Posted by Vickey Morris, SCMS, CCUE, CUDE, VP Marketing, Cornerstone Credit Union League on 8/29/2016

When they're little, most children have a poor grasp on the concept of money. But financial habits are learned at a very young age.

While many parents these days are increasingly forced to pay greater attention to personal finance and seeking more information to better their own financial situation, they often forget or are not confident enough to pass on the lessons they are learning.

Current studies show that children of wealthy parents are more financially savvy later in life, but they indicate this may be due to confidence on the part of parents. Educating yourself, along with your children, is essential for financial fitness and security later in life.  Parents in lower income families can also be confident about their financial situations, and pass that onto their kids through open conversations and planning.

Children understand concepts best when they're dealing with tangible things. As adults, we often deal with money in an abstract way. We pay for products using a debit or credit card. We have online statements and mobile banking. This abstract way of dealing with money works for us but children aren't prepared to handle that level of abstractness.  Instead, teach children about money in a direct and physical way.

I recently read an article by Trent Hamm who used “The Jar System” to teach his children about money.  If you're a parent trying to teach your kids lessons about saving and spending, you might want to follow his simple steps.  Here is the concept in his words:

Step 1: Introduce a jar system.

In my family, we've had success teaching our children about money through an allowance and a jar system. Here's how it works: We have four jars for each of our children, labeled with their name and the words "spend," "save," "give" and "invest."

  • Spend: money can be spent however they choose
  • Save: money they're saving for a specific item
  • Give: money to give to a charity of their choice
  • Invest: money used to teach about investing

Step 2: Give an allowance.

Once a week, our children each receive an allowance of 50 cents per year of their age. So, my daughter receives $3. This money is given to them in quarters. When they receive their allowance, they put an equal number of quarters in each of the jars. This is a rudimentary budget. It's done with tangible elements that they can see and hold in their hands and understand.

Step 3: Take the "spend" jar to the store.

When we go to the store with our children, we allow them to bring along whatever amount they wish from their "spend" jar, and they pick out an item they're interested in buying. 

We then point out the actual price of an item and round it to the nearest dollar to make the conversation easy. Then we count the money they have to see if they have enough to buy it. We'll literally sit down in the middle of the store and do this.

Almost always, they don't have enough money for it. If that's the case, we talk about which item they want the most, and they set that as a "save" goal.

Step 4: Let them decide to buy or save.

If they find a small item they can afford, they are free to buy it. However, we tell them if they go home without buying anything, they'll get the item they really want much faster. None of our children have had temper tantrums with this approach. If we stick to this type of tangible discussion about money, they understand why they can't have the item they want and see a route to acquiring it that makes sense to them.

Step 5. Set an example.

We often try to use cash to pay for items. We'll make sure the children see us giving cash to the cashier and receive change in return. We'll also explain that Mommy and Daddy work hard to earn that money, which we use for food, clothes and other things our family needs. When the kids see actual money changing hands, the lesson sticks.


The real key to all of this is to make money lessons tangible. Don't just talk about money. Show your children how money is used in a physical way.  Make a habit of saving with your child each week. Take them to the credit union and set-up and account, then make regular trips to deposit their allowance.

Set a Goal. Make a Plan. Save Automatically. With Your Children.

Categories: Education & Training
Posted by Mr. Dean Borland, SCMS, CUDE, VP Product Development, Credit Union Resources, Inc on 8/26/2016

At first blush, blockchain may conjure up negative connotations. After all, blockchain is the underlying technology for Bitcoin, the digital asset and payment system introduced by Satoshi Nakamoto in 2009. Bitcoin is a global cryptocurrency that has its proponents and detractors. But blockchain is not Bitcoin, it is the data processing infrastructure upon which Bitcoin relies and exists.

Simply put, the Bitcoin blockchain is a network of public “nodes” that function as individual ledgers, each of which maintains a full record of all of the transactions ever executed on the network. Unlike traditional, centralized ledger systems that rely on a single trusted party to maintain an accurate database of transactions, blockchain transaction authentication is achieved by arrangement of data “blocks” and “chains” that are validated through the consensus of all of the nodes on the network. The processing protocol and the network of nodes create the “strength in numbers” that makes blockchain processing appealing.

In its 2016 Annual Report, the United States Treasury Department's Financial Stability Oversight Council (FSOC), acknowledge the potential innovation and disruption blockchain (also referred to as “distributed ledger” or “shared ledger”) technology could impose on the financial system. According to the Report, “Distributed ledger systems may mitigate risk and improve resilience in financial networks in a number of ways. Because distributed ledgers can be designed to be broadly accessible and verifiable, they could provide a valuable mechanism for enhancing market transparency. By eliminating the need for some transactions to flow through trusted third parties, distributed ledgers could reduce concentrated risk exposures to those firms and infrastructures. In addition, by improving the speed and accuracy of settlement systems, distributed ledger systems could reduce the counterparty and operational risks which arise when financial assets are exchanged.”

With an eye to exploiting potential benefits of distributed ledger processing, CUNA and CO-OP Financial Services have undertaken initiatives to explore distributed ledger opportunities to benefit credit unions.

In a May 2, 2016 news release, CO-OP Financial Services and TMG announced a collaboration to commission a body of work by Mercator Advisory Services on blockchain technology to help credit unions make wise decisions regarding emerging digital ledger technology. By mid-June, CO-OP, TMG, and Mercator Advisory Group reported that they have “developed and begun testing a strategic decision framework for blockchain – something the companies have found does not exist today. The tool eventually will serve as an evaluation template for financial institutions exploring use cases for the emerging digital ledger technology.”

CUNA has taken a different approach. Teaming with the Mountain West Credit Union Association and John Best, Best Innovation Group, CUNA is spearheading an initiative to establish a collaboration of and funded by credit unions, to study the feasibility of creating a permissioned credit union blockchain network. CUNA’s process will be managed by a Steering Committee, chaired by Rudy Perguia, President / CEO, Royal Credit Union, Eu Claire, WI, that will oversee the activities of separate committees chartered to explore network development and application (software) selection.

The collaboration of credit union participants, which will be managed by John Best, will consist of a group of credit unions who will each host a blockchain “node,” and support the initiative with a financial contribution: $1,000 for credit unions having assets <$500M, $5,000 for credit unions having assets in the range of $500M to <$1B, and $10,000 for credit unions having assets > $1B. The network of credit union nodes will serve as a laboratory for the design and testing of a proprietary credit union distributed ledger network and its potential uses.

For those who wish to take a deeper look at blockchain technology, CUNA and Mountain West Credit Union Association offer these facts:

  • At its most basic level, blockchain technology is a private transaction database. However, in contrast to a traditional database, information on a blockchain can be accessed by participants without the permission of a central administrator. Rather, the blockchain is managed as a network of computers, much like the internet, with each connected participant’s computer defined as a “node.” Each node has a record of the entire blockchain, ensuring the integrity of transactions;
  • Because each node has a record of every encrypted transaction, the blockchain is also called a shared ledger. Think of “ledger” as an accounting ledger, or list of transactions, that can be viewed by all parties. In a traditional ledger, transactions are registered with trusted third parties;
  • If you want to share information or change ownership of an assets, you need to contact the trusted third party, follow the right procedures and the trusted third party will transfer ownership;
  • On the blockchain, knowledge of ownership is shared with all registered users. Each member of the blockchain has their own register of every transaction; and
  • All individual registers are regularly compared to correct errors and ensure agreement about the accuracy of records.
  • Blockchain technology uses public-key encryption, which is virtually impossible to breach because a message can be unlocked only when a public and private element, held solely by the recipient, are linked. As a result, the system is considered highly resistant to tampering or fraud.

Credit unions interested in participating in the CUNA / Mountain West Credit Union Association study are urged to contact the initiative through

Categories: Strategic Planning & Consulting
Posted by Karen Coble, VP Sales, Catalyst Corporate FCU on 8/25/2016

While paper checks may be on their way out the door, checking accounts and checking account services remain a vital part of any financial institution—especially credit unions. After all, whether you opened your first one with the birthday money acquired as a kid, or decided on one well into adulthood, the checking account story is a tale as old as time.

But with the prominence of physical checks decreasing more and more (see the Fed's most recent data here), how are financial institutions supposed to engage, attract, grow and sustain members enrolled in checking account services?

StrategyCorps, a financial technology company based in Nashville has recognized this challenge, and tackled it head-on by tracking and analyzing nearly four million checking account relationships. From this, they’ve developed profound insights into consumer behavior and financial performance that only real-world checking data can provide. All of this data is logged into a database referred to as “The Brain,” which helps the firm develop innovative checking solutions for financial institutions.

“The Brain is able to help us develop strategic solutions to design and build checking strategies that make checking accounts as modern and valuable as possible for both members and credit unions,” said Mike Branton, managing partner of StrategyCorps in this 2016 article by Catalyst Corporate Federal Credit Union.

So, what has StrategyCorps’ data told us?

  • Mobile and Online Banking are as Important as Member Services. “More than half of all members are looking for services that tie in seamlessly with their lives,” said Branton, citing a recent study by Accenture. The 2015 North America Consumer Digital Banking Survey shows that 54 percent of customers are interested in banks locating discounts, and 52 percent are seeking proactive product recommendations.

  • Millennials Matter. Millennial members are nearly twice as likely to switch their financial institution as those in the 35-54 age range, and about six times more likely than members over 55. However, 33 percent of millennial members will stay with a financial institution based solely on their satisfaction with an institution’s online and mobile offerings. The Brain shows that the median age of credit union members with checking accounts is 51, leaving an untapped market of millennials waiting to be wooed and impressed by engaging mobile banking services. 

  • Engage with Banking Services and Lifestyle Services. Checking with Benefits, a service Branton describes as a “modern solution to a classic product,” is a rewards program that can make a credit union’s checking accounts more attractive to members and potential members, strengthen member engagement with the credit union and generate member-friendly fee income. It employs a customizable app to enhance a checking program with on-demand benefits like geo-locatable discounts, roadside assistance, cell phone protection and more.

  • Reward Loyalty. By combining a checking account with a modern rewards-based program, members are able to get more from their credit union. “These lifestyle-based rewards are packaged in a checking account and delivered on a mobile app for members to easily use in their everyday lives,” said Branton. Giving checking account holders something practical they can—and do—use frequently is a benefit to everyone involved.

Checking accounts serve as a gateway for credit union members, giving them a foot in the door to basic financial opportunities. But more than that, checking accounts are necessary for other, more widely used payment services. For credit unions to stay competitive, viable and attractive, offering members checking services they could (and would) use is not just a best practice, but imperative.

Categories: Business Partners, Sales & Service
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