EPL, Inc. 

Branch evolution - transaction to relationship

Increased pressure on revenues, fees and capital are forcing financial services to find new ways to attract and retain customers based on the channels they prefer. With customer time and banker expertise at a premium, direct banking  services is likely to dominate the way consumers transact business with financial services and customer relationships will be built virtually.

Consumers’ attitudes towards channel preferences will dictate the way banking services are being delivered to customers and to keep building relationships financial services must change the branch usage model and propensity for customers to buy more financial products.  Gallup conducted a nationwide banking study that explored which channels customers prefer most to meet their financial needs. Surprisingly, while many credit unions are pushing enthusiastically to move customers into online or mobile channels, the study found that:

• 3 out of 4 consumers prefer in-branch interactions to open or close an account, apply for a loan or get financial advice.
• To report a problem or inquire about a fee or service charge, consumers prefer using a branch or interacting with a live call center representative.
• To make deposits, consumers still prefer using a branch. But consumers who want cash will use either a branch or ATM.

So yes, while customer behavior is changing and mobile and online technology is shifting transactions away from branches, it’s important to note that 3 out of 4 consumers still prefer to visit a branch for key financial services. The key is to create a balance and provide member options wrapped within your branded member experience through any channel selected.  That said, as the number of face time encounters declines, how can banks and credit unions capitalize on, and build deeper relationships with, the dwindling number of interactions they still do have with consumers?

In response, many banks and credits unions are transforming their branch strategy to support convenience, and provide value and services that are relevant to their customers’ needs, and finding ways to use technology to transform the branch from a cost-center into an income generator and relationship builder. For instance, according to a recent article  a technology called Telepresence is already being utilized by a major bank, credit unions and a mortgage organization to lead that transformation.

Integrating video communication like Telepresence into business will strengthen relationships and heighten communication with customers by providing a high-touch high-tech experience. Pioneering credit unions like Alabama Teachers and Mid-USA have launched the 3D Omni-Series technology from Buffalo Pacific.  TelepresenceTechnologies provides high-definition, 3D imaging and video communication with full eye contact, life-size images proportioned to human scale, and theater quality sound.. The technology is designed to give users the virtual sensation that a real, live financial advisor is sitting across the desk — as close as possible to the real thing.

Video communication is way to support the ability to increase efficiencies and streamline processes to leverage and build lasting relationships with customers! Learn more!

Robin Kolvek 

Senior Vice President, Business Development Officer

EPL, Inc.

Work smarter, not harder: 4 ways big data can improve efficiency and productivity.

We have all heard of “Big Data” but many of us don’t know where to start or how to use it.  Further, given all that we have on our plates, it can seem overwhelming to even fathom adding more technology and processes to our existing landscape.   With a host of challenges to contend with such as compliance, security, member demands, limited resources and having to continue to reduce our budgets, how will analyzing data help and where on the endless priority list does this fit? 

Truth is, Big Data is ironically the solution.

Times are changing. Instead of walking into a branch, the majority of today’s members use alternative channels such as the call center, online banking, mobile banking, VRU, social media, etc.   Statistics show that by 2016 members will use Internet/mobile 20-30 times each month; whereas, the foot traffic into the branch will reduce to 1 to 4 times per year.  Now, we all know that credit Unions differentiate themselves by building relationships with members.  But if members only visit the branch a few times each year how can we ensure a positive member experience, plus build loyalty and lasting relationships with such a limited number of face-to-face encounters?  How can we identify which technology to invest in and what our members want or are expecting?  We must re-evaluate our strategy and respond to the now or potentially be replaced by other financial providers that can.

Big Data doesn’t have to be complicated but it does need to become a part of your culture and strategy.  The first step is leveraging and evaluating the data you already have and then investing in a core processor platform that can combine the data from all channels to:

1. Better understand your members & what they need by having a 360° view of your member.  Position the data to show what products/services the member needs, and how to assist them with their financial goals.  Include what issues the member has reported and what products/services they have requested that you don’t currently offer.  Is the member at risk of leaving?  How does the member typically respond?  By having this information at your fingertips, you are able to quickly identify the opportunities.

2. Increase internal efficiency & productivity by analyzing the data to identify trends/patterns, manage risk and take proactive measures, increase operational efficiency, and monitor progress and task resolution.  Analyze the types of issues coming into the call center and what processes are manual today that can be changed.

3. Increase revenue by identifying and implementing strategies according to the data analytics. Which products are turning a profit and which are losing revenue? Which products are heavily used or have a low penetration and can be phased out?  Which products impact your members the most and are most relevant today?

4. Staff growth & development by identifying and implementing succession planning by analyzing the patterns and trends provided by the data to identify employee strengths and opportunities. Utilize transparent dashboards to motivate staff by showing goals and progress and reward through recognition programs and gamification.

By gathering the data, you will acquire information that can be turned into knowledge and develop a plan to take action.  It’s not about working harder but working smarter and using Big Data to position ourselves for the now and for the future.  

Jami Jennings

Senior Product Solutions Manager

EPL, Inc.