The giant banks now offer low or zero rates on savings at all, and sadly, most credit unions have followed suit. But perhaps credit unions have missed an opportunity to differentiate themselves with better deposit rates. Sure, plain old savings accounts and certificates aren’t all that exciting, but the rates you pay make a real, fundamental difference in perceptions as well as balances.
The safest way to double your money is to fold it over once and put it in your pocket. – Kin Hubbard
Everyone of your members has the intention of saving. Each of us knows all the reasons it’s important and what we’re saving for: a rainy day, college expenses, safety net, retirement, a nice vacation, a new car… the possibilities are almost endless, yet so are the reasons that prevent us from saving either as much as we should or anything at all. Which one of the following do you hear most often from your members?
“The reason it seems that price is all your customers care about is that you haven’t given them anything else to care about.” (Seth Godin)
As a consumer, if given the choice between buying what looks to be the same product from two different sources, you would choose the one with a lower cost, right? You probably switch brands of tissues or aspirin or dish soap to whatever is on sale at the store this week without even thinking much about it. You have no real investment in one particular brand because they all seem about the same. They are simply commodities.
More notes from the CUNA Marketing and Business Development Council Conference:
Economic Insights – Bill Hampel, SVP/Chief Economist, CUNA did an outstanding job of making economic stats understandable:
• Credit unions have been collateral damage in the financial crisis (but be sure to tell members about share insurance to put them more at ease.)
• Home prices in most of the country have hit bottom, consumer confidence back up to 50% (was 20% at one time).
• 2nd quarter of year is when jobs will start coming back, but likely 4th quarter before consumer confidence is back.
• People will be wanting to pay down debt in future.
• Spread is good between loans and savings right now. Should be September before Fed changes rate.
• Low growth economy; good time for “poaching” members.
• Look for 4% loan growth in 2010 and 6% in 2011.
• Rising delinquencies do not necessarily mean major modifications are needed. At 1.8% delinquency rate for CUs (compared to 5.37% for banks).
• Net loan write-offs have gone from .5% to 1.2% this year, forecasting .8% in 2011.
• Credit card charge offs @ 4.29% (compared to 10% for banks).
• Savings growing 8% this year, 6% next.
• Net worth is more important than net income.
• Net income to average assets: 2008- 31 basis points, 2009- 15 basis points, 2010 estimated at 40 basis points.
• It’s OK to let capital ratio fall — Net capital to assets: 6.5% in 80s, 11% in 90s, should be 9.6% this year (as a reference, 6% is when the auditors show up, 7% is considered well-capitalized).
Every credit union has them. Single service members who are a member in name only, with an auto loan or certificate that they picked up because of the rate or the convenience. If the member is paying fees or interest on a loan, then that member is likely profitable – so that’s an easy call.
Why do credit unions still focus so much on marketing checking accounts to non-members?
I mean, I know why — the checking account is still the best indicator of a PFI relationship, and it’s extraordinarily “sticky”. Members with checking are loyal members, or at least they’re stuck with you for a while. I get that.
All CU marketers know how difficult it is to get new members to switch their checking accounts. Years ago it wasn’t such a big deal, but today – with online banking, bill-pay, and automatic payments – it’s harder than ever.
The literal translation of the term laissez-faire is “let do”, and generally means “allowing events to take their own course.” Because of the phrase’s history, it tends to be used when discussing Economics and Politics – especially when the economy isn’t doing too hot. So what does this have to do with marketing? Credit Union marketers understand the problems with a “wait and see” attitude, because they are living it. Those that wait, can’t see – because they are usually in the back of the pack, choking on the dust of those that got out in front…
Unfortunately, stress has become as much a part of the holidays as shopping, annoying relatives and store decorations that are often up before Halloween. Much has been written about how to relieve holiday stress – stay home this year, draw names for gifts instead of going broke buying for 20 of your nearest and dearest, or do all of your shopping online – but most people overlook the most obvious answer of all.
As you sort out your plans and strategies for the new year, what’s different for 2009? (You are working on 2009 planning now, right?)
It’s been a rather, um, eventful year in the financial biz. Some of the plans you made back in 2007 probably went out the window as the year progressed. And 2009 will be a very different ballgame indeed.
“The FDIC’s web site last Monday tallied a record 9 million hits … Traffic was driven by concerns about IndyMac, the big California lender taken over by the FDIC on July 11, and by general concerns about banks’ health,” according to Daniel Gross of slate.com. “After several years on the D-list, deposit insurance is hot.” Gross also writes that the FDIC: “anticipating a rise in business … has called dozens of veterans out of retirement and is hiring. Five banks have failed this year…, and (Sheila) Bair (chairman of the Federal Deposit Insurance Corp.) expects more. Ninety banks are on the FDIC’s Problem List.”
In 2005, more people went bankrupt than graduated from college, according to Harvard Law Professor Elizabeth Warren — and the economy was growing. In 2006, new laws went into effect to try to combat perceived abuses of the system, and the number of filings went down. Yet in 2007, bankruptcy filings increased by 38% over the previous year. For 2008, Jack Williams, a scholar in residence at the American Bankruptcy Institute and a professor at Georgia State University, is estimating filings to be back up in the 1.2 to 1.4 million range nationwide.
Read more on Is the Cost of Being Middle-Class Leading to Bankruptcy?…
I know the real estate market is in the dumps, but you may want to be aware of this trend: Middle-income people are the fastest-growing group of second-home buyers. According to the 2005 report from the National Association of Realtors, the median income of vacation-home buyers is $71K, the median income of investment-home buyers is under $86K, and the median purchase price of the second homes is under $200K.
Read more on TrendzWatch: Second-Home Buyers May Not be Who You Expect…
People think there are a lot more wealthy Americans than there are, according to Mark Penn, author of the book Microtrends. A survey taken in the late 90s showed people believed that 15% of households could be classified as that rich, when the reality was only 4% qualify as true millionaires. Perhaps we can blame it on “Who Wants to be a Millionaire” and all those other game shows.
Reuters states “this may be the worst non-recession in years.” According to the AP, 261,255 homes received at least one foreclosure-related filing in May — up 48% from a year ago. A Credit Suisse report predicts that 6.5 million home loans will fall into foreclosure over the next 5 years, affecting more than 8% of all US homes. It’s no wonder consumer confidence is low.
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