REACH for the stars: Day 2 of the Calif., Nevada leagues' annual meeting
November 8, 2017 4:32 PM
CU in Palm Desert
Day Two of the California and Nevada Credit Union Leagues’ Annual Meeting and Convention in Palm Desert, Calif., on Tuesday gave attendees a full day of information on creating a vibrant brand strategy, how to serve cannabis businesses in the growing number of states that have legalized adult-use marijuana, how to drive membership and loan growth with data, the importance of remaining relevant, and five obsessions of innovators.
Metsger encourages CUs to REACH
Rick Metsger, current NCUA board member, former NCUA board chair and also former credit union director when he lived in Oregon, told the audience in his waning weeks and months on the NCUA board, he and current chair Mark McWatters are working toward the “betterment” of the credit union system, “because the system is more important than either one of us.”
For several years now, the name of the California and Nevada CU Leagues’ Annual Meeting and Convention has been REACH. Metsger went through the name letter by letter to offer his advice to credit unions:
R = Relevance.
“My job as a regulator is to make sure credit unions remain relevant in a changing industry,” he said, holding up his smartphone. “In 2004 the smartphone did not exist, but today it is the financial institution to many people as branch visits decline.”
E = Efficiency, effectiveness, evolution.
Metsger said NCUA has become “a lot more efficient” through a number of recent initiatives, including reducing its number of field offices to three from five. “We have gone to an 18-month exam cycle for well-run credit unions. We look to measure if we are effective and if we are evolving.”
A = Asset diversification.
“If you were the best at lending for taxi medallions, then you are in conservatorship,” he said. “You have to have an asset portfolio that reflects divergence.”
C = Capital.
“Capital is king,” he declared. “You have to have capital so you are here next year to serve your members, and the year after that.” With that said, Metsger acknowledged there are credit unions that hold too much capital. “Some credit unions have 17 percent capital. They tell us, ‘Our members don’t borrow.’ That does back to R and E – are you relevant and effective with your members?”
H = Honor the heritage of the credit union system.
“Remember why the not-for-profit alternative is so important in this country,” he said. “Don’t just have a mission statement that you look at once in a while, live your mission in the services you provide and the platform you provide.”
Metsger offered the example of hockey hall of famer Wayne Gretzky. When asked why he was so successful, Gretzky said from a young age everyone is taught to skate toward the puck, while he skates to where the puck is going to be.
“In financial services, skate to where the puck is going to be, not where it is,” Metsger counseled.
For several years now, the name of the California and Nevada CU Leagues’ Annual Meeting and Convention has been REACH. Metsger went through the name letter by letter to offer his advice to credit unions:
R = Relevance.
“My job as a regulator is to make sure credit unions remain relevant in a changing industry,” he said, holding up his smartphone. “In 2004 the smartphone did not exist, but today it is the financial institution to many people as branch visits decline.”
E = Efficiency, effectiveness, evolution.
Metsger said NCUA has become “a lot more efficient” through a number of recent initiatives, including reducing its number of field offices to three from five. “We have gone to an 18-month exam cycle for well-run credit unions. We look to measure if we are effective and if we are evolving.”
A = Asset diversification.
“If you were the best at lending for taxi medallions, then you are in conservatorship,” he said. “You have to have an asset portfolio that reflects divergence.”
C = Capital.
“Capital is king,” he declared. “You have to have capital so you are here next year to serve your members, and the year after that.” With that said, Metsger acknowledged there are credit unions that hold too much capital. “Some credit unions have 17 percent capital. They tell us, ‘Our members don’t borrow.’ That does back to R and E – are you relevant and effective with your members?”
H = Honor the heritage of the credit union system.
“Remember why the not-for-profit alternative is so important in this country,” he said. “Don’t just have a mission statement that you look at once in a while, live your mission in the services you provide and the platform you provide.”
Metsger offered the example of hockey hall of famer Wayne Gretzky. When asked why he was so successful, Gretzky said from a young age everyone is taught to skate toward the puck, while he skates to where the puck is going to be.
“In financial services, skate to where the puck is going to be, not where it is,” Metsger counseled.
Translating the CU's values
The values of a credit union sometimes are hard for non-members to understand, so CUs have to motivate consumers to join by making them feel loved and understood.
That was the message from Sasha Strauss, founder of a brand strategy consulting company called Innovation Protocol, and an adjunct professor at the graduate schools of business for three of the largest universities in the greater Los Angeles area: UCLA, UC Irvine and USC.
“You are going through a transition like all industries are going through a transition,” he told the crowd. “Technology is changing how all of us do our jobs. Financial institution customers will not put up with the old ways of interacting with their bank.”
Strauss noted as a child he was diagnosed with Attention Deficit Disorder. As an adult he remains attuned to the mass of information that is bombarding all of us all the time, he revealed. As a result, Strauss said he understands why people sometimes feel too much is coming their way.
“We live in an overwhelming time,” he observed. “We are in one of the most disruptive eras in communication history. Everyone has broadcast power in the Internet and social media. There is an old saying that the pen is mightier than the sword – today that is, the click is mightier than a bomb.”
That was the message from Sasha Strauss, founder of a brand strategy consulting company called Innovation Protocol, and an adjunct professor at the graduate schools of business for three of the largest universities in the greater Los Angeles area: UCLA, UC Irvine and USC.
“You are going through a transition like all industries are going through a transition,” he told the crowd. “Technology is changing how all of us do our jobs. Financial institution customers will not put up with the old ways of interacting with their bank.”
Strauss noted as a child he was diagnosed with Attention Deficit Disorder. As an adult he remains attuned to the mass of information that is bombarding all of us all the time, he revealed. As a result, Strauss said he understands why people sometimes feel too much is coming their way.
“We live in an overwhelming time,” he observed. “We are in one of the most disruptive eras in communication history. Everyone has broadcast power in the Internet and social media. There is an old saying that the pen is mightier than the sword – today that is, the click is mightier than a bomb.”
When it comes to pot banking, Sundie says...
With adult use of cannabis being legalized in both California and Nevada in the 2016 general election, interest in Tuesday’s cannabis banking session was high.
Sundie Seefried, CEO of $352 million Partner Colorado Credit Union in Arvada, Colo., and author of the primary textbook on credit union cannabis banking,explained how Partner Colorado CU created a DBA known as Safe Harbor Private Banking to spare the credit union of reputational risk . Safe Harbor launched in January 2015.
“If I was going to crash and burn, it was going to be under the Safe Harbor name,” she said with a laugh, adding no Safe Harbor business is conducted in any Partner Colorado branches.
Seefried said she had four motives for getting her CU involved in cannabis banking: safety, philosophy, relevancy and business.
“Safety was a huge concern with so many cannabis business owners walking around with backpacks full of cash,” she recalled. “The board really focused on community safety.”
The second reason relates to the founding philosophy of the CU movement, she continued.
“We were chartered to serve the unbanked.”
Reason three, relevancy, went to answering the oft-asked question: How are CUs going to compete against fintechs? “Our community voted on the legality of the cannabis industry, so I had to serve that community,” she said.
The business model had to be built from scratch, Seefried said, saying, “There is no silver bullet. It is a relationship banking program from start to finish.”
The marijuana industry remains illegal on the federal level, and it has a black market history, so cannabusiness owners are used to operating under the radar, Seefried noted. But with cannabis now legal in 29 states – either for medical use or adult use or both – she said there is growing sophistication and increasing investments from a number of funds.
Sundie Seefried, CEO of $352 million Partner Colorado Credit Union in Arvada, Colo., and author of the primary textbook on credit union cannabis banking,
“If I was going to crash and burn, it was going to be under the Safe Harbor name,” she said with a laugh, adding no Safe Harbor business is conducted in any Partner Colorado branches.
Seefried said she had four motives for getting her CU involved in cannabis banking: safety, philosophy, relevancy and business.
“Safety was a huge concern with so many cannabis business owners walking around with backpacks full of cash,” she recalled. “The board really focused on community safety.”
The second reason relates to the founding philosophy of the CU movement, she continued.
“We were chartered to serve the unbanked.”
Reason three, relevancy, went to answering the oft-asked question: How are CUs going to compete against fintechs? “Our community voted on the legality of the cannabis industry, so I had to serve that community,” she said.
The business model had to be built from scratch, Seefried said, saying, “There is no silver bullet. It is a relationship banking program from start to finish.”
The marijuana industry remains illegal on the federal level, and it has a black market history, so cannabusiness owners are used to operating under the radar, Seefried noted. But with cannabis now legal in 29 states – either for medical use or adult use or both – she said there is growing sophistication and increasing investments from a number of funds.
Leveraging data to grow membership and loans
Credit unions can leverage data to drive growth in membership and loans, according to Melton Knight and Sue Schroeder of Experian.
Schroeder, the company’s senior director of marketing and insight, said the majority of community banks in California and Nevada are in the asset-size range of $100 million to $1 billion. Approximately 70 percent of loans made by CUs in the two states are auto loans and mortgages, while community banks have a very different loan mix: higher concentration in commercial real estate, especially in smaller community banks.
“California and Nevada credit unions deploy fewer deposits into loans than community banks,” she said. “California and Nevada credit unions operate at higher expense ratios than community banks. By reducing costs and improving ROAA, credit unions can create more revenue for investment to grow, including technology.”
According to research cited by Schroeder, credit union membership growth in the Golden and Silver States was closely correlated to asset size – the larger the CU, the larger percentage membership growth.
“There are opportunities for credit unions in diversifying their loan portfolios by going beyond indirect auto lending, locating higher-yielding loans, and capturing micro and business loans,” she counseled.
Knight, Experian’s senior business consultant, said when it comes to leveraging data for growth, credit unions need to understand the opportunities available to them.
“To get to the right answers, you have to ask the right questions,” he said. “These include: What is our share with members? Where can we grow?”
Knight recommended CUs drive their strategic efforts with expanded credit data.
“You have a view of on-book member loans by type, but that is only part of the story. The big question is what loans members have off-book. In many cases, your members have auto loans or mortgages with another financial institution. If you know this, that gives insight as to what you can go after.”
Schroeder, the company’s senior director of marketing and insight, said the majority of community banks in California and Nevada are in the asset-size range of $100 million to $1 billion. Approximately 70 percent of loans made by CUs in the two states are auto loans and mortgages, while community banks have a very different loan mix: higher concentration in commercial real estate, especially in smaller community banks.
“California and Nevada credit unions deploy fewer deposits into loans than community banks,” she said. “California and Nevada credit unions operate at higher expense ratios than community banks. By reducing costs and improving ROAA, credit unions can create more revenue for investment to grow, including technology.”
According to research cited by Schroeder, credit union membership growth in the Golden and Silver States was closely correlated to asset size – the larger the CU, the larger percentage membership growth.
“There are opportunities for credit unions in diversifying their loan portfolios by going beyond indirect auto lending, locating higher-yielding loans, and capturing micro and business loans,” she counseled.
Knight, Experian’s senior business consultant, said when it comes to leveraging data for growth, credit unions need to understand the opportunities available to them.
“To get to the right answers, you have to ask the right questions,” he said. “These include: What is our share with members? Where can we grow?”
Knight recommended CUs drive their strategic efforts with expanded credit data.
“You have a view of on-book member loans by type, but that is only part of the story. The big question is what loans members have off-book. In many cases, your members have auto loans or mortgages with another financial institution. If you know this, that gives insight as to what you can go after.”
It pays to pause
When a credit union leader faces a challenge, an opportunity or even a threat, he or she should pause. According to Josh Linkner, “If you pause, you have the chance to try something creative rather than the obvious choice.”
Linkner, an author and entrepreneur, and the chairman and co-founder of both Fuel Leadership and the Institute for Applied Creativity, told the crowd CUs face what he termed “tie-breaker situations” all the time, meaning they can win or lose a loan, win or lose a potential member.
“A little creativity can make all the difference in the world,” he said. “Creativity is the natural state of humans, but schools, jobs and well-intentioned parents get in the way.”
Rand McNally was the No. 1 map company 20 years ago and 120 years ago. Today, Google is the No. 1 map company. According to Linkner, what happened to Rand McNally is what happened to many companies: it got intoxicated by success.
“We cannot rely on the models of the past and expect continuing success,” he insisted. “There is so much competition, we have to tap into the ultimate technology – human creativity. It cannot be outsourced.”
Linkner urged all attendees to, “Be an innovator,” and he offered the five “obsessions” of innovators:
1) Curiosity.
The more curious you are, the more creative you become, he said. “We make daily decisions based on what did or did not work in the past. That is great in a static environment, but things change all the time.” Linkner said people should regularly ask three questions: Why? What if? Why not?
2) Defy tradition.
There are many traditions that should be held in great respect, Linkner said, including those relating to family, religion and even sports, but he said “saluting the flag of the past” can be dangerous.
“Defying tradition leads to innovation, and challenging the rules can lead to better outcomes,” he said. “Some rules might be good – don’t change just for the sake of changing. But if you are doing the same thing over and over again and getting declining results, do a judo flip – make things upside down.”
3) Crave what is next.
Credit union leaders should have a “future orientation,” he said, adding they should lean in to change while letting go of the past.
“Too often, we overestimate the risk of trying something new while underestimating the risk of doing the same thing,” he said, offering the examples of comedian Louis CK, who throws away his material every year to force himself to write new jokes, and Idea Bank in Poland, which came up with a rolling ATM built into a car that is summoned in the same manner as Uber.
4) Get scrappy.
According to Linkner, anyone can succeed in business if they have unlimited resources of time and money. “Challenge yourself to get by using a creative solution with whatever resources you have on hand.”
5) Adapt fast.
The “myth” of innovating is there is a lightning flash of inspiration followed by installation. In reality, Linkner pointed out, most new ideas do not pan out. “There needs to be constant micro-innovation,” he said.
“Challenge yourself to seek one creative disruption in the next seven days,” he told attendees. “One idea becomes six ideas becomes 11 ideas. You create momentum that becomes unstoppable.”
Linkner, an author and entrepreneur, and the chairman and co-founder of both Fuel Leadership and the Institute for Applied Creativity, told the crowd CUs face what he termed “tie-breaker situations” all the time, meaning they can win or lose a loan, win or lose a potential member.
“A little creativity can make all the difference in the world,” he said. “Creativity is the natural state of humans, but schools, jobs and well-intentioned parents get in the way.”
Rand McNally was the No. 1 map company 20 years ago and 120 years ago. Today, Google is the No. 1 map company. According to Linkner, what happened to Rand McNally is what happened to many companies: it got intoxicated by success.
“We cannot rely on the models of the past and expect continuing success,” he insisted. “There is so much competition, we have to tap into the ultimate technology – human creativity. It cannot be outsourced.”
Linkner urged all attendees to, “Be an innovator,” and he offered the five “obsessions” of innovators:
1) Curiosity.
The more curious you are, the more creative you become, he said. “We make daily decisions based on what did or did not work in the past. That is great in a static environment, but things change all the time.” Linkner said people should regularly ask three questions: Why? What if? Why not?
2) Defy tradition.
There are many traditions that should be held in great respect, Linkner said, including those relating to family, religion and even sports, but he said “saluting the flag of the past” can be dangerous.
“Defying tradition leads to innovation, and challenging the rules can lead to better outcomes,” he said. “Some rules might be good – don’t change just for the sake of changing. But if you are doing the same thing over and over again and getting declining results, do a judo flip – make things upside down.”
3) Crave what is next.
Credit union leaders should have a “future orientation,” he said, adding they should lean in to change while letting go of the past.
“Too often, we overestimate the risk of trying something new while underestimating the risk of doing the same thing,” he said, offering the examples of comedian Louis CK, who throws away his material every year to force himself to write new jokes, and Idea Bank in Poland, which came up with a rolling ATM built into a car that is summoned in the same manner as Uber.
4) Get scrappy.
According to Linkner, anyone can succeed in business if they have unlimited resources of time and money. “Challenge yourself to get by using a creative solution with whatever resources you have on hand.”
5) Adapt fast.
The “myth” of innovating is there is a lightning flash of inspiration followed by installation. In reality, Linkner pointed out, most new ideas do not pan out. “There needs to be constant micro-innovation,” he said.
“Challenge yourself to seek one creative disruption in the next seven days,” he told attendees. “One idea becomes six ideas becomes 11 ideas. You create momentum that becomes unstoppable.”
