NJCUL Convention Blog

EMV and its Roadblocks 

By: Robin Brunner, Vice President of Credit Union Solutions, NJCUL

The liability shift has happened. Let’s celebrate! Credit unions are good now, right? It’s all the merchant’s liability. Not exactly. There are many roadblocks with EMV and we all might have experienced a problem once or twice as a consumer. I know I personally have – more than a dozen times.

Prior to leaving, I made sure that the cashier was educated that this is a merchant decision, not specific to the financial institution. Being in the industry, I know this – but the average consumer wouldn’t know. From this point on, I made notice of how each retailer handled my debit card transaction. I’ve had online purchases come through as non-card debits; fast food restaurants come through as PIN, when I did not enter a PIN;  other retailers hide the “credit” option;  and many other flat-out tell me that I can’t use my card as credit. I learned over the past few months how there are a lot of tricks that merchants use in order to make the routing of EMV more beneficial for them.As you might imagine, my blood starting boiling (at the time, I was an employee of that credit union and I knew this wasn’t the case). I was mad that I couldn’t use my card as credit. I was mad that I was making a transaction that was forced by the retailer, so it benefits them. I was mad that I was dipping into my ATM limit for the day. I was mad that the cashier made it seem like my credit union was the bad guy!I walk into a chain retailer to purchase Easter Bunny prizes for my kids and as I’m checking out, the device wouldn’t accept my card as credit. The cashier politely looks at me and asks, “Oh, is that a credit union card?” I indicated that it was. She then proceeded to state, “Your credit union won’t allow you to use your card as a credit transaction; they force us to use PIN.”

In speaking with Tonya Sieracki, Strategic Account Executive specializing in CO-OP products and technology, she stated: “I want the right as a consumer to be able to select how my transaction is routed!” Tonya, too, experienced the “merchant trick” of being forced into a PIN based purchase.

Tonya prepared for our upcoming, “EMV and its Roadblocks” session at Convention to arm our credit unions with findings that can change the way we do business in the future and, ultimately, the roadblocks that EMV has created for not only credit unions, but its members as well.

Brunner: Have all credit unions converted to EMV?

Sieracki: Actually no. While I’ve been doing my research, I’ve talked to a few CUs, which I would call your early adopters and a few that still haven’t converted. I plan on sharing their experiences. Of the early adopters, I wanted to know why they jumped the gun, what they would have done differently, what they wish they knew then and would they do it again?

Brunner: That’s interesting, but I’m wondering why a credit union wouldn’t have converted yet? Aren’t they concerned about the liability shift?

Sieracki: Yes, that is exactly what I learned. Why did they wait – and was it a strategic decision? You might be surprised to hear their responses on what they learned by waiting.

Brunner: I’m on the edge of my seat! Partially because this whole routing of EMV transactions really gets me mad!

Sieracki: The merchants’ trick of routing transactions is quite an art. There are pending lawsuits that may even transform the way EMV transactions are routed, but that is yet to be seen. I’ll share a few of those cases in my presentation.

Brunner: What are some of the key issues you are hearing from credit unions?

Sieracki: Costs seem to be a huge problem for credit unions. There are a lot of disruptors, such as the recent Equifax data breach – that could require credit unions to reissue these costly cards.

Brunner: Taking costs out of the equation….overall, EMV cards are safer – right?

Sieracki: In tackling counterfeit card fraud, yes. But there are other instances that credit unions need to consider. Let’s take for example – what happens if the chip is lost? Credit unions also need to be prepared for the rise of card not present and fallback fraud.

Brunner: Sounds like there are a lot more roadblocks to EMV that I might not have even considered. What else can credit unions expect from your presentation at Convention?

Sieracki: Credit unions can expect to also learn about technology that is right around the corner – and with all of the disruption, consider how your organization can remain competitive by offering other payment technology such as tokenization.


To learn more about EMV – and its roadblocks – join Tonya at the League’s Annual Meeting & Convention taking place October 22-24, 2017 at the Golden Nugget in Atlantic City. Visit www.njcuconvention.com for more information and to register.

Posted by Marissa Anema Monday, October 02, 2017 8:22:00 AM

Directors and Liability: Know What You’re Liable For and How to Protect Yourself 

By: Barbara Agin, Vice President of Member Experience & Education, NJCUL

The role of the credit union director has changed dramatically over the last decade, not just in terms of volunteerism (although that landscape has changed a bit) but regarding the complexity of information a board member is expected to know.

With board members serving their credit unions while holding down a full plate of other responsibilities, whether working full-time or enjoying retirement, keeping up a high level of knowledge and time management become challenging.

In this litigious society, it is important for every director to know what they are liable for, what insurance is available for their protection and how to best serve the membership, says attorney Drew Edwards.

Because of the weight of this topic—and with so many of our credit unions’ directors attending Convention each year, we have Drew delivering a “Duties of Directors and Indemnification of Directors and Employees” session. I had a chance to question Drew about this upcoming breakout.


Agin: In your experience, to what extent are directors knowledgeable about the expectations of their role with the credit union?

Edwards: Unfortunately, some directors are here just for the perks. There may be others who truly want to help, but do not have, or haven’t been afforded, all the financial literacy education and training they need to be an effective director. It is important for directors to understand that they are liable if they just rubber-stamp everything the CEO does.

Agin: Has the role of a director changed much in the last 5 to 10 years?

Edwards: A director has the same responsibilities, but the industry has changed. Directors need to keep pace with changes in the financial industry—and in their specific credit unions—in order to discharge their duties effectively.

Agin: Is indemnification of board and employees necessary for all asset sized credit unions?

Edwards: I do recommend it for all credit unions. It's possible to get sued even if you do everything right, and a volunteer should not be expected to take on that level of liability.

Agin: Should a credit union indemnify employees other than the CEO?

Edwards: Yes; this should be covered under the credit union's insurance policy, and it's important to make sure that you have the right coverage.

Agin: Who is responsible for a board member’s education?

Edwards: The board member is individually responsible in a legal sense, since he or she can be personally liable in certain circumstances. However, the credit union can assume financial responsibility.


To learn more about director duties and indemnification, join Drew at the League’s Annual Meeting & Convention taking place October 22-24, 2017 at the Golden Nugget in Atlantic City. Visit www.njcuconvention.com for more information and to register.

Wednesday, September 20, 2017 10:30:00 AM

Authenticity and Loyalty: A Match Made in Branding Heaven 

By: Marissa Anema, Vice President of Marketing & Communications, NJCUL

As credit unions, we talk a good game when it comes to touting our people skills. We’re in an industry based on relationships, right? We have the best intentions, but, alas, we struggle with awareness and growth. 

“We are surrounded by untapped opportunities to build loyalty,” says Frank Allgood of Your Marketing Co., a marketing agency focused on credit unions. “It all starts with authentic branding.”

During his session at the League’s upcoming convention, Frank will give credit unions the insight to build and tell an authentic brand story in order to turn members – and staff – into loyal advocates.

Anema: What is branding? Specifically, what is “authentic branding?”

Allgood: A brand is more than a logo, tagline or advertising campaigns. A brand is a holistic approach to what you’re all about.

When we take a holistic approach, we dig a little deeper both externally and internally. Externally, the brand is all of the touch points you have with members and potential members. It’s telling people who you are and what you can deliver in a cohesive and easily understood way. Internally, branding is cohesive messaging throughout the organization. It’s buy-in to what you’re selling externally and then living up to that promise.

It’s questioning, “Are we all on the same page?”, “Do we live up to what our marketing says?”, “Are we living up to our potential?” and “Are we who we say we are?”

Anema: How can a credit union establish its authentic brand?

Allgood: You need to establish what you’re all about. This can be rooted in the history of the credit union, as well as where you currently are. Take into consideration your financials, who you should be targeting and your established goals, but also look toward the future.

It takes time, as well as active planning and decision-making, to map out where you want to be and how you’re going to get there.

Many credit unions think, “We could never do that.” You can; you just need a plan and people on board.

Anema: What about smaller credit unions who have time and/or budget restraints? They may view overhauling their branding and getting the message out as a daunting, and sometimes unreachable, task.

Allgood: If you keep telling yourself you can’t, you can’t. But the truth is, you can be a $10 million credit union and position yourself as a larger credit union in the eyes of consumers.

The beautiful thing about digital advertising is that it allows us to advertise more cost effectively. You can control where the message is going and who its reaching. You can be very targeted.

I encourage credit unions to think creatively about things that can be done online and also with traditional media. Videos, for example, are very powerful and cost-effective. They give you the ability to tell your story quickly and distinctly.

You can run a TrueView ad on YouTube and never pay a dime if people don’t watch it through to the end. You only pay when someone chooses to watch your video ad in full. Yeah, your entire message might not make it through to the viewer in that case, but you’ll make a five- to ten-second impression. In this scenario, a small credit union can make a ton of impressions without breaking the bank. And viewers may think you have a grandiose marketing budget and not see you as a small credit union.

Anema: The title of your session is “Authentic Brands: A Powerful Approach to Increase and Sustain Loyalty.” What role does branding play in gaining loyalty?

Allgood: What’s important is that what’s being done externally and internally is consistent. As I illustrated in a slide at the Marketing Conference, branding should be in the center of everything, and people’s thoughts and actions should be built around that. This model will tell the story of whether or not your credit union is going to grow, remain stagnant or decline. The key is delivering on the promise that you put out there.

Take the two biggest brands in telecomm, for example. Sprint is currently going after Verizon, touting a 1% difference in the quality and speed of service. Sprint even went as far as using the Verizon’s “check mark” logo against them and they got Verizon’s old “Can you hear me now?” guy. Sprint’s ads make the case that Verizon is slower now that it’s become “unlimited.” That’s making a compelling external argument.

But the question is: are they delivering what they’re promising? Is Sprint actually as fast or faster? And if not, how does the company respond to problems and issues and complaints? You have to be able to back up your claims. That builds loyalty.

Anema: In your session description, you mention the power of employer branding. What is “employer branding”?

Allgood: Internal branding. Are you going to be a “best place to work”? Many struggle with the constant churning of call center and frontline staff. How do you keep people from leaving for a couple bucks more down the street? Create a culture that is creative, inviting, mission-driven and rewarding. Internal branding will help you keep and attract more great people.

Anema: Who establishes that brand?

Allgood: It should be the CEO, vice presidents and board members, but I believe it can be driven by anyone within an organization. It’s not the easiest approach, but if you can be persuasive, those around you in the organization will act differently and behave differently.

It can come from the top down, but it’ll only be effective if those on the frontline have buy-in. Someone has to make the decision and get others to believe it and act on it. Leadership can be found in any and all areas of the organization.

Anema: Not to give away all the secrets that you’ll share during your session, but could you give us a sneak peek of what you’ll be covering?

Allgood: I’ll be helping attendees answer important questions that need to be squared away so that they can start identifying and building their authentic brand, such as “Why does your credit union exist?”, “What are the core principles that drive it?” and “What do you seek to create, change, or achieve today and in the future?” I’ll also challenge them to identify their “only statement.” If you could only be known for one thing, what is it that you want to be known for?

We’ll touch on how a credit union’s web presence plays into the brand as a whole and how to make it more intuitive and flexible.

I’ll also provide examples of credit unions that have done a good job of living the authentic brand message and examples of different types of campaigns that helped push credit unions to the next level.

Anema: Who should attend this session? Naturally, marketers. But it seems like it would benefit credit union leaders as well. Especially those who are on the brink of, or who are considering, a rebrand or brand assessment.

Allgood: Yes. Anyone considering a name change should attend (and I’ll provide feedback on what you should or should not consider). Credit unions that have a change in demographics, are looking to add SEGs or change over to a community charter. A credit union whose mission or vision statement is stale or no longer relevant, that is experiencing a lack of brand recognition, that is looking into or going through a merger (we’ll go over how to build a brand out from that). Any credit union going through a change in leadership or setting forth a new strategy. Simply put, any credit union that is going through or looking forward to a change.


To learn more about identifying, establishing and building an authentic brand, join Frank at the League’s Annual Meeting & Convention taking place October 22-24, 2017 at the Golden Nugget in Atlantic City. Visit www.njcuconvention.com for more information and to register.

Friday, September 15, 2017 8:58:00 AM

Why Are There More Payday Lenders in America Than McDonald’s and Starbuck’s Combined? 

By: David Frankil, President/CEO, NJCUL


On the way into work one morning, I caught an NPR FRESH AIR interview with Lisa Servon, author of “The Unbanking of America: How the New Middle Class Survives.” Lisa was describing her experiences behind the counter of a check cashing store, with amazing insight into the value drivers of those businesses.

It was a compelling story.

So much so that I sat in the NJCUL parking lot for twenty minutes to hear the rest of the interview.

The timing was fortuitous, because the planning meeting to discuss options for our 83rd Annual Meeting and Convention Keynote Speaker was scheduled for later that week—just enough time to order Lisa’s book and read it. As a result, it turned out to be a much shorter meeting and far less consensus-based process than anticipated—like about two minutes, with a pre-determined outcome from my perspective.

A Professor of City Planning at the University of Pennsylvania, Lisa will help us all understand why alternative banking systems have emerged as a central feature of our economy for the unbanked. Get ready to be surprised, and to have some of your basic assumptions not just challenged but debunked.

And we are fortunate to have Lisa join us in Atlantic City as our Keynote Speaker, thanks to the generosity of CUNA Mutual Group, who sponsored our keynote session speaker.

I had a chance to visit with Lisa for a brief interview to preview her presentation. Read on to get a sneak peek of what we—the “white hats” of the financial industry—can learn from a very unexpected place …the “underworld” of the industry: check cashers and payday lenders.

It is probably not what you think it is—to quote Lisa directly from the interview below: “There is a fundamental truth here—a lot of people do know what their options are, and they are making smarter choices than we give them credit for.”


Frankil: How did you get interested in this topic in the first place?

Servon: All of my work has been around community development and urban poverty, and I was teaching a course on gender development and finance. A credit union CEO came to talk to my class, and she asked if she could bring a friend of hers that ran a chain of check-cashing stores. I always thought of them as predatory and sleazy, and frankly thought it would make for an entertaining class session. Instead, a gentleman named Joe Coleman came in and made a compelling case that his businesses were serving his communities in a valuable way. It opened my eyes and those of my students, and then I did some research and saw how fast they were growing, and wanted to investigate further.

When you do research, you figure out what method best fits the problem. In this case, I wanted to get as close as possible to the business, which meant working at one of those places as a teller. I asked Joe Coleman, and he was open to it, and that’s how it all got started.

Frankil: Let’s start with a common terminology – most of us probably have an intuitive understanding of who falls into the category of ‘the unbanked.’ For me, I’d say it would be predominately low income consumers, and perhaps undocumented workers. That’s my cultural bias at work, thinking of who doesn’t have an account somewhere.

Servon: It is an accurate assumption that they are often low-income and undocumented, or informal workers. But I would challenge the way you’re using the term ‘unbanked.’ That implies that having a bank account is always the best solution, in the same sense that you would call someone without a higher degree uneducated. It is more appropriate to focus on choices and situations.

Poor people are not ignorant and stupid, and it is not that they don’t know any better- it is a much more complex story. In fact, from my experience, lower income consumers know far more than middle or upper income consumers where every dime goes.

Many just can’t afford a bank account, so it’s not the best option - or they haven’t been served well by banks or credit unions. Some were pushed out, for various reasons – others would say they don’t get well-served, that banks and credit unions don’t want them as a customer. For some, they can’t afford a three-day waiting period to have their checks cashed.

Many of the unbanked have very rational reasons for what they do.

Frankil: The other issue that we would tend to imagine is a causal factor is financial education – as in, if only we could reach those consumers and educate them, they would take advantage of the better deals at a credit union. Did you find that lack of financial literacy was an issue?

Servon: There is a difference between financial literacy and consumers knowing about credit unions as cooperatives and not-for-profit – one is an education issue, one is marketing.

Financial literacy in general is an issue in the country, and when we look at typical financial literacy programs there is not a whole lot of evidence that they make a real difference.

We do know that one-on-one coaching appears to be more effective than a big class, and that financial education is most effective when it comes at the point of making a decision, like buying a home or taking out student loans. Both of which represent specific knowledge they can use immediately. More research needs to be done to find out what works best.

But there is a fundamental truth here - a lot of people do know what their options are, and they are making smarter choices than we give them credit for.

Frankil: So let’s talk about the phrase ‘alternative financial services’ - we tend to think of check-cashers, pawn shops, and pay day lenders interchangeably. Is that fair?

Servon: There are some differences. Payday lenders are the most problematic in terms of the fees they charge, and the fact that they often know pretty well that the people who take the loans out are not likely to be able to pay them back when they are due, which increases the total amount they need to pay back. On the other hand, check cashers are all very transparent – consumers know the fees, and are often paying a price for liquidity to get their money immediately because they are facing an emergency or have other needs and can’t wait around to see whether they were accepted or rejected for a loan.

Frankil: Let me drill down on that issue of transparency. If you polled 100 credit union executives and asked them whether they were transparent, or at least more transparent than a payday lender, I’d hazard a guess that 100% would say yes, absolutely, But the reality is more complicated, isn’t it?

Servon: It’s sometimes hard to see yourself through the eyes of others, but no, in reality, credit unions aren’t more transparent. Think of check cashers as being like a fast food restaurant with a big, lit-up menu of list prices. If you imagine someone undocumented, or someone who didn’t grow up in this country using a bank or a credit union, a typical lobby environment doesn’t have a lot of signage telling you what is on offer. What are the products and services, and what are the costs. I can certainly see how from your perspective, offering many options is intended to meet member needs – for at least this demographic, it has the opposite effect. Whereas $1.50 to pay a bill at a check casher is both easily communicated and predictable.

Frankil: We tend to think of credit unions as being hyper-local, and focused on our surrounding communities and fields of membership. But I was surprised to see that there are more payday lenders in America than McDonald’s and Starbuck’s combined. That number is staggering, in terms of the ability to focus on the needs of a neighborhood – especially when you consider that payday lending is illegal in 13 States.

Servon: The businesses I worked in were very community oriented, the people that worked there really knew their customers. I know that credit unions use that same familiarity with members as an example of how they are different from banks, so the good news is that it can be very effective.

In this case, though, the sheer number of payday lenders is clearly a competitive issue. But this can still be a competitive advantage for a credit union if leveraged well. For example, a credit union may be more likely to make a small business loan than a bank based on a relationship, as opposed to just the numbers.

Frankil: What advice would you give to a credit union CEO that is looking to help unbanked consumers in their local community?

Servon: Focus on cost transparency and service issues. Show consumers why your credit union is a much less costly option than a check casher, and make sure that your products are transparent and that it is easy to understand the trade-offs between products and services. In particular, make sure that the front line has to be really service-oriented customer service training.

Consider whether there are other things that check cashers are doing that you can, too. For example, have lower monthly minimums, lower overdraft fees, and offer faster access to money – all things that are impactful to people living paycheck-to-paycheck.


To learn more about the unbanked, how lessons from Lisa’s experience can be applied in your credit union, and to get a signed copy of her book, join us at the NJCUL Annual Convention, October 22-24, 2017 at the Golden Nugget in Atlantic City. Visit www.njcuconvention.com for more information and to register.

Thursday, September 07, 2017 8:39:00 AM

The Whos, Whats, Wheres, and Whys of Building an Effective Corporate Social Media Strategy 

By: Marissa Anema, Vice President of Marketing & Communications, NJCUL

Social media can be an effective marketing tool that raises awareness, builds relationships, and reinforces a brand, resulting in increased business—but it is only as strong as the plan behind it.

On Tuesday morning, during his session titled “How to Build a Corporate Social Media Strategy”, Ben Smidt, MGIC’s Digital Marketing Program Manager, will help credit unions at the League’s Convention craft an effective social media policy, provide content strategies that further brand reach and engagement, drive home the importance of reputation management, and share how to mitigate risk and minimize impact of negative feedback.

I recently caught up with Ben in between his many travels to get a sneak peek into what he’ll discuss and the key takeaways form his presentation that credit unions can look forward to…


Anema: For a credit union that might be new to social media or a bit apprehensive about it—especially when it comes to advertising—what would you tell them to ease their fears? Why is a social media presence important for a credit union?

Smidt: For me, I say the same thing to everyone I meet; social media is not a direct sales tool – it’s a relationship- and brand-building tool. And through those relationships you can start to see indirect sales flow through. I would never recommend a company use social media for direct selling. That would be missing the point of how to leverage this digital channel. Social media is an opportunity for any organization to proactively protect their brand, while increasing its reach to key audiences in the digital space.

Additionally, opportunity for new business exists everywhere. The social channel can provide that additional source of lead-gen to a credit union, if approached and handled correctly.

Anema: What kind of reach and/or engagement can a credit union have with social media that it might not be able to achieve with other marketing strategies?

Smidt: Arguably, a digital marketing strategy (and team) is the most valuable asset a company can have for increasing business in an efficient and effective manner. Social media is a part of that. I am not a proponent of being on every social media platform – rather I find it more beneficial to understand who you truly want to reach, which social platforms are the targets most present on, and then make a determination if being on that social platform makes sense for the company.

If you have a sound understanding of the audience you want to reach, then you can create or curate content that is more likely to garner engagement (a like, comment, or share). This engagement is where the value of social comes into play. By enticing your key audience to engage with your content you are effectively helping your company/brand scale to a broader audience organically, through other people’s network of friends, family, etc. This is one simple example of how social media marketing can help a credit union increase visibility in a positive way.

Anema: What is the difference between organic and paid reach, and which will you be discussing during your presentation?

Smidt: The differences between organic and paid reach is very straight-forward. Organic reach is the ability for a credit union to be seen by participants on social media, without any ad dollars utilized to achieve that visibility. Whereas paid reach provides a credit union the opportunity to reach a specific (or general) audience by using ad dollars to expand the reach potential of a post on social media. Typically, an advertiser on social media will have defined criteria they feel best characterizes who they want to reach with a social post and then use ad dollars to ensure that audience sees the post.

Though I have presentations on how to leverage paid social, I will not be discussing that in my presentation at the League’s Convention. I am a proponent of winning in organic reach, before leveraging a paid approach.

Anema: Without giving too much away from your presentation…could you tell me where a credit union should start when building a social media policy? Who should be involved in that process?

Smidt: Building a social media policy at any company is important and takes some time. In the financial industry it is even more time intensive given the suggested guidelines by regulators. That said, internally it is important for multiple stakeholders at a credit union to be invested and involved in the process of crafting a social media policy. In particular, consider including your legal department for compliance, corporate for reputation insights, IT for technical, human resources for procedural policy, and marketing for implementation. Having a well-rounded group of representatives provides different perspectives and insights that can make your social media policy most effective.

Anema: Compliance is a big concern when it comes to marketing and advertising—even more so when it comes to social media, which is still the “Wild West” that hasn’t quite been wrangled by regulators. Is there a rule of thumb? And how should a credit union integrate compliance into its social media plan?

Smidt: A good rule of thumb is simple: never talk rates. It goes back to what social media is really about. It’s not about direct sales; it’s about building relationships with different audiences on a digital platform that can help expand brand awareness in a positive way.

I’m a strong believer we could probably all be friends if we never talked about “Hot Button Issues”, and what I mean by that is social is not the place to talk about money, politics, or religion. If you avoid those topics you are taking a step in the right direction at building relationships up and not creating divides or deterring business opportunities. And by not talking money, you are ensuring you are staying compliant on social media, since regulators like Financial Industry Regulatory Authority (FINRA), Federal Financial Institutions Examination Council (FFIEC), and U.S. Securities and Exchange Commission (SEC) recommend you avoid discussion of mortgage rates in any capacity.

Focus your strategy on providing value that can help your members be more informed on topics that matter to them or highlight the community events you are a part of and support. This will go a lot further in building a positive digital footprint for your credit union across social, than sharing your latest mortgage rates or how low your closing costs are.


To learn more about leveraging the power of social media effectively, join Ben at the League’s Annual Meeting & Convention, taking place October 22-24, 2017 at the Golden Nugget in Atlantic City. Visit www.njcuconvention.com for more information and to register.

Monday, August 28, 2017 9:32:00 AM

Beyond Getting the Right Answer – Advanced Management Consulting Skills for Executives 

By: David Frankil, President/CEO, NJCUL

One of the sessions at our upcoming 2017 NJCUL Annual Convention (Oct 22-24, Atlantic City) is focused on understanding why Advanced Management Consulting skills are essential for CEOs, Board Members, Senior Executives, and Managers. These roles need to ensure groups agree on: why something needs to change, what success looks like, the strategy to get us there, and how to overcome what will keep us from being successful.

In this Convention session, attendees will learn how traditional management consulting has been enhanced to bring genuine alignment to valuable goals and plans, so that greater outcomes are achieved sooner; how the skill can now be learned by non-management consultants; and how the tools are now available to credit union leaders.

Our speaker on this topic is Michael Taylor, co-founder of SchellingPoint (www.schellingpoint.com), the developers of Advanced Management Consulting, and author of one of the top 20 consulting blogs, according to Feedspot. Prior to forming SchellingPoint, Michael worked at Andersen Consulting (Accenture), and is a frequent guest lecturer at Cornell, Duke, Penn, SMU, Warwick, and Wharton business schools. Mike holds a B.Sc. (Hons.) in Mathematics, Operational Research, Statistics, and Economics from the University of Warwick, England.

SchellingPoint’s Advanced Management Consulting methods and tools have been used widely by leaders, managers, and consultants at credit unions, the Fortune 50, pre-revenue ventures, not-for-profits, academia, associations, global alliances, federal and state government agencies. In fact, we used the SchellingPoint technology for our own strategic planning process here at NJCUL.


Frankil: First, let’s talk about alignment. Help us understand the concept of Schelling points. What are they, and how is that translated into an approach that helps credit unions become more effective?

Taylor: A “Schelling point” was named after the Nobel Prize winner Thomas Schelling, whose work was in like-mindedness – a Schelling point is a strategic focal point that gives a group of like-minded individual’s common purpose. Groups with strong Schelling points can coordinate their actions with minimal communications, i.e. get more done with less effort. This is relevant to any leader or manager who needs to create coordinated action among two or more individuals, such as CU executives and board members.

Frankil: I see how achieving alignment is essential – how do we get better at it?

Taylor: Most people think about the notion of alignment as a binary – yes or no, either we are or are not in alignment. There are multiple negative side-effects from this Are/Aren’t simplicity, including:

  • Incomplete Conversations: It makes sharing differences of opinion more difficult.
  • Inaccurate Designs: As soon as I sense complete alignment; no more need for questions, move on. However, much misalignment is masked in silence.
  • Flawed Execution: False positives cause us to take action that fails to bring the benefits we expected. The cause of failure is assigned elsewhere, because we were aligned, so that wasn’t the problem.

One of the breakthroughs is understanding that alignment is a continuum; a characteristic of any group is their Degree of Alignment. This is a fundamental switch from past management theory – get out of your head the idea that alignment is either Yes or No.

Over hundreds of groups measured over the past eight years, their Degree of Alignment has been between 44 and 83 out of 100 – and the 83 was after a major consulting firm spent six months working intensively with a large company. Executives have to get comfortable around the idea that there is always some degree of misalignment, and embrace the notion of sufficiency.

Frankil: Sufficiency in the sense of – is our Degree of Alignment sufficient to produce the outcomes we want?

Taylor: Traditional management consulting employed to make strategic credit union decisions is focused on the content – should we offer mortgages or car loans, add member business lending, expand into a certain SEG or community? That is DOCA – gather Data, make Observations, draw Conclusions, suggest Actions.

Its weakness has always been not really knowing whether everyone agrees with the answers produced until we’re into implementing the strategy, by which time misalignment is rarely seen as the root cause.

Advanced Management Consulting takes that core goal of management consulting – coming up with the right answer – and adjusts the steps to make sure that the answer is one that everyone truly endorses.

Frankil: And you say that credit union leaders and managers can develop and use these advanced management consulting skills?

Taylor: Through looking at 250 management consulting projects, we distilled out the key skills needed to identify the right goals and ensure they are viable and endorsed. Having the core process defined and documented in eLearning means leaders and managers are learning what used to be kept within the consulting firms (and a better version of it.)

We used the approach with one of the top ten credit unions to revise their member service vision – and rapidly surfaced a set of goals, policies, and approaches the leadership team said would keep them on the front, in terms of member service capabilities.

This way of analyzing, diagnosing, solutioning, then governing applies to strategies, policies, process improvement, mergers, innovation, and transformation programs.

Frankil: Is this approach aimed mostly at the C-Suite?

Taylor: Not at all – leadership is a shared responsibility, especially at a credit union. This isn’t about how to use complex mathematical analyses to predict investment accretion ratios (!); this is plain English on how to go from “We each think this…” to “We all agree to do that...” to “We did it.” Enhancing this capability provides a common framework for discussion, a common dictionary if you will – that makes the conversation more precise and efficient.


To learn more about the power of Advanced Management Consulting skills and how they can apply to your credit union, join Michael at the Annual Convention, October 22-24, 2017 at the Golden Nugget in Atlantic City. Visit www.njcuconvention.com for more information and to register.

Tuesday, August 22, 2017 9:33:00 AM

Balancing Risk and Reward – Setting Your Risk Appetite 

By: David Frankil, President/CEO, NJCUL

As individual investors, we intuitively understand the relationship between risk and reward. If I want low risk, it means US Treasuries, laddered CDs, or maybe even a money market – which means low reward, too. If I am willing to accept high risk, it may mean options and margin trading – which has the potential for high reward under the best scenario, lots of pain under the worst case. A well-thought-out strategy balances a mix of risks and returns, based on personal goals and situations.

Which is pretty much the same way it works for a credit union.

One of our breakout sessions at the upcoming NJCUL Annual Convention (Oct 22-24, Atlantic City) is focused on helping credit union executives and Board members think through how to determine their appetite for risk, and then develop strategies to power growth.

Our speaker is Ancin Cooley, CIA, CISA, and founder of Synergy Credit Union Consulting, Inc. A former examiner, Ancin performed safety and soundness examinations for institutions of all sizes, up to $8 billion in assets. He has also worked at a regional accounting firm doing internal audits and pre-regulatory examiner reviews, and at Synergy helps clients with a range of risk management services.

We had a chance to visit with Ancin to discuss his upcoming presentation.

Frankil: Let’s start with definitions – what do you mean when you refer to a credit union’s ‘risk appetite?

Cooley: Risk appetite is specifically how much risk a credit union is willing to take in pursuit of earnings.

One of the analogies I like to use is food - if someone has high blood pressure or high cholesterol, they need to change their appetite to adapt to their body’s condition. In a similar way, some credit unions don’t have risk appetites that fit their current conditions, whether we are talking about capital ratios, or past due ratios, for example. So in the same way you need change a diet or physical balance sheet, some credit unions need to take a more forward looking approach when deciding to strategically grow their financial institutions.

Frankil: Who has the ultimate responsibility for setting the risk appetite – the Board, the CEO, and/or NCUA? And how involved should senior executives be?

Cooley: Typically we see risk appetite conversations occur between the Board of Directors and management. Senior management should set the course, and then the Board reviews for alignment with their appetite for risk. The strategy and results should be reviewed quarterly. That is the best way to develop the synergy (no pun intended) between strategy for growth and risk appetite.

Frankil: Most credit unions are run pretty conservatively – realistically, how much difference will there be between risk strategies? Or maybe put differently, how wide is the band of acceptable risk for credit unions, especially given the oversight of our regulators?

Cooley: There are real differences – it comes down to capital constraints and the comfort levels that a Board and /management team has with pursuing additional revenue streams  SBA lending is a good example – in my opinion, SBA lending is low hanging fruit to grow loan portfolios in a safe manner, but there has to be a willingness to grow and learn, and be compliant – which typically involves some push from management side to get started. There seems to be a bias or myth around SBA loans – often we hear ‘we don’t have the expertise.’ But that is true of anything the credit union does, at some point in its evolution. Not to say it is easy or trivial, but there are significant potential benefits. Plus, you can always sell all or portions of SBA loans on the secondary market, to reduce exposure and produce incremental revenue.

Frankil: Are we only talking about risk appetite with respect to growth via lending, or are there other opportunities to apply this approach?

Cooley: No – it should be an enterprise-wide activity. For example, look at investments, which can employ a similar approach. Some credit unions have the majority of their liquid assets in ultra-safe investments with minimal yield. But there are degrees of risk credit unions should consider in pursuit of earning. I’m not suggesting that credit unions invest their assets in junk bonds, but there are plenty of opportunities for participations and other relatively safe activities that can increase earning.

Frankil: What is the first step a Board and CEO needs to walk through in a risk-setting strategic process?

Cooley: First, you want to figure out what everybody’s risk appetite is – usually with a survey of Board, CEO, and senior management, From there, understand what the general consensus is in the organization, which creates a forum for the conversation to set the risk appetite. Risk is not a yes or no question, it is a matter of degrees. From there, you develop a simple statement that captures everyone’s perspective.

Frankil: How does that statement flow through to implementation, and get communicated to the rest of the organization?

Cooley: Often, policy statements become a document that that gets stale or old. Best practice is to memorialize risk tolerances in policies and procedures, but make it an organic document. Creates a situation where the policies and parameters are alive, revisited on a regular basis, and the organization will embrace them. For example, you can back into operational goals from the broad parameters.

Frankil: How involved should NCUA or State regulators be in that risk appetite -setting process, if at all?

Cooley: In some situations, being pro-active in implementing this process means communicating with a regulator to show that you are not just pushing into a new solution without anticipating the potential risk issues. So not so much on the front end for approval, but demonstrating to regulators that you are anticipating the potential risk from a new solution or activity, and have a plan to ameliorate the concerns. That you understand it is not just about having your foot on the gas pedal, but that you understand the need for brakes and other safety devices.


To learn more about how to balance risk and reward at your credit union, come spend some quality time with Ancin (Synergy Credit Union Consulting www.syncuc.com) at the NJCUL Annual Convention, October 22-24, 2017 at the Golden Nugget in Atlantic City. Visit www.njcuconvention.com for more information and to register – early bird discount available until August 18th!

Wednesday, August 16, 2017 10:55:00 AM

Riding the Digital Revolution and Driving Loan Volume 

By: Barbara Agin, Vice President of Member Experience & Education, NJCUL


For over 100 years, credit unions have been the source of financial services for many in the United States, not for profit but to serve their members as credit cooperatives.

Today, while most are able to offer equally competitive products as do banks, it is the ability to offer credit to meet specific needs that continues to set them apart.

I had a chance to chat briefly with Don Arkell from CU Lending Advice who will deliver two impactful sessions at this year’s Annual Meeting & Convention: “Using the Digital Revolution to Deliver Lending” and “Lower Expense Ratio While Increasing Loan Volume”. 

Agin: Your first session talks about the digital revolution. In your experience, what holds a credit union back from moving to a digital platform? 

Arkell: The majority of credit unions already operate on a digital platform. However, the vast majority of credit unions don’t lead with their least expensive, most convenient channel. Consumer behavior has changed dramatically in the past 10 years, let alone the last 20 years. Often times credit unions get stuck in what they can see (the branch) and neglect their online remote presence.

Agin: What holds a credit union back in most cases? Is it the board, fear of failure, cost, or other constraints?

Arkell: There is a large chasm between the typical board member’s expectation for delivery of loans and the generation of borrowers that are entering the market today. 30% of the US population is under the age of 30. This generation surpassed the Boomers in 1Q2017 as the largest block of consumers. Their digital expectations and behavior with regard to delivery are out of sync with many BODs.

“Cost” is relative. While there is certainly a cost of entry, the cost to deliver a direct loan through a branch system is 10X higher than delivering remotely. Most credit unions today have the available technology, or have ready access to it, they just aren’t’ maximizing it.

Agin: Are there statistics to support that a move to a digital platform increases loan volume?

Arkell: Execution is at the core of any strategy. Credit unions need to understand that their membership is already using these channels and choose competitors over them because the competition leads with a more convenient (not necessarily lower cost) delivery. That is one of the key insights – we often think of loans as being commodities, driven by lowest cost of either rate or fees, but data shows that consumers value convenience over cost. In a sense, they are looking at the total value of a transaction, and valuing their time highly.

Agin: Do credit unions using digital see an increase in delinquencies?

Arkell: I’ve not seen a correlation between the digital channel of Direct Loans and delinquency rates. There are certainly additional fraud protections and related processes that need to be in place, though.

Agin: Well that is good to know! Don, your second session discusses lowering expenses while increasing loan volume. Without giving away the essence of your program, what will you address?

Arkell: For one thing, credit union executives are optimists. In my travels, I find that lending departments are typically overstaffed, from which we can infer that they are building in capacity before the actual volume exists to support it. Lending is the revenue arm of the credit union. Across the network 65% of all income generated at credit unions comes from loans. It is the most important thing we do.

Agin: I would think that the lending department would be the best investment for staffing.

Arkell: It’s all about systems, process and goal alignment. I have seen motivated Loan Officers generate the volume in one month that a typical branch generates in the same time period. Having the right people in the right seats is core of a lending strategy.  The skill sets needed to originate loans are different than the skill sets needed to underwrite loans.

Agin: So, it is not the amount of staff focused on the loan function but rather the skill set of the member-facing individuals?

Arkell: Exactly. Lending is a margin business, it is extremely important that we deploy our precious resources intentionally. How your credit union is designed organizationally sets the tone for lending. Are you set up to lend? Do you have the right people in the right seats to maximize revenue while reducing costs?

There are very few things in this world that we can control as management, one of the factors we do have control over is the ability of our front-line staff. That is 100% within our domain. Many credit unions talk about the elusive “Sales Culture” but few credit unions execute this strategy. It’s all about the people.


To hear more of Don’s insights on growing lending volume, join us at the NJCUL's 83rd Annual Meeting & Convention in Atlantic City, October 22-24, 2017. For complete pre-convention coverage, more information and to register, go to www.njcuconvention.com

Thursday, August 10, 2017 9:04:00 AM

An Ivy League Professor Who Spent 4 Months Working in a South Bronx Check-Cashing Store Says We're Getting it All Wrong 

Story originally appeared in Business Insider on Feb. 12, 2017
  • University of Pennsylvania professor Lisa Servon went to work as a teller at a check-cashing store to find out why customers use the service.
  • Prevailing wisdom holds that customers would be better served by using a bank. But Servon found that check cashers were frequently cheaper and served customers' needs better than banks.
  • Three common reasons customers cited for using a check casher over a bank were cost, transparency, and service.

Lisa Servon couldn't kick the nagging feeling that the financial elite had it all wrong.

The prevailing wisdom from bankers and policy makers went like this: People who used alternative financial services — like check cashers and payday lenders — were making expensive and unwise decisions. If we could just educate the "unbanked" and "underbanked" and usher them into the modern financial system with a bank account, their fortunes would surely improve.

But Servon, a professor of city and regional planning at the University of Pennsylvania and a former dean at the New School, spent 20 years studying low-income communities, and to her, that picture didn't add up. Most of the unbanked (the roughly 7% of US households without checking or savings accounts) and the underbanked (the nearly 20% that had such accounts but still used alternative financial services) that she encountered were neither naive nor irresponsible about money.

"The implication of that" — the biennial surveys of the "unbanked and underbanked" by the Federal Deposit Insurance Corporation — "was these people were making poor decisions," Servon recently told Business Insider. "I knew that the people I had worked with closely who don't have very much money know where every penny goes. They budget things. They know where to get the best deals on things. And so it struck me that if they were using check cashers, there must be a good reason for that."

Already steeped in academia and research, Servon didn't think she'd gain any new insight from behind the desk. So in late 2012, she decided to embed in these communities to get a firsthand look, landing a job as a teller for four months at a check-cashing store in the South Bronx. (She would later also work as a teller and loan collector at a payday loan store in Oakland.)

She didn't go undercover, but rather was hired on the up-and-up thanks to some help from Joe Coleman, the president of a small chain of New York City check cashers called RiteCheck Cashing, who had guest lectured for one of her classes years before.

"It felt like the only way I could answer this question: If alternative financial service providers are so bad — if they're so predatory and so sleazy and so much in the business of taking advantage of people — why are people using them in growing numbers?" Servon said.

Servon recounts her journey in her new book, "The Unbanking of America: How the New Middle Class Survives," which came out in January. The book seeks to untangle the reasons millions of Americans are fleeing the "broken banking system" and opting instead for alternative financial services in ever increasing numbers, providing many first-person accounts from people Servon encountered while working in the field.

Early in the book, she focuses on her experiences at RiteCheck, which is part of an industry that reached $58 billion in 2010, up from $45 billion two decades earlier. If check cashing was shady, why were more people flocking to it?

Servon was surprised by what people told her. Over and over, Servon heard and observed that check cashers often met customers' needs better than banks did.

She discovered there were three main reasons people used these services instead of banks: cost, transparency, and service.

"People told me they were saving money by going to the check casher instead of the bank," Servon told Business Insider.

The RiteCheck she worked at charged $1.50 to pay a bill, $0.89 to buy a money order, and roughly 1.95% — as regulated by state law — of the face value of a check to cash it. These small fees add up, but they often paled in comparison to the unexpected charges, maintenance fees, and overdraft fees customers had experienced at banks. The rate for money orders is cheaper than at most banks, which commonly charge $5 to $10.

"RiteCheck customers told me clearly that bank fees were an important factor in their decision to patronize check cashers," Servon wrote in her book.

In the book, she provides the example of Carlos, a local contractor who came in on a Thursday to cash $5,000 for his small business, paying a $97.50 fee (and a $10 tip to Servon) in the process. That's $100 he'll never see again — how could he be coming out ahead compared with using a bank? Servon explains:

"If Carlos is like many small contractors operating in New York City, he relies at least in part on undocumented workers, who are unlikely to have bank accounts. If Carlos deposited his check in a bank, it would take a few days to clear — too late to deliver cash on payday. Or maybe the check was a deposit for a job he had just been contracted to do, and he needed supplies to get started. If he couldn't start right away, he risked losing the job to another contractor."

Paying $100 isn't much compared with the cost of losing good laborers that need to be replaced or forfeiting new business.

"It feels expensive — it is expensive — but it made good sense," Servon said. "And there are many, many stories like that."

Outsiders may think the signage at a check casher — resembling that of a fast-food menu — is gauche compared with simple, polished interiors of their local bank branch. But that's a feature, not a bug.

Customers "felt like they knew exactly what they were paying when they went to the check casher. And if you go into a check casher, you will see there are signs that span the teller window that list every product that's for sale and how much it costs," Servon said. "The transparency is really critical."

On the contrary, customers couldn't predict when banks would charge them a fee or what that amount would be — a deal-breaker when you're operating on a tight budget.

"Walk into your bank branch and you'll see there's no literature like that that makes it obvious what's on offer," Servon said.

Moreover, Servon writes, checking accounts were the antithesis of transparent. The terms and conditions were long, technical, and laden with jargon. Many people can't afford to wonder when their deposit will clear, and they prefer paying a small fee for the clarity and speed offered by check cashers.

The third thing Servon heard repeatedly was that "people felt like they were being better served" at a check casher than at a bank.

"The customer-teller relationship at RiteCheck creates remarkable loyalty," she wrote in her book. She said the dynamic resembled the banking she grew up with in the late 1960s and early '70s that was based on relationships and that has largely faded from traditional banking.

Check-cashing companies charge small fees and thus rely on a high volume of business to turn a profit. That means inspiring loyalty is crucial to the business model, so tellers go out of their way to be friendly and flexible, and customers reward them by returning week after week, year after year.

"Banks want one customer with a million dollars. Check cashers like us want a million customers with one dollar," Coleman, the RiteCheck president, said in Servon's book.

In practice, this means providing customers with payment plans when times get tight or helping non-native speakers read letters they've received in the mail and providing advice — not to mention offering rapid access to their money that banks frequently can't match.

"One of the things that cost people a lot of money is actually waiting for their money," Servon said, alluding to the example of Carlos, the contractor.

Not all check cashers are the same, but the perception of the industry as seedy doesn't jibe with Servon's experience. And contrary to the views of the financial elite, customers' use of check cashers typically didn't seem naive or poorly thought out, but rather the smartest decision they could make given their circumstances, according to Servon.

"It showed me that those decisions are often rational, logical decisions, even if they're expensive," Servon said.

Posted by Marissa Anema Tuesday, July 11, 2017 10:33:00 AM Categories: Lisa Servon
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