Lessons In Brands, SEC & Misunderstood Competitor

Credit unions attending NACUSO's annual meeting here got lessons in branding, were told by a check-casher he's delighted by the misconceptions of the industry, and were encouraged that the SEC will soon issue its ruling related to CUSOs.

What Folks Don't Want

In a keynote address, Duane Knapp, president of Brand Strategy, Inc., and author of "The Brand Mindset," told attendees that "branding is about relationships. A true brand is about a promise. It's how you feel about the product or service."

What credit unions and CUSOs don't want, said Knapp, is to be a brand name that lacks the distinctive characteristics of a true brand. A brand name is known or even well known, but can be similar to similar commodities. Knapp said there may be no difference other than price, and that the characteristics of a true brand include:

* An obsession with making members "delighted" rather than "satisfied."

* A focus on being distinctive.

* Delivery of the functional and emotional benefits of the promise.

Rather than following the traditional old business school acronym of FRED, which stands for Familiarity, Relevance, Esteem, and Differentiate, Knapp suggested that CU and CUSO executives should DREAM, which stands for Distinctive, Relevance, Esteem, Awareness and Mental "palm pilot."

"Until your members insist on doing business with you, you haven't developed a true brand," Knapp said. And doing that requires that every CU/CUSO employee has absorbed the brand culturization and delivers the brand promise.

You're (Thankfully) Misinformed

Brian Boston, president/CEO of Industry Pages, Inc., and co-founder of the Payday Loan Corp., smashed commonly held perceptions of whom, exactly, is the average check cashing store customer.

The average customers of check-cashers aren't "lower class," nor those flying below the usual radar, nor disreputable folk and surely not those who don't have access to banks or credit unions, he argued.

"People at check-cashers love that everybody thinks that check-casher users are seedy, because it allows them to dominate the business," said Boston. This is the fastest growing sector of the financial world, bar none, Boston claimed. And credit unions and CUSOs had best listen up and make plans to enter the fray, or they may lose not just the transaction business (and the profits it generates) but the opportunity to attract millions more credit union members.

People use check-cashers because they are fast and offer immediate access to money. The service is simple, the hours are better and they are free of a snooty atmosphere. Check cashing stores are well designed, uniformly accessible and the service is friendly enough to earn repeat visits.

Boston challenged credit unions to ask themselves if they are ready to meet the challenge of check cashers. "Are you really committed to overcoming the paradigms associated with the perception of your facility?"

MCUL Supports Financial Literac

NACUSO General Counsel Guy Messick moderated a panel discussion and question and answer session on what might be expected, and when, from the Securities and Exchange Commission on the CUSO exemption.

CUNA Mutual VP Kevin Thompson expressed the anticipation best when he said, "People want to know when? Well, the SEC won't say when, but that gives us time. It's best to use that time to assess performance and think out the possibilities, everyone on the panel agreed.

Tom Taylor of Financial Network Investment Corp., said that many of his client CUs are already moving reps inside the credit union. Valorie Seyfort of CUSO Financial Services said that while some uncertainties remain, there are also things of which we can be certain. "We know the learning curve for CU people will be steep, as they have had no experience selling securities," she said.

Mark Allen president/CEO of VCU Capital, said that he had just had a SEC audit and reported that the regulator was asking a lot of questions about CUSOs, which he perceived as a positive sign. Keith Fine general counsel of LPL, and Allen spoke briefly of the costs associated with becoming a broker dealer and the time required doing so.

One question from the audience cut to the quick: "What can I tell my boss, who said that years ago a team of lawyers came into his office and told him he had to have a CUSO to shield the credit union's liability? He wants to know what's changed; why is it OK now?"

In a half-joking answer, Messick answered: "Tell him that now that they have all this experience, it's safe to bring it into the credit union."

The real answer is that it is a necessity due to a regulatory change, said Messick.