BIRMINHGAM, Ala.—Checking accounts and executive benefits are two key areas in which credit unions are stepping up their investments in 2018, according to Dennis Dollar.
The former NCUA chairman and Dollar Associates’ principal told CUToday.info that in addition there are two more areas where he is also seeing clients budgeting additional dollars this year.
“We are seeing a real move toward enhancing executive benefits in order to retain quality talent,” said Dollar. “Although there are some changes in the new tax law that will make certain types of benefit plans such as split dollar more advantageous than traditional deferred comp plans, almost every credit union with over $250 million in assets has this on their radar screen for 2018.”
Dollar emphasized that it is getting tougher for CUs to recruit and retain the level of executive leadership the growing industry requires.
Due-Diligence
“It is important to do the right due-diligence on this front and make sure the plan does not become a balance sheet liability for the credit union,” he emphasized. “But the need for such plans is crucial for the future growth and health of credit union executive leadership.”
Another area credit unions are investing their extra dollars in is new checking account promotion, Dollar said.
“The primary transactional account of a member is still worthy of investment—particularly when the average credit union only has 48% of its members using its checking account,” noted Dollar. “It is a revenue generator through non-interest income from the checking account itself, and it can lead to other business such as credit cards, car loans and mortgages. Whoever has a consumer’s checking account today with mobile and online banking is in the best position possible to drive other business.”
Dennis Dollar
Of course, Dollar said, investments in technology and big data are crucial in today’s marketplace.
“Whether it be more extensive member data or remote capture, credit unions cannot afford to fall behind the competitors in this field,” stressed Dollar. “The fintechs are coming, but there is not much they offer that credit unions cannot also provide if they stay updated and innovative in the technology arena.”
Meanwhile, Dollar told CUToday.info he’s seeing credit union focusing on charge-offs, observing there is a push with the CU community to restore old members with charged-off debt to good standing through a payoff plan.
“This is producing a lot of recoveries and the return of some good members who had a bad turn in life and are ready to become a trustworthy member for years to come,” said Dollar. “We’ve had a number of clients gain some ‘found money’ through collection of cold case charge-offs, bringing back some members into good standing.”
Restore Old Members
Dollar added that given the costs of recruiting a new member, it is always worthwhile to try to restore old members who want to make good on a charge-off.
“These four areas we are seeing in our client base as major priorities in 2018,” said Dollar. “While field of membership expansion, mergers and growth strategies are always at the forefront of credit union strategic thought, sometimes it is these subsidiary—but crucially important—areas of focus that can drive a credit union from a good year to a great year.”