Playing It Safe is a Risk that We’re Willing to Take
Credit Unions exist to serve members in ways that go far beyond what banks can offer. That’s the message we should be getting out to the public. But, is that the message the board wants to hear?
In this episode of Grow Your Credit Union, hosts Joshua Barclay and Becky Reed welcome on Kelly Botti, the President and CEO of TruMark Financial Credit Union.
Here are the topics for this episode:
Strategies for helping your members see your Credit Union as a financial partner
Measures for mitigating the risks of rising auto loan defaults
Credit Union marketing pain points (Note: We’ve got eight)
Improving employee experience and reducing turnover
The real fun starts whenever you press play. Alternatively, you can read the full transcript below.
Thanks to Silvur for sponsoring this episode
Silvur is the retirement engagement solution for Americans 50+. Leading credit unions use Silvur to retain direct deposit relationships lost at retirement (up to 80%) and reach 98% of members not served by wealth management. Support your 50+ members, reduce asset flight, and capture the $70T retirement wallet. Visit Silvur.com to learn more.
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FULL TRANSCRIPT
[Joshua Barclay]
Today we're exploring transformative strategies for credit unions. We'll dive into the eight biggest marketing pain points of 2024 and address the persistent issue of employee turnover in the industry.
[Music]
[Joshua Barclay]
Welcome to Grow Your Credit Union where credit union leaders gather, learn, and grow. I am your host Joshua Barclay, and I am with my co-host, the talk of Texas, I'm talking about Becky Reed. Becky Reed, what is up?
[Becky Reed]
Hey-o or howdy y'all.
[Joshua Barclay]
Becky, we are about to start the show. But first, I want to mention our sponsor for this episode. Silvur. They are the retirement engagement solution for Americans ages 50 and up. A huge thanks to Silvur for being our first sponsor. We greatly appreciate their partnership. Stick around to learn more about them, later in the show.
[Joshua Barclay]
Becky, I want to kick things off and ask you about the very first album you ever bought with your own money.
[Becky Reed]
I am a music enthusiast. My first career was in the music industry and so I have a very eclectic musical knowledge base, but the first album I ever bought was actually not an album, it was a cassette tape. It was AC/DC, Back in Black.
[Joshua Barclay]
I guess for me, Becky, it would be Snoop Doggy Dogg, The Doggfather.
[Becky Reed]
Oh, yeah.
[Joshua Barclay]
Ten-year-old me thought he was going to be a rapper. He would be very disappointed with where I am today talking to you all wearing a button-up shirt.
[Becky Reed]
[Laughter]
[Joshua Barclay]
With that being said, let's kick off the show. Today on Grow Your Credit Union, we have the CEO of Trumark Financial Credit Union, Kelly Botti. Kelly, welcome to the podcast.
[Kelly Botti]
Hi, thanks for having me.
[Music]
[Joshua Barclay]
Let's kick things off with something that April Clobes, the CEO of Michigan State University Federal Credit Union, said in a recent interview that I did. She emphasized the importance of credit unions being seen as financial partners and not just transactional accounts.
Kelly, based on this comment from April Clobes, could you tell us actions that credit unions should take to enhance their value to members and be perceived as true partners and not just transactional accounts?
[Kelly Botti]
One of the things that struck me about that quote is the use of the word "partnership." And I think we talk about partnership a lot internally at the credit union, but what does a partner mean? I think defining that first is critical because when I think of partners, it's somebody that has my back, it's somebody that cares about me, who is invested in my future.
And if we're thinking about partnership from that context, the first thing that you have to develop is trust. Your members have to understand and know that the value they're receiving from coming into the credit union is one that's rooted in conscientious trust. We intentionally are showing up for you.
At my credit union, that's the basis of our strategic vision. We're not chasing an asset goal; we're not chasing a growth goal. What we're chasing is a feeling, which is, "Hey, when you're a part of our community, we're in it with you." That is our strategic aspiration. That's our goal. I would say that that's the first part, is through your actions, not your words, doing the things that you say you're going to do that creates that conscientious feeling of trust and partnership.
The second thing that I would say, it's about taking care of your team because your team ultimately cares for your members. And so when you're talking about partnership with your member community, it's making sure that your team members feel that too, and that you're showing up for them the same way you expect them to show up for your members.
We spend a great deal of time and energy and prioritization around our team member growth, around our team members' engagement, around our team members' happiness. My responsibility to the organization, I'm a constant vibe checker, so I'm in and around our physical spaces quite a bit. I'm making sure that the vibe feels good where we go, that our team members feel whole and cared for.
That's a really big part of it.
The third thing I would say is the simplest thing, and that's in any relationship you're in, any partnership you're in, it's listening. And really understand, not hearing the complaints that are coming in, hearing the concern that's underlying it. I think so frequently in financial services, we try to address tactically what's wrong, we want to solve your problem right away, but there's a concern that is underlying that.
And so it's analogous to when you're receiving medical care, it's bedside manner, right? You want to make sure that you're addressing the concern and anxiety that brought them in, and making sure that they're walking away feeling confident in the choice that they have.
[Joshua Barclay]
I love that, Kelly. Becky, let's pass the mic over to you. Actions that credit unions should take so they can be perceived as true partners.
[Becky Reed]
I think walking the talk, and I can tell you from visiting Kelly at her credit union, that is absolutely something that she and her team do, and I think that's an important part of building trust. One of the things that we talked about at Lone Star Credit Union often was being the doctor.
Whenever you have members come in, if they're coming in or they're calling, it's a lot of times because they have some kind of an issue, right? You just talked about being transactional, and transactional type of behavior can happen not in a branch or not over the phone. It can happen in your app, it can happen online, it can happen a lot of different ways.
And in fact, more and more members are choosing to do transactions in that way digitally as opposed to in person. So, if they're coming to see you or they're calling on the phone, they have a problem.
We are expected to be the subject matter experts, and many times what we do, and I've been in this industry almost 30 years, and this is a natural human behavior, is we do what they ask. So, when a member says, "I need to do X, Y, or Z," or "I need you to do X, Y, or Z," we proceed with fulfilling their request.
That means we're just an order taker. I think it's important that we understand how things work behind the scenes, right? We understand what it really means to send a wire. We understand what happens in the ordering of transactions that come through their account. We understand what it takes to underwrite a loan.
Our members don't necessarily understand those things. They are just trying to meet a need that they have, and in their head, they have an idea about how to accomplish that. So, in order to truly be the doctor, we have to listen to the symptoms, and we have to diagnose the problem and provide solutions that the member may not even be aware are available to them.
[Music]
[Joshua Barclay]
According to Bankrate, "The percentage of borrowers 60 days past due on their auto loans has reached the highest level since 1996." And according to Steve Cocheo of The Financial Brand, "Credit unions' heavy consumer lending, especially in the auto sector, will contribute to a tight year.
Bloated car prices during the pandemic and its aftermath may result in nasty surprises for lenders when consumers hit by rising rates turn in their keys." And I'd like to state that as of June 2023, credit unions accounted for 32.8% of all U.S. car loans, meaning CUs have a lot of exposure to auto lending.
Kelly, what proactive measures should credit unions be taking to mitigate the risk of rising auto loan defaults?
[Kelly Botti]
You're speaking my background, so my expertise is in non-performing assets and risk management. And where I would say most credit unions should be focused is making sure your process for rehabilitating members is consistent with your member value proposition and your members' needs, and also the demographic and composition of the risk in your lending.
So, there's a lot of credit unions that are value-oriented, really believe in finding pathways for members to credit. Auto lending's a great pathway for a lot of those. It's providing a huge necessity to consumers. I mean, cars are often the last to default in a bad situation. Car payment's the last one to go.
You have to know the risk that's in your portfolio first and design hardship strategies that speak to that.
So, if you're heavy in subprime lending and you know that you have borrowers that are already taxed and already struggling with making payments or haven't had a history of great repayment, you've got to design strategies that meet them where they are and remove as much shame from the process as possible.
Because the second people can move into ostrich mode and bury their head in the sand and try not to think about it, they will. So, making sure, and that goes back to that feeling of partnership and how you're connecting with your members, making sure that you have programs in place that help destigmatize what they're going through and help them find a pathway back to rehabilitation.
Your best member is a rehabilitated member. That's the one that's going to provide you the most value long term. They're going to believe in you. They're going to know you have their back. They're going to be vocal about that to all of their friends. There's a lot of value that comes when you show up for people when they're having a hard time.
So, for example, we had flexible hardship programs. We use a lot of digital communication in our outreach – text messaging, e-mails, self-serve portals, push alerts through their home banking. They're not getting a phone call or a message that somebody's going to overhear or sense that anxiety. It allows them to connect with you on your own terms.
Having collections' hours and support, you know, loss mitigation hours that are outside of normal business hours is really helpful, making sure that your frontline staff is empowered to provide resolution. Like if somebody comes into the branch and they want to make a payment, making sure they're able to make that payment is really important.
You don't want to turn them away.
[Joshua Barclay]
I think what you're saying, Kelly, really resonates with me because in the past I had a family member who defaulted on his truck, and he felt so much shame.
[Kelly Botti]
It's so personal.
[Joshua Barclay]
It's so personal and he felt so alone. And what I love about what you're saying is the empathetic side of, "Listen, I know that you're having a hard time. I'm not going to yell at you, I'm not going to send you 55 phone calls a day harassing you, but I'm actually going to try to walk you through this."
[Kelly Botti]
Listen, that's just being human, right? And I think if all of us just take a beat and remind ourselves that we all are human beings and we can treat each other that way, you find a lot of solutions that come from just that place. You know, the other part of it too is statistically, people respond better to text messages.
We have almost a two times response rate to our text message and linkage portal. So, you're seeing success through those investments also. It might be easier for you to set a call round, but it's much more effective to communicate with your members where they are.
[Joshua Barclay]
Becky, I would love to hear your take on this. I'm sure you've encountered this on a personal level where someone was unable to, let's say, pay their car payment. What is the Becky Reed mode of action during that particular time?
[Becky Reed]
Well, the relationship starts when you make the loan. I think that what Kelly referred to from a risk mitigation strategy is absolutely important, but you have got to have a relationship so that that person responds in whatever way you reach out to them, whether it's a phone call, whether it's a text message, whether it's an email, whatever.
If your practices, your procedures in-house are to wait until they're 61 days delinquent to reach out to them, you've lost them. Because again, nobody really truly, for the most part, unless it's fraud, people want to make their payments. They do. And I don't care what their credit score is, I don't care what their family situation is, I don't care.
They know that you gave them a loan that they need to pay back. They know that. And when they can't pay it, it causes stress. But in order to help during the time of stress, you have to have a relationship first.
And I think that's one of the issues with indirect lending, frankly. A lot of credit unions have really focused on indirect lending and there's no relationship there, and we have tried for decades to create a relationship, but at the end of the day, we're just a finance company to that person. But the reason credit unions have such a large market share there, most people have a loan with a credit union.
They do because our rates are better, right? We're friendlier, the process is easier. And a lot of credit unions are available at the dealership through indirect programs. But that's not how you build a relationship with a member. When you're closing a loan, you tell that person, "If you ever, ever feel like you can't make your payment or you're getting into a situation that you feel like you might be struggling, call us first.
Call us and tell us what's going on before you miss that payment so that we can work something out."
[Joshua Barclay]
I love that, Becky, because it feels more... Back to the partnership thing and a friend thing, I did get an indirect loan from a credit union. They have not reached out to me ever other than to send me my bill. I still love you, credit union that does that to me.
[Kelly Botti]
Well, I was going to correct the record for Becky because we have a 13% conversion rate of our indirect members. And that really comes...
[Joshua Barclay]
You go, girl.
[Kelly Botti]
But that is where you're talking about building that relationship. It's calling and saying, "Hey, let us let us tell you about ourselves. Let us talk about who we are and why we're here," and that's a huge investment of manpower to do that. It is.
[Music]
[Joshua Barclay]
Hey, I want to take a moment to talk about this episode's sponsor, Silvur. Silvur is the retirement engagement solution for Americans over 50–the demographic that holds over 80% of US household wealth and is the first generation to retire without the benefit of a pension.
Silvur makes it easy to help them, with over 800 classes, powerful calculators and a proprietary Retirement Score to guide complex decisions along the 20-30 year Retirement journey.
Silvur’s always-on technology platform is designed to economically engage all of your members who are ages 50 and up, not just those served by wealth management.
Silvur helps capture and retain direct deposit relationships and uncovers hundreds of millions in new deposit and wealth opportunities. Support your most valuable member segment, reduce asset flight, and help your members retire fearlessly with Silvur. Learn more at Silvur.com.
[Music]
[Joshua Barclay]
CU Insights recently published an article called "Five Credit Union Marketing Pain Points to Address in 2024." I added three to the list, and I won't tell you the three that I added.
Number one, lack of marketing content.
Number two, infrequent publishing updates.
Number three, poor social media presence.
Number four, unappealing marketing imagery – I'm talking about stock images of people in suits shaking each other's hands.
[Laughter]
[Joshua Barclay]
Number five, lack of risk taking.
Number six, lack of unified member data.
Number seven, no marketing strategy at all.
And number eight, inability to identify win-win cross-sell offers to current members.
Kelly, based on this list of eight credit union marketing pain points, which one pains you the most and how do you plan on addressing it?
[Kelly Botti]
The one that pains me the most is data because when we're talking about building connections and finding individuals in our marketplace that want to partner with us, you have to be the right credit union for them. And the only way you understand that is through looking at your current member portfolio, looking at your current member composition, and saying, "Who wants to bank with us?
Who wants to come and share their journey with us?" and designing messages that resonate with people who are similarly situated.
And we don't have access to unified data that allows us to drive action from that place, and that's not unique to us. We're a 3 billion asset credit union. Economies of scale don't work in our favor necessarily quite yet. But it's also just the composition of legacy systems that we have. But it also opens the door without that data for human error.
One of my colleagues who leads our marketing division and our brand strategy, as she says it, it leads to a lot of assumptions that are incorrect and result in negative outcomes for the credit union. So, I would say that's what we're doing. We have a full scope data strategy that we're executing against later this year.
We have a lot of work to do internally to get there, but that's what we're working towards.
[Joshua Barclay]
Becky, on this hit list of eight credit union marketing pain points to address, which one pains you the most?
[Becky Reed]
Well, I bet you could guess, and it's going to be lack of risk taking. As an industry, our message has been wrong. We have been focused on products and services for decades. And now the younger generations, people who are just getting ready to open an account, they're in high school or they're in college or they're getting their first "real job," and they need direct deposit and a place to where they can spend their money.
But we haven't, as an industry, told our story well. So, to everyone on the outside, we look and feel just like a bank, but at the end of the day, we are not just like a bank. We are a not-for-profit financial cooperative that are democratically controlled by the member owners in whom we serve. That's the story that needs to be told.
And the story, I'm going to get on my soapbox, the story that needs to be told is if you put your direct deposit in your community credit union, your neighbor gets a car loan. That sense of community is something that is so important to people of all generations, but it is especially important to the upcoming generation that feel like they need to be part of something bigger than themselves.
And so to me, that message is a risky message, and we're not out there shouting from the mountaintops how different we are. Instead, we are marketing how we are the same.
[Joshua Barclay]
So, no differentiation. So, as a follow-up, Becky, I have to ask, I don't think it's that risky to educate people and tell them about how we really are a community, a financial cooperative, essentially. Why do you think this type of marketing message is just not being disseminated by our community of credit unions out there?
[Becky Reed]
Well, I think it's risky for the very reason that no one's doing it. If you're a credit union marketer and you're going to your C-suite or your board and you're saying, "We're going to completely turn our marketing program that we've been doing for 25 or 30 years, and we're not going to talk about how great we are and what service we have and how convenient we are.
Because none of that is true. It's not true. Okay? We don't have the best rates. We don't have the best service. We don't."
Now, I'm speaking in generalities here. In some cases, we might. But that's a risk. I'm a CMO, I'm going to sit in front of the board and I'm going to go, "Forget about marketing checking accounts or loans. I understand that our strategic plan says we have to grow loans by 10% this year, and that contributes a certain percentage to the bottom line.
I understand that, but that's not what I'm going to market. Instead, I'm going to talk about being democratically controlled and member owned. Let's do that." That's risky, Josh. That's risky. Because the board's going, "Well, but we have to grow loans. Isn't marketing supposed to help us with that?
We're supposed to grow our deposits, we're supposed to grow our checking accounts, we're supposed to grow our members, and you're talking about being a member of a credit union, a financial cooperative? No, no, no, no." So, it is a risk, Josh. So, I'm going to push back on you and say is it hard to educate and communicate that message?
No. But what is hard is to create your entire marketing plan around it.
[Music]
[Joshua Barclay]
Moving in to the final segment, and we're coming back around, Kelly, because you mentioned this early on about the importance of the employee experience, that successful, happy credit union employees make successful, happy members. CU employee turnover is really high at most credit unions.
So, Kelly, talk to me about how you're addressing employee success at Trumark Financial Credit Union.
[Kelly Botti]
One of the things that we are focused on first and foremost, and what we spent most of last year putting in place, are what we would call frameworks for success in learning and development. So, we have brought in incredible talent. Internally, they're referred to as the Navy SEALs of training and development, learning and development, and moving to a performance coaching mindset.
So, we've stepped out on a limb and are really focusing on our business line leaders' ability to coach and transition our teams into a performance mindset as opposed to tactical execution.
So, before I was in the credit union space, I was in commercial banking. And in a highly regulated environment, you get real focused really quick on getting stuff done. Your to-do list is always longer than your ta-da list in this kind of world. Part of the problem is you don't have managers... You have managers who are well-intended but don't have the time to sit down and say, "Okay, how can I help empower and improve my team members' experience?" Right?
So, focusing on that framework was one.
The other thing is I had to really look at the work that is getting done and being forced down on our team members. Because at the end of the day, I can have amazing frameworks for success and learning and growth and prioritize it, but if our team members don't feel that they have the time to invest in themselves, and that we are intentionally carving out time in the workday for them to do that and telling them and freeing up that capacity, we'll never get anywhere.
So, our leadership team undertook a really tremendous effort in actually whittling down our project list for 2024 so that our team members can take advantage of our learning and development opportunities and help them learn about themselves so they can continue to grow and take advantage of the resources that are there.
[Becky Reed]
One of the things that we did at Lone Star, and I may have spoken about this before on previous podcasts, but we had a pyramid and our strategic plan started with employee engagement. Employee engagement leads to member engagement which leads to growth.
And you just talked about happy employees lead to happy members, but because the bottom layer, the foundation layer of the pyramid was employee engagement, we focused a lot of our internal initiatives around that.
And what Kelly is saying is absolutely true. And I think all of us in any particular industry, there's never a day where there's not enough to do. Right? We're all bombarded with a thousand different things that we need to get to, and we get caught up in that whirlwind. Right?
If you've read the book, Four Disciplines of Execution, it talks about the whirlwind and how we just get caught up in the day-to-day activities of just doing stuff instead of prioritizing things.
And one of the things that is a key from a leadership perspective, and I come from a smaller credit union, and so all of our employees have to kind of wear 10 different hats and do 10 different things, including our leaders, but taking away some of those tactical duties from the leader so that they do have time to coach, they do have time to lead, and frankly, they need time to think.
You have to be able to think, right? You need to be able to read trade articles. You need to be able to listen to podcasts like this. You need to be able to sit down and talk with your employees and feel that vibe that Kelly talked about before. Otherwise, you're just caught up in the whirlwind and everybody's like, "You're so busy." I mean, how often do you get that, Kelly?
People come in and go, "Oh, I know you're busy." It's like, "No, no, no, no. I am never too busy for you. Come in. Sit down. Let's have a conversation. Yes, I'm busy, you're busy too. But you're the most important thing right now." And so that employee engagement, I think, is really important, and you have to put that at the forefront.
I'm going to go back to technology for a minute, and I really believe strongly that technology plays a part in having a happy employee. And what that means is the tools that your employees use every day need to work, they need to work properly, they need to work seamlessly because if it is painful to use the tools and the software and the hardware that you have for your employees, they're not going to give your members a good experience.
[Joshua Barclay]
Kelly, I think you came in with my favorite quote of any guest that Becky and I have had on the show. I'm paraphrasing, but essentially, you said there's too much on your to-do list and not enough on your ta-da list.
[Laughter]
[Joshua Barclay]
Let's move into some final thoughts. Kelly, do you have anything that you want to plug or any initiatives that you want to discuss? Or do you just have any parting leadership advice for current or aspiring credit union leaders?
[Kelly Botti]
I think the one thing I would just like to end on is where Becky left off, which is the importance of making sure your technology environment and the resources available to your team members is where it should be. And I say that because I think it's really common for us as leaders in the financial services industry to get caught up in managing to an ROA goal or a profitability goal and not really think about what you're cutting out in pursuit of that goal or what you're under-investing in, in pursuit of that goal.
And all that does is kick the can down the road. Right sizing our technology and operating environment is a huge priority for Trumark Financial this year to make sure that our team members have really reliable tools so they can do their best work. But I just would caution leaders in the industry today to think about what you're leaving out of your budget as much as you think about what you're putting in.
[Joshua Barclay]
The CEO of Trumark Financial Credit Union, Kelly Botti, thank you for joining us on the podcast. Becky Reed, thank you as well. AND another Huge thanks to Silvur. Remember, that is Silver with a “u.” Also, remember, they are the retirement engagement solution for those over 50. Making it easier for your members to learn and plan for retirement.Check them out at Silvur.com
This has been another episode of Grow Your Credit Union, the podcast where credit union leaders gather, learn, and grow. My name is Joshua Barclay, and if you like the show, please subscribe to the podcast, tell others.
And if you want to be a guest on the show, feel free to reach out to my co-host Becky Reed and I via LinkedIn, and we'll be happy to discuss future guest opportunities.
Thank you for listening, and we will see you next time. Take care. Bye-bye.