Old-fashioned credit unions are more relevant than ever.
I was reading this article that trumpeted the successes of “old-fashioned” banks and I couldn’t help but think that credit unions are all over this. The article identifies how certain banks have played it safe in current economic markets.
These banks have maintained lending standards. Banks that have reduced or lowered lending standards to try to improve profitability have suffered. The banks identified in this article did not give in to that temptation. Credit unions do one better by maintaining their underwriting standards while still managing to reach out to the underserved.
These conservative banks have exited or stayed out of the residential mortgage market. Conversely, credit unions have been able to stay in the residential mortgage market without getting involved in subprime lending. Today a credit union is one of the best places where a consumer can go to obtain a mortgage.
Another tool of the conservative banks is to keep costs down. Credit unions keep costs down so they can give back dividends to members. It’s how credit unions are structured. Credit unions are legendary for watching the bottom line. It is part of being a nonprofit financial cooperative.
Credit unions own consumer lending. They are designed for it and they do a terrific job at it. Given today’s lending environment and the absence of trust in that environment, credit unions are more important, more competitive and more relevant than ever.
Identity Theft Declining?
According to Javelin strategy and research, identity theft declined somewhat in the United States in 2007. Yet this crime still amounted to a $45 billion loss. I give seminars on identity theft and any information that would suggest that the crime itself is declining, even slightly, is great news, even though the FTC says ID theft complaints continue to rise.
Many people might think of identity theft as being solely a technological problem. However social engineering also plays a large role in identity theft. This is not to say that there have not been large data theft issues out of the control of the consumer with retailers and government entities. In terms of theft of data from individuals directly, social engineering is key. The largest example of this is probably Internet phishing. People will voluntarily send their information to thieves because they have been tricked into sending the information. Every week I get an e-mail allegedly from some financial institution asking me for account information. It is extremely difficult for most people to see outside their own immediate experience and notice someone trying to take advantage of them. Nowadays the threat is not just local as people from other countries are involved in perpetrating Internet scams.
People will write their pin numbers on their ATM cards and when the cards are lost and stolen thieves can easily use them. Today, not using a shredder at home can provide the user with access to a person’s data. Who knows what happens to that garbage after it leaves the curb?
Entire industries have sprung up to combat identity theft or at least its symptoms. There are services that help a person deal with the authorities, consumer reporting agencies and financial institutions. There are other vendors that tried to make it more difficult for an identity thief to steal information by placing a block on a person’s credit history with the consumer reporting agencies. Finally, insurance companies have begun offering coverage for the costs associated with identity theft.
So why is identity theft declining given greater threats and more exposure? Perhaps people are just being more careful. There is definitely greater public awareness of the problem. Certainly credit unions are spending more time and money protecting member information and helping to educate their members. Identity theft could decline even more if people stopped responding to e-mail phishing or telephone phishing and took even more care of their personal data.
Tinker FCU’s Make Your Own Video Contest.
I have to hand it to Credit Union Times. This is my third blog post in a row concerning social media where the source of the information comes from the paper. It’s the Credit Union Times social media trifecta. I hope that CU Times continues to run stories such as these.
In this instance, I am talking about the story from the February 6, 2008 issue concerning Tinker Federal Credit Union. Tinker is running a “make your own video” promotion. It is approaching colleges and high schools to invite young people to submit entries. Additionally, Tinker is promoting this through a Facebook page as well as a special Tinker website.
To me, there’s almost no such thing as bad Internet marketing. Here, the intent seems to be to reach out to young people. That’s good because if you can create brand loyalty when a person is young, that person may stick with you for life. The marketing is somewhat indirect, however, because creating a video associated with money is not the same as generating interest in specific credit union services.
I’m not being critical of this program, far from it. I applaud Tinker’s efforts in social media. When I compare this program to Carolina Postal’s social media marketing campaign, I suspect that Carolina Postal will have more tangible, measurable results. I could be completely wrong in this. Yet, I cannot shake the idea that the more focused marketing is, the more effective it is.
I guess it depends on what you’re trying to accomplish. If you are trying to generate interest in the credit union itself and a broad range of products and services, it is hard to be specific. On the other hand, if you are trying to launch a product intended for a specific audience, then it is easier to be specific. It all depends on the needs of the credit union.
Financing a Hoopty at a Credit Union.
Almost everyone, at one time or another, has had a beater car. That’s why I loved Carolina Postal Credit Union’s program targeted at beater cars for their members. Apparently, in North Carolina a beater car is called a “Hoopty.” Credit Union Times wrote an article about this program in its January 30, 2008 issue. Creating a financing program directed at these types of cars made a lot of sense for the credit union’s postal worker membership. Many of the letter carriers, for example, use their own cars for their routes. A new car is not the best choice for this.
The credit union had a very high rate of return on its Hoopty program and it offered a product that its members genuinely appreciated. That’s the definition of win-win. It’s hard to find a better example of targeted marketing that would work specifically for credit unions.
Another impressive aspect of Carolina Postal’s approach is that it used traditional marketing (a contest) and new media marketing through its website, a blog and a video hosted on YouTube. That type of approach is a textbook example of what credit unions should be doing today.
I had to think, what other types of cars could be used for this type of program? For the credit union that has many middle-aged male members, a targeted program for used sports cars might be valuable. Being in that category myself, I can speak from experience. The credit union could even work with a car dealership that specialized in used sports cars.
Credit unions that see a lot of snow in the winter could offer specialty loans for jeeps and trucks with snowplows. Credit unions along the East and West Coast could target used sport utility vehicles suitable for pulling boat and Jet Ski trailers.
The lesson here is that members of a credit union have a common bond and common interests. The credit unions that are successful in identifying those common interests and marketing products that appeal to those interests will be successful.
University of Kentucky FCU video.
Credit Union Times ran a nice article in the January 30, 2008 issue on this video. I thought they did a really nice job of framing the shots and doing the cuts. It’s pretty polished for something that the credit union said was essentially low budget. As new media advertising goes, I think it’s pretty good. Hats off to them and I hope others link to this as well.
My first choice for video is always YouTube because the sentiment around here is that it is okay for business. MySpace? Not so much. In fact, in writing this post, I chose a non-work computer because I don’t want to head over to MySpace with a work computer. Even though plenty of people are making lots of money on MySpace, it’s still perceived as mostly for social activities.
Of course, if you are a credit union reaching out to young people, arguably, that’s where you need to be.
Coming Soon: The Winter 2008 Issue of The WWR Letter
Have you picked up a copy of The WWR Letter lately? The WWR Letter is a quarterly newsletter for the credit union industry published by Weltman, Weinberg & Reis Co., L.P.A. Recent issues have included articles on such topics as podcasting, advertising risks to credit unions, collecting delinquent courtesy pay and peer-to-peer lending, just to name a few.
Stay tuned for our next issue of The WWR Letter, featuring articles on: eBay Sales of Repossessed Cars, The Quest to Go Paperless and the Criminal Forfeiture of Vehicles.
Are you interested in receiving issues of The WWR Letter? If you would like to be added to our mailing list (this newsletter is currently only available in a print version), please send an email to Mala Mason at mmason@weltman.com with your name, credit union name and address information.
Please visit this link to view past issues of The WWR Letter.
