Transcript Slide 1

CEO School
Where everyone’s a teacher,
and everyone’s a student
CU*Answers
CEO Strategies Week
December 8-12, 2008
Rules of Engagement
• CEO School is where I give my perspective on how you might use
this CUSO
• It is also about us brainstorming and coaching each other from a
CEO’s perspective on what makes up the big picture on any given
topic
• We will discuss tactics and tools, but this is not CU*Answers
University...this is about what you need to know that would
encourage you to prioritize a project in your business plan, push
your staff to learn more, or help you find the vision in all the noise
• It is CEO TNT (Teach, Negotiate, Tell)
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Today’s Topics
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What should CEOs have on their radar screen based on our
Big Declarations?
To achieve the lowest cost of
going active with innovation
To have the lowest cost in the industry
for compliance
To be known as one of the most
aggressive mortgage servicing networks
•
Responding to a new national focus on savings
Introducing Gividends
3
What should be on your
radar screen:
To achieve the lowest
cost of going active
with innovation
Lowest Cost of Going Active With Innovation
Active Innovation
From Wikipedia:
“The term innovation means a new way of doing something. It may
refer to incremental, radical, and revolutionary changes in thinking,
products, processes, or organizations. A distinction is typically
made between invention, an idea made manifest, and innovation,
ideas applied successfully”
• Collectively, we do invent...but far too often we are not as successful
innovating collectively as a network
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More than any other comments from CEO, the
one that nags at me is, “We simply do not have
enough time to implement all of the things we
have available to us”
Lowest Cost of Going Active With Innovation
Prioritizing Innovation as a CEO
• One survey across a large number of manufacturing and services
organizations found, ranked in decreasing order of popularity, that
systematic programs of organizational innovation are most
frequently driven by:
 Improved quality
 Creation of new markets
 Extension of the product range
 Reduced labor costs
 Improved production processes
 Reduced materials
 Reduced environmental damage
 Replacement of products/services
 Reduced energy consumption
 Conformance to regulations
• These goals dispel a popular myth that innovation deals mainly with
new product development
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Do we agree with these rankings when it comes to
our organizations, credit unions in general, or our
industry as a whole?
Lowest Cost of Going Active With Innovation
Common Roadblocks to Innovation
• As organizations set goals to be proficient at active innovation, they
find themselves fighting against the following cultural roadblocks:
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Poor Leadership - Interact with a large pool of leaders, intensely
Poor Organization - Digital configurations and exposure to options
Poor Communication - Speed, predefined paths, constant connectivity
Poor Empowerment - Network success stories, both good and bad
Poor Knowledge Management - All that is known is visible and accessible
• Credit unions are all too familiar with these roadblocks, whether
because of size, a tendency to run rather than build businesses, or
because they see themselves more as “fast followers” than true
innovators themselves
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The point of our collaborative:
Can we use a network architecture to address
these roadblocks at the lowest cost possible?
Lowest Cost of Going Active With Innovation
Leadership
Interact with a large pool of leaders, intensely
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CEO Strategies
Leadership Conference
CEO Ticklers
Peer Analysis
Xtend Shared Branching
cuasterisk.com, Lender*VP, Gividends, etc.
Coming in 2009: Community intranets
How you prioritize leadership interaction with the
network might be the most important factor in
driving active innovation in your credit union
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Are your leaders part of a leadership team and
pool of ideas bigger than your own organization?
Lowest Cost of Going Active With Innovation
Organization
Digital configurations and exposure to options
• Throughout 2008 and into 2009 we will continue to work on shared
content at the click of a button
Coming in 2009:
Tiered Services Peer
Inquiry
Coming in 2009:
“Learn from a Peer”
command keys on
CU*BASE
Configuration screens
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When your team is struggling to decide how to
configure a software option, come up with a sales
tip, or design a product, do they default to
network examples?
Lowest Cost of Going Active With Innovation
Communication
Speed, predefined paths, constant connectivity
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CU*BASE Alerts and emails
www.cuanswers.com
Idea Forms
AnswerBook
CU*BASE Network Links
Education, web conferences
Coming in 2009:
Community intranets
If you put every email from CU*Answers into a
“read later” folder, are you developing an instant
awareness of innovation opportunity?
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How does your firm participate in the flow of
information?
Lowest Cost of Going Active With Innovation
Empowerment
Network success stories, both good and bad
• Can our network redefine how we think about our human
resources?
• How can 3,000 credit union professionals interacting on a common
platform change the pace of innovation for all of us?
What if every organization
drew from a talent pool that
was 100x greater than the
number of its own
employees?
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CU*Talent
Lowest Cost of Going Active With Innovation
Knowledge Management
All that is known is visible and accessible
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•
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AnswerBook
Documentation, online help
Release Summaries
Data, Data, Data
Lowest Cost of Going Active With Innovation
Knowledge Management
All that is known is visible and accessible
Have you perused every database menu option
from the 2007 CEO School?
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http://ondemand.cuanswers.com/2007/11/30/ceo-school/
Lowest Cost of Going Active With Innovation
CU*Answers Innovation Engines
• Stress the system to drive more throughput...
– “Randy’s lowering prices again and we still want to get paid! How can
we do the same (and more) for less money?”
• No is only no until it’s Yes...
– “I thought this was one of Randy’s sacred cows that he would never do,
and now we have 15 minutes to get it done!”
• Encourage constructive dissent...
– “Seems like Randy pours gasoline on fires around here.”
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Lowest Cost of Going Active With Innovation
Declaration vs. Affirmation
• Whether it be you as the CEO of a credit union or me as the CEO of
this CUSO, we need the affirmation of the market, our teams, our
Boards, and our memberships that we are active innovators
• Financially, we need to know that we do it at the lowest possible
cost, and that we drive improvement into our organizations
• It will start when we can look in the mirror and say we believe it
ourselves
Will you email me 3-5 things that you would consider
evidence of this affirmation, whether in our network or
in your organization?
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What would convince you that our network can claim
the lowest cost of going active with innovation?
What should be on your
radar screen:
To have the lowest cost
in the industry
for compliance
Lowest Cost In the Industry for Compliance
Nailing Down the Cost of Compliance
• If we are going to win on this goal, we need to do some
brainstorming on the priorities for how our network can tackle the
cost of compliance using our areas of expertise
– Top 5 costs from your homework assignment were
1.
2.
3.
4.
5.
Training and testing employees; full-time internal auditor
Attorney costs for 3rd party contract reviews
Bank Secrecy, ALM, FACT Act/Red Flag, Call Report, CISP
Writing/updating policies; validating processes; forms changes
Disaster recovery planning
• Let’s spend a few minutes getting the group’s priorities
Nothing seems to force the hands of credit union
investment and project priorities more than
changes in the compliance area
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How as a network can we reduce the cost of
complying with a third-party’s deadline?
Lowest Cost In the Industry for Compliance
What drives compliance costs?
Thoughts from Jim Vilker, Audit Link Manager:
• Risk Assessments overly prepared and over-estimating risk
• Fracturing the duties amongst too many people and losing a single
focus
• Training curriculums
• Allowing examiners to rule the roost... What about saying no? What
about being reasonable?
• Understanding of time requirements, insider audits, BSA, Reg D,
error correction
– Audit Link does an average credit union in CU*BASE in 1 ½ hours
• Compliance is sometimes so vague in what it encompasses that it
becomes the tiger you cannot tame
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Lowest Cost In the Industry for Compliance
Compliance: Breaking it Down
Organization/Employee Compliance
Operational Compliance
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Employee security and segregation
Website and advertising
HR
Bylaws
5300
FR2900
State and Federal regulations
pertaining to allowable services and
delivery methodology
General Ledger suspense and
settlement
Financial statement
GAP
Transactional
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BSA
Reg D
Reg E
Insider
Reg CC
NACHA
Lowest Cost In the Industry for Compliance
Compliance: Breaking it Down
Member Compliance
• Disclosures
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TIS
Reg E
Reg CC
Reg Z
Reg D
New product or fee design
– Disclosures
– Financial statement configs
– Advertising and marketing
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Partner Compliance
• Risk Assessment
• Oversight
• Contract requirements
• Monitoring
Lowest Cost In the Industry for Compliance
A Collaborative View
Lowering Costs Through Shared Services
• From the CUSO perspective, could we build a cooperative,
collaborative view of how to comply?
• Could we have a working model to analyze, understand, and even
make judgment calls about one way to do it?
• Could we have a working model that aggressively tries to drive down
the cost of day-to-day execution around
compliance and auditing?
• Could we use that aggressive model to
improve the software and tool foundation
that everyone uses in diverse ways?
• The vision is Yes – and in 2008, we started
Audit Link
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http://www.xtendcu.org/pages/audit
Lowest Cost In the Industry for Compliance
Audit Link
Lowering Costs Through Shared Services
• Audit Link is like SRS Bookkeeping
– Do the work, every day, using CU*BASE tools intensely
– Drive throughput as hard as possible and innovate to meet the goal
– Share with everyone, clients and non-clients, what we learn – be a
template for everybody
Do you have
documented
processes to
innovate
against?
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It’s more than
just a user
manual
Lowest Cost In the Industry for Compliance
Big-Picture Collaborative Efforts
Lowering Costs Through Collective/Proxy Investment
www.cuanswers.com/kitchen
http://advisor.cuanswers.com
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Do you avoid unnecessary thirdparty costs by being part of a
developing solution?
Lowest Cost In the Industry for Compliance
Tools for your Auditor
Lowering Costs Through Developing Shared Tools
• Released already. . . are you using them yet?
– MNAUDT
– Audit Tracker
– New Red Flag address indicator on credit reports
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Lowest Cost In the Industry for Compliance
Tools for your Auditor
A Flurry of Compliance-Related Development
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OFAC scans on outgoing wires
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Released November 2008
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#20312 Status: Awaiting Programming Resources
OFAC scans when setting up A2A
account relationship records
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Released November 2008
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AS Level 1 incorporated into the
account opening process
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#22083 Status: Awaiting QC testing
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New collector screen sort to monitor
for first payment skips
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Enhancements to Reg D statistics
report (FR2900)
#23555 Status: In QC testing
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Credit reporting change to add the
Address Indicator field to confirm
address verification after discrepancy
(Red Flag)
OFAC scans on corporate drafts
#24553 Status: Awaiting approval
Address change warnings (Red Flag)
#24551 Status: Awaiting approval
Update to BSA report
#24092 Status: In process
#22426 Status: In QC Testing
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New BSA file structure to monitor for
FSCC and Xtend shared branching
#24190 Status: In Process
#24335 Status: In Process
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Automated scan for FinCEN
Dormancy predictor enhancements
#23844 Status: Awaiting Implementation
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NCUA Share Insurance Analysis report
#24015 Status: In process
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Employee Security Config report
#24604 Status: Awaiting Programming Resources
Tools do not equal lower cost; how will you
implement, and how can the network help?
Lowest Cost In the Industry for Compliance
5300 Tools: Building a Cooperative Business
Lowering Costs Through Shared Tools and Services
• CU*BASE offers dozens of tools and techniques to a CEO faced with
filling in their first 5300 Call Report...but which tool do you use to
get each answer?
– Typical Call Report = 600+ questions!
• Our goal is to start down a path that will give the credit union CEO
valuable assistance and robust, easy-to-use tools to help reduce the
burden of completing this critical task
– Ultimately, Audit Link also wants to be able to offer 5300 completion
services to our clients, using these tools
• We will start with some major projects that will kick off in 2009, and
will continue to make this an important concept for future
development efforts for several years to come
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Lowest Cost In the Industry for Compliance
5300 Tools: Building a Cooperative Business
Lowering Costs Through Shared Tools and Services
Proposed Project Outline
• Phase 1: Discovery and Documentation
– To document how existing CU*BASE tools can be used to fill out a 5300
Call Report
• Phase 2: A New CU*BASE Database
– A new database that will allow 5300 data to be entered via CU*BASE,
saved and used to populate the next month’s report as well as for
future analysis
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Looking for in-the-field
participants and
teachers!
Lowest Cost In the Industry for Compliance
5300 Tools: Building a Cooperative Business
Lowering Costs Through Shared Tools and Services
Proposed Project Outline (continued)
• Phase 3: Integration with Third-Party Tools
– When a CU has completed entering data into the 5300 database in
CU*BASE, a simple download process will move the data directly into a
third-party tool for reporting to the NCUA (no re-keying)
• Phase 4: Pulling in Data from Your CU*BASE Files
– A series of individual projects to begin pulling data from various
locations in CU*BASE and populating the appropriate 5300 field(s)
automatically
• Phase 5: Analyzing 5300 Trends Without Leaving CU*BASE
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– A long-term, ultimate goal is the development of tools that can take
data keyed into your CU*BASE 5300 database and give you easy
trending and analysis
Looking for in-the-field
participants and
teachers!
Lowest Cost In the Industry for Compliance
Automating Third-party Risk Assessments
Lowering Costs Through Collective/Proxy Investment
Coming soon!
Compliance needs more than a
tool in CU*BASE
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What other kinds of shared
activities could the network be
doing beyond toolkits?
Lowest Cost In the Industry for Compliance
Declaration vs. Affirmation
• Whether it be you as the CEO of a credit union or me as the CEO of
this CUSO, we need the affirmation of the market, our teams, our
Boards, and our memberships that we have the lowest cost for
compliance
• Financially, those costs might range from developing solutions, to
executing in a compliant manner, to creatively avoiding compliance
costs
• It will start when we can look in the mirror and say we believe it
ourselves
Will you email me 3-5 things that you would consider
evidence of this affirmation, whether in our network or
in your organization?
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What would convince you that our network can claim
the lowest cost in the industry for compliance?
What should be on your
radar screen:
To be known as one of
the most
aggressive mortgage
servicing networks
An Aggressive Mortgage Servicing Network
A Narrow Goal in a Big Wide Space
• While CU*Answers has lots of options for credit union mortgage
programs, this goal is very specific: make mortgage servicing a core
competency of credit unions and our network
• Lender*VP has products for origination, consulting on pricing
schemas, help with forms packages, and interfaces to third parties
• But our goal is to make credit union employees and members as
comfortable with a mortgage being serviced by the credit union as
they are a car loan
• Whether it be credit unions servicing mortgages directly as
portfolio’d assets, or through a third-party participation partner, or
through a relationship with Xtend for sub-servicing, our goal is to
have a broad set of servicing options that excite credit unions about
offering mortgages to their members
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How does this goal relate to your future business plan? How does
it relate to the current economic situation in the U.S. today?
An Aggressive Mortgage Servicing Network
Why are credit unions uncomfortable with
mortgage servicing?
• Let’s brainstorm until we have 5-7 things to tackle
(remember our goal: to make CU employees and members as
comfortable with a mortgage being serviced by the credit union as
they are a car loan)
1.
2.
3.
4.
5.
6.
7.
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I have a long list of technical things people wish the mortgage
software could do, but they are behind the scenes; what are the
front counter issues we need to worry about?
An Aggressive Mortgage Servicing Network
Configuring Mortgage Servicing on CU*BASE
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•
•
•
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First mortgages – 360 and 365/366 interest calc types
Home equity options
Escrow options
Variable rate options
An Aggressive Mortgage Servicing Network
New Solutions in the Works
• “Escrow 365” (coming early in 2009)
– Intelligent escrow processing for loans that have multiple payments per
month
– CU*BASE will understand when the escrow transfer has been satisfied
and when it is delinquent
– Broadens the database for escrow processing
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An Aggressive Mortgage Servicing Network
New Solutions in the Works
Extending 360 Capabilities
• Eliminate the significance of the 20th of the month
– Members will be able to pay any time, on demand
– If payments are made prior to the 20th, system will perform an
interactive calculation of interest due and post interest collected to
income
– Payments can be made ahead (i.e., post the August pmt on June 28)
– Intuitive messaging for the user to declare their intent when posting a
payment
• “Are you making your August payment now, or would you like to pay extra
on principal?”
• Based on the response, the system will know how to post the payment
spread
– Phase 1 will include CU*BASE Phone Op and Teller posting, It’s Me 247
online banking, and all transfer programs
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Beta slated for April 1, 2009
An Aggressive Mortgage Servicing Network
Shared Servicing Concepts
• What do you need to know about our sub-servicing options?
• What obstacles do you see in offering mortgage servicing to your
members? Could they be overcome by network service?
• What business might you start from our template?
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www.lendervp.com/lender_re
An Aggressive Mortgage Servicing Network
Other Mortgage Support
• Prime Alliance
• Where Members Borrow
• Online Rate Board
Prime Alliance Web-Based
Application Tool
MNMGMA #6
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An Aggressive Mortgage Servicing Network
Declaration vs. Affirmation
• Whether it be you as the CEO of a credit union or me as the CEO of
this CUSO, we need the affirmation of the market, our teams, our
Boards, and our memberships that we are an aggressive mortgage
servicing network
• It will start when we can look in the mirror and say we believe it
ourselves
Will you email me 3-5 things that you would consider
evidence of this affirmation, whether in our network or
in your organization?
39
What would convince you that our network can claim
we are the one of the most aggressive mortgage
servicing networks?
Driving Returns to Your
Stakeholders
What does a bigger focus on savings by America
and your members mean to your credit union?
What if everybody decides they’re overleveraged and have too many loans?
Introducing Gividends
Gividends
A Potential Shift
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Gividends
A Potential Shift
• Two Goals
– Renew thrift as an American value
– Create broadly democratic pro-thrift institutions as alternatives to the
current crop of anti-thrift institutions
• Right or wrong, what if this sentiment becomes very popular in the
next few years?
• Where does your credit union stand? Are you a proponent of thrift,
and do your members see you that way?
• Are you already the institution this group has a
goal to create?
42
Gividends
A New Network Focus
Introducing Gividends
• Like Lender*VP, which is a strategic partnership for a credit union’s
lending program success, in 2009 CU*Answers will introduce a new
consulting focus: Gividends
• Gividends will be a strategic partnership for a credit union’s savings
program success
– As the word implies, how can you give more value back through your
dividend and savings programs to your stakeholders?
• Gividends will work with credit unions to amplify their voice on
savings concepts, the return of value on the other side of the credit
union equation
• What will your credit union do in 2009 if there is a revolution in the
way American consumers think about savings?
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Gividends
A New Network Focus
Introducing Gividends
Some short-term focuses for Gividends in 2009:
• Lead on the development of a comprehensive and CUSO-owned
rewards program
• Help credit unions understand their savings return models and how
they can implement them through CU*BASE
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Automated Dividend Donations (“Save the Whales”)
Automated Savings Transfers (“Keep The Change”)
Conditional Dividend Posting (“Qualified Dividends”)
Reverse Tier Pricing
Patronage/Ownership Dividends
Bonus Savings / Loan Interest Dividends
• Lead on the development of additional pricing models and tools to
highlight credit union savings returns
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Gividends
Recent Focus Group
The Future of
CU*BASE Tiered
Services
Tiered Services
Development Focus Group
October 9, 2008
1
Check out the Focus Group presentation
and meeting notes in the Kitchen!
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http://www.cuanswers.com/kitchen
Gividends
Gividends Rewards Management
• Gividends Rewards Management (GRM) – a new collective effort
and processing initiative brought to you by Xtend and its partners at
cuasterisk.com
– GRM is a new effort by the Xtend team to work closely with the credit
unions who utilize the CU*BASE core processing platform for their
member rewards programs
– Combines the Tiered Service feature set with a member rewards
fulfillment capability that allows credit unions to
• Merge transaction reward points with core member relationship points
• Market the advantage of credit union rewards
• Manage the redemption of member points for credit union and general
marketplace value on demand
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Gividends
“Save the Whales”
Automated Dividend Donations
• Currently running a beta with FOCUS Credit Union in Wauwatosa,
Wisconsin, that allows members to assign their dividends to a
charity of their choice
• CU*BASE uses a new
dividend payment code
to funnel a specified percentage of the dividend
payment (50%, 100%, etc.) to a specified G/L account number
• The basics are done, and we will be adding even more flexibility
during 2009
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Gividends
“Keep The Change”
Automated Savings Transfers
• It seems like people go hot and cold on programs that are designed
to help the member save subconsciously
– From programs that round-up debit card transactions, to rounding up
loan payments, to this Wachovia program that actually tacks an extra
$1 onto multiple kinds of transactions
– Effectively, this is like throwing loose change into the coin jar at home –
but who has loose change in their pockets anymore?
• We completed a test product for
lending in 2008, but it has not
moved forward – too hard to explain
to members
• How do you feel about these
kinds of processes?
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www.wachovia.com/savings/way2-save.html
Gividends
“Qualified Dividends”
Conditional Dividend Posting
• What we are planning to do is create the engine for these basic
processes first:
– Set the product to pay a Qualified Dividend, on Schedule A or B
• Schedule A is a single/base rate, and Schedule B has a possible tiered
structure
– Develop a Conditional Dividend configuration by Dividend Application
• Rules are unique for the product and tightly integrated for efficient
processing
• Possible conditions, to grow over time:
– Activity by delivery channel, amount, and number of transactions
– Test for e-services (e-statements, bill pay, etc.)
– Develop the dividend payment programs to evaluate members before
paying dividends
• Determine which schedule the member qualifies for
• Pay dividends according to the qualification
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Gividends
“Qualified Dividends”
Conditional Dividend Posting
• Currently have programs in place
with three CUs
– One with BankVUE
– Two with the native
CU*BASE solution
• We need to use the Know Your Member, Marketing Club, and Tiered
Service database evaluation tools we have already written, as part
of this new process, so that employees have easy verification of why
and how members earn dividends
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Gividends
Patronage / Ownership Dividends
(Available now)
• Configurable Patronage Dividends: making ownership dividends real
for your members
• To reward members for their entire relationship with the credit
union
– Considers savings, CDs, and loans (even accounts closed during the
year)
– Pays the entire dividend to the base share account
– Can be used on demand, at any time – such as an annual special bonus,
or a special credit union
anniversary promotion, etc.
– Puts the “profit sharing” concept
back in play for credit union owners
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MNMISC #27 & 28
Gividends
Bonus Savings / Loan Interest Dividends
(Look for the menu option in 2009)
• Replaces traditional custom programming done commonly at endof-year
– Posts individual dividends based on a specific account – one-to-one
ratio
• So you could post a bonus just to your “Super Savers” share type or to your
home equity lines of credit
– Pays to active accounts only
– Under development and in testing as of 12/31/08
• Our teams will use these as proof-of-concept in 2008; in 2009 CUs will be
able to set up, test, and schedule these dividends to post without any
custom programming fees/leadtimes
• This is a product incentive to increase your penetration with a direct
tactic targeted to a certain type of account
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Still toying with the idea of splitting the
dividend payment as an additional way
to identify the ownership difference
Gividends
Thinking About Your Credit Union
• What does a bigger focus on savings by America and your members
mean to your credit union?
• What if everybody decides they’re over-leveraged and have too
many loans?
• Does working with Gividends make sense to you?
• What else would you have the network focus on, given this potential
shift in how members may react to this current economic
environment?
Coming soon...
CU*Answers Management Services
53
Pardon our dust; we’re building a whole
new department and focus for 2009
Conclusion
With our 3 declarations, we’ve identified the areas
we hope the market will recognize as
strengths of our network
We’ve discussed a potential shift in the mood of
members about their savings goals for 2009
Does this fit with what you were thinking about for
2009 and 2010? What do you wish to be known for?
How can the network help?