By Frank J. Diekmann
I heard them, and you heard them, too, but let’s all just admit it--we really don’t remember exactly when we heard it, and that’s if the words registered at all in the first place.
Let me refresh your memory thing. The following phrases are going to ring a bell, but there’s probably some patchy fog for you around who rung it: “Barring unforeseen circumstances,” or “unless something drastic happens,” or the ubiquitous, “there’s nothing on the horizon.”
That’s not all. What about these three words--top of wallet? You’ve no doubt recall hearing those words, too, but you likely also have stronger memories of when you last lost your wallet, right?
Funny how quickly the unforeseen is being seen all too clearly, the calm has indeed become drastic, and one big thing is so dominating that same horizon it’s nearly blocking the view.
And top of wallet? If it’s not top of mind right now, you’re not paying attention.
Never Checked This Box
All of the above references, of course, have to do with the coronavirus COVID-19, which is significantly disrupting life and credit union forecasts for 2020 and beyond in ways no one ever really imagined. Sure, every late 2019 planning session checked off a box about worst-case scenarios, but really, who thought it could be worst case? And so soon?
CU boards are meeting by telephone, management teams are discovering “mobile workforce” sounded better in the business continuity plan, employees are looking askance at cash, and members are no doubt putting off plans to borrow.
I mean does March even occur if there’s no March Madness, or do we go straight to April? And can you imagine being the programming department at ESPN right now?
What early 2020 is offering is a real-world lesson in the real world and best-laid plans. Every economist I heard in 2019, every economic forecast given to a credit union meeting last year, was a generally upbeat Magic 8 Ball where every time it was turned over the answer was either “Looks Good,” “Looks Really Good” or “Go Ahead and Plan that European Vacation—You’re 401(k) is Thriving!”
The Only Question
The only real question—and credit union audiences asked it again and again—was when would a recession arrive. Maybe after the election in 2020, or sometime in 2021, the experts would respond, nearly in universal agreement the country was in for a slowdown, not a recession, and in either case it would be mild.
And then, as if required by the First Law of Economic Forecasting, there was always the fine print caveat, “Barring unforeseen circumstances,” “unless something drastic happens,” or “there’s nothing on the horizon.”
But, hey, who reads (or hears) the fine print?
A decade ago a generation of credit union leaders got their lesson in the fine print and learned just how painful a bursting bubble can be. That was supposed to be a once-in-a-century event. Now, nine decades short of a century later, a new generation has been involuntarily enrolled in the School for Hard Knocks’ College of Planning Going Sideways. If your management team and board take away nothing else from the coronavirus COVID-19 pandemic, it must be how seriously contingency planning must be taken.
CUToday.info isn’t immune, by the way. We kicked off the year with an editorial series on now to deal with a rising rate environment.
There is No Number-Two
Here’s what else must be taken seriously; it’s those other three words mentioned above—top of wallet. For some time many in credit unions have been stressing how crucial it is for CUs to get members to make their CU debit/credit card the card used for the increasing number of automated monthly expenses, such as Netflix or some other subscription service, and as the default card for online purchases through Amazon and Uber and DoorDash and the like.
As CO-OP Financial Services’ CEO Todd Clark noted here, every 60 seconds in the United States there are 180,000 debit and credit card transactions. How do you think that number is trending as people say home from work and restaurants close to sit-down diners and all those people now working from home due to the pandemic do some shopping?
Being top-of-wallet for those purchases and interchange income is so very important for another reason—basically, there is no number-two position. You’re either number one or you’re the emergency card buried so deep in the wallet resurrections occur about as often as the one in the New Testament.
Be the Sun
The COVID-19 outbreak is going to be felt by credit unions in ways that aren’t yet imaginable. What every CU does need to not just imagine but make reality are ways to help worried members deal with financial strains they never gave a thought to when singing Auld Lang Syne less than three months ago.
For credit unions themselves, there most definitely is a big blot on the horizon that’s going to require management to be at its best. And for members, there is also now something on their horizons—it’s your job to make sure it’s their credit union, and that it looks like a sunrise.
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.info or @FrankCUToday.