CUES Podcast

The U.S. economy may soon be poised for takeoff, according to Dan Berger, our guest on episode 113 of the CUES Podcast.

The efforts of credit unions to serve members at a time of need will continue to be a key factor, says Berger, president/CEO of the National Association of Federally-Insured Credit Unions, Washington, D.C.

“I think that we got some more stuff to get through in 2021 in regards to COVID and cranking up the economy and getting more people and to be financially inclusive with the economy,” he explains. “I equate it to laying the runway in 2021 so you can really take off in 2022. But I'm so pleased with this industry, in the CEOs I speak to across the country, in the jobs that they're doing. I mean, it's really been an incredible effort across the board, and I don't see it stopping.

“The stories I hear from across the country with, you know, skip-a-pay programs and workout loans and things along those lines,” he continues, “ … that’s the difference between us and the big banks. When people were helping folks even before Congress said they had to do it …. and, in terms of forbearance, this industry has really responded to their members as well as their communities. 

“Credit unions have come up with very innovative programs to help their members through this,” he says. “And that's where, in the long run, people are going to remember that institution that was there that did a workout loan for them or did some loan modifications for them. They're going to remember that. You can't buy a full-page ad like when Wells Fargo does to try to re-establish trust. You have to build that over time. 

"And that's what credit unions have," he underscores. "They have this incredible amount of trust, and it's even built upon even further through 2020. And you'll see it throughout 2021 as well.”

Berger also says in the show that continued vaccine distribution and targeted stimulus to people who need it will play key roles in getting the economy back on track.

The show also gets into:

• The unemployment situation in 2020, now and going forward
• The importance of taking care of employee so they, in turn, take care of members
• The likely impact of remote work as the world reopens
• The increasingly important role of community development financial institutions
• How increased liquidity from deposits of federal stimulus program funds and increased savings due to the pandemic might impact credit union operations and financials

Links for this show

• B. Dan Berger on LinkedIn
• National Association of Federally-Insured Credit Unions
• Show transcript
• Two other recent episodes about the economy: 111 with Steve Rick of CUNA Mutual Group and 112 with Bryan Yu of Central 1
• High Performing Boards Digital Series
• Strategy and Digital Marketing Cornell Certificate Program

Governments around the world have spent more than $14 trillion to try to offset the economic damage of the pandemic, says Bryan Yu, in the latest episode of the CUES Podcast.

“In Canada, I think we moved pretty quick,” says Yu, director and chief economist with Central 1 in Vancouver, British Columbia, which leverages its scale, strength and expertise to power progress for more than 250 credit unions and other financial institutions. “We had seen the implementation of the Canadian Emergency Response Benefit, which was largely providing funds for households who were negatively impacted by the pandemic and lost jobs, about $500 per week. So, a significant amount.

“We also, of course, see the wage subsidy programs in Canada as well,” he adds in the show.  “So employers who lost substantial amounts of business were able to tap the subsidy in order to keep individuals employed.”

He estimates that the Canadian government will now have to deal with a $380 billion deficit after the outlay. “But we're also, of course, recognizing that without these measures, we could be in a much worse state at this point,” he says. “We'd have the pandemic plus we'd have a lot of individuals without income, and that would have led to more foreclosures, bankruptcies, etc.”

Yu also thinks the rollout of the COVID-19 vaccine in Canada will have a significant impact on the economic recovery.

“The vaccine will in fact, provide a huge boost for Canada. One of the big differences I think, between the US and Canada right now is that rate of deployment,” he explains. In Canada, “only about 3% of our population has been vaccinated .. and that's really a reflection partly of the countries which are making the vaccines. The US and the UK, of course, are producers. So they are able to deploy much quicker. 

“But as those vaccines do roll out, I do expect to see that that will finally be able to reopen some of our borders more towards tourism. People will be more willing to go into into more restaurants, really moving back that service-oriented economy back to full capacity. 

“So that's my hope at this point,” he says. “I think that's going to be driving our move back to a pre-pandemic type of levels within the next two years. I would think there is still going to be a lot of challenges … going forward.”

The show also gets into:

• Unemployment trends in Canada
• What shifts caused by the pandemic will continue into the future
• Ideas managing the coronavirus mutations that have been identified
• The strengths credit unions have that will help them weather the pandemic
• The question of inflation in these times

Links for this show

• Central 1
• Bryan Yu, director and chief economist at Central 1
• Episode 111 with guest Steve Rick, director and chief economist at CUNA Mutual Group
• High Performing Board Digital Series
• Strategy and Digital Marketing Cornell Certificate Program (all online)
• Episode 112 transcript

As is always true with the economy, there is both good and bad news at once.

On episode 111 of the CUES Podcast, Steve Rick says some of the good news is that the jobless rate has dropped back to a rate of 6.3%, after spiking to 14.7% at the height of the pandemic shutdown last year.

Director and chief economist at CUESolutions Platinum provider for executive benefits CUNA Mutual Group, Madison, Wisconsin, Rick says economists believe that 4.5% is the “long-run natural employment rate” in the U.S. He is forecasting reaching that rate again by the end of 2022.

“We do believe we will reach herd immunity, probably by the fourth quarter of this year … where … 75 to 80% of our population has been vaccinated and is … immune,” he says. “So, we're hoping by the end of this year to have the unemployment rate down to 5.5%.”

Some of the bad news Rick cites includes the hard hit taken by retail businesses during the government-mandated shutdowns early in 2020. Many stores, restaurants and movie theaters have been severely disrupted or even permanently shut down in what Rick calls a “retail apocalypse.” 

While those that closed may never reopen, there is a glimmer of hope here, too. In the January retail sales report, Rick says, “We saw sales pick up 5.3% compared to December. Now, that's a huge jump. … if we can compare this January of 2021 … to January 2020 … before the pandemic, we're up 7.4%. Now, that is a huge increase, 7.4% in spending. … So we're actually seeing a nice recovery already.”

Rick projects a jump in gross domestic product this year of about 4.5 percentage points. “So we're going to be making 4.5% more stuff, if you will, then we did last year,” he says. “And last year … we dropped 3.5% in the production of goods and services. So, a nice recovery for 2021. 

“… if we get another $1,400 stimulus check sometime this spring, you know, if President Biden gets his 1.9 trillion stimulus,” he adds, “we could see a really strong economy going into the second half of this year.”

The show also gets into:

• More on the potential impact of any additional federal stimulus checks
• Ideas about retraining workers to help counteract unemployment
• The huge surge in member deposits
• The answer to a question from CUES member Cynthia Ryan, EVP/COO of Connect Credit Union, Fort Lauderdale, Florida, about how to handle the boost in liquidity from the increase in member deposits
• The mortgage refi boom and how many loans to sell on the secondary market in these times
• The potential impact of any forgiveness of federal student loan debt
• The importance of cost control and managing net interest margin right now

Links for this show:

• Email Steve Rick
• CUESolutions Platinum provider for executive benefits CUNA Mutual Group, Madison, Wisconsin
• CU Management magazine’s monthly CFO Focus columns
• CUES Advanced Management Program from Cornell University
• Partial transcript for Episode 111

“For some reason, people just love pineapples,” says Bolun Li in this episode of the CUES Podcast. As a result, pineapple emojis are the points in Zogo, the gamified smartphone app that Li co-launched in 2019 to better teach personal finance to members of Gen Z.

CEO of CUES Supplier member Zogo Finance, the sponsor of this show, Li says that pineapples tested extremely well during the app’s development.

“We tested so many different emojis for the points,” he explains. “We have no idea why people love pineapples, but they love pineapples. So, we’re like, we’re going to use pineapples” for the point system.

A 2019 graduate of Duke University, Li first learned about personal finance through a high school program that was delivered by a bank. He describes that offering as “boring” and “inadequate.” 

In contrast, the app he and his co-founders (all members of Gen Z themselves) have launched aims to teach members of Gen Z about personal finance in a way they find fun. Zogo offers more than 300 bite-sized learning modules and awards pineapple points for module completion that can be redeemed for gift cards or deposits in accounts at partnering financial institutions—such as credit unions.

During the show, Li tells the story of his introduction to credit unions. Since then, Zogo has partnered with more than 75 CUs to help them attract Gen Zers—members CUs need to connect with now to ensure a bright tomorrow.

When users first log into Zogo, they are invited to put in a code from a financial institution. Once they enter a CU's code, the app becomes  co-branded with the CU’s colors and logo. In addition, a CU has access to a dashboard of information about app users. Partnering CUs can also create custom  learning modules about their product offerings, community commitment or whatever topics they wish.

This year Zogo is rolling out a unique approach to offering financial education in schools. It reaches out to students, not teachers, to be ambassadors for the app and the CU partner. 

“These students will be going out there with the Zogo app and spreading the credit union’s name within their generation, their friends," he says. Young people are much more likely to use something “when it’s recommended by their friends than if it’s being enforced by their teachers. We want all the Gen Zers to think personal finance is very fun and their local credit union is very cool.”

The show also gets into:

• how pleased Li was to learn that Zogo appeals to people of all ages, not just Gen Zers
• the national awards Zogo has won
• the 24-hour process for a CU to sign up for Zogo
• what Li thinks CUs need to have in their strategic plans to better attract younger members
• what Li learned from surveying Duke students about CUs
• what board members need to know about Gen Z and the future
• Li’s rallying cry for Financial Literacy Month in April

Links for this show:

• CUES Supplier member Zogo
• Two CUES articles by Zogo: here and here
• More on generational strategy and marketing

There’s a growing trend of credit unions hiring chief diversity officers, says Renee Sattiewhite, CUDE, CDP, president/CEO of the African American Credit Union Coalition.

“It is amazing that so many credit unions are calling or asking about what should they do, what should they be looking for,” Sattiewhite says in this episode. “I’m happy to report that the credit unions that are larger are doing that. And then some of the credit unions are calling us because they don’t have a chief diversity officer (wondering), ‘What can they do in lieu of that?’”

Why is this trend good news? “I think that it’s a good sign with the industry that they’re looking at having someone who is certified, who’s got the information, who’s got the intellect and the skill to help lead the organization in their DEI (diversity, equity and inclusion) journey,” Sattiewhite explained.

Hiring a chief diversity officer that isn’t certified is troubling, she explained. “It’s quite important to have the knowledge behind you so that you can talk about the unconscious biases, that you can talk about the DEI-specific things so you can help the organization move past that,” Sattiewhite emphasizes. “You need to really vet the people that you’re looking at for candidates, making sure that the organization is not just checking a box.

“It’s not a project. It’s a journey. It is not a sprint. It is a marathon,” she adds. “And I think people need to see it that way. They think that, ‘We came up with a DEI plan, so we’re good.’ No, that does not make you good. Can you execute on that plan? Can you change that plan when it needs to be changed? Are you open to making sure that everyone is included in that plan? … DEI is not just a race issue; it’s more than just that.”

What should credit unions look for in a chief diversity officer? Sattiewhite says the key lies in “making sure that that person has the right spirit—the spirit of change, a spirit of helping, a spirit of openness, preferably someone who has experience and understands the needs of a multicultural membership or a multicultural staff and employees. I think that to think that just because you have a plan that you’re done is an unrealistic expectation,” she says. 

“The organization didn’t get to where it is overnight. So the DEI journey, it’s going to be … unfortunately sometimes painful. You have to have a lot of grit, a lot of gumption. You have to have someone who is fearless and really wants to effect change not just in the organization but in the community that they serve.”

The show also gets into:

• The idea that the African American Credit Union Coalition is inclusive and anyone can join
• More about AACUC’s work and educational offerings
• The connection between credit unions, the motto “people helping people” and eradicating racism
• How to set your chief diversity officer up for success

Links for this show:

• African American Credit Union Coalition
• AACUC’s Commitment to Change, Credit Unions Unite Against Racism program
• Sattiewhite’s CUES article, Diversity Insight: Red Versus Blue
• Diversity, Equity, and Inclusion Cornell Certificate Program

When people join a board, they don't always get the opportunity to understand what exactly the job entails—and what a board is really for, says Matt Fullbrook in this show.

Manager of the David and Sharon Johnston Centre for Corporate Governance Innovation at the University of Toronto and a board effectiveness researcher and consultant for Fullbrook Board Effectiveness, Fullbrook says providing an opportunity for better understanding of those two things is at the root of board education.

Fullbook explains that board education also goes a step further to answer the question, “How do we take that role as a director and turn it into something that has the potential to create something of tremendous value for the organization?”

It’s very difficult for anyone to create good answers to these key questions themselves, says Fullbrook, who will serve as academic director for the new High Performing Board Digital Series from CUES that starts April 13. 

The reality of director education, he explains, “is it gives directors an opportunity on the one hand to be ... with other people who are going through something like what they’re going through, so you feel like you’re not alone. But second of all, you get to learn from their successes and mistakes.

“Also, you get access to people, educators and so on who have been thinking about this and have created and explored solutions that you may never have thought about."

Director education “gives you a whole new toolkit to bring back to your board and ask, ‘How are we going to implement this in a way that is going to empower our credit union to be better for its members on an ongoing basis?’” he says. “It opens up a whole universe of new tools and insights and opportunities for your board to do things in new and better ways.” 

Fullbrook emphasizes the importance of applying director education. “The potential value of education ... is really undermined if you don’t go back ... and make an effort to ensure that it has an impact. That takes discipline.”

Putting board education into practice can’t just be a book report, where the director who attended the education says, “I learned a, b, c and d.” Instead, Fullbrook suggests the director should say something like, “I’d like to have a conversation about how we can take what I learned and use it to make our board better. Here are my ideas.” 

The show also gets into:

• Why Fullbrook rejects the term “best practice” for governance
• Fullbrook’s short definition of what governance is
• Why board education must be ongoing
• The value of being curious about how you might improve your current board practices
• Details about the High Performing Board Digital Series
• Fullbrook’s new podcast, One Minute Governance

Links for this show:

• Fullbrook Board Effectiveness
• David and Sharon Johnston Centre for Corporate Governance Innovation
• High Performing Board Digital Series
• Matt Fulbrook in the CUES Podcast episodes 24 and 85
• Most recent Matt Fullbrook video for Unlimited+ members: Provocative Considerations for Board Chairs

It’s interesting that as the unpredicted, unprecedented year of 2020 was closing, Rodney E. Hood identifies this quote as a professional mantra he lives by: “Proper preparation and planning can prevent poor performance.”

Chairman of the National Credit Union Administration Board, Hood says in this show, taped Dec. 8, that this quote he learned in high school helps him remember to always put his best foot forward and get “things done with professionalism, duty and integrity.”

“As long as I stay focused on those Ps … it gets me through,” he says.

For 2020, putting the best foot forward meant helping the federal agency he leads support credit unions on two important fronts: the COVID-19 pandemic and efforts to boost diversity, equity and inclusion in the credit union industry after the killing of George Floyd in May.

Hood talks in the show about key things the National Credit Union Administration did in response to the COVID-19 pandemic, including:

• Staying open, even though the staff is working from home for safety
• Allowing remote board meetings and annual membership meetings
• Continuing offsite regulatory examinations
• Recognizing the challenges of lending in these times and supported the making of small-dollar loans, loan modifications and forbearances
• Supporting small and low-income-designated credit unions that are on the front lines in serving people who have been marginalized or underserved

He also expresses his vision for the inception and next steps of NCUA’s Advancing Communities through Credit, Education, Stability and Support program, also known as ACCESS.

The show also gets into:

• Why Hood loved studying Latin and what modern language he’d like to speak fluently (and why)
• How the pandemic-impacted economy compares to the Great Recession in 2008 and why Hood thinks credit unions are better positioned for success now than they were then
• What Hood thinks would be good next steps for NCUA to take as credit unions ride out the pandemic
• Examples of real people who have been impacted by credit unions during these unprecedented times

Links for this show:

• NCUA’s COVID-19 response 
• Chairman Hood’s statement in response to the killing of George Floyd
• African American Credit Union Coalition
• NCUA’s ACCESS program
• NCUA’s voluntary diversity assessment

What does it mean to be CEO-ready? How can candidates know when they’re ready? How can boards know a candidate is ready for the top slot?

Some key things candidates should have if they’re really ready to lead an organization include a deep understanding of cross-functional leadership, solid knowledge of the business and how to work with people; and experience with effective board governance, explains Deedee Myers, Ph.D., MSC, PCC, president/CEO of DDJ Myers Inc., a CUESolutions provider based in Phoenix. 

“Cultivation (of a CEO) … is not an overnight phenomenon,” she explains in the show. “So we want to set it up and have these different milestones and testing places along the way to test our internal candidates and to test ourselves. Are we ready?”

DDJ Myers SVP Peter Myers adds that he wants to distinguish between being ready to get the CEO job and being ready to do the job exceptionally well. “Make sure you self-assess,” he advises, “why you want to get this job…. Find someone you trust to give you unvarnished feedback. Ask them, ‘What do you think are the primary and secondary reason I’m vying for this job?’ … Boards and members and staff want someone that is going to put their needs far above and beyond (the executive’s) own self-interest needs. One of the primary jobs of the CEO is to get the best out of their staff.”

The show also gets into

• How candidates can become more CEO ready
• Must-dos for candidates interviewing for the CEO slot with a credit union board
• No-nos for candidates interviewing for the CEO slot with a credit union board
• The current CEO’s role in the CEO succession planning process
• What boards can expect from the CEO succession planning process
• The value of having a specific structure and process to follow when undergoing CEO succession planning
• The answers to two questions from CUES Podcast listeners

Links for this episode

• CUESolutions Silver provider DDJ Myers Inc.
• Episode sponsor CUESolutions Bronze provider Strategic Resource Management
• DDJ Myers’ previous episode of the CUES Podcast, How to Smash a CEO Interview
• 2020 CUES Outstanding Chief Executive profile of Garth Warner, CCD, president/CEO of Servus Credit Union, Edmonton, Alberta
• CEO Institutes hosted by CUES
• CUES Executive Compensation Survey

The pandemic came to the fore while CUES and Industry Insights were fielding this year’s compensation and salary surveys. But fortunately, great data was still collected that can form an excellent foundation for credit unions making decisions about executive compensation and staff salaries.

“It provides us a great base for moving forward, for understanding the true impact of COVID, says Michael Becher, vice president of Industry Insights, CUES' partner in producing CUES Executive Compensation Survey and the CUES Employee Salary Survey. “This data is very, very relevant” and can support decision-making about pay levels now and after the COVID-19 pandemic.

Becher says the increases in pay for staff and executives highlighted by the CUES surveys are bigger than those reported across all industries in the U.S. WorldatWork has reported increases for staff and executives of 3% to 3.3% for the last few years. “CU increases have been more in the 5% to 8% range,” he adds. CUES Executive Compensation Survey reports increases on all of the 22 positions it covers, including increases in base salary, bonuses and total compensation.

“It shows the strength of the credit union and financial services industry,” Becher says, “ … and it’s just a nice thing if you’re in the credit union space.”

During the show, which is supported by a commercial from CUES Supplier member Harland Clarke, Becher also describes how the CUES survey has been looking at the pay situation for women since 2018. The survey finds that 47% of credit unions with less than a billion dollars in assets employ a female CEO compared with 39% of credit unions with more than a billion dollars in assets. Not surprisingly, the pay for CEOs at smaller credit unions is typically lower than the pay for CEOs at larger credit unions. 

Becher also says eight positions covered by the survey have a higher rate of women: HR executive, chief member solutions officer, marketing executive, retail branch executive, compliance exec, chief operations officer, regional branch management executive and chief operating officer.

 “We’re still pretty early in collecting this type of information,” Becher says. “We’re looking forward to continuing to collect this information.”

Laura Lynch, products and services manager at CUES, says in the show that the surveys provide important data to help credit unions see if they’re competitive with their peers. Only with the data can they choose to pay executives and employees at a particular level, whether that’s at market, above market or below market. 

“A lot that goes into compensation package and the data is an important part of that,” Lynch says. “We’ve been known for providing that competitive data for many years. 

“There are lots of tools where they can create that peer group,” she adds, referring to the reporting tools included with both surveys that allow credit unions to “slice and dice” the data to help them make decisions.

Links for this episode:

• Michael Becher at Industry Insights
• CUES Executive Compensation Survey
• CUES Employee Salary Survey
• Commercial sponsor: CUES Supplier member Harland Clarke
• 2019 compensation podcast

Even before the pandemic, credit unions were the most empathetic collectors around. While credit unions clearly need members to pay their loans and credit cards, they have always approached collections with an eye for helping the member through financial difficulty and educating them about personal finance.

Enter the pandemic and many members were suddenly unemployed. Credit unions were on the financial front lines, working on ways to help, says Jeff Mortenson, VP/client services for the Financial Institution Group at CUES Supplier member SWBC, San Antonio, Texas. SWBC is the sponsor of this show.

“They clearly understood up front that they need to figure out how to help their members,” Mortenson says in the show. But they quickly discovered that calling their members every couple of days wasn’t helping them. “So they took a step backwards … and said, “Wait a minute. What’s best for our memberships and how can we help them?’ …

“They were proactive with it,” he adds. “Being proactive with it has been very successful for them. What they end up doing is creating loyal membership.

“The pandemic is an event none of us has experienced before,” Mortenson says. “Delinquency is something many of the members have never experienced before, either.” As a result, some members might feel embarrassed about getting a collections call. This can make self-service options like text or email great ways to communicate with members during delinquency.

But how can a credit union determine which communication channel a member really prefers? Mortenson says that can happen in one of two ways. The first is during member onboarding if a member specifically notes a preference for texts. The second is by watching member behavior. If a member more often responds to email, that is probably that person’s preferred method.

In the show, Mortenson talks about a new SWBC offering made possible by a partnership with FICO. This system helps track collections communications and, over time, discern members’ preferred channels.

“There’s no crystal ballt hat will tell us where delinquency is headed in the next few months. CUs need to be prepared at least on a temp basis to handle increased delinquency. They should consider adding multiple comm strategies for collecting delinquent accounts, including IVR, text and email with self-service capability. Omnichannel, along with the traditional collection models, will maximize their results.”

The show also gets into:

•  Three things to do to prepare for the future of collections, no matter what the pandemic and the economy bring
• Statistics supporting the value of offering texting as a collections communication channel
• More details about the partnership SWBC has forged with FICO to provide members collections communications using their preferred channels
• Plans for using the FICO platform for early, mid- and late-stage collections
• The value of automation when volume is high

Links for this episode of the CUES Podcast

• CUES Supplier member SWBC, the sponsor of this show
• SWBC outsourced collections
• More CUES content on collections from SWBC
  • Three Ways to Manage Delinquencies with Indirect Borrowers
  • Five Qualities of a Well-Rounded Collection Agent
  • A Guide to Auditing Your In-House Collections