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Some Outside Perspectives On Some Inside Challenges

Cleaning out the notebook...

• Here are a couple of perspectives from outside credit unions, gleaned during SourceMedia's recent Best Practices in Retail Financial Services Symposium in Orlando.

Ronald Kerr of Nationwide Insurance noted, "The behavior we see from customers is that virtually everyone starts their shopping experience online. But the difference is in how far do they go with that experience online. It has to do with customer preference and how complicated do we make the process. What we have seen from customers is that with the more complex products, customers are very interested in starting the learning process online, but very uninterested in finishing that process online. They want to learn enough to have a good conversation in person; 'Let me learn enough to protect me.'"

Andy Hernandez of BBVA Compass concurred. "People talk about getting an inconsistent experience across channels, and now that is starting to show up in people's dissatisfaction. People want to start a more complex product online, but ultimately online can't satisfy, and they want to come in."

Hernandez added that while he often is focused on that online experience and his responsibility is for non-branch channels, "What may be unique about what BBVA is doing is that my team exists as a compliment to the branch. The branch is the heart, the anchor of our strategy."

When Kerr was asked about which retail providers he admires, he didn't cite credit unions. Instead, he shared, "I bought a fleece jacket online from Land's End. It didn't fit and I returned it to Sears, which has a relationship with Land's End. The next day I got a call from Land's End asking if there was a problem and asking if I had made a decision about a replacement. He reminded me I got a 25% discount for buying online and got free shipping. The point being was that in that one sales transaction I was across three different channels, and that to me was a simple, nice, customer-friendly example of integrated information and multi-point distribution."

Why is it worth mentioning? Because members measure credit unions against the Land's Ends of the world.

• At the same meeting, Eugene Ludwig, the former Comptroller of Currency under President Clinton and today a consultant, said, "If I were a (bank) manager right now the one thing I would insist upon are good reports."

Ludwig shared his own experiences in working in banks and as an auditor. At one bank they would always have a three-inch-thick Risk Report better known as "the brick" that no one ever read. The risk manager, when pressed about something that had gone wrong, would always point out that it had been "disclosed on page 133, in the third footnote. That means it wasn't disclosed. Reports need to be good, crisp and easy to read."

On other topics, Ludwig observed: "Risk management is not a spectator sport. You must be active. The risk-management team must be forceful. If you are not taken seriously then you should leave the job. If you report something but no action was taken, that is not good for you."

As for a discussion that has dominated hallways at CU meetings, "The notion that we can solve all the problems with more and more capital is not correct. We did an analysis of this most recent crisis and capital did not necessarily correlate with failure or success. What did correlate? Good management. We've lost a lot of prestige in the world as the result of this crisis."

• Dennis McCuistion, the board governance expert and former host of a PBS program that bore his name, recently told a group of credit unions that the "universal truth is the directors who submit proposals for board term limits are always the ones you want to keep."

Indeed, why is it that every time I come out of a room full of CU board members I have the same two thoughts: "Wow, l'd like to put my money in the credit union where he's on the board," and, "Wow, I'd drive right now to that credit union if I were a member and take my money out."

• During a recent CUNA HR Council meeting I heard three different HR directors note that one of the most popular additions to their offices has been a Wii game system in the employee break room.

• In the Virginia-based Daily Press recently there was a long profile on the local Drug Court and its effectiveness in helping people arrested for drug-related crimes to kick the habit and turn their lives around. Reporting on a ceremony marking a recent Drug Court "graduation," at least one credit union found itself being measured by a new criterion, when a family member of a Drug Court graduate identified as "Charlie" said he had gone from being a "criminal to a card-carrying member of the Langley Federal Credit Union."

Frank J. Diekmann is publisher of Credit Union Journal and can be reached at fdiekmann@cujournal.com.

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