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Are you paying attention to what is happening? I blogged some time ago about the distraction that was Dodd Frank.

I’m not bragging or anything but I think I was pretty spot on. Credit unions are still enjoying their exemption from the interchange amendment (as promised) and instead of worrying about potential loss of income we should’ve been preparing for the opportunity of the decade – new members that are going to finally move their money from the big-bad-TARP-taking-too-big-to-fail banks.  As I predicted, banks WILL find a way to make up for that lost income. B of A’s decisioin to begin charging for the debit card was the salt rubbed in the wound of their reputation…..game over.

Let’s face it – checking account promotions haven’t worked for years. Bill pay did its job. It is sticky. Most people feel stuck in their current relationship. The only time a person is willing to move their checking account is if they are so pissed off at their current financial institution.

Thank you Bank of America for pissing off your customers. Again.

But here’s the rub.

1. Most credit unions don’t need deposits right now. They need loans.

2. Most credit unions new member process is cumbersome. Frontline folks are either not trained or not given permission to qualify new members for credit. Fix that.

3. Switch kits suck. There, I said it. Everyone says they have one but no one has a decent one – that I’ve seen. It doesn’t help me “switch” it just illustrates, in brochure fashion, what a nightmare this is going to be. How about a human switch kit? Be the concierge for the checking and help them move these over.

4. Most credit unions don’t instant issue debit cards. At the center of this opportunity is the beloved debit card. B of A wants to charge their customers $5 a month to use it and if they switch to a credit union it’ll take them two weeks to get a new one. Fix that!

5.  Most credit unions are open from 9 to 5, Monday through Friday. And that wonderful woman Kristen Christian has declared Bank Transfer Day as a Saturday. Open your branches!

This is just the beginning of the marketer’s dream. You see, we have time. About two months and 10 days to be exact. To improve our onboarding experience. The earthquake hit when B of A made the announcement. The tsunami will hit on January 1st of next year when they actually begin charging the fee.

My husband Mark has always said that B of A’s tagline should be: “We Bank on Inertia.” And until now, it’s worked in their favor.

 But I predict that our time has finally come. We are TARP free, self-funded, financial cooperatives with a volunteer board. Somehow that has meaning again.

We knew it was going to happen. Those big greedy banks were going to come up with new fees to replace the interchange income lost thanks to Dodd-Frank-Durbin-Obama. I hiked the hill last year (my first time) to try and get the Durbin amendment stalled – because it was flawed. But no – this is a bill that helps consumers. Balls.

When the average American consumer can ill afford it, banks are once again hurting the little guy.

History is repeating itself. Credit Unions to the rescue.

Raise your hand if your credit union’s loan-to-share ratio is at an historic low point and your CFO is looking for non-interest income? I know there are probably lots of CFOs saying “Let’s charge LESS for checking and we can still be the hero.” To them I say a firm, “No!” (use a rolled up newspaper if you need to and just hit against your leg for effect)

This is such an opportunity that cannot be taken lightly. A true differentiator could emerge. Think about it – when people ask us:

“What’s the difference between a bank and a credit union?”
Our answer can simply be, we don’t charge you for checking.

When someone asks:

“Why should I join a credit union?”
We can simply say, we don’t charge for checking.

But Denise – we need to make money!!

Okay. How about this. Lend.

That’s right. Make your money the old-fashioned way. Lending it.

Banks are also being accused of not lending to people in need even after those greedy bastards got bailed out by the taxpayers. For shame.

Make a loan to someone with no credit score! Crazy! Before we had FICO scores EVERYONE we made a loan to had no credit score.

Imagine being the hero that makes a Gen Y their FIRST car loan and helps them establish credit AND doesn’t charge them or checking! We could lower that average age of a CU member (now hovering around 49) considerably.

In the immortal words of Seal “We are never gonna survive……..unless we get a little crazy.”

It’s finally happening. Banks are giving up on Free Checking. After taxpayer bailouts and posting record profits, it’s not enough. Let’s see how much money we can get from consumers in the worst economy since the Depression.

Now is the time for credit unions to do nothing. Absolutely nothing – and you will be the hero. You will have your differentiator back.

Consider the airline industry. No one charged for bags. Then American airlines had to charge (so they say) and then one-by-one everyone followed. Everyone except Southwest Airlines. And the best part? Marketing decided to flaunt their decision to do nothing in a series of very successful ads.

So please, do nothing.

So I’m driving into work this morning listening to Pandora on my iPhone through my car stereo and something new happened. About every 3rd song a nice young woman comes on and says “Would you like to listen to Pandora without interruption? You can for only $36.00 a year. Just click on the button on your mobile device.”

My commute is about 45 minutes. I heard the ad about three times.

For just $3.00 a month I could listen interruption free. That’s good pricing. I signed up.

The psychology of parting with the value of our time turned into money fascinates me. So let’s look at the 3 dollar dilemma.

  • I will pay $3.00 a month to avoid commercials on Pandora for my drive in to work but
  • I will bitch about paying $3.00 a gallon for the gas I’m burning on that commute.
  • I won’t think twice about paying $3.00 for the cup of coffee I’ll buy at Starbucks on my way but
  • I resent paying $3.00 to get money out of an ATM to pay for my Starbucks.

I heard Bank of America is going to start charging for checking! Outrageous! Greedy bastards.

How can they charge people to have global 24/7/365 access to their money?

Would your members pay $3.00 a month for that convenience?

I can’t stay silent anymore on this issue and I know it’s going to ruffle a lot of feathers. So I’m going to approach it from a brand perspective. Brand is after all, your reputation. What you’re known for. And right now Credit Unions are getting a ton of unwanted press from the People magazine of the news world – USA Today.

Last week it was interest rates on “pay day loan” alternatives. This week it’s courtesy pay

On Tuesday I was speaking at the CU Association of New York’s annual meeting. My topic, “2009 Reasons to Question Everything.” I took a chronological look at CU press in the past 8 months. At best we look like we’re struggling under the weight of a corporate stabilization – at worse we look like greedy bankers hiding behind this statement:

“…courtesy overdraft is provided because, “If we didn’t, (consumers) would go somewhere else and get it.”

That quote is directly from this latest USA Today coverage. But on Tuesday when I showed the previous week’s coverage an audience member rose their hand and basically said the same thing. So rather than losing it I took a deep breath and turned that comment back to the audience. I asked them how they felt about this statement –

“If we didn’t provide payday lending and courtesy pay, our members would go somewhere else and get it.”

There was a great debate that ensued. It was a debate of values. And it came down to this – are you okay losing revenue to a banker/competitor by doing what’s best for the member? Some argue that gouging them less (400% instead of 600%) was best for the member. Others said they didn’t want any part of enabling that kind of dangerous behavior – they were still in the business of helping members live within their means. Then it shifted back to the year of “chasing ROA” and having no choice. Others sheepishly admitted to being addicted  – or dependent – on the revenue at this point and it would be really hard to replace it. 

As you head into your strategic planning sessions this year – I think it’s time to review your values. If you’ve framed the word “integrity” on the wall and still allowed yourself to subscribe to the “courtesy pay” without advertising so we don’t have to comply with Truth In Lending, you might want to rethink that word. 

I know that sounds harsh – but these are harsh times. You cannot temporarily inject your bottom line with bad profits and expect it won’t impact your reputation and the reputation of all credit unions. 

Remember, we were founded to promote thrift and to provide loans for provident and productive purposes only.

Dale Kerslake, President/CEO of Cascade FCU has declared an NSF Fee Holiday. For the month of December the credit union is waiving all NSF fees for members.

In January, they will get a letter advising them of the dollar amount that was not charged and encouraging members to start the New Year with Balance.

Wow. Happy Holidays Dale! You rock!

In Fred Reichheld’s groundbreaking book The Ultimate Question he talks about good profits and bad profits.

Good profits come from fees customers will gladly pay because they see value in the transaction. A great example is the annual COSTCO membership. I happily pay a $50.00 a year for the privilege of shopping there.

Bad profits are those that are collected at the expense of a customer relationship. They not only turn off customers, they erode employee morale.

I flew from Raleigh-Durham, North Carolina to Orlando, Florida today. Here are the bad profits that hit my radar……..just to mention a few.

$15.00 to check a bag.
$6.00 for a glass of wine on the plane.
$3.00 for a bag of pretzels on the plane.
$5.00 to rent a headset to watch the movie on the plane.
$15.00 to SELF park my car at the JW Marriott.
$4.50 for a bottle of water in my room
$15.95 per day for wireless internet, in my room.

But the winner of the bad-profit-fee-of-the-week comes from Wachovia (yes, the failed bank that is now owned by Wells Fargo) who has begun charging a $20.00 employee reference fee!!!

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