Episode 7: Youth and the Economic Crisis

This week we aired lucky number episode 7, “The Economic Crisis”. Once again we solicited candid responses from members of Gen-Y about how the recession is impacting them. When I say Gen-Y, I should point out the fact that many of the people we spoke to were either in the work force or actively pursuing jobs. As such, many of their responses reflected the privileged position they found themselves in. We’ve also included some statistics in there to reflect the impact of the recession on youth nation-wide.

While doing some research for this episode, I was fortunate enough to stumble upon this video that appeared on CBS. It highlights five youth ranging from 6th grade to seniors in high school who attend the Tribeca Film Institute in New York City. There they created short films about how the recession is impacting their lives and those around them. Due to the different stage of life these youth are in and the nature of the documentary, the takeaways for credit unions could be much different from those reached in ours. However, I won’t limit your ideas be listing me own here. Let us know what you think after you have checked them out.

Corporate Bailout Drags Down CUs ~Credit Union Journal

Uncertainty Frustrates CU Financial Managers ~Credit Union Times

Financial Advisers Don’t See a Quick Rebound ~Boston Globe

Today, there is a great deal of uncertainty, not only in the credit union industry, but about the economy as a whole. Despite solid growth across many important metrics, the strategic consciousness of the industry is perpetually directed toward the short term, and in many cases rightly so. It is still unclear exactly how much has been lost in corporate investments; the regulatory environment governing the industry is constantly shifting; economists are predicting that unemployment will continue to rise throughout 2009, even into 2010.

What about after that? What about 2015? 2020? 2050? At what point does the strategy of this recession transition from a focus on surviving to thriving? The vast majority of credit unions have been able to maintain healthy capital levels and achieve robust balance sheet growth throughout the first quarter of 2009. Understandably, in times of uncertainty, it can be extremely difficult to justify making long-term investments over the next two years, especially those that might not fully pay off for another ten.

“Gen Y” has become just a buzz word for some, and a dubious, unaffordable investment for others. However, CYouth believes that reaching young adults is—or rather, should be—a critical component of a credit union’s long-term growth strategy. The newest episode (Episode 6 for those counting) from CYouth features Amy Eblacker presenting the top five reasons to reach Gen Y.

If your youth marketing program has been one of the casualties in the war on expenses, isn’t it time to re-examine how you can resume your investment in Gen Y? Or if you don’t have a youth program yet, it is never too late to start.

Questions open for general discussion: Is this recession about surviving the present or investing in the future?  How far into the future should credit unions plan?  The president of Kodak once commented on the companies 500 year plan.  Should reaching Gen Y be considered an investment or a marketing expense?

Credit card bill of rights on its way to Obama

We’re just one John Hancock away from a significant shift in the way many credit card providers do business.  While its provisions don’t kick in until 2010, credit unions should brace for change.  Here are my initial thoughts on it:

1) Credit unions should not be directly affected, because from what I’ve seen, there is not a large degree of involvement in activities prohibited or regulated by the bill.

2) I expect to see a lot of people wanting to settle the debt on their old credit card, especially when they receive that first “heads up” in the mail, especially for those more than 60 days behind on their payments.  This may mean paying off existing balances for those able to do so; more likely it will mean debt consolidation.

3)Based on point 2, credit unions may see credit card delinquency rise, receiving advanced notification of rate changes may make Gen Y members more acutely aware of the rates they are currently paying, meaning they will focus on paying off high-rate balances first.  This, of course, assumes the credit union credit card does not have the highest rate.

4)Crummy business practices in the card market  were bad news for Gen Y, but made it easy for credit unions to stand out.

5)Balancing out #4, many providers may pull out of the youth market, mostly due to restrictions on risk pricing.  If effective, this bill may make it harder for young members to get credit in the form of a credit cards .  There are multiple ways credit unions can respond; one example would be encouraging students to make school related purchases using their student loan rather than a credit card (more on this when we release our student lending episode).

6)Now youth under 21 need a parent to sign with them to get a credit card unless the youth can independently verify their income.  CUs should start prepping marketing materials for the 18 to 21 crowd that integrates the parents.  However, prepaid debit almost seems like a better option at this point.

Feel free to agree or disagree.  Further, do you see any holes in the bill?  Where can credit unions capitalize on the market once bill comes into effect?  No doubt we’ll eventually drill down and do an episode on what exactly this will mean for credit unions trying to reach Gen Y, just entertaining some early reactions.

How Transparent Are You?

Transparency is in high demand today: Government, business, marketing and even socializing (What are you doing on facebook? I’m writing a blog post) are being shaped by this cultural shift.

The U.S. public has been demanding the transparency of TARP fund allocation since the legislative process began, growing increasingly concerned over pork barrel government spending and an increasingly alarming national debt. The government, in turn demands transparency from the companies vying for these funds.

In the credit union world, leaders are demanding transparency from NCUA, following their corporate stabilization plan and conservatorship of U.S. Central and WesCorp. That is, a level of transparency on par with that required of natural person credit unions during regulatory examinations. Seems fair to me.

As consumers, we demand that sales processes be as transparent as possible, insisting on outside reviews, pricing estimates, condition, descriptions, warranty, confidentiality agreements, origins, dimensions, order confirmation, shipping time, estimated delivery date, tracking…you get the idea.

So, why is the demand for transparency higher than surgical masks right now? I came up with a few initial reasons (and invite you to share yours as well):

1. The nature of the current economic crisis: By now we are all well aware of how we got into the economic mess we are in. Whether you are talking about mortgage backed securities or the mortgages themselves, the underlying theme is one of allusion. In general, the public felt hoodwinked by a vale of complex terms and the unclear connectivity of their money to the assets they represented.
2. The internet: The internet has provided us with increasing instantaneity. If you can’t find an honest answer to a question in two minutes, it probably doesn’t exist. Now remember, I am also talking about your cell phone.
3. The internet 2.0: The static gates have come crashing down. Now that the internet is a living, breathing entity, anyone can put information on it. Johannes Gutenberg (inventor of the printing press) would roll over in his grave if he knew we could all disseminate information globally in a matter of seconds. Companies can no longer control their brands, only “manage” them. More blogs are read everyday than newspapers.
4. You tell me (comment below)

Check out this week’s episode on CYouth! Elliott takes a critical look at the transparency of three transactions: buying a wii and applying for a credit card at two very different financial institutions (bet you can’t guess which ones!).

Happy Credit Union Youth Week!

Running from April 19th through April 25th, Youth Week is designed to encourage saving among younger members, and highlight ways that credit unions can help them manage their money.  Our newest episode release, Doing Good is Good Business highlights why it is important that you let our generation know what you’re doing to better serve your members and community.

 

Believe it or not we actually do notice when you go out of your way to make a difference.  Here are some stats to prove it:

• 83% will trust a company more if it is socially/environmentally responsible (2006 Cone Millennial Cause Study, http://www.csrwire.com/PressRelease.php?id=6641 )
• In a study of college graduates one of big difference between the class of 1982 and the class of 2008 is that the recent class “tends to be somewhat more community-oriented, more concerned with job and economic security, and the ethical behavior of employers.” I can certainly see the influence of Enron, the economy and the environment emerging there. (NACE Exec Director, http://www.awlp.org/awlp/blog/wlarchive2008/wlblog_08-19-08.html )
• 40% of Gen Y would stop using a product that they love if they discovered the provider was not socially responsible (“The Net Generation: A Strategice Invesigation,” Syndicated Research Project)

 

Tune into our latest CYouth video to hear more about Gen Y’s views on corporate responsibility.

Episode 3: Revenge of the… Evan…

We’ve been excited about posting this one for a while now. We created this episode a couple months ago, so some of the rates are a little old, but I think the point is still on target.

It’s also interesting to consider this episode in light of the Treasury considering bailouts for consumers with too much credit card debt. As credit unions increase penetration in the card market, might we see this kind of problem phase out, diminish, or stay the same (I’m leaving out the grim possibility of credit card debt getting worse under those circumstances)? Feel free to share your thoughts here!

National Credit Union Youth Week Approaches!

How’s it going everyone?  Things are pretty busy around here at CYouth and Callahan & Associates.  The conservatorships by the NCUA that became final this week definitely has brought opinions out of the wordwork, including extensive insight from our CEO Chip Filson.  I’m sure you’ve been busy trying to figure out how you’re going to handle the impact this will have on various parts of your credit union as well as how it will effect your members.

In times of economic strife, its easy to get tunnel vision on a particular problem or issue.  Individuals do it, families do it, and companies certainly get tunnel vision as well.  However, its important to fight this urge, not only in your personal life but at your credit union.  That’s why 2009′s upcoming National Credit Union Youth Week, running April 19th-25th, is really important.

To weather the Corporate storm as well as the overall economic downturn, you need to continue to expand your base and recruit new members.  This starts with the young people.  Youth Week is meant to promote saving among young members… and the concept of saving is something we as a society must instill early on (I know if we had that mindset years ago, my friends and I would be much better off as recent college grads).

Not only will you be helping your credit union by getting new members, you’ll be increasing share deposits.  In what can only be described as the mission of a credit union, you’ll be helping your new and young members start a lifelong task– SAVING!  It’s a win-win for everyone involved that can pay dividends far down the road.

CYouth will be posting here over the next 2 weeks about various things related to National Credit Union Youth Week.  Be sure to check back regularly.  Also, check out CUNA’s Youth Week site for more information.

Take it easy everybody.

Twitter…because everyone is doing it

What did your mom tell you about peer pressure!?! Huh!??! If (insert naughty friend’s name here) jumped off a bridge, would you do it too? If you’re like me, that answer was almost always yes, but in the case of Twitter, I’m not ready to take the plunge yet. I’m also not sure that credit unions should either.

Consider the numbers: Netbanker has a nice summation of the financial institutions involvement in Twitter as of March 13th – 15 U.S. banks and 14 credit unions. The largest, most advanced (only one to promote Twitter on its website) is Wachovia with about 2,000 followers.

To decide if you should jump off the Twitter Bridge with the other 29 institutions, check out this article on iMedia which highlights a hilarious Twitter blunder by Skittles and some things to consider if you plan on using Twitter as a marketing tool. Also, be sure to read this other iMedia article about the new social media “paradigm” that Twitter created and why the heck such a seemingly simple thing is becoming so huge.

So far, it seems as if the majority of financial institutions on Twitter are using it simply to gather information about what people are saying about them. To see what kind of things they are actively “tweeting” about, I’ve decided to follow these few. Update to come…

 Financial Institutions I am “following”:

ING DIRECT – Save your money. ING DIRECT Official.

Wachovia – We’re here primarily to listen, to learn, to engage with the Twitter community and, occasionally, to share information about our company and services

Pioneer Credit Union – Pioneer has been around since 1927 well B4 Twitter, podcasts or wikis. The intent is to tweet useful info, goings on at the CU & some mindless stuff 2.

1st Mariner Bank – Service oriented, local bank headquartered in Baltimore, MD and proud of it.

Brewery Credit Union – Southeastern Wisconsin based Credit Union that is open to the public.

GH Credit Union – News & information to strengthen your family’s finances. Tell us money issues you’d like to learn about; we’ll do our best to point you in the right directi

(that wasn’t a typo, GH ran out of characters)

Episode 2: Attack of the…err What is a Credit Union?

Lame joke in the title, I know, but give me a break, it’s Monday. As we continue on in our CYouth web series we will gradually get into greater detail on individual topics. Hold on, we aren’t there yet.

Episode 2 takes one more step and asks D.C. college students simple questions about our financial system like: Who owns a bank? and What is a credit union?

The answers themselves aren’t extremely shocking but they do provide some actionable takeaways for every credit union viewer. The most remarkable part about our experience: over half of the students we interviewed were either a credit union member currently or in the past. Check out what they had to say.

a casual post for a casual day

So, it’s casual day here at the office.  I’m sitting here at my (new!) computer in jeans and a t-shirt, enjoying every minute of it.  A lot of offices shy away from the casual day, believing that it promotes a casual approach to work.  Whether that’s true or not, a casual approach does not necessarily mean less work is getting accomplished.

Casual days serve two purposes: 1) to promote creativity and 2) to reward hard work.

I do find myself to be much more creative when freed from professional clothing.  The small change to comfortable clothing creates the impression of a more open work environment, loosens the mind, and lets the thoughts flow.  These days are of critical importance when I find myself pressed for time and ideas.

Whenever we have some kind of labor intensive project here at the office, we are frequently rewarded with a casual day, and guess what.  No one complains about putting in the extra work!  I would gladly put in a little extra time and effort, diverting from my personal projects here at work, into a collective project in order to earn a casual day reward.  So now, not only am I taking advantage of my productive casual time, but I’m working harder during non-casual time!

While casual days aren’t a must–I don’t pick jobs based on the availability of casual days–they are a useful incetive, and a great way to promote innovation, especially from younger employees.  I’d keep writing more on this post, but I just got a great idea for my article next week for creditunions.com.  Thanks, Jeans!