Members Are Speaking Loudly: Are We Listening?

1. CUNA’s Marketing and Business Development Council Conference Nashville—March 17, 2008 Members Are Speaking Loudly: Are We Listening? Bob Hoel Filene Fellow www.filene.org

2. Listening to Members: The Key to Growth?

3. Two Ways to Grow • More Members • More Business per Member

4. Where Americans “Bank” % of U.S. Households Total CU % = 34% Source: J. Lee, Filene Research Institute, 2007

5. New Filene Study • Stefanie Norvaisas,Why Choose a Credit Union? Making Credit Union Membership Meaningful, Filene Research Institute, 2007

6. 1. Learning and Growing Segment • Just getting started • Starting over again • Encountering a new stage in life • Often turn to family members, church and the Internet • Know CU offers financial planning—but for people with lots of money

7. “Learning and Growing” Segment Meeting their needs: • Just-in-time info • Confidence-building measures • Confidentiality • Partnering, not parenting • Reassurance that they can master their financial lives • Help with personal goal identification

8. Off to First Job • University of Wisconsin Alumni Association offers a financial briefing plus counseling for graduating seniors • A credit union opportunity?

9. First-time Homebuyers

10. Divorce & Widowhood: Big Events!

11. Focus on Life Events

12. Meet Their Transaction Needs First-time Accounts • Checking account • Debit card • ATM card • Internet access • Credit card

13. Focus on Big Life Events... First-time Car Buyers

14. The New Americans 33 Million Immigrants

15. 2. Demanding and Complex Segment • Have substantial assets and complex needs • Likely to be… • Touching or interacting with their money • Moving it around • Strategizing on regular basis • Consider themselves savvy—expect you to treat them that way • Use more than one institution • Concerned CU is not sufficiently sophisticated • Smart money management is more important than loyalty

16. Demanding and Complex Segment • Personal banking-like services • Easy changes & control over their total portfolios • Information on financial opportunities (CD specials, etc) • Tangible frequent-user rewards • Want to feel like members and experts • Flexible policies—like good community bank • Opportunity to mentor others (members?) • Customized online experience to meet sophisticated needs • Ability to track finances

17. Example: American Express Centurion Card(the “Black Card”) • $2500 annual fee • Complimentary companion tickets on trans-Atlantic flights • Personal shoppers at prestige stores • Access to airport clubs • Membership in dozens of clubs • Many hotel benefits

18. Seek safety above all else, risk averse, looking for comfort Limited and fixed resources—typically May be… Retired On fixed income Carrying significant debt 3. Security Segment

19. Security Segment • Banking is often a social issue • Build confidence—remind segment that deposits are safe, sound and federally insured • Inform about CU defenses against identity theft and other threats • Send credit score reports automatically

20. 4. Control Seeker Segment • Have control systems—for self and family • Budgets, envelopes, allowances • Hidden money • May have had financial trouble previously • Want financial details at fingertips

21. Control Seekers • Budgeting assistance • Automatic credit score reports • Credit cards with locked limits • Information on basic money management skills • A global perspective—to help them see the bigger picture • Automatic updates on account status or abnormalities • Overdraft protection—limited backup lines of credit to reduce worry • Complements and reassurance that they can become masters of their financial lives

23. Opportunities: Create Buckets

24. 5. Challenged Individuals • Financial troubles in past or now—on verge of sinking in debt • Operate with fear and misinformation • Often make quick decisions • Some don’t know they are in trouble • Group includes people living paycheck to paycheck • Partners out of control?

25. Meeting Needs of Challenged Individuals • Small, short-term loans—emergency loans • Check-cashing services • Money transfer services—money orders and international transfers • Special savings products • Low-limit credit cards—reloadable Visa cards • Just-in-time advice • Milestone recognition • No moralistic preaching or treatment • Confidentiality and anonymity • Skills training

26. The AFS Market Payday Lending In 1990Fewer than 50 locations In United States Now over 25,000 LocationsProjected locations to exceed 40,000

27. REAL Solutions Reaching out and Serving Low-Wealth Households --It’s good business AND --Good philosophy

29. Prize-based Savings…

30. 6. Status Quo • Content with financial services they’ve established through experience • Survived some financial bumps • Rely on the CU’s core product and service package • You must continue to provide good value and service

31. 7. Big Spenders

32. Who? Good incomes Optimistic, impulsive Expensive homes relative to income Status cars & vacations Lots of adult toys & stuff Income increase boosts spending Relatively small savings Sometimes secretly worried “Big hat, no cattle” Want Second mortgages, HELOCs, lines of credit Approval of lifestyle and recognition of status—CUs often viewed as too judgmental Platinum and titanium credit cards—high limits Fast service and quick loan approvals Flexible terms Prestige décor and good coffee Big Spenders

33. Lifestyle Lending =

34. A Growing Market Source: American Society of Plastic Surgeons

35. Now: Discount Prices Source: American Cosmetic Surgery Network, 2007

36. Opportunities • Emphasize your CU difference • Most members see little or no difference between their CU and another financial institution • “What’s the one thing we’re known for?” • Touch points vs. brick and mortar • Many members like branch convenience but rarely visit • Give more power to branches • Create some excitement • Personalize and tailor offerings • Watch language—”financial planning” and “wealth management” can be intimidating • Stress community • Reward membership • Be innovative

37. Keep in Touch and Free Reports Bob Hoel Filene Research Institute • bobhoel@filene.org • www.filene.org 608-279-5553 Guest Member Pass: www.filene.org/free/guestpass