The Aite Group LLC reported that 33 percent of credit unions with over $100 million in assets are planning to convert to mutual savings banks. Likely these converted credit unions will ultimately become for-profit, stockholder-owned financial institutions.

One-third of this class of credit union represents $193.8 billion in assets, assuming the 33 percent of converting credit unions is spread across the 1200 representative credit unions in this class evenly. In turn that represents over a quarter (27 percent to be exact) of all credit union assets. One-quarter of the money in credit unions is on its way out the door.

In 2006, fee income exceeded return on average assets (page 4 of the 2006 report, if you’re interested) credit union-wide for the first time ever as CUs looked for ways to replace money drained away by compressed interest margins. Banks are using the same tactic.

At the same time, Nobel Peace Prize winner Muhammed Yunus is considering starting a credit union in the U.S. There are movements of varying size and momentum, but movements nonetheless, to provide alternatives to banks through such things as peer-to-peer lending, democratically-run, socially responsible banks, and account aggregation and financial planning using social networks.

Isn’t the message credit unions preach differentiating themselves from banks now even more relevant – even hip?

So, then…why leave?

The Wall Street Journal published an article titled “Beyond Payday Loans” last week, written cooperatively by political cartoons Bill Clinton and Arnold Schwarzenegger.

In the article, they discuss the $8 billion problem of payday lending.

Here’s a snippet:

Here is one initiative that can unite progressives and conservatives as well as business leaders and community activists: helping the “unbanked” enter the financial mainstream by opening checking and savings accounts, and working collaboratively with financial institutions and community groups to develop and market products that work for this untapped market. This will put money in the pockets of individuals and grow the economy. And it won’t cost taxpayers a dime.

Is it just me, or do Bill and Arnold seem to be channeling the credit union philosophy?

Two credit unions tackling the problem are Wright-Patt CU with their StretchPay loan and Prospera CU, with GoodMoney.

StretchPay is a short-term loan of either $250 or $500 available to Wright-Patt members. The loan comes with a low 18% APR, and is payable over 30 days.

GoodMoney, with branches located in Goodwill stores, offers short term loans at half the rate of the average payday lender, lower-fee check-cashing, bill payment options, wire transferring, and financial education through Goodwill’s Financial Information and Service Center.

Check out this video on GoodMoney from the 2007 Herb Wegner Awards:

Both initiatives stem out of the National Credit Union Foundation’s program REAL Solutions. Full disclosure, REAL Solutions is a client of ours – it’s how I’ve been exposed to some of the awesome things they’re doing for the movement. REAL Solutions is helping credit unions develop products to serve low-income and unbanked consumers.

When we were discussing this, Charlie asked this question:

Are CUs really helping people by making it easier and the rates lower, rather than helping people get into a better financial habit?

I think offering attractive alternatives to predatory lending is step one in the process, but it is kind of a band-aid on the greater question – How do you truly effect people’s financial behavior? Can it be done?

(Also, hat tip to Payment News for highlighting the WSJ article.)

This is a straight-up re-post from Currency Tim’s blog, but I don’t care because this video needs to be posted as many places in Credit Uniondom as possible.

Please watch 19-year old Larissa, spokesperson for Commonwealth CU’s Young & Free campaign, explain the difference between credit unions and banks.

To quote Charlie from an earlier tweet:

“Larissa’s vid is just what I have in mind when I picture a national CU vs Bank differentiation campaign.”

Question for Tim:

Would you ever consider re-editing, and re-releasing a less-Y&F-branded version for CUs to put on their own homepages, “about us” pages, and blogs?

Question for CUs:

Is this something you’d like to put in front of your members?

Ron Shevlin said something to Matt and I at dinner a few months ago that resonated with me. Credit union websites should be operational. Sites should be a resource for staff to solve problems, not just a marketing tool.

Coast Capital Savings Credit Union does a great job of communicating its voice. It’s aggressively casual. It communicates the personality of the credit union and is an extension, perhaps even the center piece, of the marketing campaign. Creatively, it’s good work.

I hope more credit unions don’t do this. I hope they realize Coast Capital is a rare breed, willing to cop an attitude in a very conservative, very attitude-less industry. There’s only room for one smart-ass in the class.

Instead, when creating content for a site, credit unions should focus less on what the Coast Capitals of the world are doing and more on what their MSR’s are doing. Don’t worrying about fluffy, fun, catchy content – go the other way. Become operational. Become informational. Creative writing is expensive and difficult to maintain (insert picture of frazzled brand manager wringing her or his hands and asking “is it ON BRAND???!!!” with every update).

This idea of sites being operational is something that as a web development firm, I’m going to discuss with our clients. It’s something any of you in credit unions out there reworking websites and creating copy might consider. Leverage what you do well when developing content.

Don’t be flashy. Inform. Solve problems. That’s what CU’s are good at. And consider the first audience to be your front-line staff. Put information on the site that they can use to solve member problems when they call or come into a branch. Consider what information CAN go on the site. I’m sure most operational CU documents might find a home on the website for your staff and membership to use. PDF’s of forms; outlines of procedures; how to find your routing number.

At that point, it really DOES become a resource. It informs. And information drives traffic.

The folks at Common Craft do an awesome job of demystifying social media buzzwords through their “Explanations in Plain English” videos. Here’s their video on RSS (hat-tip to Bryan Sims for sending this our way several months ago):

They also explain blogs, wikis, and zombies.

These rock because:

• Video is a lot more engaging than a long blog post, or even an audio podcast.
• Their presentation is all about imagination and clarity over production quality.
• They don’t talk down to me, they just talk.

Are any financial institutions out there doing something similar with personal finance? I’ve seen quite a few financial literacy podcasts pop up, but honestly, most are boring – not something I’d spend time listening to if I didn’t work in this industry.

Wesabe and Mint have made managing your cash a little sexier. Can understanding your cash be interesting and simple?

Check out Patelco CU’s gr8 r8 Savings, where members up to age 21 get 8.00% with $1 minimum balance.

On the marketing side, I don’t know if they’re doing anything with social media to promote the account, but Common Wealth CU is proving that product tie-ins can fit in social media.

Wouldn’t it rock if they had a gr8 r8 Checking where balances could be checked via SMS? How about an iPhone/iPod Touch-optimized part of online banking and the account sign-up process?

Christopher describes a current i3 project on the Nexus blog -

Here’s the general idea. Create a credit union island in Second Life, an online virtual world created by its “residents,” that would function as a central online location for the industry. Participating credit unions can set up a portal to the island through their Web sites. Check out the video below.

The island itself will include financial management games, virtual stock market tickers (yes, there really are virtual stock markets in SL), and a simulated currency-exchange-rate display. Even cooler is that credit union members will be able to use a virtual ATM to convert their Linden dollars (the virtual currency of SL) to U.S. dollars and deposit them directly in their CU accounts. No one else does that, not even Wells Fargo, which was an early adopter of virtual worlds.

The comment thread is where it gets even more interesting. Take a gander.

BTW, I love the idea of the ATM but not the idea of actual staffing. Also, I’m not too jazzed about the financial management games idea, but effective implementation could change my mind.

Just my two lindens.

I heart NY. Hat tip to Chuck and Ron.

This is the best cooperative ad campaign I’ve yet to see, and it comes from New York’s credit unions.

Why does it rock?

Other than the solid website and TV spots, here are a few points that are brilliantly executed but might not be so obvious at first glance.

• It explains how to start a credit union. At BarCampBankSeattle, Jesse expressed disappointment that he could find no resources explaining the process for Black Rock FCU. It’s nice to see that New York doesn’t simply say, “Here’s how you do it, now go have fun” – they say, “Here’s who you call at NCUA and at the NY State Banking Department. We’ll help.”
• It debunks CU myths while avoiding the rhetoric. As a whole, we worry too much about taxation and not enough about reaching new members – and not just “Gen Y’ers” either. Doggone it, one of the best ideas I’ve seen in a while is the burial plot loan.
• It even brings focus to volunteer opportunities within a credit union – both in the community and in the credit union itself.
• Instead of “People, not profit” it emphasizes “People over profit.” I hereby move that “People, not profit” be struck from the lexicon and replaced by this new phrase. Of course, we return those profits back to our members (or we should).

Overall, this campaign and the corresponding website explains eloquently that we are cooperatives, not banks. Every league should take a long look at this site, consider it the benchmark, and get campaigns like this launched in their state.

One of the running jokes, but undeniable truths, that surfaced at BarCampBankSeattle was that you could tack ”...and that’s why Wesabe is brilliant” to the end of any conversation point, and it would be relevant.

Yesterday, Wesabe launched their new Firefox extension. The extension completely automates the download-from-your-bank/upload-to-wesabe process, no matter who you bank with. From Marc’s post on Wesabe’s blog:

The Firefox Uploader is an extension for Firefox 2.0 or later, which makes it trivially easy to automate downloads from your bank or credit card, whether or not your bank makes that easy for you to do. If your bank doesn’t already provide automated downloads, you can record a download session once, and the Firefox Uploader will then play your recording back automatically for you from then on. And, you still get all of the benefits of the original desktop Uploader — you don’t have to give Wesabe your bank passwords or account numbers, which remain safe on your own computer.

As Wired points out, this makes the financial-management side of your credit union’s banking interface somewhat irrelevant (I was alerted of this article via Wesabe’s Twitter, by the way):

Since the vast, vast majority of banking sites are antiquated pieces of crap, this effectively means you can stop using them. For instance, I have a credit card at a bank that insists I use Internet Explorer despite the fact the it isn’t even offered on the OS I use. After adding the account to Wesabe, there’s no need to worry I can track my money the way I want to, not the way the bank wants me to.

Wired’s point makes me really excited. Now, except to pay bills (which happens automatically anyway) and transfer funds, I will rarely need to log in to my online banking. Essentially, my banking interface is now Wesabe, which means my banking interface just got tricked out.

So does this mean that Wesabe : Transactions :: RSS : Web Content? Will this change the way banks will approach their online banking interfaces in the future?

Also, check out Jim Bruene’s post on netbanker covering their new e-commerce image-capture functionality, another benefit of the extension.

Finally, for those of you who skip the pesky “words” in blog posts in favor of pretty pictures and video (like me), here’s a YouTube clip explaining the tasty new goods:

...and that’s why Wesabe is brilliant.

Check it out. The interim president of Florida A&M University wants FAMU FCU to change its name. A campus blogger with a pretty wide audience writes it up. Students, alums, and credit union members and non-members rally around the credit union.

From the comments:

• “All they have to do is stall; [the interim president’s] presidency will be ending sooner than she could get a cease and desist court ruling.”
• “I can’t imagine having to refer to my credit union as something other than FAMU Federal Credit Union. This is our credit union which is owned by the members and not the University.”
• “I think this is a bigger deal than just the FAMU Credit Union. If you can intimidate and shut down anything referring to FAMU, why couldn’t you do the same thing to anything using the term “Rattler” (like this blog!) ?! To me the issue is whether you have a non-profit institution, like the credit union, or a commercial, for-profit one, like a T-shirt manufacturer.”

And many more comments express the same sentiment. Sure there are detractors, but in the 46 comments posted so far, it’s been overwhelmingly pro-CU.

I tend to point out more examples of bloggers criticizing credit unions than praising them (hey, it’s more fun to write about the controversial stuff), but here’s a case of the community standing up for a credit union who’s obviously loved. Reminds me of a question Seth Godin asked a few weeks ago: Will you be missed?.

I believe FAMU FCU would be missed (read Seth’s post to figure out what I’m talking about). The commenters are talking about tradition and history and the story of their credit union. They’re talking about the credit union’s name and how they’ve earned it.

Yep, FAMU FCU would be missed. That’s evident in their community going to bat for them. Would your community do the same?

Muhammad Yunus and the Grameen Bank he founded have won the Nobel Peace Prize. If you haven’t read Banker to the Poor: Micro-Lending and the Battle Against World Poverty then you may want to give it a shot—it’s a very worthwhile read.

Here’s a quote from an article about the prize:

The secretive five-member Norwegian Nobel Committee said the elimination of poverty was a path to peace and democracy.

“Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development,” it said in the award citation.

I particularly like the line “work to bring about their own development”. One of the reasons we are so passionate about the credit union industry is its potential to impact the negative US savings rate and help people reduce their dependence on the likes of “payday lenders.” The Grameen story is so powerful because it has significantly reduced poverty by helping its customers help themselves, not by providing a handout.

Financial responsibility can’t (and shouldn’t) be forced. But I think credit unions can do a lot more to encourage and facilitate good behavior. Our goal is to change this from “we wish” to “here’s how.”

Also, a special thanks to George at Filene for letting us borrow his copy of “Banker to the Poor.” I would send it back, but Brent just started reading it this week. It’s currently sitting in a position of honor at Trabian headquarters.

On second thought, George, we may need to send you a new copy.

I had several different conversations last week on the importance of promoting financial literacy among youth. One revolved around Biz Kid$, a show about to be kicked off on PBS, produced by the folks who did Bill Nye, and sponsored by a slew of credit unions. Another was with Tom from the BrassMedia crew, discussing how focusing marketing and education on consumers in their prime lending years now, although important, is no way to sustain long-term growth for credit unions. Hit ‘em while they’re young.

The conversation that woke me up the most was with Todd Pietzsch, head of PR at Seattle’s BECU. BECU won an award at the dinner on Thursday for their work with a local high school. These guys actually have a branch in the school that is both used and run by students. The idea of this is to 1) give those punk kids some real world working experience and, more importantly, 2) wake those punk kids up to the importance and understanding of financial literacy.

It’s a really great program. And apparently quite a few credit unions are doing this, I had no clue until talking about this stuff with Todd.

So here’s where the call-out happens, and where Todd reminded me of the exceptional reality of the Credit Union Movement. When talking to him about the program’s specifics, I asked, “So what kind of an effect has this had on your membership? Are you seeing quite a bit of turnaround in the high school?”

The dude just looked at me, like the question honestly hadn’t occurred to him.

Then he replied (this is a rough transcript): “No no no, it’s not about new memberships at all! This is all about teaching these kids how to handle their money, and how to get out there and be responsible and prosperous in the real world. Even if we don’t get a single new member, this program will be a complete success. Educating the students is what’s important.”

Touché, man. And after having just spoken a few hours earlier on the importance of keeping your eye on the values of the movement, and not being so bottom-line focused, this was a much-needed moment of honesty.

I was going to add this as a comment to the last post, but this is incredible enough to get its own spotlight:

UMB, one of the US’s largest independent banks, launched a beautifully consumer-driven campaign a little over a month ago. American Copywriter, a podcast* and blog by employees of ad agency Sullivan Higdon & Sink explains:

The campaign is called My Ugly Room and it centers on myuglyroom.com. At the site, registered users upload photos of their ugly rooms and fill out a profile. Other users vote to give the rooms the “thumbs down.’ Each week we give a $100 to a random winner from the top ten ugliest rooms. At the end of the contest, the top ten rooms, as chosen by users of the site, will be placed in a drawing for $10,000 to redecorate. Along the way, we give everyone a chance to redecorate now with a little help from UMB. We’ve promoted the site in a host of borderless ways, including redecorating some of the bank’s lobbies with ugly furniture and signage like the mock-up you see here.

In addition to this, they have launched My Ugly Blog, which keeps up with the campaign and its issues, including The Ugly vs. Messy Debate.

And if all of that isn’t enough, UMB is educating with a "Basics of a Home Equity Line" podcast.

This is a perfect example of empowering, demonstrating and involving the market to create a meaningful experience.

* Probably my favorite podcast of all time.

We just got out of the first general session with Bill Strickland. Man, is this guy impressive. He’s done some amazing work with the Manchester Craftsmen’s Guild and the Bidwell Training Center by treating people like “assets, not liabilities.”

Bill started his message by mentioning that he represents the same people that credit unions represent—the poor people. How true is this now? There’s certainly an effort by some people to bring CUs back to serving the under-served (Filene’s REAL Solutions comes to mind), but how many credit unions make it a point to focus on the low-wealth individuals in their area?

Bill also said that in order to succeed with something like he was doing (training the poor for careers as chemical technicians, pharmaceutical technicians, and top-level chefs, among others), “you have to redefine the conversation.” In the credit union industry, I think this means we need to start talking about serving the “underbanked” as an opportunity rather than as something we feel guilty for ignoring. Bill succeeds because he gives people hope and teaches them “how to fish”. Credit unions need to do the same.

I just noticed an article about Bill Strickland on Signal vs. Noise. The following quote got my attention:

“At the end of the lecture, students are lined up wanting to work for me,” Strickland says. “It’s startling. I have students coming up with tears in their eyes, saying, ‘You are doing what I want to do with my life.’ I say, ‘I thought you were in business school because you wanted to run Xerox.’ And they say, ‘We’re here because we wanted to find an opportunity where life could make some sense. You make sense.’ Then I tell them, ‘We’re going to take all this genius, all your enthusiasm, and see the world as a set of possibilities. This is a new game, and I’m one of the guys who’s right in the middle of it. Welcome to the conversation.’”

This ties into something that Dan Mica said at the beginning of the general session. He pointed out that most business “gurus” agree that people are being drawn to businesses and groups that believe in something other than “just the buck.” Does anybody know that CUs are about more than “just the buck?” Are credit unions connecting philosophically with anyone? If not, how do we change that?