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NAFCU does Seattle
The National Association of Federally-Insured Credit Unions’ 51st annual conference took place in Seattle last week, with a look at the future of the movement, what the rest of the year might hold for legislative and regulatory matters, advice on board development, the coming retirement crisis and more. Here’s a look at some of the other highlights from the convention.
Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions, addressing the trade group's 2018 convention in Seattle.
The four areas where CUs need to focus
The only constant is change. Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions acknowledged this is a familiar phrase, but on Wednesday morning as he led off the trade group’s 51st annual conference he said it was appropriate because so much has happened to credit unions and in the financial services space in the last year.

“We have seen a shakeup on Capitol Hill, we got comprehensive tax reform passed with the credit union tax exemption intact, the CFPB is moving away from burdensome rulemaking and we are seeing regulatory relief from Congress,” Berger said. “When we say we are No. 1 in advocacy, we mean it. There is still much more work to be done. We will be focused and aggressive during the buildup to mid-term elections, and NAFCU is already focused on 2019 and beyond. We will continue to make credit unions the best choice for the American consumer.”

According to Berger, credit unions need to be focused on four concepts right now: vision, strategy, execution and innovation.

“Seattle is a city that thrives on vision, strategy, execution and innovation. Look at all the companies that were founded here – Amazon, Zillow, Starbucks, UPS and Boeing,” he said. “What is a common characteristic at all of these companies? They are open to new ideas, they have the start-up mentality, all of the people are all-in, and they understand how to put customers first. What would credit unions be like if they were operated like Starbucks stores? If they were seen as a gathering place? Starbucks started with one coffee shop here in Seattle, and turned it into a worldwide phenomenon.”

What can CUs learn from Amazon? The importance of delighting their members, Berger continued. He said they should make every day Day 1 to eliminate complacency, be willing to experiment and accept failures, and double down when they see member delight.

“Credit unions have more in common with Amazon than you think,” he asserted. “Credit unions need to have a distinctive member experience. We have been on this path since the inception of the industry. We provide the best rates and charge the lowest fees. Having a vision and strategy are key, but putting them into practice is the real test. Execution is how we deliver on our promise to always put members first.”
Michael Tchong, Ubercool Innovation - NAFCU 2018 conference - CUJ 062518.JPG
How credit unions can succeed in the technology age
Forecasting the future is a “hazardous venture,” warned Michael Tchong.

Tchong, founder of Ubercool Innovation, as well as a futurist and author, told attendees of NAFCU’s 51st annual meeting in Seattle technology continues to become a bigger part of everyday life, and it is increasingly a bigger part of the business world.

Tchong walked the audience through a number of developing consumer products. Just 8 years ago, 2010 saw the debut of the iPhone 4. One year later came a huge increase in the use of emojis in text messages – with an emoji elevated to Webster’s Word of the Year. In April 2015 Amazon Echo with the Alexa voice assistant launched. Today, there are thousands of devices today with Alexa built in, something Tchong refers to as a device becoming “Alexified.” The latest development is Alexa-enabled kitchen ware. There will be 56.3 million pieces of Alexified products shipped in 2018.

“The common thread of all of these disruptions is technology,” he said. “Tech companies are becoming a larger part of U.S. businesses. They have the wind in their sails because Generation Next is smitten with technology and digital.”

The No. 1 technology trend today is cryptocurrency, of which Bitcoin is a prime example, Tchong continued. He said cryptocurrencies have open-source architecture, making it relatively easy to copy, which has led to thousands of types of cryptocurrencies.

“Bitcoin is disruptive because it is the first decentralized system of money,” he said.

The term “change readiness” is the No. 1 trending topic currently on LinkedIn, Tchong continued. He said an “ubertrend” is a major movement, pattern or wave emerging in the consumer marketplace that causes a fundamental change in population values.

He offered CUs four suggestions to succeed in this technology age:

1: Challenge old ways of thinking.
2: Identify unmet needs. “Any pain point your members experience is an innovation opportunity,” he said.
3: Leverage all the resources the credit union has available to it, including input from all employees.
4: Ride trend waves.

“What will you do for your members? he asked. “Trends represent change, and they are the best opportunities to disrupt. Millions of dollars have been invested in fintech companies in the past two years. You need to have continuous innovation.”
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Be a hero
What is a “hero”? What does a “hero” look like?

Over the last 10 years Kevin Brown estimates he has asked more than 5,000 people for their opinions on how to the define the term. On Thursday Brown, a motivational storyteller with Kevin Brown Enterprises, told the NAFCU audience his first thought is members of America’s military: “The men and women in the armed forces who put them lives on the line every day to keep us free in the greatest nation on earth,” he declared.

In gathering responses from others, Brown reported he has heard a wide variety of thoughts, including the military, first responders, leaders such as Martin Luther King or Nelson Mandela, doctors and nurses that fix us when we are hurt or sick, sports heroes who achieved at a great level, such as Michael Jordan, LeBron James or Peyton Manning. “I heard Tom Brady’s name much more than I would have liked, because everybody brought him up,” he quipped.

Over and over, Brown kept hearing, “Heroes are ordinary people who do extraordinary things.” But even after thousands of times he knew it was not true. “It is the opposite. Ordinary is a choice. A hero is an extraordinary person who chooses not to be ordinary,” he argued.

Brown offered several pieces of advice to credit unions:
· “Be the best version of yourself every day, because what you did on previous days does not matter to the people you are helping or serving today.”
· “No one will ever tell your credit union’s story like an enthusiastic member.”
· “Every person you meet pours a little bit of themselves into you. They are all influencers.”
· “You can never go wrong doing the right thing – such as treating someone with respect.”
· “When we were kids we saw the world differently. We think we can fly. Later in life we forget how to fly and accept being ordinary.”
· “When you become brilliant at what you do, you show up as an extraordinary version of yourself every day.”
Pete Hilger, Allied Solutions - NAFCU 2018 conference - CUJ 062518.JPG
Staying relevant
If a credit union operates as a commodity, Pete Hilger says in today’s financial services environment it will become irrelevant and will become irrelevant quickly because there are so many competitors.

Hilger, president and CEO of Allied Solutions, Carmel, Ind., said all credit unions combined do not spend enough to add up to the amount being invested in fintech companies.

“We are aligned with you, so our existence depends on you being relevant,” he told the audience of credit union professionals. “You are competing with competitors you have never seen before. They are making loans fast and cheap. They depend on volume.”

CUs are investing millions of dollars in technology because their members are changing dynamically, Hilger continued. He noted yesterday’s member preferred visiting the branch to make transactions, did not have technology and did not have a lot of loan options.

“Your future member prefers making digital transactions online or through mobile apps, and he/she wants variety,” he said. “People buy a car online now without ever looking at the vehicle. A lot of younger people know the information available at their fingertips is so powerful, they don’t want to talk to people.”

However, only 25 percent of consumer banking products are available online. Hilger said as an industry, CUs do a “poor job” of figuring out how to be relevant to their respective memberships without requiring them to do a face-to-face transaction to obtain a loan.

Everyone is talking about big data, and everyone says they have the solution for big data, but Hilger insisted that is hot air. “I say they don’t. Data is powerful. The speed to buy is critical and services must be customized to specific consumer needs.

“Relationships are changing, so how will you nurture member relationships? How will you stay connected and remain meaningful? How will you avoid becoming a commodity? You need to identify needs and provide solutions in a digital world,” Hilger said.

With new car sales declining, historically low mortgage interest rates and more competition for all types of loans, credit unions need to increase their breadth of lending options, Hilger continued. He suggested CUs “get creative” with lending, but not by taking on more risk.

“Your average member probably has three or four loans elsewhere, so create solutions for them,” he counseled. “Engage with members after a transaction to find out what else is out there. If they have a car loan with you, I’ll bet you that household has another car loan, or two, somewhere else, and you don’t even know it. You have to be creative and you have to partner with some other organization. If you try to compete alone you will fail because there are a lot of companies investing a lot of money to take opportunities away from you.”