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November 2015 |
FOCUS is a monthly e-newsletter of the Office of Small Credit Union Initiatives. It focuses on helping small credit unions achieve success by providing news and highlighting opportunities.
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Featured this Month
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Headliner: The Power of Rent Reporting
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"[At our credit union] rent reporting gives public housing residents...a powerful incentive to make their rent payments on time and a positive difference in their financial lives."
Dave Miller, Chief Financial Officer, Urban Upbound Federal Credit Union
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Select image to read entire article. Photo courtesy of Urban Upbound Federal Credit Union. |
More than 39 million U.S. households -- approximately 100 million people -- live in rental housing. Making late housing payments can damage the credit of renters and homeowners alike. However, historically only homeowners have been able to build positive credit through on-time mortgage payments. Now renters can, too.
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In Focus with Bill: Product Development
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A small credit union can't be everything to everyone. But, if it's not something to someone, it won't survive. How does a credit union balance the need to attract and retain members while insuring that net income adequately adds to net worth? How does each credit union pick a sustainable growth path by deciding what product to add next?
The Office of Small Credit Union Initiatives has examined the order and pattern in which credit unions add products as they grow. A credit union could add a new product because the product adds net income, increases lendable assets, attracts new members, retains current members, or is a gateway for other products. Some products just express the credit union brand or are good for members. This diversity of justifications leads to four product strategies, outlined below, that are often combined in a single credit union:
- Linked products to mimic the members' financial growth. This strategy facilitates progressive adoption of credit union products. For example, a member joining a youth initiative would migrate to a job-related savings account, and as the member ages, a student loan, a car loan and eventually a home loan and retirement products. The assumption is that members use their credit union accounts because their financial needs keep being fulfilled.
- Products as suites. There are entry products linked to profitable products, linked to "look swell" offerings. This more complex approach suggests that each suite has to meet several needs of the credit union. Members will choose credit union products because they are already members. For example, a checking account links to a debit card, links to ATM service, links to a line-of-credit.
- Each product stands on its own. Products are added because they solve a problem the credit union is experiencing. For example, if short-term investment rates are low, expand lending by adding, or expanding, a short-term loan product. This strategy assumes members are making unbundled choices when they choose a product. It also means the credit union has to be the best in every category to get business.
- Subsidized products like financial education, individual development accounts, and prize-based savings. These products are hard to bring to scale and usually require multi-player partnership and collaboration. But they are a good place to test markets and research innovation. This strategy wins members' hearts.
Our examination found two general lessons. First, by the time credit union assets reach $30 million, it shows the capacity to add each product tracked in the Call Report. Second, electronic banking has become a threshold product. It is becoming hard for offline financial institutions to thrive.
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Consulting: Curtain Call for Requests
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Nov. 30, 5 p.m., Eastern is deadline for next Consulting cycle nominations
Sherita's suggestions were valuable in providing product suggestions to help increase our income.
CEO Linda Rogers,
Texas Farm Bureau Federal Credit Union
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Select the image to access the nomination form. |
Sometimes just 10 minutes and some patience can be enough to start a group on a turnaround. Mix that with a little help and legwork from supporters, and such is a success story from the Texas Farm Bureau Federal Credit Union, a small, low-income designated credit union located on the premises of its sponsor company, the Texas Farm Bureau Insurance Companies, in Waco, Texas. Like many small credit unions, it was challenged to stay profitable and compete with larger credit unions while providing quality service to its members.
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Training: Scheduled Webinars
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Data Mining
See what you missed
More than 272 individuals have viewed this webinar on using member data to design targeted marketing campaigns. Catch the archived version of "Data Mining: Golden Nuggets for Your Marketing Campaign."
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Automobile Lending
Mark Your Calendar
If your credit union is looking to expand its auto lending in this competitive market, take part in our upcoming webinar. On Nov. 18, we offer strategies to consider in "Automobile Lending."
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Getting Started in Mortgage Lending -
Coming next month
Listen in on Dec. 16 to learn some mortgage lending best practices and hear an overview of mortgage underwriting in today's environment. Join in to hear from experts and have your questions answered live.
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Webinars begin at 2 p.m. Eastern. There is no charge to participate. A live question-and-answer session with our experts follows the presentation. A certificate of completion is available for those who successfully complete an online quiz.
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Select image to R.S.V.P. to this event by email.
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Announcements: Non-NCUA Opportunities and Resources |
Funding Opportunities
Bank On Capacity Grant Fund:
The Cities for Financial Empowerment Fund announces a new grant fund to support the operations of existing and new local Bank On initiatives. Awards will support local coalitions' efforts to partner more effectively with financial institutions and other key stakeholders to connect their unbanked and underbanked residents to safe and appropriate mainstream accounts. The grant application is open now, and proposals will be accepted on a rolling basis.
Partner Events
Deadline extended for 2016 Your Money, Your Goals Cohort: The Consumer Financial Protection Bureau will accepting letters of interest until Nov. 20 from organizations that would like to participate. The cohort will provide an opportunity to use this resource to help improve the financial capability of the people you serve.
Training Opportunities
Learn How to Design Children's Savings Accounts Programs: Join the Assets & Opportunity Network on Nov. 17 at 3 p.m., Eastern, for a webinar in which we will presenthighlights from the guide and discuss how you can use it both to support program design and to advocate for a CSA program in your area.
Youth Financial Education Curriculum Review Tool: On Nov. 18 at 2 p.m., Eastern, the Consumer Financial Protection Bureau will offer a webinar to showcase its new tool to support the selection and development of a high-quality financial education curriculum.
Other Resources
Product Testing Opportunity: The Filene Research Institute plans to replicate its test of the viability of five innovative financial products for low-and-moderate-income consumers. The newest effort will start in spring 2016 with five new products, this time targeted to the needs of underserved minority populations. The application deadline is Nov. 20.
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National Credit Union Administration
The Office of Small Credit Union Initiatives
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