NAFCU Services Blog

Jan 02, 2012 by David Frankil

Nine Credit Union Industry Experts Tell Us What To Watch For In 2012

I like to say that one of a visionary leader’s most important functions is seeing over the horizon and recognizing opportunities and threats before anyone else does, and then shaping the strategy and tactics of the organization accordingly.

So for our year-end blog post I asked our Preferred Partners to tell us what they see coming over the horizon, from their perspective, that credit union executives need to be focused on and/or prepared for as we head into 2012.  Here is what a few of them said --

Pete Hilger - President, Allied Solutions
As I look over the horizon it seems clear that the economy is going to continue its recovery, albeit in fits and starts. That means loan growth, of all kinds, probably accelerated by the flight from banks. Now is a perfect opportunity to make sure that your credit union has all the tools in place to support that loan growth when it comes so you can maximize the benefit. By tools I mean solutions (both the loans and ancillary income-producing products), technology, marketing, as well as a thorough understanding of the drivers that incent members to take or refinance loans.

DeeDee Myers  - Founder and CEO, DDJ Myers, Ltd.
We’ve all recognized that the most precious resource is the individual who comes to work every day.  Empower your team to proactively seek ways in 2012 to modify existing models and designs, and to challenge established methods and protocols.  This practice does not involve a line item in our budget; it happens in conversations involving individuals and teams, and is started and sustained by an attitude on our part. For 2012, focus on understanding what motivates the individual and create an environment that encourages creativity and innovation.

David Allison - SVP, Dovenmuehle
Without question, new regulatory requirements for mortgage servicing will be a major factor continuing into 2012.  National mortgage servicing standards, higher penalties for non-compliance, new requirements from Fannie Mae, Freddie Mac, Ginnie Mae, FHA and the PMI companies will all impact credit union servicing operations.  States and even municipalities will continue to impose tighter requirements especially for loans in default.  The new ordinance from the City of Chicago is just one example where lenders must now assume certain responsibilities for securing and maintaining properties even prior to taking title after foreclosure.  These new requirements will make compliance even more difficult and expose credit unions to more regulatory violations, penalties, fines and possibly litigation.

Martie Woods - Chief Experience Officer, Deluxe Corporation
Banks and credit unions need to be much better retailers. Consumers do not think of their bank or credit union as a place where they purchase financial and payment tools. And, further, consumers struggle to even list the things that banks and credit unions sell. This is undermining their ability to position themselves as a provider of valuable services and to charge in a way that feels more like 'shopping.' The smart credit union will pay close attention to how people shop and redesign their own retail strategy that allows for things like better browsing, multiple and integrated channels, test-drives and other strategies more commonly found in mainstream retail.

Evan Shelan – CEO,
Plan for how the situation in Europe will affect your credit union – and it is not just a question of whether you have international facilities and/or members.  In the 2012 worst case, consider Europe setting the stage for a global recession in the absence of a bailout plan, which would likely mean a weaker US economy along with a stock market correction. Do some financial modeling to see how this affects your members with significant equity portfolios or retirement accounts weighted towards equities, and also what this means for any income streams derived from those members. Continue to exercise caution prior to committing to certain capital expenditures, or at the least stress-test for another dip in the economy before full recovery.

Leslie McDow - Credit Union Segment Marketing Manager, Genworth
As the residential real estate market shifts from a refinance to a purchase market in early 2012, the time is right to begin educating your members on the services and benefits your credit union has to offer – especially mortgage products.  Start educating your members, new and old, on your mortgage product offerings. Invite members to your branch and conduct homebuyer seminars to showcase your products and educate them on market conditions. Promote your seminar through statement stuffers, lobby signage and social media outlets.

Jeff Chesky – CEO, Insuritas
The Internet and your website are a more central component of your growth strategy with each passing year. Credit unions must understand how the tremendous repeat traffic to their websites is an unrecognized, unleveraged asset for income growth. Transition your website from information and services (online banking) to income opportunities, and monetize that traffic by deploying e-commerce in 2012.

Greg Hagan - Regional Director, Pentegra Retirement Services
As margins continue to get squeezed credit unions will need to look more closely at the costs embedded in every part of their business, including employee benefits. In the 401k realm, look for a new form to be published by the US Department of Labor around April 2012 with new fee disclosures that should be an eye-opener. Put a tickler in your calendar to request a copy of this form for every third party vendor and consultant involved in your 401k plan, the hidden fees you’re paying may surprise you. I’d also be surprised if this disclosure didn’t fuel a trend towards multi-employer benefit plans to bring economies of scale to administrative costs.

Julie M. Nielsen - Regional Vice President, Securian Financial Group
We are seeing two areas of compliance and risk mitigation that are crucial to successful lending and payment protection programs: 1) Lending documentation: specifically, providing proper disclosures and being able to underwrite new advances under a multi-featured consumer lending plan, and 2) verifying members' eligibility to receive benefits under a credit life & disability or debt protection plan before enrolling them in the program. We're already aware of litigation in both these areas that have arisen from programs that may appear to be unfair to borrowers. With respect to lending documentation, closed-end subaccounts require closed-end disclosures and allow you to still underwrite each new advance, while open-end subaccounts require open-end disclosures. In both cases I'd suggest that credit union CEOs review their existing documentation and disclosures to make sure they offer maximum protection against liability.

We hope these insights are helpful. Best wishes for a happy and healthy 2012!

Post written by Dave Frankil, President, NAFCU Services Corp.

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