Can Wesabe's Springboard Propel Delta Community CU Young Adults?

Recent news, and a smattering of blog posts, indicate that mixing real-time money management with personal finance tools has become somewhat of a reality.

Delta Community Credit Union and Wesabe announced a partnership on Apirl 28th to deliver Wesabe's Springboard^TM to DCCU members. Springboard, as the press release explains, "... gives consumers a "smart" dashboard view of their account data and personal finances - guiding them towards value, savings and goal completion, and away from poor financial decisions."

I'm not familiar with exactly how DCCU and Wesabe's new toy works or how good the tools and personal finance information really are. But it sure sounds as if the partnership will address two major issues that are important to young adults like me.

1. Ease of use - Budgeting software and other money management tools can be very complicated and difficult to use. (This is a major reason we developed EasyBudget for MoneyMix^TM... to simplify budgeting for young adults.) Often times budgeting software contains confusing options, loads of irrelevant input fields, and unfamiliar jargon.
   
   Human error also makes things interesting. In my experience using budgeting software, I've often wondered if I've entered the correct information and how accurate projections really were. I've also experienced the joy of watching errors pop up as I reconcile the software with my online account... not a good feeling after painstakingly entering in your information.
   
   The solution here is to offer simple instructions, relevant guides, and pull account information directly from the credit union. My understanding is that DCCU & Wesabe's collaboration will make this happen.



2. Accessible to me - I'm part of the Gen Y crowd that's "always" connected to the internet (remember, not all of us are internet junkies). Online banking has always appealed to me. Even though there haven't been any security breaches yet, I've never really trusted online budgeting Web sites... I'd prefer to keep my finances firmly planted behind the firewalls of my credit union.
   
   A partnership such as DCCU and Wesabe engenders trust because, as far as I'm concerned as a user, the tools are part of the credit union.
   
   Even if I were to use a site to help manage my finances, I still need to log into my account and make adjustments. Integrating my online account with personal finance tools means I'm more likely to actually do what the tools suggest. I'm one step closer to clicking a button and acting upon my decision.
   

So, Springboard sounds great on paper and there's a lot of potential. I'll be anxious to hear how well this works for DCCU. I certainly applaud them for offering the service to their members. It's the kind of service that will appeal to young adults and impact other demographics as well.

At the very least this partnership demonstrates that integrating real-time money management with personal finance tools is possible, and it's only a matter of time before someone perfects it.

This one goes out to the marketers...

In a slight departure from our normal focus on young adults, I'd like to draw your attention to a post from our own Christopher Morris on the Open Source CU Blog.

Christopher's guest post should be required reading for the credit union marketers in the audience. He offers up a solid list of free online tools and resources every credit union marketer needs now... which is good because that's the title for his post.

Morris' main point?

"If you are going to embark on a social media campaign in the near future or even if you are not, you need to know what people are publicly saying about your credit union on the internet."

An excellent point to make, and the resources he shares are great for monitoring your credit union's brand in cyberspace.

So, head on over to find out what else Christopher has to say and be sure to say hello to Brent, Charlie, and the rest of the Open Source CU gang.

Insight or Claptrap?

In the April 3 issue of Engage:Gen Y, “a newsletter dedicated to exploring this exciting demographic made up of individuals ages 18 to 30,” Chip Walker celebrates the admirable uniqueness of capitalism’s favorite demographic.

In the course of this paean, Walker makes some extraordinary generalizations, which readers might be forgiven for mistaking for claptrap. For example, how does this claim:

“Among GenYers' most important personal values are authenticity, altruism and community.”

Compare with this statistic?

Volunteers by selected characteristics (age), September 2008

Age	% of population
16 to 24 years	21.9
25 to 34 years	22.8
35 to 44 years	31.3
45 to 54 years	29.9
55 to 64 years	28.1
65 years and over	23.5

U.S. Bureau of Labor Statistics Division of Labor Force Statistics

Looks like the under 35s have the worst record of any age group for service to community. Sure, it’s only one measure of altruism, but I have to wonder if Gen Y is as adept as “self-mythologizing” as the notoriously narcissistic Baby Boomers.

Walker claims that Gen Y’s penchant for activism is different from that of their over-the-hill parents. “For today's Gen-Yers, activism is not about rebelling against institutions -- there's simply not that much left to rebel against.”

What? With daily revelations of corruption at the highest levels of government and corporate leadership, Gen Y can’t find enough injustice to get up off the couch to protest? (Or did the Boomers clean everything up?)

Finally, consider this: “Gen Y-ers don't just want to buy brands, they want buy in to what a brand believes in.” That kind of gullibility just means we can look forward to replenishing the pool of prospective Ponzi victims in the future, when the materialistic and self-deluded Boomers finally step aside.

Podcasts and CU Innovators

Hello YES CU readers and happy 2009! I want to share the following bit of news about one of our own as we plunge into the new year and refocus on important credit union tasks at hand.

YES CU Blogger, YES Summit co-moderator, and CUNA Councils Web Manager Christopher Morris was recently highlighted as a credit union innovator by the folks over at Currency Marketing.

Listen to the podcast and check out the rest of the details at the CU Brand Blog.

This naturally brings up the question of whether credit unions should podcast. I say yes, because of it's increasing popularity among the masses, and because podcasting is another relevant way to communicate your message and develop a relationship with members, young and old.

Because it involves technology, you may think that podcasting only appeals to young adults. But with the proliferation of iPods, Mp3 players, and home computing in general, podcasts are becoming more and more popular with all demographics. Although not considered "mainstream" podcasts have increased in popularity over the past few years and there's reason to believe podcast's popularity will continue to rise. This chart from a Pew Research discussion on podcasting backs up these assertions.

Click on the chart for a better view...

The folks over at CU Hype Blog aren't so convinced, so you may want to check out their posts on the matter here and here. The one post does offer 5 things to consider before jumping head first into podcasting, which are good rules of thumb in my opinion. Podcasting is simple, and with a little planning, you can offer something interesting and informative.

That said, there are a number of credit union podcasts out there on the Web you may want to check out. Topics range from member focused information to Movement related issues. Here are just a few that I've run across.

Keep in mind I offer no "endorsement" for those listed, this is simply a list of those podcasts I am aware of. Feel free to do a google search, or even search iTunes, for additional content. If you find one you particularly like, go ahead and post a link to it in a comment.

Random CU Related Podcasts I've found...

National Credit Union Foundation's REAL Solutions podcasts
Filene Research Institute podcasts
Open Source CU podcasts
Current Issues in Credit Unions podcasts
Home and Family Finance Radio podcasts
Michigan Credit Union League podcasts
The Golden 1 Credit Union podcasts
Omni Community Credit Union podcasts
ORNL Federal Credit Union podcasts

YES LIVE: Happy trails to you

YES LIVE: I Hart My New Camera

Jamie Hart, Virginia CU, Inc., won a Flip camera, similar to that used to record the videos from YES LIVE, in a final day drawing.

YES LIVE: "Bad Haircut" wins award

Bad Haircut" was the award-winning educational program designed at the YES Summit to teach creditworthiness to 18-to-30s. Accepting their cash awards from conference organizer and host, Josh Jones, are (from left above): Terry Boden (MemberFocus Community CU), Carmen Ellington (Autotruck FCU), Melissa Sexe (Credit Union of Colorado), Amy Etheridge (Robins FCU--partially obscured because Josh, a typical Gen Yer, likes to hog the camera, that's her to the near left), Paula Anderson (Anheuser-Busch ECU), and Sue Yoder (Citizens Equity First CU).

YES LIVE: Go and walk the talk

Claudine Oriani capped the third annual YES Summit by giving attendees their marching orders to put ideas learned at the conference into action. Oriani, chief creative officer of the Partland, Ore.-based As If Productions instructed her audience to pick no more than three to five goals. Any more would be overwhelming.

Among the points that summit speakers delivered over the previous two days and Oriani emphasized:

· Engage in dialogue, not monologue. The 18-to-30 guests who appeared at the summit make it clear that listening to the demographic is even more important than speaking to them. Gather first-hand input from interviews and panel discussions and let young adults’ insights guide your strrategies.

· Rethink marketing methods and messages. Don’t follow existing print media models or conventional. Become familiar with the current delivery channels and use them. Look for stories that resonate with the intended audience. “If rates are not the value proposition that works with this age group,” Oriani said, “stop shouting rates from the rooftop.”

· Explore the power of parental influence and peer referrals. Advertisers send 5,000 messages every day, but only two or three register with individuals. Advice from peers and parents is more believeable because it’s telling, not selling.

· Make the business case for change. Connect programs to existing strategic plans, goals, tactics. Conduct employee interviews and keep coworkers informed. Provide “talking points” for front-line staff. Repeated messaging is key.

Oriani sees credit unions facing increased competition from “person-to-person” lending. As an example, she points to Prosper, which claims, on its web site, to offer “personal loans without the big bank attitude.” Consumers in need of credit start the ball rolling by registering with Prosper and listing the desired loan amount and maximum acceptable interest rate. Interested individuals then compete for the loan, and the lowest bidder credits the borrowers bank account, from which monthly payments flow automatically. Prosper promises “No hidden fees, no pre-payment penalties, and your interest rate never changes.”

The people-to-people lending model that Prosper represents is relatively new, so the jury is still out on whether default rates on the unsecured loans are signigicant. Still, Oriani believes the innovation warrants watching.

YES LIVE: Rodney Hood's Gen Y "elevator pitch"

NCUA Vice Chairman Rodney Hood.

YES LIVE: Parental Influence on Financial Decisions of Young Adults

Time and time again throughout the last few days, YES Summit attendees heard the importance of parents on young adults’ financial decisions – whether it be in areas such as student loans, establishing a banking relationship, savings habits, and sharing advice.

Susan Follick, Segment Marketing Director at PSCU Financial Services, says you have allies in your attempts to get through to young adults—their parents. “This generation looks to their parents for advice. Leverage the relationship your credit union has with its members who are parents of Gen Y.”

Who cares? We should – Recent high school seniors’ test scores on finances are falling from previous years. With school system’s budgets strained, credit unions have a great opportunity to step up to the plate (banks already are – see Wells Fargo’s popular Stagecoach Island as one example).

How?
Provide financial education material to engage parents – some examples:

• Giveme20.com – website to educate 12-22 year olds
• “Parents” section on website

Financial products positioned as teaching/learning tools to teach financial life lessons, such as:

• Savings programs
• Reloadable prepaid cards
• Checking accounts w/debit cards
• Online banking
• Credit cards – age appropriate

Susan shared a few related best practices in product packages from credit unions across the country (click links for details of each):

• Apple FCU – Fairfax, VA: eXtras Student Checking
• Oregon Community CU – Eugene, OR: Remarkable Checking
• Pacific Service CU – Walnut Creek, CA: FirstStep Checking
• City-County FCU - Minneapolis, MN: boom! (Budgeting Our Own Money)
• CFE Federal Credit Union – Orlando, FL: Innovators Account for ages 15 – 17 & Horizons Account 18 - 22

Susan also said via email before the summit that one of the greatest challenges credit unions face in serving 18-to-30 year olds centers on new media. Sure, you need to be familiar with what’s hot online, but you have to be there yourself. Susan wants to change the thinking within credit unions on the importance of using new media tactics to reach Gen Y. She says, you have to get “over the fear of jumping in and trying it.”

YES LIVE: Rodney Hood--“Now is the time to differentiate yourselves from other financial institutions”

Nothing could be more important at this time than to get out the message that credit unions are not part of the current economic problem, that credit unions are safe and sound, and credit unions are open for business, according to Rodney Hood, vice chairman of the National Credit Union Administration.

Hood spoke at CUNA’s YES Summit on Friday. He pointed out that with a national average net worth 11.16%, representing $89.6 billion in capital, “credit unions have the wherewithal to weather the storm and extend credit. I encourage credit unions with adequate capital to use it.”

Joking that it’s “never been a more exciting time to be a regulator,” Hood cited the newly chartered Realtors Federal Credit Union for members of the national realtors association as an example of the continuing strength of the credit union model. “They could have become a bank, but they chose to have a credit union for their 1.5 million realtor members,” he said.

Hood urged summit attendees to increase their marketing efforts to restore and maintain confidence in credit unions. The message should focus on educating members and the public about:

· The expansion of insurance coverage of their credit union savings,
· The overall strength of the movement, and
· The continued availability of credit.

Hood also spoke to the summit audience about Blueprint 2020, NCUA’s initiative, announced in June 2007, to encourage strategic partnerships between credit unions and universities and trade schools to provide internship opportunities for young adults. Students would receive income, academic credit, and the opportunity for permanent employment. In the process, the interns will help sponsoring credit unions attract not only the next generation of members but also the next generation of leaders.

“We have strong credit union leaders and wonderful boards,” said Hood. But he recently met a man who has served on his board for 65 years. Hood said he was grateful for his service, but believed that unless credit union recruit young leaders, they will become stagnant, and miss essential new ideas.

Hood expects the Blueprint 2020 task force, listed in the Blueprint, to set benchmarks for the initiative in the future. To make it possible for low-income credit unions to participate in the enterprise, NCUA provides grants of up to $3,000 for paid internships.

IMHO: What we call the “next generation” cannot be limited to 18-to-30s. In reality, credit unions would not be struggling as hard to pursue young adults’ business today, if they’d captured that business 17 to 29 years earlier, when there was no competition for the target group’s hearts and minds. To be successful in the long-term, credit unions must augment their young adult strategies with aggressive youth programs. Otherwise, they will be doomed to a perpetual and increasingly more expensive campaign in pursuit of the elusive 18-to-30 market, locked in battle with big-bank competitors with a lot more marketing dollars to spend.

YES LIVE: Kelly, age 25

Kelly is married with three children and works as a paralegal. My job is very secure, but my husband works in construction. We don’t have credit card debt, just a mortgage, which we’re three months behind on. We want to pay, but we can’t cover everything. We called the bank and told them: It’s either something or nothing.”

YES LIVE: Cassandra, age 30

Cassandra is single and works for an insurance company. “The more money I have in the bank, the more I spend. I try to save, but I keep dipping into it. There’s always an emergency, like buying new tires. Financially I’m OK, but I don’t have many options. I have two credit cards. They don’t have high limits, but they have high rates. I’m making minimum payments, but the interest rates are so high that I can’t make progress.

YES LIVE: Felipe, age 25

Felipe is single and a business consultant. He and his girlfriend recently moved out of their apartment because they could no longer afford the $1,200 a month rent. “We couldn’t keep up, so we moved in with my mother-in-law. I have a 401(k), but my employer doesn’t match funds. I can’t move my money around, so I’m looking for options outside.”

YES LIVE: One of Matthew's biggest problems with his bank

Matthew, age 22, single.

YES LIVE: Jena's biggest misconception about credit unions

Jena, age 23, single, one child.

YES LIVE: Gen Y panel provides instant feedback

Thursday afternoon’s session gave attendees the chance to get to know a wide cross-section of 18-to-30s recruited from the Tampa area. Twenty-eight visitors spent an hour answering questions about their personal finances, spending and saving behaviors, and financial goals. Attendees then had one hour to devise a program or product that they thought would appeal to and meet the young adults’ needs. Finally five of the most outspoken recruits returned to hear attendees proposals and evaluate them.

Phillip Crocker, director of financial literacy for Resource One Credit Union in Dallas, presented a proposal from his table for an auto loan with a repayment plan that included an extra $25 per month, which would be diverted to a high-interest savings account. The principal and interest would revert to borrowers when their loans were repaid.

The panel was lukewarm to the proposal. Two expressed a strong preference for a lower payment in lieu of the forced savings. One suggested that the savings balance should be available if the alternative were defaulting on the loan.

IMHO: Generalizing about 18-to-30s will doom your programs to failure. You have to float proposals with real, representative people, because you'll never be able to respond to objections that you couldn't antipicate otherwise.

YES LIVE: John's main concern about banks

John, age 30, separated, two children.

YES LIVE: One of Jason's complaints about banks

Jason, age 28, single.

YES LIVE: Tracie's bank horror story

Tracie, age 27, single.

YES LIVE: Pierre Cardenas reveals the secret to understanding under-25s

YES LIVE: Kris Wickline's elevator pitch for Gen Y

YES LIVE: Matching your brand to your target market

Pierre Cardenas believes in the power of brand. Brand is the basis of the connection between his credit union and its target demographic, which he defines, not by age, but by a preference for doing business online.

Wednesday morning at the YES Summit, Cardenas, vice president of retail for the $485 million Amplify Federal Credit Union of Austin, Texas, began by pointing out that overall credit union growth was 1.7%. But without the members who joined via indirect channels, such as through car dealership and retail lending activities, that national growth rate would have been negative.

“Financial institutions will continue to consolidate. Earnings are down, margins compressed,” Cardenas said. But the response from banks and credit unions has been curious. The expansion of physical branches continues, even though branch business growth is expected to be 0.5% over the next three years. In the same period, online business will increase by an estimated 30%.

That statistic has driven strategic planning at Amplify FCU, which has reinvented itself in recent years to reflect the new realities of consumer choice.

Once a Wells Fargo employee challenged one of Cardenas’ coworker to compare the number of branches each institution had. (Wells Fargo many mulitples of Amplify five physical branches.) The coworker pulled out his cell phone, and said, “Every one of these is a branch of ours.”

Amplify's reinvention was based in part on recognition of the way the public views credit unions. Research has shown that the most common characteristics applied to credit unions are “unsophisticated,” “blue collar,” “have to belong to some organization,” “lack expertise,” “not the same services as banks,” and “have car loans at a pretty good rate.” Given the mainly negative associations, Amplify decided to recast itself futuristically as an online institution.

“A brand is something that people think they are,” says Cardenas. “People become what they believe.” The credit union’s new slogan—“Amplify: Bank less, live more—reflects its determination to give its members the convenience of time. The decision not to include the words “credit union” in the slogan was a conscious determination to avoid any unflattering connotations.

Before the summit, Cardenas explained that credit unions need to be concerned with being relevant and convenient. It’s important, however, to be sure to understand how the target audience defines those terms. “18-to-30s have too many distractions and choices,” he said “They can access whatever they need, whenever they need it. The only market penetration that we can expect to have at this point is with those whose parents have told them to be part of their credit union.

“How long they stay, how much they decide to use a credit union will depend on the ease of use and ability to meet the need at the time. How accessible are we as credit unions? In the past we defined convenience as a branch location with close proximity to work or home. That definition is changing and will start first with Gen Yers. Accessibility is the new convenience.”

Cardenas elaborated on this during his summit presentation, showing attendees scenes of the redesigned Amplify offices. “To build a brand; build an experience,” he explains. The new interiors comprise a multi-purpose center, whose every component mobile, allowing the credit union to host social events of all kinds. Members benefit from the use of wireless connections to provide real-time video conferencing with investment and mortgage advisers in remote central location.

Amplify has also developed a proprietary personal financial management tool called MoneyTracker. The idea came from an employee, who received a green light for development without a formal business plan or ROI assessment. The tool, available free to any member with an Internet connection, provides instant account information and home deposits.

IMHO: Amplify FCU’s willingness to experiment required the whole-hearted support of leadership that is willing to accept risk. This is not to say that there was no risk calculation. It was secondary to an open-minded assessment of human behavior, based not only on statistics but also on trust in widespread anecdotal evidence.

YES LIVE: 30 under 30 - Creating Programs for Young Adults by Young Adults

It is important to know what the major needs of the demographic are, and how credit unions are successfully meeting those needs. But it is equally important to stay on top of what is going on within credit union land so you can draw upon current information and knowledge to further develop effective programs for young adults. In the spirit of YES Summit sessions such as yesterday’s on Young & Free, as well as tomorrow’s session on NCUA’s 2020 initiative, this session provided another opportunity for attendees to learn about another way the movement is tackling the issue of better serving and attracting young adults.

Jeremy Presta, CEO of Parkside Federal Credit Union, led a session on 30 Under 30 - a program initiated by the Filene Research Institute to bring 30 young credit union professionals under the age of 30 from across the country together to develop solutions for credit unions to better serve young adults.

After giving an overview of the last year of the 30 under 30 program and all of the resulting projects from the group, Jeremy spoke about his own group’s project – iAdvancecu.com (actual site under construction):

A mounting talent shortage affecting all industries is projected to peak by 2010. This war for talent will make it even harder to retain top talent and credit unions alone – large or small – will not be able to compete. Combine this shortage with the reality that Generation Y will not only change jobs but careers numerous times, and it’s inevitable that this generation of employees will likely leave your credit union within 2-3 years. iAdvancecu.com, is a website that unites credit union opportunities, showcases our expeditious career-paths and provides testimonials of relevant Gen Y employees that will serve as a recruiting tool for credit unions. (this overview taken from Filene’s website)

> Click here for the full iAdvancecu.com Business Plan

Before he presented, I asked Jeremy what he thought the biggest challenges were facing credit unions in serving young adults:

1. Changing the mindset of not only employees and management, but also convincing the board of directors that we need to focus on this generation.
2. Generally speaking a member early on in the financial life cycle is an unprofitable member. There needs to be some foresight and see the big picture that down the road these members will become profitable, and be the members that we all want.
3. Typically credit union employees including management and board members themselves are of the older generations and they don’t understand and in some cases don’t care to ever understand or serve this generation.
4. Credit unions need to realize that simply setting up a Facebook/Myspace page is serving these individuals or connecting with them where they are.

At the end of the session, Josh Jones also talked a little about the transition of the 30 under 30 program from Filene to CUNA. In early 2009, CUNA will start the application process for the “new class.” I’m looking forward to continuing to be involved with the program in some capacity.

PS – I’d be remiss if I didn’t give a shameless plug for my 30 under 30 group’s project: "Win-Win Savings." Read the full business plan here.

Resource Links:
CU Tomorrow Blog
Filene Research Institute
Overview & Links to all 30 under 30 group business plans

YES LIVE: “Plow the runway” for young would-be investors

One of the biggest challenges in serving “Generation Why” is overcoming young adults’ disinterest in delayed gratification. Kris Wickline, Gen Y consumer program manager for the CUNA Mutual Group, gave her YES Summit audience detailed advice for convincing 18-to-30s to address their need for long-term investing.

Not surprisingly, the top consumer generation is both optimistic and unrealistic about their futures. Eighty percent say getting rich is their most important or the second-most important goal. However, only 5% say they have concerns about achieving lifestyle of leisure.

Even though more than four 10 Gen Yers expect to have to support their parents in old age, today’s young adults are largely ignorant of economic realities. Two-thirds of seniors at four-year colleges will graduate with an average of $20,000 in debt. And as Anya Kamenetz points out in her book “Generation Debt,” 25-to-34-year olds are currently spending 16% more than they earn.

Fortunately, credit unions who act soon can seize significant investment market share. With some notable exceptions, says Wickline, the investment industry is mostly oblivious to the potential of the young adult market. Credit unions can move on this potential, according to Wickline, if they:

• Start with a focus on the short term. Young adults are unlikely to have emergency funds or solid plans to reach short-term financial goals. By helping them succeed with their immediate saving and investment concerns will give you the chance to follow up with wealth-building and retirement. Wickline calls this entry-level intervention as “plowing the runway” so that young adults can land in stormy economic times. Once safely on the ground with basic savings, they’ll be more receptive to your long-term wealth-building messages.

• Educate about debt and money management. Help young adults form an investment plan and execute plan. Don’t be shy about putting your investment products in front of young adults. Wickline says that you can “ask for the sale” without being perceived as using hard-sell tactics and generating resistance.

• Provide simple online investment options supported with solid information. Generation Yers are more likely to face many job changes than their parents. By the same token, they’re less likely to have the access to the same kinds of employer pension and retirement plans and support from Social Security than their elders. They need a range of products designed for them, with low entry and participation limits and easy management procedures.

Wickline cited models of successful approaches. Companies such as ING are online with “personal financial management” (PFM) tools that offer free online investment planning tools that draw 18-to-30s away from their competitors.

IMHO: The idea of building long-term wealth-building is nearly as difficult a subject to sell to young adults as the need for insurance. Anything you can do to extend a helping hand with long-term investing will give you a tremendous competitive advantage by establishing a long-term relationship with young members. You’ll reach Gen Y through online interaction, but you’ll need to back it up with friendly, reassuring face-to-face support.

YES LIVE: Vote for Your Favorite Financial Education Program!

In Wednesday's late interactive session, attendees worked together in groups to create an "award winning financial education program." The moderators judged all of the entries and have narrowed them down to the top three.

Voting is now closed and the winner will be posted shortly.

> Click here to view all the entries

YES LIVE: Gary Perez: The biggest mistake credit unions make...

YES Live: Fast Forward

Melanie Riedl, manager of marketing for University of Louisiana FCU, leads her table group in a design discussion. Their assignment: To create an award-winning program to improve young members' creditworthiness. The group dreamed up "Fast Forward," a series of short, funny videos to show the consequences of poor dinancial decisions as Liz Stablien, coorindator of yoith marketing for Erie General Electric FCU, put it. The proposed program would entice members to subscribe, which would allow the credit union to track improvements in credit scores, and invite members to submit their own examples.

YES LIVE: Savings and Credit for Young Military Members

Sarah Shirley, Military Saves Director at the Consumer Federation of America, provided her perspective on the credit worthiness needs of a specific group within the demographic - young adults in the military. Even though the discussion was geared toward this specific group of young adults, there were broader ideas about saving and credit that apply to young adults in various life stages and situations.

Sarah's key points:

• Patriotism is important to many young people
• Just because we know young people are interested in their credit scores doesn't mean they are incapable of being interested in their net worth
• Helping others can be motivating to young people

My take:
(note that I lost a longer post on this session because my blogger account timed out before I posted - lesson to future live-bloggers: do everything in Word first.)

Where was Military Saves when I was in the service? It sounds really cool and is much needed.

When I was in the Army right after high school ('96-'99), I only knew how to balance my checkbook...nothing about money management, asset building, credit worthiness, or debt management. I was eager to do something more with my money, but didn't know where to go for guidance (I also was too busy to dig too hard). My only big transaction was someone sold me a bad life insurance policy, which somehow sounded good at the time (all those graphs with my money getting bigger). Naturally, it was a waste of my money (I already had a $200,000 Army life insurance...and I was single with no dependents!), but I didn't realize it for about five years and by that time, it was too late - the monthly payments I had put in didn't add up to much.

I was an "untapped market" for sure. I wish someone led me into the credit union on base instead during those three years!

Now if I only invested that money...

Resource Links:
www.MilitarySaves.org
www.AmericaSaves.org
www.AmericaSavesWeek.org

YES LIVE: Kim Crockett: What I learned from our spokesters

YES Live: Your credit union needs a spokester

Kim Crockett’s guiding principle is very simple. “Generation Y is not a passing fad. Gen Y will drive online banking growth.”

Crockett, manager of Young and Free, for Servus (formerly Common Wealth) Credit Union, a $10 billion credit union based in Lloydminister, Alberta, Canada, was heavily been involved in the now-famous Young & Free Alberta Campaign, a marketing program to launch a free checking account for young adults.

After a little more than one year, the effort has drawn more than 3,000 accounts and $5,000,000 non-interest-bearing deposits.

Among Crockett’s insights:

• To reach young people, you have to go where they live, which is online. Example, Diggnation, a weekly tech/web culture show, has 400,000 subscribers, comparable to the number of daily visitors to the CNN web site.

• Innovation requires trust and a leap of faith. As Crockett puts it, “Young & Free is an ongoing beta test. There was not a strong business case for launch.” Elements in favor included tightly a defined target group (19-to-25 years old), an already recognizable brand, and senior management involvement,

• Rethink the three-month promotional campaign. Young & Free selects a spokesperson (dubbed “spokester”) for a one-year appointment through online competitions. (Here’s a history-of video.)

• Give young people freedom and resources and they will respond with amazing creativity. Y&F spokespeople are hired to blog several times a week, with little more than general guidelines. They respond with lively communications that cover subjects from gas prices to popular movies, and include audio, video, and artwork.

• Ask for permission to get involved in the lives of young people. The strength of social media like Diggnation is that they solicit feedback from their audiences. Y&F asks for email addresses and engages in two-way communication with its primary target market. Servus CU plans to continually mine the relationships Young & Free has created for information about serving members under age 25.

According to Crockett, the greatest challenge that credit unions face in serving 18-to-30s is “our tendency to rely on the products and service delivery methods we have used for years. Young adults have different needs and service delivery preferences than the generation before them and we will need to address those needs on their terms. We need to intentionally try to be different.”

Crockett urges credits unions to keep the following guidelines in mind as they plan to reach out to young adults:

1. Gen Y is accustomed to being connected with their their friends and their interests. They can plug into people and activities almost instantly. Credit unions should look to become part of their conversation. Create opportunities for an open dialogue between you and your younger members.

2. Entertain first and then educate. Trust is vital and it needs to be achieved by respecting their world. Your side of the dialogue should be entertaining and reflect openness, honesty and integrity. When you’ve gained Gen Y’s trust, you have a much better chance to provide education and bring young members into the credit union fold for financial services.

IMHO: Making young people feel welcome at and in your credit union is the most important step in rejuvenating your credit union’s membership. Putting that message front and center will make your marketing efforts more forcerful and effective.
For useful marketing conversations and ideas, Crockett recommends Currency Marketing.

YES LIVE: Gen Y Staff Impact & Resource One's Gen Y Financial Ed Program

Unfortunately, when some think about young adults' work habits, tired stereotypes come to mind - "lazy, inexperienced, un-motivated, naive..." Naturally this makes it harder to land a job they are qualified for, no matter what the resume says.

Philip Crocker, Director of Financial Literacy at Resource One Credit Union, like many young adults exemplifies the exact opposite of these stereotypes. He shared his experiences climbing the credit union ladder as a young adult and how he personally has had an impact at Resource One Credit Union. He also talked about Resource One's financial education program and gave advice on creating financial education programs targeting young adults.

Key insights from Philip's presentation:

• Ordinary People “Can Do” Extraordinary Things
• Believe in Your Staff – No Matter What Their Age or Tenure
• Cultivate – Plant – Nurture - Empower
• Realize that today’s Gen Y Employee may have different self-fulfillment needs than other generations of employees.
• Find the right person for the position – discover the person who has the desired characteristics, everything else can be taught.
• Create a Financial Education Plan that Works with Your Strategic Vision
• Do not re-create the wheel…
• United We Stand – “There is Plenty to Go Around”
• Create a Network and Use It – “Stay Involved”

Earlier, I asked Philip what he thought the greatest challenge is facing credit unions in serving 18-to-30 year olds. Here is his response:

Glad, you asked for my opinion. I certainly do not have all the right answers. Here is what I see as great challenges for my credit union as well as most others. I will answer this in two parts.

The first part is that the whole credit union movement has got to get better at courting and retaining this age group of consumers. Every credible article or information source that I read seems to suggest that this age group is at risk for flight. There seems to be a loyalty issue with this age group. In my opinion, I do not think that it is a loyalty issue. I just think that all of their options have been laid before them. These options are in their face through many different delivery channels. This age group can be influenced by so many more delivery channels than were previous generations. While every age group is susceptible to these same delivery channels, I think that this age group has embraced all forms of media for gathering information. This age group wants to make up their own minds and may not easily fall into the ranks with the way they conduct their personal finances. To many it appears to be a loyalty problem, but I challenge the industry to stay relevant and in their face. Which leads to my second part…

The second part is that we have to stay relevant to their needs. We have got to get away from throwing out a bunch of features and tying them into a bow and calling this “new product line” a Gen Y friendly alternative. How long or how far will an insincere attempt to try and grab this market really get a Credit Union? As a credit union or a “movement” we need to stay relevant with this age group and really pinpoint our product offerings, levels of service, and ease of doing business to meet their needs and not a business plan.

So in summary we need to gain their interest, keep their interest, “be relevant” or they will go somewhere else. There are still many choices out there, even though our landscape has changed lately.

YES LIVE: Student loans are key to credit union relevancy

“If we are unable to restore relevancy in the hearts and minds of young people, credit unions will not exist,” said Gary Perez, CEO of Los Angeles-based $350-million USC Credit Union (USCCU), told YES Summit attendees.

This guiding principle has led USCCU to become the largest student loan originator in the country, making more than $500 million in student loans in the past decade, and $120 million in the past year.

Although USCCU has a community charter, it has targeted people associated with the university. Competing financial institutions do a pretty good job of serving the ordinary consumer, Perez says. A poll of the summit audience conformed this, with 90% to 100% providing personal loans, auto loans, and mortgage. Only one fifth offer student loans, the number one loan of necessity for 18-to-30 members, mainly through Federal Family Education Loan Program (FFELP).

In 1997, the credit union’s net spread jumped from 160 basis points to 240 basis points. And since then, says Perez, “We have not experienced a single loss—not one charged-off student loan. In fact, we’ve never even had a single delinquency.

The explanation for this is simple; USCCU holds its student loans for four years. When they go into repayment, it sells them to the secondary market without recourse. Until then, says Perez, they are a great source of revenue, comparable not to other loans, which have better margins, but to investments. “Student loans are investment quality loans,” says Perez.

With the collapse of the traditional secondary market, the federal government has stepped in. New legislation allows the U.S. Department of Education to act as a secondary market to purchase eligible Stafford and PLUS Loans.

What makes the FFELP, with student loans such as Federal Stafford Loans and Federal PLUS Loans for parents, such a solid book of business? They are:
• 3% origination fee
• 97% government guarantee
• Non-dischargeable in bankruptcy.
• Good return on extremely safe loan
• Primary source of student aid
• Attract younger members
• Ease of outsourced originations and servicing

Student lending is not the only area in which USCCU achieves relevance and dispels myths. In 1998, it added a student to the credit union’s board. “Students are the smartest, most engaged people on USC Credit Union’s board,” Perez asserts.

Far from being a loss leader or a slacker generation, says Perez, “Students are USCCU’s most profitable segment.”

IMHO: In a wildly shifting economy, training and education become more important daily. Seizing the student loan market is a way for credit unions to position themselves as partners for members who are entering the peak borrowing stage of their lives. Nothing could be more relevant than that.

YES LIVE: What Are Young Adults' Personal Finance Attitudes & Behaviors?

To kick things off for our first "official" session, attendees examined the personal finance attitudes & behaviors of young adults. This is important because it directly influences how people manage money and debt, their credit worthiness, and to what degree they are able to build assets. This is a good jumping off point for more focused sessions over the next few days - it lays the groundwork for in-depth discussions and specific areas of focus.

Mark Schwanhausser, Research Analyst of Javelin Strategy and Research, led the first data driven session - "Analysis of the Demographic: Personal Finance Attitudes & Behaviors. "

Key insights from Mark's presentation:

Gen Y has growing economic clout.

• Will comprise 29% of population by 2017, outnumbering Boomers (77 million) and Gen X (88 million).

Gen Y: Two definitions of mobility.

• They move because they’re still establishing their lives.
• They will be the first generation of Americans to embrace the idea that their mobile devices will become a irreplaceable banking tool – a mobile wallet.

Gen Y consumers are not content with one channel or one payment method.

• They have stronger preferences for online channels and debit-card transactions, but they expect to have options and use them where they see fit.

Gen Y consumers want tools to help them manage and monitor their money.

• Gen Y use online- and mobile-banking alerts, personal finance management tools and education to help them stay on top of their finances.

It’s important to invest now to hook Gen Y.

• They are more likely to stick with the institutions they know and trust since they were children. Many will follow their parents’ guidance, with many starting out with credit union accounts.

My take:

Hard to argue with the numbers - great baseline for the rest of the conference. It's important to get the facts because there are so many generalizations and assumptions regarding 18-to-30 year olds. What stood out to me is the fact that young adults prefer everything online - an assumption that is heard so often (Facebook! Mobile Banking! Twitter! And so on...). Instead, they prefer these options, but still expect to be able to visit a branch and do "normal" banking.

Welcome 2008 YES

Live from Tampa: It’s YES!

Welcome to Tampa, Fla.--home of the No. 1 U.S. airport in a 2008 Zagat poll released one week ago.

How about it, YES Summit attendees who flew in—what was your experience?

It’s nice to know that the 10,000 Zagateers who weighed in on this question felt that Tampa International Airport was tops, but guess what? Polls don’t count if you run into a rude gate agent or a disgusting Airside E restroom.

Credit unions had a 20-year run of first-place finishes in the American Banker’s annual consumer satisfaction survey. Yet it’s the daily treatment of individual bank customers and credit union members that has always been more important.

We’re here in Tampa to look at the “18-to-30 demographic.” But credit unions don’t exist to be No. 1 with a group. The movement was founded to be No. 1 with each and every member. That includes 18-to30s—in great numbers, if we’re lucky.

So, as we discuss and discover what Generation Y wants in financial service, let’s not lose sight of the experiences of the individual men and women who comprise that group.

That’s why we’re here in sunny Tampa—to find out how to design financial products for 18-to-30s in general and how to better serve the 23-year-old single mother of two at your teller window in particular. Stay tuned as the conversation unfolds.

Like last year, your friendly bloggers—Christopher “Daddy! Daddy!” Morris and Philip “The Bald Soprano” Heckman—will be reporting to you live on the YES CU Blog.

We promise that their live blog posts from the conference will go beyond merely taking notes. Besides posting the main points that speakers make, we’ll record attendees’ insights and reactions, bringing the dialogue to the credit union world as it happens. We hope to hear from attendees, as well as you, distant reader.

This year’s YES Summit lineup of 18-to-30 topics includes:

• Mark Schwanhausser, of Javelin Strategy & Research, on attitudes and behaviors

• Kim Crockett, Manager, of Common Wealth CU, on media and messages

• Sarah Shirley, of Consumer Federation of America, on savings and credit in the military

• Rodney Hood, of NCUA, on attracting and retaining young employees

• Claudine Oriani, of As If Productions, on developing human capital