If there’s ever been a time for care in asset liability management (ALM), it’s now. The biggest obstacle today seems to be the unwillingness to price deposit money at market rates.

What with plenty of liquidity, less than stellar loan demand, low rates of return on investments (the liquidity), and a reluctance (on the credit union’s part) to lower savings rates, even though it can’t be loaned out…

What’s a credit union to do?

Keep it simple!

First, make sure you pinpoint a target gross spread (GS). GS is the difference between the return on earning assets and the cost of funds. It is the essence of good ALM.

If you set a target and hold to it, it will help eliminate some of the temptations that come during pricing decisions (particularly on the deposit side). 

Next, strive for a consistent GS. This will be done primarily through pricing. In theory, you would like to see your pricing changed in lock step on both sides of the ledger. This, however, is very nearly impossible. So, you must strive to adjust pricing (on both sides) so that you can maintain your GS within a 40bp range.

So, it isn’t hard - this ALM business. You just have to set a solid target and demonstrate discipline to reach that goal.

Credit unions made headlines in yesterday’s New York Times for operating “gentler” credit card programs than that of their bank colleagues. It’s a message that CUs across the country — including TMG clients — consistently work to communicate.

If you didn’t get a chance to read the op-ed, contributed by Harvard doctoral candidates, here’s a link.

TMG recognizes and applauds the CU industry for continuing to prioritize member needs over profits and is proud to support the industry’s continued efforts to create sustainable, member-centric card programs.

I viewed a webinar put on by VISA last week. The title was “Trends and Implications in a Challenging Environment,” and the subject matter referred primarily to consumers.

According to the Webinar hosts, consumers are rethinking their approach to life and re-prioritizing what has meaning; they are less material-minded and are carefully planning their spending. In doing so, they are open to the concept of value beyond the price tag.

The Webinar also discussed a new focus on paying down large amounts of household debt and a populace that is more responsible and re-evaluating who they trust.

Some of VISA’s conclusions:

1. Messaging (of products and services) should emphasize the long-term.
2. The message should be compelling and communicate the value of the products and services.
3. Consumers are not pessimistic; rather, they are realistic about the future.
4. Attitudes about technology are changing, and it is only important to the extent that it is practical to their lives.

If these thoughts are on target, how are credit unions responding? How should they?

I think there are some pretty obvious clues given off by the consumer, and they all point to credit unions as a bona fide contender to provide solutions being sought.

Many of TMG’s credit union clients have begun to look at the gift card as more than a product to sell their members. In addition to selling the cards, these smart CUs are using the plastic as incentives to drive activity in other areas of the credit union.

Here are just a few of the ways our creative clients are putting ATIRAgift to work:

• Rewarding new mortgage and car loan members
• Attracting new members by promising gift cards for every opened account
• Giving ATIRAgift cards to CU employees during the holidays
• Awarding winners of internal CU contests

Imagine the possibilities if these clever CUs were to share their gift-card ideas with business members.

Not only would the CU increase revenue from boosted gift card sales; the business members would gain a convenient, safe and economic way to reward their own people.

Isn’t giving fun?

The “Credit Union Difference” message is perfectly tailored to today’s consumer audience – people struggling to find fair and reasonable financial services.

But telling your prospective members that you’re different isn’t going to be nearly as effective as showing them.

Right now, there’s an entire group of curious consumers in your community who’ve wondered what it’s like to do business with your credit union, but just aren’t ready to make the leap to member status.

Why not offer them a trial run? The reloadable card gives you the perfect opportunity to let your community test the credit-union waters.

Reloadable cardholders get the opportunity to experience first-hand how credit unions compare to banks and other prepaid card issuers. With your CU’s reloadable card program, they’ll experience low fees, superb customer service, easy account maintenance and super convenient reloads.

Just remember, it’s your job to convert these water-testers to full-on credit union members. Stay consistent in your messages, deliver on your promises, and chances are your reloadable cardholders will give credit union membership a closer look.

In the reloadable card community, “stickiness” is all the rage. The term refers to how long a card “sticks” with its cardholder. In other words, is the cardholder pitching the plastic the minute his balance hits zero, or is he continuing to load funds, adding to the fee income realized by the card issuer?

Credit unions issuing reloadable cards all crave the stickiness. So, what can you do to ensure that your CU’s reloadable cards become the super glue of the prepaid world?

Here are four quick ideas:

1. Promote Direct Deposit. Particularly among the underbanked, cash checking companies are a financial burden. Direct deposit onto the ATIRAreload card creates a stronger “bond” with the cardholder and an incentive for your card to be used. It’s a cheaper and safer payment method for the underbanked. Do a bit of research into what check-cashing organizations are charging employees in your community and set your card fees accordingly.

Also, remind your business members of the costs of traditional check-based payroll and introduce them to the concept of prepaid payroll cards.

2. Promote Top-Notch Service. Keeping track of balances and fees can be difficult for reloadable customers. ATIRAreload cards provide 24×7 online and telephone support. In the near future, this will also include the ability for cardholders to receive text messages on their mobile phones for transactions and balance inquiries.

3. Sell the Convenience Factor. The card can be loaded at your branches, online and via the VISA ReadyLink network of merchants. Cardholders essentially have their pick of how they want to add funds in a way that matches their needs.

4. Educate the Younger Generation. A recent survey showed that young people are generally aware of the dangers of credit cards, yet most still desire the convenience – not to mention the implied status – of a credit card.

Promote the reloadable card as a risk-free option for parents with teenagers who beg for their own plastic. Introduce them to the types of balances, such as gifts, allowances and wages, that can be loaded onto the cards. Remind them that everyone from the teen to his parent and grandparents can add to the balance.

Sounds kinda like a movie title, doesn’t it? Maybe a war movie?

Or maybe…like that slow, kind of melancholy song by the Beatles, “The Long and Winding Road.”

Well, it has been kind of like a war out there. And it has been kind of sad. A lot of chaos, and loss, and anguish and despair. And, it probably isn’t over yet.

It’s going to be a long, slow recovery according to a Friday, May 7th article from the front page of the Money section of USA Today - “U.S. may face years of sluggish growth.”

From the standpoint of the glut of greed that has infected our society for so long, we’re in no small pickle of a fix. Anybody who thinks we can turn this thing around with a little puff here, a little slight of hand there has got to be smokin’ their socks - or something.

Here’s what consumers are thinking and doing. See “How the crisis is changing you” in a May 11th CNN Money article. They get it! Printing more money is a pipe dream of gigantic proportions.

Believe it or not, there is a silver lining…

Now is the time for credit unions. This is where we can shine. We’re good at promoting thrift and fiscal responsibility. Are you promoting these values to your members and potential members?

Several market conditions ranging from the decreasing availability of credit to the increasing distrust of banks are boosting the popularity of reloadable cards.

Since the inception of the reloadable card, pricing has been all over the map. And now that Walmart has entered the reloadable market, what consumers expect to pay for these safe and convenient methods of payment is lowering by the day.

Currently, Walmart promises an “across-the-board” fee of $3, meaning everything from card purchase to their monthly use fee is $3. (Of course, there are few other, higher fees disclosed upon purchase of the card.)

In anticipation of a dynamic fee environment, TMG built its reloadable card program with a customizable fee model for any credit union adding ATIRAreload to its plastic product line up.

With this flexibility, our CUs can decide how aggressively they want to compete with other reloadable card providers in their local communities, including WalMart.

Do you want to charge a fee for the purchase of the card? What about reloading fees? With ATIRAreload, you decide.

Before you feel the pressure to sink to Walmart’s level, consider your market. Who are you hoping to attract with the reloadable product? Which providers are they currently using and what have they been paying? Can you save them money while increasing their service and forming a new relationship?

Also remember, pricing isn’t everything. Consider how you will also compete in terms of service and safety.

For more information on how reloadable cards can attract new members to your credit union, check out our white paper “Reloadable Cards – It’s All in the Marketing.”

The following is an excerpt from an article published in the March 11, 2009 Credit Union Times.

These unprecedented times create an opportunity for credit unions to flourish in the coming decades – IF we harness the power of collaboration and pair that with innovation. 

 
In the last period of unprecedented economic times, credit unions were formed as cooperative alternatives to the banking industry. But this isn’t the 1930s. Our competitive challenges increase daily. 

We need to find new methods of collaboration to create financial solutions for more Americans. 

 
Credit union service organizations (CUSOs) have been a key driver of innovation in the past two decades, particularly in credit union payment systems and in operational efficiencies. Yet CUSOs are hampered by restrictive rules limiting the ability of credit unions to work together to bring new products, services and business models to the market.

Current NCUA rules only allow for a specifically enumerated list of services for credit union investment and lending. These include many well known services such as card processing and loan support services.

However, this list is not inclusive of many new services that could be developed for the benefit of members.

In recent months, two services were proposed to help credit unions compete in the marketplace: 1) credit card loan origination services; and 2) payroll processing.

I was personally involved in advocating for the addition of credit card loan origination to the CUSO rule, and the process to add this took 17 months. This is not to suggest a delay by the NCUA; that’s just the nature of the rulemaking process. 

 
Our competitors are not hampered by regulations that require specific approval for new types of services to be brought to an industry. Many banks use holding companies to own operating companies not specifically related to banking.

 
I propose that the NCUA adopt a pilot program provision for CUSOs. The NCUA currently allows for an investment pilot program. The investment regulation specifies the capital, expertise and supervision requirements for a company to participate in a pilot. No such provision is available for CUSOs, despite a clear need.

As new products and services are proposed that are not listed in the current guidelines, each CUSO is required to go through a lengthy and formal process to change the NCUA rule. 

  
This pilot program would allow for the NCUA to approve a new type of service conditionally for one or more CUSOs that agree to come under a specific set of supervisory guidelines.

 
It would have specific safety and soundness guidelines that would be agreed to by the NCUA and the CUSOs, which would likely include minimum capitalization and risk management performance metrics.

The CUSO would then take their service to the marketplace operating under these rules. If the pilot was successful in meeting the performance guidelines within a defined period of time, the NCUA would then move to an expedited rule-making process allowing others to enter the marketplace and make the new service category permanent.

A pilot provision to the federal CUSO rule would stimulate a new wave of innovation and collaboration, while balancing the needs of our industry for safety and soundness.

When crisis strikes, crystal clear communication is key.
 
Over the past few weeks, we’ve watched the latest health scare migrate from “Swine Flu” to the “H1N1 Virus.” We witnessed its progression from fatal pandemic to treatable virus. We listened to the two cents of medical experts, agricultural gurus and public health pundits from across the globe
 
As a combination of accurate and bogus information flooded media channels, the public understandably became confused, spreading rumors faster than the virus itself.
 
The credit union industry, too, is facing an environment where misinformation, suspicion and confusion threaten the member-credit union relationship.
 
The upheaval caused by the NCUA’s conservatorship actions, new and proposed credit card legislation, mortgage and credit industry woes – these are just three of the many complex news stories coming at your members from all angles.
 
Yes, it’s a good idea to mobilize your team for response to inquiries. But, it’s even better to be proactive. Here are a few ideas for how to get a handle on the rumor mill before it even starts:
 
1. Set up a specific phone line and email account for questions with regards to the economy and how the news headlines will directly and indirectly impact your members.
 
2. Start a blog and write daily about how your credit union is handling challenges or why the stories of the day do not affect your organization.
 
3. Get your CEO out in the community, speaking before business and entertainment groups or talking to local business reporters about the credit union difference.
 
Don’t wait for the rumors. Nip them in the bud today. Now is the time for over-achievement in communication.