Posted by Steve Stovall, Product & Experiential Marketing Manager, Credit Union Resources, Inc on 1/3/2019

By Todd Clark, CO-OP Financial Services

While now is the busiest time of year for our industry, it is also a time to reflect on our successes and challenges in order to begin planning for a new year. These past few weeks have been particularly exciting at CO-OP, having just received a favorable review of our organization from NCUA and with two new additions to our Executive Management Team: Chief Product Officer Bruce Dragt and Chief People Officer Cheryl Middleton Jones. I feel more confident than ever that we have the right business plan and team to fuel growth within the credit union movement.

Our industry continues to grow and thrive. In fact, according to the latest NCUA and Callahan research, credit union membership is up 4.5 percent in 2018, adding five million new members over the course of the year. Altogether, our movement is now 116.9 million members strong.

These data points are not surprising. Credit unions continue to deliver exceptional value to their members on many fronts – from the personalized service we provide to the growing array of digital solutions and extended branch access made possible by shared branching.

As our industry expands, we face both opportunities and headwinds from new, disruptive technologies. Record investments were made in fintech during 2018 as companies continued to jump in and compete for their share of the $110 trillion payments market.

While the future is promising, the competition is fiercer than ever – with big banks coming after our members in force. In order to compete, credit unions must embrace digital transformation – always with an eye on member service. 

At CO-OP, we’ve been living and breathing this transformation all year by focusing on fully integrating the TMG business into our own. The new CO-OP is distinguished by an incredibly strong, talented and committed workforce of 1,600 employees and healthy revenue growth.

Additionally, the integration of our Operations and Technology teams to form Enterprise Technology & Services (ET&S) has brought forth a new service model – we have embraced a more client-centric focus which, in turn, is allowing our client credit unions to be more member-centric.

One thing we’ve learned this year is that integration and innovation go hand-in-hand. Thanks to the hard work of our team and valuable feedback from our clients, we’ve made tremendous progress in both integration and innovation in 2018.

Here is a snapshot of the milestones we reached this year:

Payments

Payments will continue to be a critical element in winning preferred financial institution (PFI) status for credit unions. But winning the payments race is about more than just offering the latest technology. Payments – and banking in general – are rapidly being judged by consumers based on the experience they provide. 

Today’s members want choices, including access to multiple channels, and they want security without fail. They also want their financial institution to sort out the complexity of an industry in flux to make payments as simple as possible for them. 

To help credit unions succeed in this dynamic marketplace, we focused this year on advancing our payments offerings with a strong emphasis on mobile, real-time and contactless options.

I’ve spoken at length about why I believe Zelle can be so transformative for credit unions and I’m excited that our own Zelle solution will help make it faster, easier and much less expensive for credit unions to provide Zelle payments to members. We were also first to market this year with supporting payments integration for Garmin and Fitbit wearables, which research shows consumers are overwhelmingly beginning to demand. Finally, we continued to advance our digital wallet solutions, including Apple, Samsung and Google Pay, which we believe will be vital for helping credit unions achieve top-of-wallet and PFI status.

Experience

There has been a significant shift in consumer sentiment, as “by the year 2020, customer experience will overtake price and product as the key brand differentiator,” reports Superoffice.com. Improving experience within an organization takes time but more importantly it requires feedback. That is why we focused a lot of our efforts this year on engaging directly with our credit unions and members to understand their experiences.

All year round our Client Experience team and Co-Creation Councils have been collecting feedback from you, our credit union clients, to help drive the strategic direction of CO-OP, our product roadmap and our new service model.

A perfect example of the impact of this work has been the development of a new disputes and chargebacks system. Based on the recommendation of the Co-Creation Councils at our June meeting, we are now actively working to replace our two legacy settlement systems – one developed over time here at CO-OP and a second that came with the TMG acquisition last year – with an updated enterprise-wide solution that is being designed and architected under the guidance of the Co-Creation Councils. The new system will streamline settlement processes for credit unions for better, faster service to members.

We are thrilled with the excitement and collaboration we are seeing on the experience front and look forward to continuing to drive innovation with the Co-Creation Councils in 2019.

Technology Innovation

This year, we also launched two major flagship products: MyCO-OP and COOPER. These new innovations will anchor our infrastructure going forward and serve our clients and their members for years to come. 

MyCO-OP is our new highly secure, PCI-compliant access point to CO-OP systems and applications. Designed to protect credit union and member data while allowing employees to freely move from one application to another, MyCO-OP is already helping our clients work more efficiently and serve members faster. The next generation of MyCO-OP is in the works to include more robust reporting and is slated to go live in 2019.

We also introduced COOPER Fraud Analyzer, a data-driven fraud mitigation tool, now in pilot testing and on pace for full availability throughout our shared branch network early next year. COOPER has been a huge initiative, as we believe AI and machine learning technology will be vital for understanding member behaviors and preferences in order to drive better engagement.

Giving Back to Communities

Finally, I feel extremely proud of the philanthropic work we’ve done this year to help make a difference in our local communities. Whether it was delivering aid to communities impacted by natural disasters, or partnering to deliver 1,500 backpacks and financial literacy kits through our Yoobi Back-to-School program, CO-OP credit unions have remained true to the mission of “people helping people.” This year we also celebrated 10 years of the CO-OP Miracle Match Program, and the fact that we have collectively raised over $20 million to support our local hospitals.

Looking Ahead at 2019

As our industry continues to advance at breakneck speed, we are reminded of the importance of education and staying on top of the trends shaping the future. 

To help you stay informed, CO-OP continues to invest in events that convene thought leaders throughout the industry, including our THINK conference series. In 2018, more than 750 credit union representatives joined us for a week of discovery and collaboration at THINK. Our THINK 19 conference, themed “Opportunity Never Rests,” will once again give us a unique opportunity to connect, exchange ideas, benchmark our progress and seize opportunities. 

On behalf of the CO-OP organization, I would like to thank you for partnering with us on this journey – and congratulate you on another year of growth, achievement and member service.

As THINK 18 alum Jaron Lanier noted: “Credit unions have a tremendous opportunity. How many organizations have 50 million+ people, have financial relationships with those people, and have trust? Apple. Amazon. And credit unions.”

We’re in good company – and poised to stay there.

This blog originally posted at the CO-OP Financial Services Insight Vault on December 16, 2018. The original post can be found here.

Posted by Justin Lutes, AAP, NCP, Vice President, Correspondent Services, Catalyst Corporate FCU on 12/27/2018

A new round of Same Day ACH (SDA) advancements is on the horizon! Earlier this year, NACHA’s voting membership approved three new SDA rules that will take effect over the next two years. 

SDA is already the leader in faster payments processing, with nearly 41 million SDA transactions conducted nationwide in the second quarter of 2018, a year-over-year increase of 243 percent. NACHA’s expansion of SDA capabilities will further speed payments processing for consumers, businesses and financial institutions.

The first new rule increases the speed of funds availability for same-day and next-day ACH credits. The second rule change increases the SDA per-transaction dollar limit to $100,000. The third rule allows submission of SDA transactions to the ACH network an additional two hours every business day.

NACHA will begin implementing these rules in September 2019. As the New Year begins, credit unions may want to evaluate the impact these SDA changes will have on their funds availability policies.

Providing Faster SDA Funds Availability

The first rule, which takes effect Sept. 20, 2019, increases the speed of funds availability for certain SDA credits. Faster funds availability for same-day and next-day ACH credits aids both consumers and businesses that receive deposits and disbursements via ACH.

Funds from SDA credits processed in the existing, first processing window will be available by 1:30 p.m. RDFI's local time. Funds from non-SDA credits will be available by 9 a.m. local time on the settlement date, if credits were made available to the RDFI by 5 p.m. on the previous day (i.e., apply the existing “PPD rule” to all ACH credits).

Increasing the SDA Dollar Limit

The second new rule, effective March 20, 2020, increases the SDA per-transaction dollar limit to $100,000. Currently, SDA transactions are limited to $25,000 per transaction.

While the current limit covers approximately 98 percent of all ACH transactions, as well as 89 percent of B2B (business-to-business) transactions, a higher dollar limit would benefit some end users. Examples include SDA payments for payrolls, claims payments, B2B payments and reversals of larger pools of transactions.

Expanding Access to SDA

The third new rule expands access to SDA by the two ACH network operators. A third processing window provides two additional hours each business day, until 4:45 p.m. EST, to submit SDA transactions. ACH end users will have a longer business day to initiate SDA payments such as payrolls, bill payments and B2B transactions.

Currently, the latest an ODFI can submit SDA transaction files to an ACH operator is 2:45 p.m. EST. The new processing window is intended to balance expanded access to SDA with minimal impact to financial institutions’ end-of-day operations and the re-opening of the next banking day/Fedwire re-openings at 9 p.m. EST. The proposed new window allows for closing Fedwire by 7 p.m. EST, with a two-hour window before re-opening.

This rule is currently slated to take effect September 18, 2020, with a NACHA approval deadline of June 30, 2019. Some financial institutions, however, have requested additional implementation time. If NACHA approves this rule after July 1, the effective date will be extended to March 19, 2021.

Categories: Business Partners, Education & Training, Financial & Auditing
Posted by Steve Stovall, Product & Experiential Marketing Manager, Credit Union Resources, Inc on 12/18/2018

By CO-OP Financial Services

According to Forbes Magazine, global revenue derived from artificial intelligence (AI) for enterprise applications is projected to grow at more than 52 percent annually, from “$1.62B in 2018 to $31.2B in 2025.” The share of U.S. jobs requiring AI skills has grown “4.5X since 2013.” And 84 percent of enterprises “believe investing in AI will lead to greater competitive advantages.”

While AI, machine learning and related technologies are poised to transform the future of fintech, what do these tools mean for credit unions, and how can they be applied to unleash growth opportunities?

“AI presents an enormous opportunity for credit unions to transform the member experience on many levels,” said Fotis Konstantinidis, SVP of Fraud Products and Data Scientist for CO-OP.  “By analyzing millions of data points about your members’ spending and transaction history, a sophisticated AI platform can help you uncover deep insights about your members and engage with them on a more personal level.”

Take card portfolios, for example. Credit unions can leverage the power of AI in varying degrees of complexity to gather and analyze member data points ranging from membership accounts, activation rates and number of transactions by category (PIN, signature and credit) to average ticket, revenue and expense. Benchmarking this type of data can help credit unions develop more informed penetration, activation and usage (PAU) strategies – and execute more successful marketing campaigns as a result.

At CO-OP we are actively working towards bringing the benefits of AI and machine learning to the credit union industry. Here’s how we see credit unions being able to leverage machine learning and AI to boost PAU for their credit and debit card portfolios.

Penetration: Growing the Cardholder Base

Credit unions are known to have distinct advantages over larger banks when it comes to their credit and debit offerings, such as lower fees and interest rates. Yet members are constantly bombarded with so many credit card offers and bank solicitations it can be easy for them simply use one of the more name-brand recognized card networks by default.

AI can help credit unions cut through the noise and optimize their card marketing strategy for frequency and relevancy. For example, machine learning can use spending and purchase behavior from existing members to identify the right time to engage them and determine the right offer. Let’s say your data reveals that certain members are more likely to travel during a certain month of the year; a machine learning algorithm could automatically segment out those members and send them a limited-time custom rewards or cashback incentive on travel-related purchases. Machine learning can also help identify account holders who may be good candidates for new card offers.

Activation: Simplified by Automation

Getting your members to activate and begin using their debit or credit cards can be challenging and most-often very labor-intensive. Tactics can range from instant issuance and automated alerts to sending out welcome kits, direct mailers or having dedicated representatives calling those members.

AI can be, and in many cases already is, used to automate these processes and reduce the strain on internal resources. For example, instead of having employees manually pull and review lists of inactive cardholders for activation campaigns, AI platforms can automatically identify those users whom have yet to activate their cards from within the system – and send out targeted e-mails accordingly. It could even set up a multi-step engagement strategy, without needing someone at your credit union to manually hit send every time.

Pre-programmed chatbots could also be implemented to automate activation services for members. Not only do these platforms eliminate the need to staff phone and chat lines, but members can get through the activation process faster.

Usage: Achieving Top-of-Wallet Success

Penetration and activation is half the battle but usage is the key driver of card portfolio growth. While member rewards are one of the more effective ways of driving cardholder usage, they work best when they are customized to the member. If members don’t feel the rewards they are receiving are relevant to them, they won’t feel incentivized to use them. In fact, research from Mintel suggests that only a third of banking members understand and actively use the rewards offers they are receiving.

This is where AI really provides deeper insight into your members. By designing rewards and other incentive programs based on your members’ behavior and transaction history, you are providing relevancy and value to those members in a way that feels more personalized. Some members may want cash back rewards while others might prefer airline miles – instead of presenting both options and making the member choose, machine learning can identify what offer your member is more likely to use based on his or her transaction history. Or, taking it a step further, you can use that information to provide your members with unexpected rewards. For example: rewarding a music-loving member with an exclusive cash back reward or discount offer on concert tickets. Personalization like this can go a long way towards achieving top-of-wall status and, more importantly, building loyalty with members.

Building Long-term Member Relationships

Optimizing the health of your credit or debit card portfolio is just one of the benefits that AI promises for credit unions. Ultimately, AI serves a tool that can inform our decision-making processes, helping us become more efficient and providing more personalized experiences for our members.

Download our new whitepaper to learn more about the transformative impact AI and machine learning will have on the credit union industry; Get a closer look at how CO-OP is bringing the benefits of AI and machine learning to credit unions through our advanced data-driven platform COOPER.

This blog originally posted at the CO-OP Financial Services Insight Vault on December 16, 2018. The original post can be found here.

Categories: Business Partners, Financial & Auditing, Marketing & Printing
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