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					Key Findings

                  Denise R. Gabel
               Chief Innovation Officer,
               Filene Research Institute
          Key Findings

    BLuEPrIntS           A Note from the Author
                         What Is Filene i³?

For InnovatIon           Fueling the Innovation Pipeline

                         HoW to HELP MEMBErS...

                         Build Wealth                                 7
                         Online Goal Setting                           8
                         Prize-Linked Savings | Update                14
                         The S-card: Save a Little, Spend a Little    18
                         The Savings Revolution | Update              22
                         Unite                                        26

                         navigate Financial Waters                   33
                         Collaboration in the Classroom               34
                         Virtual Finance | Update                     40

                         Meet Life’s Milestones                      45
                         The Big Idea                                 46
                         Choice Endings                               54
                         CUPay                                        60
                         Sandwich Generation Recipe / CU 2020         66
                         Single Again                                 72

                         Make community connections                  79
                         Airport Oasis Lounge                         80
                         First Step Program                           86

                         Borrow                                      93
                         Interest Refund Loan                         94

                         nEW i³ MEMBErS

                         Welcome to New i³ Members                   101

                                             Blueprints for Innovation

a notE FroM tHE autHor
denise r. Gabel, chief Innovation officer,
Filene research Institute

In 2005, the main focus of i³ was to generate open source ideas that
would fuel credit union growth. at that time, we established and began
to populate an innovation pipeline of ideas. By continuing to refine our
approach that allows creativity to flourish, each year more ideas pour in
and wind their way through the development process. Increasingly, we
are turning our attention to implementation and building the infrastructure
that will support taking these ideas to market.

The innovation pipeline as we know it today has a clear    Key Findings: Blueprints for Innovation features the i3
beginning, middle, and end (see graphic pages 4-5).        team outputs in the form of Concept Documents, each
At Phase One, opportunities are identified and ideas       to provide fuel for innovation. As you review the ideas
are generated. Our think tank received 12 new ideas        and evaluate the fit for your organization, I invite you
from the i3 teams in 2008. Many ideas have flowed into     to make some improvements and customize these ideas
Phase Two, where they are being further prototyped         —that’s the very nature of open source innovation. In
and tested. And three ideas have now been pumped           addition, we’ve also included an update on the three
into Phase Three, where they will be scaled up for         ideas that are reaching the end of Filene’s innovation
national rollout: Prize-Linked Savings, The Savings        pipeline. Greater resources are available to assist you in
Revolution, and Virtual Finance.                           implementing these concepts.

Ideas move based on marketplace demand—it’s that           The information provided is current to the best of our
simple. The speed at which they move through the           knowledge at press time. If we’ve missed anything or if
pipeline can be attributed to environmental factors, and   you have any updates, please let us know. The process
perhaps to the fact that credit unions across the nation   of open source innovation is only strengthened by the
are embracing open source innovation as a way to           involvement of many.
shorten the development and implementation process.


 Ideas, InnovatIon, ImplementatIon

               The i3 team members gathered in Portland, OR, to present their latest ideas.

What Is Filene i³?
Filene i³ (Ideas, Innovation, Implementation) is committed to strengthening
the credit union system through the development of new products, services,
and business models. the work is accomplished by a team of insightful and
passionate executive-level volunteers who are supported by their individual
credit unions to drive open source innovation that benefits all.

the objectives of Filene i³ include:

   •	 Develop	and	implement	new,	innovative	ideas.
   •	 Provide	a	forum	for	cooperation,	collaboration,	
      professional development, and industry succession planning.
   •	 Act	as	ambassadors	for	change	and	innovation.

                  Blueprints for Innovation

                       Phase One
                IDEA / OPPORTUNITY
                 PROOF OF CONCEPT

    •	 CU PICK 64 (NCAA-style stock pick game)
    •	 Hi 5 (Matching dollars for youth accounts)
    •	 S-Card: Save a Little, Spend a Little (Buying savings)
    •	 Unite (Friends and family-style rewards program)

    •	 Choice Endings (Funeral planning and Totten Trust)
    •	 Decision Point (Helping the sandwich generation)
    •	 Sandwich Generation (Web content for same)

    •	 Collaboration in the Classroom (Education for teens)
    •	 INForm (Podcasting and concerts)
    •	 LOT$A MOT$A (An interactive money lab)
    •	 Women: A Strategy for Success (Experiment in online
       budget education)

    •	 Auto Resource Center (Car buying on one dashboard)
    •	 CU 1031 (Real estate exchange)
    •	 Flex-One (One account)
    •	 Interest Refund Loan (Incentives for completing loan term)
    •	 Lifestyle Lending (Indirect lending for cosmetic surgery, etc.)
    •	 Lifetime Auto Loan (Leverage open-end loans)

    •	 Airport Oasis Lounge (For CU members only)
    •	 Community Impact Center (A national resource for building
    •	 First Step Program (Working with community organizations
       to serve the underserved)

      T H I N K TA N K

                                              Introduction | Fueling the Innovation Pipeline

          Phase TwO
•	 Auto Savings (Round up loan payments)
•	 No Excuses Savings (Round up
   debit transactions)
•	 Online Goal Setting (Users set their own
   goals and penalties)

•	 CUPay (Via cell phones)
•	 MatriMoney® (Wedding gift registry)
•	 Single	Again	(Loan	modification	and	
   Web content)                                                                                     Phase Three
•	 The Big Idea (Small biz assessment tool)                                                NATIONAL DEVELOPMENT
                                                                                                AND SCALE UP
•	 Smart Score (Informing members quarterly)
                                                                                               BUILD WEALTH
                                                                                               •	 Prize-Linked Savings (Winning prizes
MAKE COMMUNITY CONNECTIONS                                                                        for saving)
•	 MoneyWorks (Home parties)                                                                   •	 The Savings Revolution (Savings
•	 My Community Connection                                                                        challenges with real families)
   (Portal to activities and organizations)

                                                                                               NAVIGATE FINANCIAL WATERS
                                                                                               •	 Virtual	Finance	(Online	financial	
                                                                                                  simulation game)

                                                                          ll the i
                                                                   ideas to date

                                       Blueprints for Innovation

    the Filene research Institute would like to recognize and thank the following
    individuals and organizations for their support of and contributions to Filene i³:

       america’s corporate credit unions for the special grant that, in part,
       makes i³ possible.

       vicki Joyal, cvJ Strategic Intelligence, for secondary research and editorial

       karen Hodgkiss, Filene’s Innovation Project catalyst, for her endless energy in
       bringing this publication to life.

       those in the credit union system who encourage ideas to grow through the
       model of open source innovation.

    Special acknowledgement is particularly appropriate to the i3 individuals and their
    cEos for the countless hours they have contributed developing, piloting, and
    implementing ideas.

sectIon 1
How to Help members…

  Online Goal Setting

  Prize-Linked Savings   | UPDATE

  The S-card: Save a Little, Spend a Little

  The Savings Revolution    | UPDATE


                  Blueprints for Innovation   | Section 1

    wHat ’ a better motIvator:
    carrots or stIcks wHen
    tryIng to reacH goals?

GoaL SEttInG

tHE oPPortunItY

an october 2007 online survey of Franklincovey customers in the united
States found that respondents’ top three new Year’s resolutions or goals
for 2008 were to (1) get out of debt or save money, (2) lose weight, and
(3) develop a healthy habit like exercise or healthy eating. the survey
also discovered that 35% of people break their new Year’s resolutions by
the end of January, while only 23% accomplish their resolution or reach
their goal.

      Productivity experts Franklincovey and Julie Morgenstern Enterprises recommend the
      following tips for making new Year’s resolutions and goals more effective:1

          •	 Think	of	your	resolutions	as	goals.	Make	sure	each	goal	includes	clear	
             measurements and specific deadlines.

          •	 Write	down	your	goals.	Make	sure	you	record	them	in	a	place	where	you	will	review	
             them often.

          •	 Go	public.	Tell	people	you	live	or	work	with	about	your	goals.	When	friends,	family,	
             and coworkers know what you are working toward, they will be more likely to notice
             or ask about your progress and provide encouragement.

          •	 Track	your	progress.

    FranklinCovey, “FranklinCovey Survey Reveals Top 3 New Year’s Resolutions for 2008: Eliminate Debt, Lose Weight, Develop Healthy Habits,” media
    release, December 18, 2007.

                                                   Blueprints for Innovation       | Section 1

tHE SoLutIon
                                                                                 one option is, an online
                                                                                 goal setting Web site developed by
online Goal Setting provides the                                                 two renowned Yale professors, dean
framework whereby members                                                        karlan and Ian ayres, who tested the
commit to save and choose their                                                  effectiveness of commitment contracts
own penalties for failure and                                                    through extensive field research.2 users
                                                                                 were offered the option of setting a
rewards for success.
                                                                                 goal based on quitting smoking, losing
Users create public commitments to achieve personal                              weight, voting, exercise and fitness, or
goals, such as losing weight, quitting smoking, or saving
money by setting rewards and reinforcement mechanisms
                                                                                 “other.” saw an opportunity
to create the greatest likelihood of success. They establish                     to partner with credit unions after its
optional layers of accountability—such as putting money                          data revealed that 15% of users who
on the line to ensure success by increasing the cost of                          chose the “other” category developed
failure (“stakes”); designating a trusted individual to
verify progress (“referee”); and soliciting the support of
                                                                                 goals related to personal finance.
friends, family members, and colleagues to cheer the user                        Further, users whose contracts have
on along the way (“supporters”). Users have the ability to                       a financially binding component have
track their progress through personal profile pages and                          enjoyed success rates of nearly 80%.
can network with others who have similar goals.

tarGEt MarkEt

An online survey of members of Alliant Credit Union                         Nearly 60% of men and women aged 18 to 27 participate
($5.7 billion) in Chicago, IL, Xceed Financial Credit                       in social networks, according to Forrester’s North
Union ($800 million) in El Segundo, CA, and Heritage                        American Social Technographics Online Survey, Q2
Credit Union ($148 million) in Madison, WI, revealed                        2007. Further, young adults are more than twice as likely
that credit union members who say they would “definitely                    as the average adult to participate in or maintain profiles
use” or “probably use” the site in the future                    on a social networking site. The membership survey and
are 54% women and are 39.7 years old, on average. The                       demographics, when considered jointly, indicate that
most likely credit union member users are familiar with                     there is a sizeable target market of youthful, tech-savvy
technology, have credit union checking accounts, and                        members who may be attracted to this combination of
use home banking.                                                           social networking and goal setting.

    Nava Ashraf, Dean Karlan, and Wesley Yin, “Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines,”
    Quarterly Journal of Economics 121(2), May 2006: 635-672.

                                                Build Wealth | Online Goal Setting

                             Online U.S. Adult Participation in Social Networking Activities

       Visit social networking sites                                                          25%

    Update/maintain a profile on a
           social networking site

 Add comments to someone else’s
  page on a social networking site

    Contribute to online forums or
                discussion groups

                                       0%     5%          10%     15%       20%         25%         30%

                        Percentages represent online adults in the United States who participate in online social
                                 networking at least monthly. Over 10,000 consumers were surveyed.
                          Source: Forrester’s North American Social Technographics Online Survey, Q2 2007

                                      Users by Age

                                                     8%         3%

                                                                                                          Younger than 18 years
                                                                                                          18 to 25 years
                                                                                                          26 to 30 years
                                                                                           20%            31 to 40 years
                                                                                                          41 to 50 years
                                                                                                          51 years or older

                                               Source:, July 2008

MarkEtInG tactIcS

There are many opportunities to integrate Online Goal                    •	 Offer	to	college	students	as	a	way	to	attract	younger	
Setting into existing marketing efforts. Below are examples                 members. Promotional offers could include a special
of campaigns and offers that can be implemented:                            savings rate of interest and prizes for signing up and
                                                                            for accomplishing goals.
  •	 Create	 a	 special	 account	 (share,	 money	 market,	 or	           •	 Develop	 an	 educational	 series	 on	 savings	 and	
     share certificate). Offer to pay a premium interest rate               accomplishing financial goals. At the end of the session,
     for members who meet their savings goals using the                     direct members back to the online tool to input their
     online tool.                                                           own personal goals.
  •	 Develop	a	“money	coach”	program,	where	members	                     •	 Utilize	as	a	community	outreach	tool	and	offer	to	other	
     can meet with a designated coach at the credit union                   nonprofits. Have community users access the tool
     to set their financial goals and manage the progress                   through your credit union’s Web site to attract new
     toward goals.                                                          members. Offer prizes and special rates as incentives.
  •	 Promote	to	select	employee	groups	as	an	opportunity	                •	 Include	an	informational	section	on	the	credit	union	
     for companies to help their employees set and reach any                Web site and promote through all online channels,
     type of goal (including health and financial well-being).              including home banking, bill pay, and email.

                                         Blueprints for Innovation    | Section 1

                          Net Importance of Savings Goals for Credit Union Members

          For financial security                                                          77%

                 For retirement                                                     67%

                For a rainy day                            34%

                                   0%   10%   20%   30%    40%       50%   60%      70%   80%
        Net importance is measured as the percentage of credit union members who rated each goal “very important”
           or “important,” minus the percentage who rated each goal of “little importance” or of “no importance.”
                   Source: Filene i³ Online Goal Setting team credit union member survey, August 2008

                                                              oPEratIonaL and
     MEMBEr BEnEFItS                                          otHEr conSIdEratIonS
      Provide members with a fun,
      effective way to set and reach                          Consider two options: a free version or a co-
      financial goals.                                        branded solution. A free version is simply a link to
                                                              an online goal setting site, such as The
      Easily manage progress toward                           co-branded solution is a separately functioning Web
                                                              site managed by the credit union that does not share
      financial goals from the credit
                                                              member data with the partner. Through exclusive
      union’s Web site.                                       administrative access, a designated representative at
                                                              each credit union will have full capability of designing
      Earn rewards and incentives for                         contracts and related parameters, offering rewards,
      reaching financial goals.                               designating referees, establishing email marketing
                                                              campaigns, tracking trends, and more.

                                                              Security issues would need to be addressed in order to
     crEdIt unIon BEnEFItS                                    integrate with the credit union’s home banking or core
                                                              processing system. With appropriate security features
      Increase core deposits.                                 in place, members will be able to open accounts or
                                                              make deposits as the co-branded site becomes fully
      attract new members from those                          integrated.
      assigned as referees or supporters.

      Increase use of specific credit union
       products and services by
       strategically creating predefined
       goals and placing product

                                            Build Wealth | Online Goal Setting

 ProoF oF concEPt launched in January 2008. During the first                  of The following observations surfaced
 seven months of operation, over 18,000 individuals                     through the member survey:
 created accounts and made over 9,000 commitment
 contracts. This growth was fueled organically by word                     •	 38%	 of	 members	 said	 they	 would	 definitely	 or	
 of mouth and extensive media attention.                                      probably use the site in the future.
                                                                           •	 Likely	 users	 find	 the	 concept	 site	 well	 organized	
 To assist with development of the credit union portal,                       and user friendly.
 the i³ team compiled data from both the                        •	 Likely	users	are	most	inclined	to	use	the	contracts	
 consumer site and a credit union member survey.                              for savings purposes.
 The member survey asked respondents to react to the                       •	 Likely	 users	 believe	 incentives	 increase	 the	 value	
 product concept through a visual online presentation                         and would help them achieve their goals.

wow !

 GEttInG StartEd

 A free version of that allows credit unions                2        Develop an integration plan that includes a
 to set campaigns and track usage, success rates, and                           process for fulfilling account opening and deposit
 other trends is in development. Also on the drawing                            requests.
 board is a fee-based, co-branded portal that will give                3        Incorporate the online goal setting product into
 credit unions the ability to create their own ads. Credit                      existing marketing plans, with a particular focus
 union next steps include:                                                      on electronic channels such as home banking,
                                                                                bill pay, and email.
 1    Evaluate and determine whether the free or
      co-branded portal is best for your organization.                          Visit
                                                                                for more information.
         onLInE GoaL SEttInG

                                    Caroline Redmann, Heritage Credit Union, Madison, WI; Frank Weidner, Alliant Credit Union, Chicago, IL;
                                                     Kathryn Koepf Davis, Xceed Financial Credit Union, El Segundo, CA

Prize-Linked Savings

Prize-Linked Savings adds excitement and suspense                                 •	 Centra	Credit	Union	($790	million)	in	
to the discipline of saving. Prize-Linked Savings pays                               Columbus, IN
out regular interest plus offers a chance for additional                          •	 CES	Credit	Union	($114	million)	in	
returns in the form of prizes awarded to accountholders                              Mount Vernon, OH
through periodic drawings. Consider that the average                              •	 ELGA	Credit	Union	($264	million)	in	
household spends $514 a year on lotteries, according                                 Burton, MI
to Peter Tufano of Harvard Business School.3 If this                              •	 Envision	Federal	Credit	Union	($66	million)	
amount of money was instead deposited into a Prize-                                  in Bossier City, LA
Linked Savings account, household members could                                   •	 FORUM	Credit	Union	($1.1	billion)	in	
save and earn interest on their $514, and could poten-                               Indianapolis, IN
tially win a grand prize or one of many smaller prizes                            •	 Members	Credit	Union	($209	million)	in	
each month.                                                                          Winston-Salem, NC
                                                                                  •	 Neighborhood	Credit	Union	($254	million)	in	
Two years after Filene i3 product inception, Prize-Linked                            Dallas, TX
Savings is growing in popularity. It is now offered by a                          •	 Tower	Federal	Credit	Union	($1.8	billion)	in	
number of credit unions across the country, including:                               Laurel, MD
                                                                                  •	 WEOKIE	Credit	Union	($654	million)	in	
                                                                                     Oklahoma City, OK
                                                                                  •	 Xceed	Financial	Credit	Union	($800	million)	in	
                                                                                     El Segundo, CA

    Interest in prize-linked savings is greatest among people who do not have regular savings habits, who have little actual savings, who play lotteries
    extensively, and who are optimistic about their future. Nick Maynard, Jan Emmanuel De Neve, and Peter Tufano, “Consumer Demand for Prize-Linked
    Savings: A Preliminary Analysis,” (February 8, 2008). Harvard Business School Finance Working Paper No. 08-061.

Prize-Linked Savings continues to evolve. Credit unions                                  Union uses this account to manage its cost of funds
such as Neighborhood Credit Union and WEOKIE                                             by paying a lower-than-average dividend rate. Its Prize
Credit Union have designated Prize-Linked Savings as                                     Savings Account consists of 10 monthly, one quarterly,
their basic membership share accounts. At WEOKIE                                         and one annual prize drawing worth a total of $35,000.
Credit Union, a member must add $50 to the average                                       The grand prize of $15,000 is awarded at the credit
daily balance during each month to be eligible for one                                   union’s annual meeting.
of 30 prizes totaling $5,000. Neighborhood Credit

                                                      Prize-Linked Savings Demand by Savings Habits and Lottery Spending
                                                     80%                                             75%
                                                     70%        65%
              % interested in Prize-Linked Savings

                                                     60%                                                                 56%





                                                              Nonsaver     Saver                  More than $100     Less than $100
                                                                                                 in past 6 months   in past 6 months
Source: Results from the Clarksville Centra Credit Union branch survey in Clarksville, Indiana, November-December 2006 as reported
by Nick Maynard, Jan Emmanuel De Neve, and Peter Tufano in “Consumer Demand for Prize-Linked Savings: A Preliminary Analysis,”
                         (February 8, 2008). Harvard Business School Finance Working Paper No. 08-061.

                                           Blueprints for Innovation   | Section 1

    profile: cES crEdIt unIon ($114 million)

    The Wealth Builder Savings Sweepstakes is offered           share accounts grew over $1.7 million—more than
    by CES Credit Union to entice savings among credit          enough to pay for the program.
    union members and the community as a whole. Entry
    into the sweepstakes starts with every dollar on deposit    Although Schermerhorn initially wanted to offer a
    in a CES Credit Union basic share account counting as       $10,000 monthly prize, the current $5,000 monthly
    an entry into a monthly drawing. One random winner          prize appears large enough to capture the community’s
    is awarded $5,000 at the end of each month.                 attention because the winner of each drawing has been
                                                                covered by the local newspaper and radio station.
    CES Credit Union CEO Kelly Schermerhorn reports             Schermerhorn concludes, “With the national trend

    that growth in savings from the Wealth Builder Savings      of funds moving out of share accounts into CDs
    Sweepstakes allowed the credit union to cover the           [certificates of deposit] and MMAs [money market
    cost of the program and produced a positive return          accounts], we are ecstatic to see any positive growth
    on investment (ROI) within the first five months of         in core deposits, and to have already grown enough to
    operation. The program’s average net yield is 5.45%,        claim a positive ROI in five months is stunning to me.
    resulting in a break-even point of approximately $1         Our members are saving, and it becomes a win-win.”
    million. As of May 31, 2008, CES Credit Union’s base

    profile: MEMBErS crEdIt unIon ($209 million)

    What Are You Saving For? (WAYSF) was introduced             community, MCU will hold semiannual Biggest Saver
    in April 2008 by Members Credit Union (MCU) as              contests that will allow users to select winners of $2,000
    a way to reframe the U.S. personal savings dilemma          share certificates. According to Eric Stiff, vice president
    from a negative to a positive. “Americans need positive     of marketing, “The online component educates,
    reinforcement,” suggests MCU president and CEO              celebrates, and congratulates savers, and empowers
    Jack V. Braswell, Jr. “If the national goal is to create    them to reward the people who have shown the most
    a society of better savers, we need to stop telling each    dedication to developing this new savings paradigm.”
    other ‘you can’t’ and start encouraging each other that
    ‘you can.’”
                                                                   Mcu’s What are You Saving
    WAYSF combines the basics of Prize-Linked Savings
    with social media and financial education. Rather than      For? program was included in
    using a lower-than-average dividend rate to manage the      the September 2008 issue of
    cost of funds and cover a portion of program expenses,
    MCU incents members to save by paying a higher-             Fast Company as an example of
    than-average dividend rate on WAYSF accounts. In            how credit unions are promoting
    fact, accountholders who make a commitment to save
    at least $25 each month receive double their MCU            savings, attracting new members,
    regular savings rate. And for every $25 in average daily    and “making banking fun.”
    balance in the WAYSF account, members receive a
    chance to win monthly cash prizes.

    The credit union has also developed a Web
    site for social networking and online support
    ( The site encourages
    members to share their savings goals, the steps
    they are taking to achieve their goals, and the
    pain and joy they experience along the way. As
    an added incentive to participate in the online

                                                       Build Wealth | Prize-Linked Savings

                                                                Credit Union Results

                               Centra Credit Union           ELGA Credit Union           FORUM Credit Union                Neighborhood Credit
                                    ($790M)                      ($264M)                       ($1.1B)                        Union ($254M)
                                 Columbus, IN                   Burton, MI                 Indianapolis, IN                     Dallas, TX

                                                               Sweepstakes                                                     Prize Savings
      Product Name                 Super Savings                                             Weekly 5 Club
                                                              Savings Account                                                     Account
     Months in Market                     19                           12                            12                                12

    Number of Accounts                  1,692                        2,623                          697                              5,186
     Average Savings
                                         $492                         $364                        $1,153                             $872
       Total Balance
                                      $832,864                     $955,762                      $803,641                        $4,524,283
        on Deposit
        Core Data
                                  USERS (Fiserv)           Open Solutions (OSI)              USERS (Fiserv)            IntegraSys/ CUBE (Fiserv)
    Processing System

                                                                  Results as of 6/30/08

New developmeNts

In June 2008, the Doorways 2 Dreams Fund (D2D                                   Pilot project objectives include the following:
Fund) in partnership with Filene received a grant from
the Center for Financial Services Innovation (CFSI)                                •	 Further	 document	 and	 better	 understand	
enabling them to further test Prize-Linked Savings as                                 consumer demand for a Prize-Linked Savings
a 2009 pilot project in Michigan.4                                                    product.
                                                                                   •	 Demonstrate	 the	 financial	 viability	 of	 a	 Prize-
This collaboration between the Michigan Credit Union                                  Linked Savings product for financial institutions
League and a consortium of credit unions allows each                                  and establish a business model to offer Prize-
credit union to offer monthly prizes to its Prize-Linked                              Linked Savings on a larger scale throughout the
Savings accountholders. In addition, one grand prize of                               credit union system.
$100,000 will be awarded to a member drawn from all                                •	 Demonstrate	 that	 the	 product	 attracts	 low-	 to	
participating credit union entries.                                                   moderate-income consumers, especially nonsavers
                                                                                      and the underbanked.
                                                                                   •	 Demonstrate	 that	 the	 product	 generates	 new	
                                                                                      savings dollars.
                                                                                   •	 Identify	 legal	 and	 regulatory	 hurdles,	 if	 any,	 and	
                                                                                      develop remedies.

         $ 100, 000
         gran d p ri z e

     D2D Fund in Roxbury, MA, seeks to expand access to financial services—especially asset-building opportunities—for low-income families by
    creating, testing, and deploying innovative financial products and services. CFSI develops and distributes real-world tested research and strategy,
    provides funding to promising companies, and facilitates cross-sector business collaboration to transform industry practice and the lives of
    underbanked consumers across the economic, geographic, and cultural spectrum.

                     Blueprints for Innovation   | Section 2

     crackIng tHe fInancIal
     educatIon nut




tHE S-card:
SavE a LIttLE,
SPEnd a LIttLE
tHE oPPortunItY

Since mid-2005, credit union membership growth rates have averaged
less than 1.5% per year. this means that credit unions are barely attracting
more members than they are losing.
In addition, Credit Union National Association                              simply placing a plastic card in a young person’s wallet
(CUNA) research indicates that the average age of                           does little to advance basic financial principles. In fact,
adult credit union members has increased from 40                            many young people will rapidly accumulate significant
to 47 over the past two decades. Both of these trends                       debt, leading to depressed credit scores and potential
signify a critical need for credit unions to attract more                   bankruptcy. A 2007 survey by The Hartford Financial
young members.                                                              Services Group reports that parents and students
                                                                            believe that college students are not well prepared to
With an estimated spending power among teens of                             deal with the financial challenges that await them after
$216 billion per year, this market segment is attractive                    graduation.
to merchants and credit card companies.5 However,

tHE SoLutIon

Rather than placing several cards (credit, debit, and                          •	 A	spending	pocket	with	the	ability	to	see	all	spending	
ATM) in their wallets, place one card—a reloadable super                          transactions and monitor patterns of spending.
card (the S-card) that helps move money and provides                           •	 A	savings	pocket	that	will	allow	parents	to	set	aside	
financial framework at the same time. The S-card has                              some savings for the child and create a matching
three functions, all with the partnership and protection of                       incentive for each additional dollar a child saves on
parental control: savings, spending, and charitable giving.                       his or her own.
                                                                               •	 The	 ability	 to	 add	 gifted	 savings	 from	 relatives	 or	
The S-card will allow for multiple pockets of funding,                            others automatically to an existing S-card via a card-
helping young people learn about all aspects of financial                         to-card transfer.
management. Features will include:                                             •	 An	 option	 to	 transfer	 accumulated	 savings	 into	
                                                                                  a time-deposit or higher-yielding credit union
                                                                               •	 A	charity	pocket	to	teach	about	social	responsibility	
                                                                                  and giving back to the community.

    The annual figure is based on 2007 teen spending power estimates from a survey conducted by The Harrison Group, Waterbury, CT.

                                       Blueprints for Innovation   | Section 1

                                                            tarGEt MarkEt
                                                            The primary target market for the S-card is parents
     For the gift giver:
                                                            who wish to provide teenagers with the gift of savings
       ability to play an active role in                    and a sound financial experience via a safe, reloadable
                                                            debit and savings card.
       teaching the card recipient about
       money management.                                    Given that grandparents, aunts, uncles, and other
                                                            adults are likely to purchase gifts for teenage relatives
       an initial gift can be built upon for                and friends of the family, a secondary target market is
       years to come, creating the gift                     all adults between the ages of 35 and 65. Once a teen
       of choice.                                           has an S-card, others will be able to gift funds to his or
                                                            her card.
     For the gift recipient:

       a flexible, convenient alternative to                MarkEtInG tactIcS
       checks and cash.
                                                            Scheduled marketing would coincide with life-event
       utilizing real-world experience to                   and gift-giving occasions such as Christmas, high
       learn basic fiscal responsibility.                   school graduation, starting college, and the summer
                                                            job season.

                                                            Promotion of the S-card to parents and other adults
     crEdIt unIon BEnEFItS                                  would be via traditional methods using a tagline similar
                                                            to “Give the gift that keeps on giving.” The school
       Further good financial habits of                     newspaper, teen section of the credit union’s Web site,
       young people.                                        direct mail, email, blogs, and funny YouTube vignettes
                                                            may be avenues for promoting the program directly to
       attack and retain young adult                        young people.

       Earn noninterest income.

                                               Areas Where Parents Feel They Could Do a
                                              Better Job Teaching and Preparing Their Teens

                                   Saving                                                        61%

                               Budgeting                                                 54%

                                Investing                                            49%

                             Using credit                                          47%

                    Balancing a checkbook                             29%
                        Charitable giving/
                            Volunteerism                              28%

                            None of these             9%

                                             0%    10%     20%      30%     40%   50%      60%      70%

                                              Source: Charles Schwab Parents & Money Survey, 2008

                                           Build Wealth | The S-card: Save a Little, Spend a Little

   a parent may establish an S-card in                                              and $1 will be placed into a charity
   the name of a child (minimum age 12                                              subaccount. the remaining $7 would be
   years), monitor purchase activity, and                                           available for spending.
   establish allocations for savings and
                                                                                    another alternative that can promote
   charitable donations. For example, the
                                                                                    and encourage savings is a matching
   parent and child might agree that $2 of
                                                                                    program where the parent sets up a
   a $10 allowance will be automatically
                                                                                    corresponding match on money saved
   placed into a savings subaccount
                                                                                    by the child.

oPEratIonaL and otHEr conSIdEratIonS

When offering the S-card, it is important to understand                            led to the recommendation of the Visa Buxx® platform
the underlying payment networks and be able to                                     to support the S-card. This platform was designed to
navigate through the myriad providers, issuers, and                                enable parent–child joint management of a reloadable
processors. Filene i3’s preliminary investigation into                             card and also allows for the creation of a super card that
finding a partner with expertise in this environment                               offers multiple subaccounts.

ProoF oF concEPt                                                                   GEttInG StartEd

The Visa Buxx system has been in place for a number                                1        Determine your credit union’s involvement with
of years. However, this particular product concept                                          or access to the Visa Buxx platform.
has not yet been piloted. The i3 team believes that the                            2        Establish a small set of parents and teens to
supporting components for the success of this idea                                          codevelop and test the S-card.
are firmly in place: the popularity of prepaid card
                                                                                            Consider using early adopters to promote the
adoption; the proof that active attention to youth
                                                                                            product into a full product launch.
financial education is invaluable; and the reality that
savings can be automated, painless, and fun.                                              Visit for the
                                                                                          S-card concept document.
   S-card: SavE a LIttLE,
      SPEnd a LIttLE

                            Kathleen Emery, Online Resources Corporation, San Diego, CA; Charlie White, Members United Corporate Federal Credit Union, Albany, NY;
                            Laura Campbell, Farmers Insurance Group Federal Credit Union, Los Angeles, CA; Scott Moriarty, Moriarty Consulting, LLC, Midlothian, VA

The Savings Revolution

The Savings Revolution is like Weight Watchers® for         including the ability to learn from and share with
your wallet. The program allows people to overhaul their    others in similar situations—to make lifestyle changes
financial lifestyles to save money and reduce debt with     allowing them to reach savings and debt-reduction
simple strategies that are supported by social media with   goals. The individual or family that comes closest to or
credit union collaboration. The Revolution is sparked       exceeds its financial targets is named the winner and is
by the Savings Challenge—a contest in which select          given a substantial cash prize.
credit union members compete to achieve predefined
savings and debt-reduction goals. Participants in these     Television, radio, and print outlets have been
challenges are chosen through an application process        particularly receptive to becoming involved in the
and then meet with a credit union financial coach,          Savings Challenge because it combines human interest
who proposes a set of realistic yet ambitious financial     stories with a challenge that many families face,
goals. Progress is tracked over time and is publicized to   especially in this time of economic turmoil.
inspire others to take the next step toward achieving
their own financial goals.                                  After two successful years, GECU ($1.4 billion) in
                                                            El Paso, TX, is preparing to launch its third Savings
The Revolution occurs as other individuals and families     Challenge. But this year, the focus will change. Six
see the changes that participants are making and decide     college students will compete for a grand prize of
to play along, utilizing online tools and resources—        $10,000. Five others will receive $2,500 each for their

     IMPLEMEntatIon tEaM

                                   The Implementation Team worked on expanding ideas that were originally conceived by prior i3 teams.
                             In addition to The Savings Revolution, this team contributed to the further development of The Big Idea and Unite.
                              Chad Graves, Ent Federal Credit Union, Colorado Springs, CO; Kim Vu, Technology Credit Union, San Jose, CA;
                               Blake Griffin, Firstmark Credit Union, San Antonio, TX; Tim Mislansky, Wright-Patt Credit Union, Fairborn, OH;
                               Steve Koenen, Altra Federal Credit Union, La Crosse, WI; Mary Dolan, Maine State Credit Union, Augusta, ME;
                                 Todd Marksberry, Delta Community Credit Union, Lawrenceville, GA; Musette Bracher, GECU, El Paso, TX

participation. At least 90% of the prize money must                          •	 E	Federal	Credit	Union	($215	million)	in	
be put toward paying college expenses and existing                              Baton Rouge, LA*
debt. GECU’s college edition will focus on the basics                        •	 Educators	Credit	Union	($1	billion)	in	
of personal finance.                                                            Racine, WI
                                                                             •	 First	Tech	Credit	Union	($1.9	billion)	in	
Since the inaugural Challenge, innovative credit unions                         Beaverton, OR
across the United States and elsewhere have launched                         •	 Jamaica	Police	Co-operative	Credit	Union	
or are in the process of launching their own Savings                            (JA$1.9 billion; ~US$25 million) in
Challenges:                                                                     Kingston, Jamaica
                                                                             •	 Kemba	Financial	Credit	Union	($461	million)	
  •	 A+	Federal	Credit	Union	($611	million)	in	                                 in Gahanna, OH
     Austin, TX                                                              •	 Midstate	Educators	Credit	Union	($76	million)	
  •	 AMOCO	FCU	($464	million)	in	                                               in Columbus, OH
     Texas City, TX*                                                         •	 North	Island	Credit	Union	($1.7	billion)	in	
  •	 Central	Ohio	Chapter	of	Credit	Unions*                                     San Diego, CA*
  •	 Community	America	Credit	Union	($1.7	billion)	                          •	 Wright-Patt	Credit	Union	($1.4	billion)	in	
     in Kansas City, MO                                                         Fairborn, OH
  •	 Connex	Credit	Union	($337	million)	in	
                                                                                                                    *Scheduled to launch in early 2009.
     North Haven, CT

                                            Blueprints for Innovation   | Section 1

profile: EducatorS crEdIt unIon ($1 billion)

Educators Credit Union has partnered with                           •	 Open	 and	 maintain	 a	 VIP	 Savings	 Account—a	
southeastern Wisconsin YMCAs to help six families                      one-year, high dividend, deposit-based rewards
significantly improve their financial situation                        account—throughout the Challenge.
over the course of the nine-month Challenge. In                     •	 Keep	a	spending	plan	for	each	month	during	the	
addition, Educators Credit Union has incorporated                      Challenge.
a play-at-home version of the Savings Challenge                     •	 Complete	 three	 financial	 education	 sessions,	
to run concurrently. The home version utilizes                         podcasts, or Balance Financial Fitness online
a downloadable Savings Challenge Passport and                          courses.
Spending Plan, and includes the following eligibility
requirements for prizes:                                          Participants who achieve the above goals are entered in
                                                                  a drawing for cash prizes up to $1,000.
     •	 Set	a	goal	to	obtain	over	the	same	time	period	as	
        the regular nine-month Savings Challenge.
     •	 Obtain	 three	 credit	 reports	 and	 scores	 utilizing	
        ECU’s free “What’s Your Score?” program—at the
        beginning, at the halfway point, and at the end of
        the Savings Challenge.

profile: cEntraL oHIo cHaPtEr oF crEdIt unIonS

The Central Ohio Chapter of Credit Unions has                     Each credit union will be able to select one family to
organized the first chapter-wide Savings Challenge.               compete in the overall Challenge. Credit unions will
Conceived as a “pay-to-play” program, each credit union           also provide a “financial coach” from the credit union to
that participates commits to contributing a minimum               meet with their participating family over the course of the
amount toward prize money and funding the Web site                Challenge. Member stories and updates will be shared on
that is needed to support the Challenge. Any surplus              the program’s Web site as well as with the media.
funds will be put toward media initiatives.
                                                                  Ten credit unions will kick off this chapter-based
                                                                  Savings Challenge in early 2009. The top prize will be
                                                                  $10,000, with $2,500 each for two runners-up.

                                                                                  go ohio!

                                         Build Wealth | The Savings Revolution

                                      Americans Say They Aren’t Saving Enough


                                                                                                  Don’t know/refused
                                                                                                  Saving enough
                                                                                                  Not saving enough


                         Source: Pew Research Center’s Social & Demographic Trends project, Spring 2008

New developmeNts

Imagine the Savings Revolution combined with                    Filene is currently pursuing funding to:
transformational television (like NBC’s “The Biggest
Loser”). The program would feature real families and              •	 Develop	a	Web	component	that	will	provide	online	
real financial challenges played out on television. It’s on          goal setting and monitoring tools and enable
the drawing board.                                                   blogging by Savings Challenge participants.
                                                                  •	 Establish	a	colition	of	frontline	credit	union	wealth	
                                                                  •	 Create	 an	 intranet-like	 space	 for	 credit	 union	
                                                                     coaches to collaborate and broaden the reach
                                                                     directly to consumers from Montana to Maine.

                                                                The addition of these elements will further spark The
                                                                Savings Revolution.

                  Blueprints for Innovation   | Section 2

     turnIng members loose to
     create tHeIr own frIends
     and famIly reward program.

tHE oPPortunItY

rewards programs have become popular as a means for attracting new
customers with offers of product discounts and other attractive benefits.
current efforts run the gamut from free miles attached to credit card use
to cash for opening checking accounts. according to loyalty marketing
publisher coLLoQuY, “Membership in u.S. loyalty reward programs
has reached 1.3 billion—more than four times the national population.6”
rewards programs have proven to be successful in attaining new business,
in an age when consumers continually ask “What’s in it for me?”
In Word of Mouth Marketing: How Smart Companies                            mutually beneficial word-of-mouth marketing. Although
Get People Talking, author Andy Sernovitz states that                      most programs promoted to consumers today offer a
consumers are likely to turn to a trusted colleague,                       small reward to the individual who brings in more friends
friend, or family member to get advice before making                       or family members to the relationship, a community that
a purchase decision.7 He suggests that companies can                       shares in a benefit as an entire group is seldom created.
positively influence word of mouth by “giving people a                     Perhaps one of the most popular examples of this form
reason to talk about your stuff and making it easier for                   of social marketing has been attributed to MCI. In 1991,
that conversation to take place.”                                          MCI launched the incredibly successful Friends and
                                                                           Family program, giving consumers a reason to talk about
When the concept of a social network is overlaid onto a                    phone service. MCI’s campaign generated 10 million new
rewards program, it has the potential to strongly promote                  subscribers in a two-year period.8

      a recent poll posted on altra Federal credit union’s Web site revealed that a friends-
      and-family-type rewards program would appeal to 87% of respondents. Furthermore, a
      substantial percentage of interested respondents indicated that they would move more
      of their business to the credit union to take advantage of such a program.

    COLLOQUY, “Loyalty Census from COLLOQUY Shows Membership in U.S. Loyalty Rewards Programs,”, May 14, 2007.
    Andy Sernovitz, Word of Mouth Marketing: How Smart Companies Get People Talking (Chicago: Kaplan Business, 2006).
    Alexei Barrionuevo, “Reshaping Telecommunications: The Passing of a Pioneer; From MCI, a Lesson in Corporate Complacency,”
    New York Times, February 15, 2005.

                                        Blueprints for Innovation    | Section 1

tHE SoLutIon

unite is a relationship pricing program that allows a group of credit union
members to benefit from the collective value of utilizing specific credit
union products and services. the objective of unite is to use the current
trend of social networking to the advantage of both credit unions and their
members to deepen member relationships and to create a friendly level of
peer pressure that stimulates new business.
Individuals create their own Unite group consisting of       discount on his or her next consumer loan or a similar
up to 20 members. Use of credit union products and           rate increase on a time certificate. At higher point levels,
services such as checking accounts, debit cards, online      benefits may include items such as credit consultations,
bill payment, and credit cards will qualify the group to     waived fees, free checks, free safe deposit boxes, and
earn points. Points will be tracked for the entire group,    discounted warranty products. Bonus points will be
and as certain point targets are reached, everyone in the    given to the group for recruiting new members to join
group benefits. For example, at the first threshold, each    the credit union.
member of the group might be entitled to a 0.25%

      MEMBEr BEnEFItS                                        crEdIt unIon BEnEFItS
         ongoing rewards—discounts, fee                             retain existing members by building
         waivers, gifts—for all group                               member loyalty and trust.
                                                                    attract new members through
         Satisfaction derived from helping                          word-of-mouth recommendations by
         friends and family benefit from credit                     existing members.
         union offerings.
                                                                    Expand the number of services used
                                                                    by members.

                                                                    Gain wallet share.

tarGEt MarkEt

     •	 Members	age	18	or	older	who	use	at	least	one	of	       •	 Members	 aged	 40	 to	 60	 with	 children	 and	
        the reward-earning products and services.                 grandchildren.
     •	 Members	 aged	 18	 to	 60	 who	 have	 a	 higher	       •	 Eligible	adult	nonmembers.
        propensity for utilizing technology.                   •	 Credit	 union	 employees	 and	 their	 families	 and	
     •	 Members	age	25	or	older	who	own	their	homes.              friends.

                                                          Build Wealth | Unite

MarkEtInG tactIcS

Here are some considerations for maximizing the                              •	 Once	the	credit	union	is	ready	for	a	full	launch,	
introduction of the Unite program:                                              use direct mail, member newsletters, outdoor
                                                                                advertisements, and possibly radio and television
  •	 Ask	 member	 service	 representatives	 (MSRs)	                             to promote the program.
     to identify potential Unite participants during                         •	 Utilize	testimonials	about	the	program	to	validate	
     member interviews. Consider a competition                                  the concept for other credit union members.
     between MSRs to bring in Unite groups.                                  •	 Tap	into	social	marketing	to	enable	the	members	
  •	 Create	materials	to	explain	the	program	and	ask	MSRs	                      to grow the program themselves.
     and tellers to hand them out at the point of sale.

                              U.S. Households Participating in at Least One Rewards Program

                                                                                                             Do not participate


                                                   Source: Consumer Reports, July 2008

                                Participation in Top Five Sectors of Loyalty Reward Programs

              Airline frequent flyer program                                                     254

                     Financial services and
                 credit card reward program                                                238

             Specialty retail reward program                               137

                    Grocery reward program                           124

           Department store reward program                         107

                                               0   50          100         150    200      250         300
                                                              Millions of U.S. consumers
                                      Source: “COLLOQUY; Loyalty Reward Programs: The Antidote to
                                   Economic Stimulus Payment Shrinkage,” Science Letter, June 10, 2008

                                          Blueprints for Innovation   | Section 1

oPEratIonaL and otHEr conSIdEratIonS

Unite provides a vehicle for solidifying and increasing        In addition:
member relationships. However, the financial impact
is also a crucial success measurement. A profitability           •	 Software	 needs	 to	 be	 modified	 to	 support	 the	
analysis of the product and the associated point level              Unite group relationships.
is necessary.                                                    •	 A	 solid	 marketing	 and	 training	 plan	 must	 be	

ProoF oF concEPt

The Unite concept began a test phase in March 2008             Altra Federal Credit Union’s initial test phase, which began
                                                                                                           g on
at Altra Federal Credit Union ($602 million) in La             with one new member, generated in just six months:

Crosse, WI, and at Maine State Credit Union ($245

                                                                                                   row        at
million) in Augusta, ME.                                         •	 Six	new	members	
                                                                 •	 Two	checking	accounts        g       ber
                                                                                                     mem ime
Members within defined groups can earn points for the            •	 Three	credit	cards

                                                                                                       a t
following products and services:                                 •	 $95,300	in	consumer	loans
                                                                 •	 $365,413	in	equity-related	loans
     •	 Active	 checking—used	 at	 least	 once	 per	 month,	
        measured by balances.                                  Maine State Credit Union’s pilot group began with
     •	 Debit	 card—used	 at	 least	 once	 per	 month,	        three existing members and grew by three more
        measured by purchase activity.                         existing members. They also achieved tangible product
     •	 Credit	card—measured	by	balances	and	activity.         and service growth:
     •	 Bill	pay—used	to	pay	at	least	one	bill	per	month.
     •	 Equity	 loan—measured	 by	 balances	 (includes	          •	 Six	checking	accounts
        second mortgages and home equity lines of credit).       •	 Four	debit	cards
     •	 Consumer	loans—measured	by	balances.                     •	 $23,979	in	consumer	loans	

The average number of points the group earns over
a predetermined period determines the group’s
“relationship score” and thus its eligibility for rewards.

                                                            Build Wealth | Unite

    Qualifying Level and                                                            Discounts
    Relationship Score                                           (at each level, all previous discounts apply)
                                    •	 0.25%	off	next	car	loan	rate
          Level One
                                    •	 Free	credit	report	and	consultation
         2,500 points
                                    •	 Free	checks
                                    •	 0.25%	off	next	closed-end	equity	loan	rate
          Level Two                 •	 0.10%	higher	certificate	rate
         5,000 points               •	 One	non-sufficient	funds	fee	waived	per	year
                                    •	 Credit	union	logo	merchandise	($15	to	$25	value	per	year)
                                    •	 Free	safe	deposit	box
         Level Three
                                    •	 Fee-free	gift	cards
         7,500 points
                                    •	 $100	discount	on	vehicle	warranty
                                    •	 0.50%	off	next	car	loan	rate
         Level Four
                                    •	 $50	discount	on	guaranteed	asset	protection	Insurance
        10,000 points
                                    •	 Credit	union	logo	merchandise	($20	to	$35	value	per	year)
                                    •	 0.50%	off	next	equity	loan	rate
         Level Five                 •	 Special	double	credit	card	reward	point	specials	for	limited	periods
        12,500 points               •	 $100	off	closing	costs	on	next	purchase	or	refinance	of	mortgage	loan	
                                       (new money only)
                                    •	 Double	the	six-month	teaser	rate	period	on	next	home	equity	line	of	credit	
          Level	Six
                                    •	 Platinum	rate	on	credit	card	regardless	of	credit	score
        15,000 points
                                    •	 0.25%	higher	certificate	rate

GEttInG StartEd

Participating credit unions should consider:                                        Visit for
                                                                                    more information.
1    The selection of eligible products and services
     and the respective point system.
2    Technology and software needs to monitor the                                 What if friends and family extended
     group relationships and measure profitability of                             beyond a single credit union? could
     the program.                                                                 multiple credit unions across the
3    Marketing and training resources.
                                                                                  country unite to offer this program?

                           Charlie White, Members United Corporate Federal Credit Union, Albany, NY; Karin Kovalovsky, Air Academy Federal Credit Union,
                                     Colorado Springs, CO; Musette Bracher, GECU, El Paso, TX; Nan Morrow, Centra Credit Union, Columbus, IN;
                                                             Steve Koenen, Altra Federal Credit Union, La Crosse, WI

              Blueprints for Innovation   | Section 1

n    ot e s

sectIon 2
How to Help members…

  Collaboration in the Classroom

  Virtual Finance: The Credit Union Island   | UPDATE

     wHat If every HIgH scHool student Had
     an IncentIve to joIn a credIt unIon?

In tHE
tHE oPPortunItY

Americans are in a state of financial turmoil.              Are Americans financially illiterate? Could a lack of
Consider:                                                   financial education for children and teens, at home
                                                            and in school, be a contributing factor? Financial
  •	 Individuals	 with	 low	 financial	 literacy	 are	 34%	 habits that are developed in the teen years and early
     less likely to participate in a voluntary 401(k) plan 20s—often learned by default or by following the
     and 11% less likely to participate in an automatic habits of peers—can become the basis for adult money
     enrollment plan. The impact of financial literacy management skills. The strength of this foundation,
     on saving is even stronger than the impact of or lack thereof, impacts spending, borrowing, saving,
     income.9                                               and investing patterns later in life. To achieve a dream
  •	 Only	 48%	 of	 high	 school	 seniors	 passed	 the	 of financial freedom as an adult, solid financial skills
     2008 national financial literacy test, according to should be acquired as a youth.
     the Jump$tart Coalition® for Personal Financial
     Literacy.10                                            Are credit unions willing and ready to teach personal
  •	 Over	 half	 of	 college	 students	 accumulate	 more	 finance to young people? Some credit unions do
     than $5,000 in credit card debt while in school.11 an excellent job of teaching classes in area schools.
                                                            Others no doubt struggle to do so. Consider that half
In addition to student loan payments and the pressures      of credit unions with $10 million or more in assets
of establishing a career, young people are entering         lack the necessary staff time to provide financial
adulthood with a burden of consumer debt that leaves        education to young members (age 17 and younger),
them years behind in accumulated savings.                   according to a 2007 CUNA Center for Personal
                                                            Finance survey. In addition, two in 10 credit unions
                                                            report that they lack the necessary staff expertise, and
                                                            one in 10 indicate that they lack the information and
                                                            resources to do so.

     Julie R. Agnew, Lisa Szykman, Stephen P Utkus, and Jean A. Young, “Do Financial Literacy and Mistrust Affect 401(k) Participation?” Center for
     Retirement Research at Boston College. November 2007, Number 7-17.
     Jump$tart Coalition® for Personal Financial Literacy, “Financial Literacy Still Declining among High School Seniors, Jump$tart Coalition’s 2008
     Survey Shows,” media release, April 2008.
     Sallie Mae, “Sallie Mae Launches New ‘Be Debt Smart’ Campaign to Educate Students, Parents and Graduates on Managing Debt and Understanding
     Credit,” media release, January 2007.

                                                           Blueprints for Innovation            | Section 2

                                          High School Senior Financial Literacy Survey Scores


                     60%                57%                52%                           52%           52%
                                                                          50%                                       48%



                                        1997               2000           2002           2004          2006         2008

                                    Note: Scores represent the average percent of questions answered correctly.
                                        Source: Jump$tart Coalition for Personal Financial Literacy Surveys

               Greatest Barriers to Credit Unions for Providing Financial Education to Youth Members

                Lack of necessary staff time                                                    51%

                   Lack of member interest                                       33%

                 No/limited budget to do so                             23%

           Lack of necessary staff expertise                       19%

     Lack of available information/resources               11%

              Unknown bottom-line impact              5%

                                      Other                   15%

                                No barriers                  14%

                                               0%      10%        20%    30%      40%     50%       60%      70%   80%

                                                      Base is credit unions with $10M or more in assets.
                                                    Source: CUNA Center for Personal Finance survey, 2007

tHE SoLutIon

Collaboration in the Classroom is a unique financial                                   book format to reinforce the classroom presentation
education program that offers credit unions a cost-                                    components:
effective way to reach out to teachers; provides students
with an engaging, entertaining class and computer-                                       •	 Credit	management.
simulated follow up; and provides an incentive for                                       •	 The	importance	of	savings.
students to open a credit union savings account.                                         •	 Investing.
                                                                                         •	 Identify	theft	protection.
The concept is modeled after a successful pilot program
in Washington State called Credit University, which                                    Upon completion of the educational models (the entire
utilizes a shared educator to provide one hour of high                                 course can be completed in roughly two hours), students
school classroom training on behalf of a group of local                                who have passed all the quizzes will “graduate” from
or statewide credit unions.                                                            Credit University and receive a certificate of completion
                                                                                       plus a voucher for $25 to open a share savings account
Collaboration in the Classroom adds four Web-based,                                    at any of the sponsoring credit unions.
self-guided learning modules designed in a comic

                                            Navigate Financial Waters | Collaboration in the Classroom

tarGEt MarkEt

Collaboration in the Classroom is designed for high                        the program is likely to be delivered to sophomores,
school students. The primary target market is high                         juniors, and some seniors. The ultimate goal is to
school teachers of finance, economics, Delta Epsilon                       provide valuable financial education and ensure that
Chi of America, Future Business Leaders of America,                        every teen joins a credit union before his or her high

and other business-related classes or clubs located in the                 school graduation.
communities of participating credit unions. As a result,

MarkEtInG tactIcS

Key to the program’s success are relationships built                       information should be provided to both teachers and
between the shared credit union educator and high                          students. Press mentions, articles in school newsletters,
school teachers and principals. A colorful brochure                        and a credit union presence at community events
describing concepts presented in the session, along with                   and functions will help to spread the word about
a list of sponsoring credit unions with contact                            Collaboration in the Classroom and its accomplishments.

                                                 Why Teens Want to Learn About Money Matters

                    To stay out of debt                                                               88%
             To be able to pay my bills                                                               88%
To not have to rely on others for money                                                              85%
   To be able to take care of my family                                                        77%
                To buy the things I like                                                       77%
      To be able to do the things I love                                                       77%
                     To get a good job                                                  66%
                             To get rich                                   46%
                         To get married                                   44%

                                           0%   10%   20%    30%    40%    50%   60%    70%    80%    90%   100%

                                                Source: Charles Schwab Teens & Money 2007 Survey Findings

                                       Blueprints for Innovation   | Section 2

oPEratIonaL and
otHEr conSIdEratIonS                                           MEMBEr BEnEFItS
                                                                    Students learn about identity theft
For this program to achieve optimal visibility and                  and the basics of personal finance.
efficiency, an organization should be created to
oversee the national Credit University program. The                 completion of the course results in
organization would be responsible for providing a                   ownership of a credit union savings
credit union educator or facilitator who would find                 account.
and work with teachers, integrate the Credit University
course with other personal finance educational offerings            credit unions supplement parental
(e.g., CUNA, National Endowment for Financial
                                                                    efforts to teach children about money
Education, Jump$tart, etc.), and teach the course.
The Credit University program organization would                    management and identity theft.
also provide technical support for the Web-based
learning modules, generate certificates of completion,
                                                                    Educators receive the much-needed
and distribute program brochures. Each state would                  help they request to teach personal
require a lead credit union to help facilitate credit               finance.
union collaborations.

To combat the potential for fraudulent certificates of         crEdIt unIon BEnEFItS
completion, each certificate will print with a unique
identification number. In addition, students could                  attract and retain high school–age
match the $25 deposit with their own money and                      members.
provide their student identification when opening
their account.                                                      advance financial literacy among
                                                                    young people.

                                                                    community outreach and
                                                                    relationship building with local high
                                                                    schools and educators.

                              Navigate Financial Waters | Collaboration in the Classroom

ProoF oF concEPt                                                          GEttInG StartEd

Credit University sessions were delivered to 3,372                        Credit unions interested in Collaboration in the
students at 30 locations during the first eight months                    Classroom should:
of 2008.
                                                                          1        Identify schools that are interested in offering
The enhanced Credit University program (e.g.,                                      this curriculum.
classroom plus Web-based modules) will be piloted in                      2        Secure potential credit union collaborators and
January 2009 by America First Federal Credit Union                                 their financial commitment.
($4.4 billion) in Ogden, UT. Results will be tracked for
the number of students completing the online training                     3        Select the shared educator and prepare training
component and the number of new accounts opened,                                   materials.
as well as teacher receptivity to the program.                                   Visit
                                                                                 for more information.
   coLLaBoratIon In
    tHE cLaSSrooM

                         Tammy Gallegos, America First Federal Credit Union, Ogden, UT; Tom Anonson, Class Act Federal Credit Union, Louisville, KY;
                                                                Shari Storm, Verity Credit Union, Seattle, WA

Virtual Finance:
The Credit Union Island

virtual Finance offers financial education in a virtual classroom situated in
an interactive environment that includes games, social interface, and the
opportunity for prospective members to earn virtual money redeemable
for real credit union products and services. It consists of an environment
called the credit union Island within the teen Grid in Second Life®.
Development of the Credit Union Island began in 2007           As with all virtual worlds, the attraction for youth is based
under the leadership of Filene i3 members and their            on a social networking component. Individuals’ avatars
credit unions, in partnership with Ohio University’s           can interact with other avatars in a three-dimensional
Virtual Immersive Technologies and Arts for Learning           environment. The purpose of Virtual Finance is to bring
(VITAL) Laboratory. A Web site, interfaces, a prototype        the game to small groups of teens, either in a school
island, and a simulated financial game, all accessible via a   classroom or through a planned virtual event. Initial
link from participating credit unions’ Web sites, are fast     testing will focus on the classroom experience where 20
approaching completion.                                        to 25 students may play the game at school, facilitated
                                                               by local credit unions. A credit union—or a group of
                                                               credit unions—may also draw teens to the site with
                                                               virtual events such as contests, games, virtual giveaways,
                                                               or other planned social events such as concerts.

The game allows players to make simulated financial          To quickly gain a presence within Teen Second Life, a
decisions that mirror those they will face during their      credit union can create a link from its Web site to the
lives, such as buying a car, securing a mortgage, or         Credit Union Island. Members sign up for free, create
investing in a 401(k). Players’ decisions not only result    an avatar, and enter the national unbranded credit union
in possession of virtual cars and homes, but also create     area of the game. A how-to instructional package will be
a competition among multiple users to see who makes          posted on Filene’s Web site to help credit unions gain
the best financial choices. Rewards can be given to the      access to the island when it is opened in early 2009.
highest score, and eventually the game could allow for       Various tutorial videos will be available in the orientation
virtual money to be converted to real currency and           area of the island to help new users navigate. Pursuing
deposited electronically into a credit union account.        this course of involvement is free to credit unions and
                                                             involves few administrative costs.
The Teen Grid of Second Life is a secure area with age-
appropriate content suitable for children and teens. The
teen portion of Second Life is closed to anyone over the
age of 17 who has not gone through a full background
check. This will help credit unions mitigate reputational
risk and allow them to slowly and safely enter the virtual
world environment.

                                       Blueprints for Innovation   | Section 2

New developmeNts

Building on Filene i3’s early prototype, Members            These credit unions are looking to enhance their
United Corporate FCU in Warrenville, IL, expressed          financial education initiatives by helping to design
strong interest in the Virtual Finance project and          content and offering the game in local middle schools
committed additional funding and resources to help          and high schools in their communities to test:
with further development of educational content, user
acceptance testing, and, most importantly, validation         •	 Ease	of	implementation	into	local	school	systems.
of educational effectiveness.                                 •	 Ease	 of	 use	 from	 the	 credit	 union	 instructors’	
Additionally, four credit unions are involved in shaping      •	 Educational	 effectiveness	 (including	 pre-	 and	
the project to maximize effectiveness:                           post-tests).
                                                              •	 Overall	 classroom	 experience	 from	 the	 students’	
     •	 Altra	Federal	Credit	Union	($602	million)	in	            perspective.
        La Crosse, WI                                         •	 Receptivity	to	the	game	by	local	school	districts.
     •	 Ohio	University	Credit	Union	($220	million)	in	
        Athens, OH
     •	 Point	Breeze	Credit	Union	($650	million)	in	
        Hunt Valley, MD
     •	 Sunmark	Federal	Credit	Union	($435	million)	in	
        Schenectady, New York                                  vIrtuaL WorLdS
                                                               virtUal world
                                                                   •	A	computer-based	simulated	
                                                                     environment in which users interact
                                                                     by sending text or voice messages,
                                                                     playing games, and building or
                                                                     exploring the environment.

                                                                   •	The	visual	representation	of	an	
   Worldwide, 80 universities are                                    Internet user. In a virtual world,
now using Second Life as an                                          the avatar is generally a three-
                                                                     dimensional rendering of an often
educational tool.
                                                                     idealized human form, with a
                                                                     name and apparent demographic

                                                               secoNd life®
                                                                   •	A	virtual	world	and	online	game	
                                                                     founded in 2003 by Linden Lab.
                                                                     Second Life allows users to establish
                                                                     an avatar and interact with others in a
                                                                     virtual environment. users can create
                                                                     and use virtual objects and can also
                                                                     engage in trade.

                        Navigate Financial Waters | Virtual Finance

   “the really interesting aspect about virtual Finance is that we’re building
something in a virtual environment that meets national standards of what
students should be learning about economics. Having it in this format
makes it more interactive and therefore more engaging.”—teresa Franklin,
associate Professor of Instructional technology, college of Education at
ohio university

              Blueprints for Innovation   | Section 2

n    ot e s

                   Navigate Financial Waters | LOT$A MOT$A

sectIon 3
How to Help members…

Meet Life’s
  The Big Idea

  Choice Endings


  Sandwich Generation Recipe / CU 2020

  Single Again

                    Blueprints for Innovation   | Chapter 2

     HelpIng entrepreneurs sHape
     tHeIr Ideas and go for It.

tHE oPPortunItY

In a world that rapidly changes, small businesses                             to other countries, demand more on the work-life
and entrepreneurship are certainly no exception.                              spectrum, eliminate pensions, and cut benefits,
According to Intuit’s Future of Small Business Report,                        declining corporate loyalty will also fuel small business
the demographics of small business ownership are                              start-ups by those aged 50 and older.
rapidly evolving.12 Gone are the days of middle-aged,
white, male, small business owners. Generation Y,                             While starting a business is a challenge at any age, a
women, immigrants, and aging baby boomers are now                             first-timer starting a business later in life will encounter
joining the ranks in increasing numbers. According to                         different obstacles than younger entrepreneurs. The
the Kauffman Foundation, Americans aged 55 to 64                              concerns include funding the business, securing health
form small businesses at the highest rate of any age                          insurance, managing personal finances, and succession
group—28% higher than the adult average.13 Born                               planning. Even more important is the need to get it
between 1946 and 1964, baby boomers are now                                   right the first time. People over age 50 may not have
moving through the prime years of small business                              the option to return to the traditional workforce
formation. Many Americans are not looking at                                  should their business idea fail. A recent Ipsos Reid poll
retirement as a time of rest and relaxation, but rather                       indicates that the two biggest fears of baby boomers
as a time for new pursuits.                                                   who have either retired early to start their own business
                                                                              or intend to do so are not having enough customers
This trend is fueled by a number of societal factors.                         and not having enough money.14
Longer life spans in which people remain healthier and
active later in life have led to many near-retirees being                     Credit unions can help this group of emerging
physically capable of still working. In addition, baby                        entrepreneurs by providing tools to assist them in
boomers have historically been active in life—whether                         evaluating a potential business endeavor, resources to
socially, politically, or otherwise—and they do not                           help them along the way, and cost-effective business
envision a normal retirement like that of their parents.                      banking products and services.
As baby boomers watch companies cut jobs, outsource

     Intuit, “Demographic Trends and Small Business, The Intuit Future of Small Business Series,” January 2007,
     Robert W. Fairlie, Kauffman Index of Entrepreneurial Activity: 1996-2007 (April 24, 2008). Available at SSRN:
     BMO Financial Group Poll conducted by Ipsos Reid, October 2-7, 2007.

                                                Blueprints for Innovation      | Section 3

                                                Ideal Plan for Living in Retirement
                                         21%                            11%
                                                                                                 Working full-time
                                                                                                 Starting own business
                                                                                 8%              Other
                                                                                                 Working part-time
                                                                                                 Going back & forth between
                                                                                                 work and leisure
                                                                                                 Never working for pay again


               Base is those aged 25 to 70. Not that respondents’ anticipated average retirement age is 61. This figure does
               not vary considerably by current age of respondent. Source: The 2006 Merrill Lynch New Retirement Survey

                                       Kaufmann Index of Entrepreneurial Activity by Age
                                           (% of Americans that Start a Business Each Month)

                            20 to 34           35 to 44             45 to 54          55 to 64            65 & older





                        1996      1997     1998      1999        2000   2001     2002     2003        2004     2005

                Source: Robert W. Fairlie, University of California, Santa Cruz, using the Current Population Survey

                                                      Meet Life’s Milestones | The Big Idea

tHE SoLutIon

The Big Idea will help credit unions position themselves to be at the forefront of this new wave of older
entrepreneurs by providing support, resources, and products and services to help turn business ideas into realities.
The project consists of two distinct and potentially separate opportunities:

     1.The Big Idea evaluator—a tool to help evaluate business readiness.

        The Big Idea Evaluator helps prospective entrepreneurs evaluate their likelihood of success.
        This 32-question tool assesses respondent readiness to effectively pursue a chosen business
        venture. The questions cover three critical categories: marketing, management, and money.
        This tool was originally developed by the Arkansas Small Business Development Center
        at the University of Arkansas at Little Rock.15 With permission, Filene i³ modified the
        questions to better suit its target audience. A weighted scoring system provides an overall
        score for each category:

                    Score                   Rating

              Less	than	−50                 Red Light—Business idea needs significant work before launch

                 −50	to	50                  Yellow Light—Business idea needs some work before launch

                 51 or more                 Green Light—Business idea is ready for launch

        The results of each category include the overall score as well as a series of customizable Web-
        based resources to help the respondent improve his or her readiness in the respective category.

     The Big Idea Evaluator Tool was created by Timothy Lee, Associate Extension Specialist, and Quentin May, Graduate Assistant, with the Arkansas
     Small Business Development Center. Filene i3 and Beyond Marketing, LLC of Lenexa, KS, provided additional development and customization.

                                                   Blueprints for Innovation   | Section 3

tHE SoLutIon contInuEd

     2.The Big Idea Challenge—a contest to create                              •	 Identify	 and	 briefly	 describe	 the	 business	 you	
       awareness among members and potential members                              plan to start.
       about the credit union’s business service offerings                     •	 Identify	the	product	or	service	you	plan	to	sell.
       and its commitment to entrepreneurship. If your                         •	 What	 will	 be	 your	 company’s	 competitive	
       credit union is one of the 62% of credit unions                            advantage?
       that do not offer business services, the Big Idea
       Challenge can be used to gauge member interest                          Entries are judged by a panel of representatives
       in business service offerings.16                                        from local businesses. The winner is awarded a prize
                                                                               customized to help start his or her business that
        The Big Idea Challenge is designed to generate                         may include services such as logo and letterhead
        buzz around the credit union’s business service                        design, business plan consulting, legal advice,
        offerings. This popular culture phenomenon                             accounting, printing services, and QuickBooks®
        engages participants and therefore increases a credit                  software.
        union’s likelihood of building relationships with
        prospective business services clients. To participate
        in the challenge, a prospective entrepreneur must
        outline the business proposition in the following

     CUNA’s 2007 Small Business Services Survey.

                                       Meet Life’s Milestones | The Big Idea

tarGEt MarkEt
                                                                MEMBEr BEnEFItS
The target market for The Big Idea is baby boomers                 awareness of credit union products
aged 55 to 64 nearing retirement age but not yet ready
                                                                   and services and resources for
for full-time retirement.
                                                                   small business owners.

MarkEtInG tactIcS                                                  access to a quick and free
                                                                   assessment of business ideas.
The Big Idea can be easily promoted using direct mail              opportunity to win start-up
and email, Web site information, lobby displays, and
press releases. The Big Idea concept is a clever way to
promote a credit union’s offerings for small business
owners, so it is important to cross-promote and cross-
sell account offerings within the project.                      crEdIt unIon BEnEFItS
                                                                   attract new members.
oPEratIonaL and
otHEr conSIdEratIonS                                               Low cost entrée into small business

The low and largely fixed implementation costs for                 Increase small business account
The Big Idea pose a minimal financial risk to the credit            deposits, loans, service use, and
union. Implementation of The Big Idea Evaluator
                                                                    net income.
tool requires IT resources to install and integrate the
tool with the credit union’s Web site. Other program
expenditures include marketing, contest judging, legal
review, and prizes. A credit union should be able to
quickly recover its initial investment in The Big Idea
project by opening a minimal number of small business
checking accounts.

                          Percent of Credit Unions That Offer Small Business Services


                                                                                 Do not offer business services
                                                                                 Offer business services


                                  Source: CUNA’s 2007 Small Business Services Survey

                                      Blueprints for Innovation   | Section 3

ProoF oF concEPt

Four credit unions have piloted The Big Idea concept:

       Mazuma credit union ($358 million)                           Motorola Employees credit
       in Kansas City, MO, tested both The Big Idea                 union ($661 million) in Schaumburg, IL,
       Challenge and The Big Idea Evaluator during                  launched a four-week pilot in fall 2008.
       an 11-week period in early 2008. The credit                  Motorola offered a $2,000 prize package to
       union tallied 66 submissions of the Evaluator                cover marketing and set-up costs. The credit
       and received 14 entries for the Challenge. In                union also partnered with a local university to
       addition, 147 new deposit accounts were                      provide a workshop on the fundamentals of
       opened totaling $2.6 million in balances, and                small business.
       29 new loans were originated totaling $2
       million. Just under half (43%) of Challenge         Key findings from the pilot include:
       entries were between the ages of 55 and 64.
                                                                  •	 Validation	that	credit	union	members	do	have	
       Wright-Patt credit union                  ($1.4               big ideas.
       billion) in Fairborn, OH, also piloted both                •	 The	 age	 ranges	 of	 Big	 Idea	 Challenge	
       program components. Wright-Patt’s Challenge                   competitors vary from one credit union to
       ran for six weeks during March and April 2008.                another, and extend below the 55- to 64-year-
       The credit union received 144 submissions of                  old target market. Perhaps The Big Idea could
       the Evaluator and 92 entries for the Challenge.               also be effectively used to target younger
       Business account openings during this six-week                members for those credit unions that wish to
       period were notably higher than during the                    do so.
       same time frame in 2007, resulting in a 28%                •	 The	Challenge	prize	is	a	motivator	that	drives	
       increase in the number of new business savings                members to the tools. Credit unions should
       accounts and a 38% increase in the number of                  make sure to mention the prize up front and
       new business checking accounts. Wright-Patt’s                 often when promoting The Big Idea.
       Challenge generated about one-third of its                 •	 Composition	 of	 the	 Challenge	 prize	 may	 be	
       entries from those aged 35 to 44, and 23% of                  a factor in generating interest. The most
       entrants were between the ages of 55 and 64.                  well-rounded prize package generated the
                                                                     most entries.
       alliant credit union           ($5.7 billion) in           •	 Credit	 unions	 can	 generate	 new	 business	
       Chicago, IL, also tested both The Big Idea                    services accounts using The Big Idea.
       Evaluator and the Challenge, but did so as an
       opportunity to gauge member interest in             Three additional credit unions—Cyprus Credit Union
       business services (not currently offered by the     ($548	 million)	 in	 West	 Jordan,	 UT,	 A+	 Federal	 Credit	
       credit union). Over a seven-week period in          Union ($611 million) in Austin, TX, and America First
       March and April 2008, the credit union received     Federal Credit Union ($4.4 billion) in Ogden, UT—have
       784 hits on the Evaluator and 74 entries to the     committed to piloting The Big Idea Evaluator tool.
       Challenge. Alliant relied on email marketing,
       which generated nearly 80% of submissions.
       Half of the Challenge entries were submitted by
       members aged 45 to 54, and 12% were aged 55
       to 64.

               good response
               given no biz servic

                                         Meet Life’s Milestones | The Big Idea

GEttInG StartEd

Open source innovation has created options for
credit unions:

1    The Web page code is available at http://filene.
     org/home/innovation. This will require an
     investment of credit union IT resources for
2    Beyond Marketing, LLC is offering a solution
     with the complete technology at a minimal
     cost. For more information, contact strategy@
3    Another fee-based option is Currency
     Marketing’s The Big Idea Biz Challenge.
     The-Big-Idea-Biz-Challenge for more

    Visit for The
    Big Idea operational and marketing materials.
    tHE BIG IdEa

                                   Frank Weidner, Alliant Credit Union, Chicago, IL; Lisa Renner, Mazuma Credit Union, Lenexa, KS;
                               Mary Dolan, Maine State Credit Union, Augusta, ME; Rebecca Secor, Member Loyalty Group, Kenosha, WI;
                                                        Tim Mislansky, Wright-Patt Credit Union, Fairborn, OH

                   Blueprints for Innovation   | Chapter 3

     managIng tHe HIgH costs of dyIng.


tHE oPPortunItY

americans have been overpaying for funerals for decades. a 1961
Time magazine article titled “the High cost of dying” bemoaned
the high costs of funerals even then.17
Funerals are among the most expensive purchases                                Dying is a big business and one that is largely
many consumers will ever make, according to the                                underscrutinized by families. Nearly half of all U.S.
Federal Trade Commission. Funeral home costs alone                             consumers have never arranged for a funeral, so they don’t
can amount to thousands of dollars ($7,323 on average                          have a point of reference. Unlike individuals shopping
in 2006), not including cemetery expenses or other                             for a home, car, or other significant lifetime purchases,
miscellaneous items such as burial clothes, additional                         those in the market for funeral services are likely in an
transportation charges, flowers, clergy honorarium,                            emotional state and under strict time pressures.
luncheon, and newspaper notices.18 From start to
finish, a traditional funeral can exceed $10,000. The                          As trusted financial providers, credit unions can help
amount of money involved provides good reason for                              members at these difficult times by educating them on
consumers to purchase a funeral with care.                                     the funeral planning process and helping them save
                                                                               money. This will boost member loyalty while increasing
                                                                               credit union deposits and noninterest income.

     “The High Cost of Dying,” Time, June 2, 1961,,9171,827010,00.html.
     National Funeral Directors Association, “NFDA Releases Results of General Price List Survey,” media release, June 2, 2008.

                                        Blueprints for Innovation   | Section 3

tHE SoLutIon

the traditional funeral planning process and disposition of assets
imposes sudden new responsibilities and decision making at a
time when families are grieving and money may be in short supply.
Filene i³’s choice Endings program consists of three key elements
for credit unions to offer their members to assist with funeral
planning ahead of time to ease the burden of last-minute decisions
and large expenses:
     1. education                                                   written trust agreement, and does not need to go
       Members should know about the options available              through probate upon the member’s death. Like
       to them when planning and saving for a funeral               any other savings account, members can add or
       or another memorial event. Using information                 withdraw funds and even fund the account via
       compiled from the Federal Trade Commission and               payroll deposit. Funds are held in a revocable trust
       the Funeral Consumers Alliance, a series of useful           for a named beneficiary. At the time of death, the
       tools has been developed to educate members                  account balance passes to the living beneficiary(ies).
       on how to avoid paying too much for a funeral                While many, if not most, credit unions offer this
       and how to plan ahead so that surviving family               type of account to members, Choice Endings
       members understand final wishes.                             ties these accounts to a document—called the
                                                                    Dear Family Letter—that spells out the member’s
                                                                    memorial plans and final wishes.
     2. Totten Trust/Payable on Death accounts
                                                                  3. affordable, easy-to-Obtain Insurance
       Members save funds for their funerals at their
       credit union as an alternative to prepaid plans.             For members who do not want to earmark money
       Choice Endings utilizes standard credit union                for funeral expenses or who simply do not have
       share accounts designated with an agent to                   the means, credit unions, through partnerships,
       administer affairs. Members can establish a Totten           should offer term life insurance positioned as a
       Trust, also known as a payable on death account.             final expense policy.
       This simple trust account does not require a

                                                                      Percent Who Preplanned Funeral
                  12%                                                    or Burial for Self or Others

                                                                              Yes, for self & other(s)
                                                                              Yes, for self
                                                                              Yes, for someone else

                                                                         Base is those aged 50 and older.
                                                              Source: AARP’s 2007 Funeral and Burial Planners Survey

                                     Meet Life’s Milestones | Choice Endings

   MEMBEr BEnEFItS                                        crEdIt unIon BEnEFItS
      achieve peace of mind for self and                      Improve member loyalty.
                                                              Increase noninterest income from
      Save money by making sound                               insurance sales.
      financial decisions.
                                                              Increase deposits in core share
      Protect personal assets.                                 accounts.

                                                              Provide additional financial planning.

                                                              retain family beneficiaries’ transfer
                                                              of wealth.

tarGEt MarkEt                                             MarkEtInG tactIcS

The target market for this program is baby boomers        Death is a difficult topic to broach, both on the front
who are likely dealing with aging parents. By resolving   line and with marketing materials. Credit unions
these planning issues for their parents, members will     should utilize a targeted approach to promote this
hopefully also realize the importance of preplanning      program. Statement inserts, brochures, and postcards
for themselves.                                           have already been designed and can be customized. In
                                                          addition, credit unions are encouraged to create general
To further segment this target market, credit unions      awareness of the program by using posters, newsletter
can select members with the following characteristics:    articles, and counter table tents. Finally, a sample
                                                          Web page may be viewed at http://www.cypruscu.
  •	 Ages	45	to	65.                                       com/financial/choice/. This Web site includes posted
  •	 Household	incomes	of	$40,000	to	$75,000.             podcasts to educate members about what to expect and
  •	 Married	with	children.                               how to plan ahead.
  •	 Checking	accountholders.

A sample questionnaire is available for credit unions
that wish to measure interest among their members.

oPEratIonaL and otHEr conSIdEratIonS

Each individual credit union needs to determine           Regardless of the implementation plan, staff training is
how it wants to implement Choice Endings. Options         a crucial element. A comprehensive training plan has
include having brokerage service representatives offer    been developed and is available for credit union use.
the service, training frontline staff to understand the
resources available and provide advice to members, or
offering the tools on their Web sites and having staff
refer members to these resources.

                                            Blueprints for Innovation    | Section 3

ProoF oF concEPt

Choice Endings is currently being tested or                         Union, and Point Loma Credit Union have trained
implemented at the following credit unions:                         their frontline staff regarding available resources and
                                                                    member needs and offer the tools through their Web
     •	 CTCE	Federal	Credit	Union	($80	million),	                   sites. KC Councils Federal Credit Union promotes
        Reading, PA                                                 Choice Endings via newsletter articles and statement
     •	 Cyprus	Federal	Credit	Union	($545	million),	                inserts, as well as presentations to seniors’ groups to
        West Jordan, UT                                             generate interest and spark inquiries.
     •	 KC	Councils	Federal	Credit	Union	
        ($16 million), College Park, MD                             Complete pilot results are not yet available, but Point
     •	 Motorola	Employees	Credit	Union	                            Loma Credit Union and Cyprus Federal Credit Union
        ($661 million), Schaumburg, IL                              have received positive feedback from members. A new
     •	 Point	Loma	Credit	Union	($475	million),	                    Cyprus member moved a $162,590 trust account to the
        San Diego, CA                                               credit union because of the Choice Endings program. In
                                                                    response to member inquires, KC Councils Federal
Motorola Employees Credit Union has trained                         Credit Union has distributed 20 “What to Know
its brokerage representatives to offer the program.                 Before You Go” packets from the Funeral Consumer
CTCE Federal Credit Union, Cyprus Federal Credit                    Alliance.

                     Percent Who Completed Funeral Arrangements or Burial Pre-Plans by Age



                               35 to 49                     50 to 59                    60 & older

                 Base is those aged 35 and older who have heard about funeral arrangements or burial pre-plans.
                      Source: AARP Bulletin Poll “Getting Ready to Go” Executive Summary, January 2008

                                         Meet Life’s Milestones | Choice Endings

GEttInG StartEd                                                            “thank you for all the very
                                                                       useful information on funerals
1    Review the entire array of Choice Endings                         and services. I wish I had this
     resources developed by the Filene i³ team.
     Choice Endings in a Box includes a sample                         information when I needed to
     executive approval memorandum, marketing                          bury my mom. It would have
     materials, resources, and training materials.
2    Decide whether this is the right program for                      saved me a lot of stress. But
     your credit union. Survey members to gauge                        I am happy you are showing
     interest and identify your potential target
     market.                                                           leadership and compassion by
3    Customize the Choice Endings materials.                           offering this information to your
    Visit for                        membership. It was presented
    Choice Endings resources and marketing                             tastefully.”—arlene (age 54),
                                                                       Member, Point Loma credit union
    cHoIcE EndInGS

                       Thomas Bowen, KC Councils Federal Credit Union, College Park, MD; Dave Brooke, Point Loma Credit Union, San Diego, CA;
                          Trish Shermot, CTCE Federal Credit Union, Reading, PA; Steve Fifield, Cyprus Federal Credit Union, West Jordan, UT;
                                                   Jean Theis, Motorola Employees Credit Union, Schaumburg, IL

                       Blueprints for Innovation   | Chapter 4

     wHo needs a credIt card
     wHen you Have a cell pHone
     wItH a barcode?

tHE oPPortunItY

cuPay is a revolutionary cash substitute that challenges today’s paradigm
of payment processing. Imagine going to a cash register to purchase
something at a retailer. Instead of pulling out your wallet, you enter the
retailer’s identification number and the amount of your purchase into your
smartphone. Instantly a barcode is displayed on the phone and is then
scanned by the cashier to complete the sale. Your personal information is
never shared with the retailer, and there is no credit or debit card number
to be compromised.
Checks, traveler’s checks, credit cards, debit cards, gift                 An April 2008 study commissioned by Fiserv found that
cards...the concept of cash substitutes is certainly not                   75% of consumers who use a cell phone at least once
new, but the pace of development and acceptance of                         a week would consider using mobile banking services
new payment systems has increased exponentially.                           if offered.19 Tower Group estimates that more than 40
Consider Visa Buxx, PayPal, Disney Dollars, decoupled                      million U.S. consumers will adopt mobile banking
debit cards, Amazon Payments, Ginko Financial,                             by 2012.20 Cell phone carriers are already processing
WoW Gold, Gpay, and AceBucks. The combination                              direct payments for items such as ring tones.
of existing payment systems controlled by only a few
players and data security that is compromised on a daily
basis has created an environment ripe for change.

                              Interest in Doing Banking-Related Services on Your Wireless Phone

                         Look up account balance
                        Contact customer service
                               Locate ATM/office
                                  Transfer money
                                Review statement                                                             Somewhat interested
                                        Pay bills
                                                                                                             Very interested
                        Swipe phone at retail POS
                      Update personal information
                                     Trade stocks
                       Manage retirement account

                                                    0% 10% 20% 30% 40% 50% 60% 70% 80%
                                                          Base is active users of online banking.
                                                           Source: Compete, Inc., April 2007

     Fiserv, “Survey Finds Vast Majority of Consumers Willing to Use Mobile Banking with Anytime, Anywhere Access to Account Information and
     Financial Services,” media release, September 9, 2008.
     TowerGroup, “TowerGroup Estimates that Over 40 Million U.S. Consumers Will Use Mobile Banking by 2012,” media release, November 13, 2007.

                                                 Blueprints for Innovation     | Section 3

tHE SoLutIon

cuPay combines the benefits of existing retail payment technology with
the promise of emerging mobile technology. With cuPay, members
can complete point-of-sale transactions easily and securely using their
mobile phones.
CUPay will allow credit unions to determine appropriate                  Implementation of CUPay would require minimal
interchange fees charged to merchants for processing                     start-up and maintenance costs. CUPay relies on
transactions. However, nationwide interchange fee                        existing technology: ACH, a member’s mobile
standards would be set to ensure cooperation and fair                    phone, and the retailer’s existing point-of-sale (POS)
competition among credit unions, and retailers should                    equipment. Credit unions will not have to purchase
be able to reduce their transaction costs.                               additional equipment, issue expensive payment
                                                                         devices, or maintain costly reissue programs. For
Because transactions processed using the Automated                       retailers, the only equipment requirement, assuming
Clearing House (ACH) system cost significantly less                      they have an existing barcode scanner, is a low-cost
than traditional network transactions, credit unions                     piece of software that enables the retailer to accept
could direct a larger portion of interchange income                      these barcodes for payment.
toward developing a robust payments-based member
reward program. According to the Federal Reserve                         CUPay’s unique transaction barcode process provides
Bank of Kansas City, consumer payment choice is                          ultimate data security. The unique barcode provides
correlated with reward programs on payment cards.21                      the credit union with the merchant information it
Simply, cards that offer a reward program get used                       needs to settle the payment via ACH. There are no
more often than cards that don’t.                                        cards to issue or replace. Member account information
                                                                         cannot be compromised by retailers, because the data
                                                                         does not pass through the merchant’s system.

       MEMBEr BEnEFItS                                                    crEdIt unIon BEnEFItS
           Increased transaction security.                                    ability to meet the technology needs
                                                                              of Generation Y.
           access to a more substantial reward
           program.                                                           opportunity to transform the credit
                                                                              union image (to a technology leader).
           the ultimate in payment convenience.
                                                                              Increase member loyalty.
           Eliminate inconvenience from
           compromised plastic cards.                                         decrease expenses associated with
                                                                              reissuing plastic cards.


     Andrew Ching and Fumiko Hayashi, “Payment Card Rewards Programs and Consumer Payment Choice, Payments System Research,” Federal Reserve
     Bank of Kansas City, July 18, 2006,

                                        Meet Life’s Milestones | CUPay

tarGEt MarkEt

The ideal target market for CUPay is young adults aged   An additional target market is the business market,
21 to 34 (Generation Y) who utilize online services.     namely retailers. Due to transaction and interchange
These members are highly likely to adopt this new        fees and exposure to significant liability when handling
payment technology given their use of online services    and transmitting sensitive data, retailers—especially
and reliance on cell phones.                             those that target Generation Y and sell high-dollar
                                                         volume goods—should be a target market for CUPay.
Smartphone owners, early adopters of technology,
and business people who travel are also likely to be
interested in this payment system.

                                   How PrivateSecure™ Mobile POS Works

MarkEtInG tactIcS

CUPay cannot advance without participation from          the credit union. Retailers will gain recognition
retailers and members willing to test a new payment      and exposure as the credit union promotes the new
system.                                                  payment system to its members.

In-person sales will be required to secure merchant      Incentives should be used to drive word of mouth and
participation. Pricing models will be used to            influence adoption among credit union members.
demonstrate anticipated savings. Ideally, selected       Weekly drawings for iPhones, iPods, and similar
retailers would be located close to a credit union       technologies related to the payment delivery system
branch and/or have an existing relationship with         will stimulate interest.

                                           Blueprints for Innovation   | Section 3

      the number of compromised credit and debit card incidents is on the rise—bringing
      increased costs to credit unions and inconvenience and mistrust to consumers.

oPEratIonaL and otHEr conSIdEratIonS

A number of operational and other factors must be                 •	 Multifactor authentication. The member has
considered in the CUPay implementation process.                      a PIN to log in, which meets the single-factor
                                                                     authentication requirement. The second piece
       technology                                                    of authentication could come from Bluetooth or
                                                                     GPS technology, which verifies that the phone
       From a technology perspective, CUPay is a seamless,
                                                                     and member are in the geographic location that
       low-cost payment solution that capitalizes on the
                                                                     matches with the retailer code entered at the time
       strengths of existing technology:
                                                                     of purchase.
     •	 Payment       Device.      Member-owned          and
        maintained. CUPay uses existing technology to                  Financial Impact
        transmit barcodes to the member during a POS                   Given that credit unions, like all financial
        transaction. This type of technology is already                institutions, derive a great deal of income from
        used by billions of cell phone users and is available          credit card interchange income, they may be slow
        on most smartphones.                                           to immediately embrace change. Understanding
                                                                       the impact to the credit union’s balance sheet will
     •	 Payment settlement. CUPay utilizes the existing                be an important step prior to implementing the
        ACH framework. Member payments are settled                     product.
        with merchants via ACH.
                                                                       Marketplace competition
     •	 Point-of-sale equipment. CUPay uses existing                   The worldwide payments landscape is rapidly
        LED or image-based barcode readers, which are                  changing. Japanese consumers can pay for items at
        currently used by many merchants worldwide. The                vending machines using their cell phones. Many
        software needed for CUPay can be integrated into               U.S. consumers, however, are still wedded to cash
        existing hardware at the retail location. Retailers            and checks as their primary payment mechanisms.
        do not need to adopt or pay for new hardware.                  Others utilize the plastic card system, which
                                                                       generally operates quite efficiently. Where CUPay
       regulatory considerations                                       adds value to consumers is in the arena of fraud
       From a regulatory perspective, CUPay must                       elimination.
       address two important regulations to become
       widely adopted:

     •	 electronic Funds Transfer act (regulation
        e). Regulation E, which provides protection for
        consumers regarding dispute resolution, is an
        important consideration. For CUPay, the software
        application that the phone uses to process the
        transaction—not the phone itself—is required to
        be Regulation E compliant. The application Filene
        i3 used for the pilot, PrivateSecure Mobile POS, is
        Regulation E compliant.

                                                    Meet Life’s Milestones | CUPay

ProoF oF concEPt

The CUPay i3 team worked with a company, Metafos,                            PrivateSecure Mobile will include applications for
to demonstrate how this technology works using                               both POS and person-to-person transactions. The
its solution, PrivateSecure. A number of companies                           person-to-person method was successfully tested by
have the capacity to provide a platform for a system                         the CUPay team.
like CUPay. However, from economic and security
standpoints, Metafos provided an ideal platform for                          In the future, CUPay must also be able to provide a
the CUPay team to illustrate the valuable opportunity                        proof of concept for the POS version of PrivateSecure
that exists for credit unions, retailers, and members in                     Mobile. Once this key step is accomplished, the
the POS process.                                                             process of getting started moves from technology
                                                                             development to business development. The business
Metafos’s PrivateSecure Mobile POS is a new paradigm                         development process will result in a comprehensive
in authorization and settlement. PrivateSecure provides                      merchant program for deployment, as well as a
the ability to authorize at the point of sale without                        strategy for engaging consumers and retailers through
sending a credit union member’s account information                          credit unions.
through the network. PrivateSecure verifies funds by
providing the purchase dollar amount to the credit                           According to the Filene i3 team, the ultimate vision for
union for verification and authorization. PrivateSecure                      CUPay requires the technology to be purchased, white-
ties the merchant identification information to the                          labeled, and delivered as a single credit union industry
transaction detail and transmits this for settlement at                      solution. Ideally, this would happen through a credit
the merchant’s bank or credit union.                                         union service organization that is owned and operated
                                                                             on behalf of all credit unions.

GEttInG StartEd

    Visit for
    CUPay product development updates as they
    become available.

                    Mike Fletcher, Point West Credit Union, Portland, OR; Nan Morrow, Centra Credit Union, Columbus, IN; Rob Folsom, USA Federal Credit Union,
                                 San Diego, CA; Rebecca Secor, Member Loyalty Group, Kenosha, WI; Kevin Johns, TruWest Credit Union, Austin, TX

                   Blueprints for Innovation   | Chapter 4

     pullIng togetHer tHe IngredIents to
     Help famIly members wHo need It most.

tHE oPPortunItY

The sandwich generation is commonly defined as the                           financial aid, or 500 hours of other assistance), and
generation of people who are caring for aging parents                        support for children (defined as co-residence of a child
while supporting dependent children or grandchildren.                        under age 21, support in college, $1,000 of financial
Ranging in age from the mid-30s to the mid-60s,                              aid, or 500 hours of other assistance).22 On average,
members of the sandwich generation frequently feel                           these women spend $10,000 and 1,350 hours each year
overwhelmed by their numerous responsibilities.                              helping their children and parents.
Squeezed between simultaneous demands, they
spend time away from work visiting the doctor,                               In January 2008, a Filene i³ team surveyed 421
filling prescriptions, and cooking meals in addition                         employees of three credit unions: Navy Federal Credit
to attending children’s events, running errands, and                         Union ($35 billion) in Merrifield, VA, Rogue Federal
helping with homework. They have little time for                             Credit Union ($409 million) in Medford, OR, and
themselves and worry about their financial situations.                       MidWest Financial Credit Union ($186 million) in
                                                                             Ann Arbor, MI. Results from the survey—based on 149
The Pew Research Center indicates that one in every                          respondents (35% response rate)—revealed that 96%
eight Americans aged 40 to 60 is both raising a child and                    of sandwich generation members would use a resource
caring for a parent. An in-depth analysis of data from the                   tool, if available, to help them with parental finances,
National Longitudinal Survey of Young Women reveals                          medical options, Social Security, and assistance with
that 9% of 45- to 56-year-old women provide support                          medical care or some form of assisted living.
for parents (defined as either co-residence, $1,000 of

                      Sandwich Generation Members’ Readiness to Deal with Caring for Aging Parents

                          Would use a resource tool
                         for these issues if available                                               96%

                          Not prepared financially to
                               deal with such issues                                        77%

                Have had conversations with parents
                      about parents’ financial future                                63%

                        Know their parents wishes if
                      eldercare becomes necessary                                 60%

                       Have discussed eldercare for
                     their parents with their siblings                     48%

                                                         0%   20%   40%        60%         80%      100%
                                          Base is the 34% of credit union employees that consider themselves
                                            part of the sandwich generation. Source: Filene i3 Survey, 2008

     Charles R. Pierret, “The ‘Sandwich Generation’: Women Caring for Parents and Children,” Monthly Labor Review 129(9), September 2006: 3-9.

                                            Blueprints for Innovation    | Section 3

tHE SoLutIon

The Sandwich Generation Recipe provides trustworthy                •	 national association       of   social   workers
insight and information for those dealing with or                     (resources on aging).
planning to deal with sandwich generation issues using
a single, easy-to-access resource originating from a               •	 working Caregiver (resources to help families
                                                                      with parent care decisions, including a senior
credit union’s Web site. It includes the following links:
                                                                      services directory).
     •	 360 Degrees of Financial Literacy provided
        by the American Institute of Certified Public              •	 Family Caregiving 101 provided by the National
        Accountants (articles, tools, and frequently asked            Family Caregivers Association and the National
        questions on budgeting, health care and insurance,            Alliance for Caregiving (basic tools, skills, and
        housing, long-term and dependent care, Social                 information to protect caregivers’ physical and
        Security, etc.).                                              mental health while they provide high-quality care
                                                                      for their loved one).
     •	 eldercare Locator provided by the U.S.
        Administration on Aging (locating eldercare                •	 Financial Caregiving: a survival Guide provided
        providers by ZIP code, city, and county).                     by the FDIC (financial tips, information, and
                                                                      resources for those called upon to care for a needy
                                                                      relative or friend).
     •	 Benefits Check Up provided by the National
        Council on Aging (helps people find and enroll
                                                                 In addition, the credit union should provide
        in federal, state, local, and private programs that
                                                                 links to relevant financial products and services,
        help pay for prescription drugs, utility bills, meals,
                                                                 including long-term savings options, trust services,
        health care, and other needs).
                                                                 investments, insurance, and Web-based bill pay that
                                                                 will help sandwich generation members manage
     •	 Medicare provided by the U.S. Department of              their time and finances.
        Health and Human Services (eligibility tools, plan
        choices, claims, etc.).

tarGEt MarkEt

The target market for the Sandwich Generation Recipe             someday be) simultaneously caring for both parents
is members aged 40 to 55 who are (or who may                     and dependent children.

      MEMBEr BEnEFItS                                            crEdIt unIon BEnEFItS
         access to critical information provided                        Build or strengthen relationships
         by a trusted advisor.                                          with existing members.

         realization that the credit union                              attract new members.
         provides more than checking and
                                                                        opportunity to refer to trust, insurance,
         savings accounts; it can be a partner
                                                                        and investment products.
         and resource for other financial tools.

         access to pertinent information and
         benefits for different life stages.

                                 Meet Life’s Milestones | Sandwich Generation Recipe

MarkEtInG tactIcS

Traditional marketing tactics can be used to create            Frontline staff interactions will be pivotal to the success
awareness of the Sandwich Generation Recipe. Direct            of this Web-based resource. Staff, including investment
mail and email can be used to communicate with                 and insurance services representatives, must be trained
members. Newsletter articles, lobby posters, Web site          on what is being offered and how it works to be able to
banner ads, and Web site links from related topics             demonstrate to members how to navigate the Web site
can be used to stimulate interest among members.               and make use of the resources for ongoing questions
Furthermore, credit unions that host educational               and answers.
seminars on estate planning, long-term care, and other
topics of interest to aging baby boomers can include
this resource in their presentations.

                            Percentage of Baby Boomers (Ages 41 to 59) Providing
                                 Financial Support in the Past Year to a Child
                                                17%               1%

                                                                                                 Provide primary financial
                                                                                                 support to children
                                                                                                 Gave some financial support
                           15%                                                                   to children
                                                                                                 Gave no financial support
                                                                                                 to children
                                                                                                 Have no children
                                                                                                 Don’t know


                 Source: Pew Research Center, “From the Age of Aquarius to the Age of Responsibility,” 2005

                             Percentage of Baby Boomers (Ages 41 to 59) Providing
                                 Financial Support in the Past Year to a Parent

                                                                                                 Did not provide financial
                                                                                                 support to a parent
                                                                                                 Gave financial support
                                                                                                 to a parent
                                                                                                 Have no living parents



                 Source: Pew Research Center, “From the Age of Aquarius to the Age of Responsibility,” 2005

                                              Blueprints for Innovation            | Section 3

oPEratIonaL and otHEr conSIdEratIonS

The Sandwich Generation Recipe should be customized                        citizens. Each credit union will need to add links to
according to the credit union’s portfolio of products                      appropriate state and local resources to its Web site in
and services targeted toward baby boomers and senior                       addition to the federal resource links provided.

ProoF oF concEPt

A prototype for the Sandwich Generation Recipe was                         to the Web page. The survey asked visitors to identify
developed and tested by MidWest Financial Credit                           whether the information was useful, what information
Union ($186 million) in Ann Arbor, MI. In addition                         was most useful, whether they would recommend
to the various Sandwich Generation Recipe resource                         the resource to their friends, and suggestions for
links, a survey link requested feedback from visitors                      improvement.

GEttInG StartEd

To position your credit union as a credible resource for
such information:

1      Develop a marketing and training plan.
2      Add the Sandwich Generation Recipe resource
       page to the credit union Web site.

      Visit for the
      Sandwich Generation concept document.
     SandWIcH GEnEratIon/
           cu 2020

                            Tom Gisewhite, MidWest Financial Credit Union, Ann Arbor, MI; Jeanne Pickens, Rogue Federal Credit Union, Medford, OR;
                                                             Susan Brooks, Navy Federal Credit Union, Vienna, VA

                                         Meet Life’s Milestones | CU 2020

cu 2020

The Filene i3 team members who generated the              first: Grow the conversation.
Sandwich Generation Recipe found themselves
considering broader issues related to the future of         •	 Start	at	the	local	level	through	leadership	
the Credit Union System. Their discussion led to the           teams and in board rooms.
development of a data-gathering process referred to         •	 Build	at	the	state	level	by	partnering	with	
as CU 2020, designed to create meaningful dialogue             other credit unions and leagues.
and bring focus on the future.                              •	 Go	industrywide	at	association	and	vendor	
From the beginning, credit unions have been about
people helping people. They found a niche by              Next: combine with Key Questions.
serving people looking for an alternative to loan
sharks. But what role will credit unions play in the        •	 Are	credit	unions	relevant	in	today’s	financial	
financial services space in the year 2020? Here is the         services marketplace?
i3 team’s recipe for generating dialogue and ideas.         •	 Are	they	gaining	market	share?	
                                                            •	 Have	credit	unions	become	a	commodity,	
                                                               easily interchangeable with banks?
Credit Union Annual Average Membership Growth               •	 So	what	is	the	niche	today?	
12%                                                         •	 What	might	credit	unions	do	to	further	
                                                               differentiate themselves to help ensure market
10%                                                         •	 Can	credit	unions	achieve	sustainability	by	
                                                               following their traditional business model,
 8%                                                            or should credit union leaders be looking to
                6.7%    6.7%                                   develop a new business model for the future?
                                                          finally: explore. focus. execute.
                                 3.9%                     The success of CU 2020 largely depends on the
                                                          willingness of a key trade association or industry
                                                          vendor to provide the forum for this discussion
 2%                                                       to occur. In addition, participation by a large
                                                          and varied group of credit union executives
 0%                                                       and industry experts is the key to obtaining
       1950s   1960s    1970s    1980s   1990s    2000-   and generating innovative ideas and discussion
                                                          regarding a future credit union business model.
  Source: NCUA and Credit Union National Association as
    published in “Recent Credit Union Growth Trends,”
      CUNA Economics & Statistics, June 11, 2008.

         Blueprints for Innovation   | Chapter 4

     could restructurIng loans actually
     reduce losses and retaIn members?


tHE oPPortunItY

Nine in ten Americans will get married at least once                           increased likelihood of loan defaults. Credit unions
over the course of their lives.23 Unfortunately, at least                      must also worry about salvaging account relationships,
half of all marriages end in divorce, and many more                            because some members may think it’s easier to close
Americans will eventually lose their spouse or significant                     former joint accounts and start anew at different
other due to separation or death. When relationships                           financial institutions.
end, the financial stakes are high. Attorneys help sever
the relationship or manage the estate, while friends                           Survey findings also reveal that 3 in 10 credit union
and family provide emotional support. But where                                members (29%) had already experienced an event
can members go for financial advice and help with                              where they had to remove a joint owner from an
transitioning from joint to single accounts, retitling                         account, most often as a result of separation or divorce.
assets, and modifying loans to remove a joint owner?                           Had they been available, members may have used
A recent survey conducted by Filene i³ indicates that,                         credit union services to modify loan ownership, switch
second to family, members say they would turn to                               checking accounts, and change names on official
their credit union for financial advice when facing a                          documents, among others.
life event.24
                                                                               Despite the need for accurate, practical information
Millions of credit union members with jointly held                             and assistance, few resources are currently available to
finances will eventually go through the complicated                            the everyday consumer. In fact, many of the sites that
process of untangling joint accounts, loans, and                               allegedly contain pertinent information on what to do
investments during an incredibly difficult period of                           with finances during a divorce are sponsored by divorce
their lives. For a credit union, concerns include the                          attorneys looking for new clients.

     Daniel Lichter and Zhenchao Qian, “Marriage and Family in a Multiracial Society,” Russell Sage Foundation and the Population Reference Bureau,
     December 2004.
     Results of a survey posted on the Web sites of American Airlines Credit Union, Point West Credit Union, and USA Federal Credit Union, 2008.

                                               Blueprints for Innovation    | Section 3

                                    Percentage of Members Who Would Use Services to
                                  Remove Joint Accountholder If Offered by the Credit Union

        Loan modification that
          removes joint owner                                                                   69%

          Checking switch kit                                                    50%

 Web links or forms to change
        name on official docs

In-person financial counseling                                          42%

            Credit monitoring                                     35%

                   Tax advice                         22%

           Budget calculators                        19%

                                 0%   10%      20%      30%      40%       50%     60%      70%       80%

                             Base is members who found it necessary to remove a joint owner from an account.
                                                    Source: Filene i3 survey, 2008

  tHE SoLutIon

             Single Again provides easy-to-implement                    •	 Consumer and Mortgage Loan Modifications.
             resources for credit unions to use when                       One of the most innovative pieces of the site is
             helping members who are experiencing                          the loan modification information. The process is
             divorce, separation, or death of a spouse or                  clearly outlined, and documents are provided to
              significant other. The solution consists of a                allow members to apply for loan modifications.
                  Web site map and page contents that can                  This process allows the credit union to modify
                  be easily adapted for credit unions with                 loans from joint borrowers to single borrowers
                  a few minor edits of proprietary names,                  without requiring a full application, underwriting,
                   logos, and quick links, including:                      or changing the terms of the agreements.

                  • Checklists for Divorce and                          •	 Frequently asked Questions (FaQs). Answers to
                 Death. Financial checklists provide a                     FAQs are provided for both separation and death
               comprehensive list of steps to take after                   of a loved one. Because procedures vary from
               separation or divorce and loss of a loved                   state to state, the answers are general in nature.
               one.                                                        Individual credit unions may want to update or
                                                                           add resources.
               •		Changes to accounts and Opening new
               accounts. While members understand the                   •	 Useful Links. Each credit union will be able to
               need to make changes to their accounts,                     customize a set of links to external resources such
               they tend to not understand the legalities                  as the motor vehicle department, Social Security
               of ownership and responsibility. Member                     Administration, state child support departments,
               concerns are addressed in simple-to-                        budgeting materials, credit reporting agencies,
                understand terms as they are guided to                     calculators, and other useful resources.
                other links in the credit union Web site.

                                         Meet Life’s Milestones | Single Again

tarGEt MarkEt

The occurrence of divorce, separation, or death affects a     Again is any member who needs to reorganize personal
broad range of consumers. The target market for Single        finances due to the departure of a partner.

                  Percent of U.S. Population Who Are Widowed and Divorced By Age, 2006
                            Widowed                                                 Divorced






           18 -     25-    35-     45-     65-     75              18 -    25-     35-     45-      65-     75
           24       34     44      64      74      +               24      34      44      64       74      +
              Men         Women       Source: U.S. Census Bureau, America’s Families and Living Arrangements, 2006

MarkEtInG tactIcS

Due to the sensitive and very personal nature of              are trained to discuss these matters. By
divorce, separation, and death, marketing must be             building understanding and empathy
a thoughtful combination of awareness building,               into each interaction, staff can build
education, and training.                                      long-lasting relationships as they
                                                              support members who experience such
Low-key, straightforward emails and newsletters can           life-altering events.
be used to create awareness via regular credit union
communication channels. For example, if the Single            Single Again fits a credit union’s mission
Again information is added to a credit union’s life           to provide financial education. Credit
events or life stages section of its Web site, members        unions offering Single Again could
can be notified of a new addition.                            reach out to divorce and death support
                                                              groups by offering to provide information
For members who prefer to deal directly with a credit         or present seminars on dealing with the
union representative, it is imperative that frontline staff   financial impact of these events.

                                         Blueprints for Innovation   | Section 3

oPEratIonaL and
otHEr conSIdEratIonS                                               MEMBEr BEnEFItS
                                                                       access to critical information from a
All financial institutions provide a means for changing                trusted advisor.
deposit account ownership due to separation, divorce,
or death of accountholders, whether through retitling                  clarity and closure regarding
the accounts or closing them to open new ones. These                   splitting property and debts.
processes involve little or no risk to the credit union.
Loan accounts do pose a different problem, which is                    ability to reorganize finances and
addressed by the Single Again program. While allowing                  start anew.
a member to remove a coborrower could be construed
as adding risk to the loan, it’s also possible that such an
action could, in fact, save the loan for the credit union.         crEdIt unIon BEnEFItS
By using loan modification documents and assessing
a fee to mitigate potential losses, the credit union can               Strengthen relationships with
potentially preserve the entire financial relationship.                members.

                                                                       retain members.

                                                                       Minimize delinquencies and

                              Primary Source of Advice When Facing a Life Event



                                                                                           Credit union
                                                                                           Family member

                                   36%                                             3%


                                              Source: Filene i3 survey, 2008

                                                        Meet Life’s Milestones | Single Again

ProoF oF concEPt

Two credit unions, American Airlines Credit Union                                     In addition, the following three credit unions have
($4.8 billion) in Fort Worth, TX, and Point West                                      since added the Single Again checklists and/or FAQs
Credit Union ($104 million) in Portland, OR, adapted                                  to their Web sites:
the Single Again materials for their Web sites and
rolled them out in March 2008. At both credit unions,                                    •	 Carolina	Postal	Credit	Union	($65	million),	
a segment of the membership was notified via email                                          Charlotte, NC
that the Single Again information had been added to                                      •	 Greensboro	Municipal	Credit	Union	
the credit union’s Web site. While the click-through                                        ($32 million), Greensboro, NC
statistics below represent early response to email                                       •	 Rocky	Mountain	Law	Enforcement	Federal	
notifications, the nature of Single Again better lends                                      Credit Union ($136 million), Denver, CO
itself to long-term measurements as members find
themselves in a position to need the information.

                                                               Point West Credit Union                                American Airlines Credit Union

                                                            Number                        Percent                       Number                        Percent

                    Email to members                          1,781                                                      68,898
                    Message opened                              295                         16.8%                         9,964                        14.5%
                     Click-throughs                             28                          9.5%                           182                          1.8%

GEttInG StartEd

1    Adapt the predesigned Web site map and page                                             Visit for a
     contents to match the look and feel of the credit                                       Web site map and page contents for Single Again.
     union’s Web site.
2    Develop loan modification forms that work
     within the framework of the credit union’s
     current lending policies and state requirements.
     SInGLE aGaIn

                                            C. Lee Brice, Desert Schools Federal Credit Union, Phoenix, AZ; Caroline Redmann, Heritage Credit Union,
                                Madison, WI; Lori Hall, American Airlines Federal Credit Union, Fort Worth, TX; Mike Fletcher, Point West Credit Union, Portland, OR;
                                                                    Robert A. Folsom, USA Federal Credit Union, San Diego, CA

              Blueprints for Innovation   | Section 3

n    ot e s

sectIon 4
How to Help members…
  Airport Oasis Lounge

  First Step Program

                  Blueprints for Innovation   | Chapter 4

     relax. refresH. recHarge.
     for credIt unIon members only.

tHE oPPortunItY

air travel often involves long waits, missed flights, stressful delays, and
the hassle of rigorous security. Some frequent flyers receive an option
to visit a private airline lounge as a quiet and civilized escape from the
masses. But not everyone is afforded this opportunity.
A 2004 market research study determined that 39% of                          In addition, the demographics of airline travelers are
U.S. adults (92 million Americans) took at least one                         strikingly similar to those of credit union members.
round-trip airline flight during the past year.25

tHE SoLutIon

America’s Credit Union’s Airport Oasis Lounge is                                •	 Light	refreshments.
designed to reduce the hassle and stress of air travel                          •	 Free	wireless	Internet	access.
by offering credit union member-only lounges                                    •	 Free	 recharging	 stations	 for	 cell	 phones,	 PDAs,	
in major airports across the United States. These                                  laptops, and iPods.
lounges would provide members a place to relax,                                 •	 Surcharge-free	 ATM	 or	 shared	 branching	 access	
refresh, and recharge while waiting for their flights.                             via a kiosk with the ability to manage money and
As envisioned, each Airport Oasis Lounge would                                     withdraw cash at no charge.
provide the following:                                                          •	 News,	 information,	 and	 up-to-the-minute	 flight	
                                                                                   status reports.
                                                                                •	 Temporary	luggage	storage	for	those	who	wish	to	
                                                                                   shop and browse the airport.

     The Arbitron Airport Advertising Study: Exploring an Undiscovered Upscale Medium, 2004.

                                          Blueprints for Innovation    | Section 4

     MEMBEr BEnEFItS                                           crEdIt unIon BEnEFItS
       access to comfort and convenience                              Increase community awareness
       while waiting for flights.                                      of the credit union brand.

       ability to obtain fee-free, last-minute,                       attract new credit union members.
       or emergency cash.
                                                                      Build brand loyalty by reinforcing the
       realization that the unique benefits                           value of credit union membership.
       of credit union membership extend
       throughout the community and
       across the country.

tarGEt MarkEt                                                  Member Likelihood of Using Airport Oasis Lounge...

                                                                        ...If Provided as a Free Member Benefit
The target market for the Airport Oasis Lounge is
credit union members and potential members who                                                            3%
travel by air.

MarkEtInG tactIcS

A myriad of marketing and advertising campaigns will
be needed to ensure that the Airport Oasis Lounge                                           Very likely
achieves its objectives. First, a regional or national                                      Somewhat likely
advertising campaign would be developed and utilized
to create awareness of the Airport Oasis Lounge
locations and to highlight the benefits of membership                      ...If Provided With a Fee Attached
and the credit union brand. Second, individual credit
union partners would want to use traditional marketing                                      38%
tactics within their fields of membership to create
awareness of this new member benefit. Finally, airport
signs and advertising displays would be necessary to                                                         11%
direct members to the Airport Oasis Lounge while
reinforcing the credit union brand. Due to long
waiting times and the fact that many business people                             51%
travel solo, many air travelers notice and read airport
advertising. The latest airport advertising medium is
                                                                                          Very likely
the plastic bins utilized by airport security; at least four
U.S. airports are selling ad space on the inside bottom                                   Somewhat likely
of the tubs.                                                                              Would not use

                                                                       Source: Survey of Affinity Federal Credit Union and
                                                                         Coastal Federal Credit Union members, 2008

                                Make Community Connections | Airport Oasis Lounge

oPEratIonaL and otHEr conSIdEratIonS

A significant cooperative partnership between               preferably at a mid-sized airport due to costs, space
individual credit unions, credit union system               availability, open-mindedness, and approachability.
providers and trade associations, and airport retail        Baltimore/Washington International Airport (BWI)
developers and managers must exist to bring                 was suggested as an ideal pilot location given its
this program concept to life. The final product             proximity to Washington, DC, where the Airport
concept, operating costs, and funding must all be           Oasis Lounge could become a symbol of credit union
addressed once interested parties are determined.           collaboration and differentiation in the eyes of our
A prototype needs to be developed and piloted,              country’s lawmakers.

ProoF oF concEPt

A survey was conducted among members of Affinity            In addition, a meeting was secured with the vice
Federal Credit Union ($1.8 billion) in Basking Ridge,       president of BAA USA (an airport retail development
NJ, and Coastal Federal Credit Union ($2 billion) in        and management firm), who is also the general manager
Raleigh, NC, to measure interest in the airport lounge      of BWI. Initial feedback was generally positive, and
program concept. The vast majority (85%) of the             BAA believes the concept is doable. However, airport
1,400 member respondents indicate that they travel          retail space is expensive, and profitability would
at least two or three times a year. In addition, 92%        be difficult to achieve. BAA suggested a number of
of respondents expressed interest in the Airport Oasis      alternative ideas such as strategic partnerships between
Lounge concept, with two-thirds of survey respondents       businesses and individual credit unions and/or the
“very interested” in the idea. As expected, members         credit union system:
would be much more likely to use the airport lounge
if it was provided as a free member benefit than they         •	 BAA	and	credit	unions	could	partner	to	develop	
would if it required an annual or per-use fee. However,          and install recharging stations powered by
11% of members would be very likely to use the airport           America’s credit unions in the space formerly
lounge even if it cost to do so.                                 occupied by pay phone booths.
                                                              •	 Credit	 unions	 could	 negotiate	 with	 the	
The Airport Oasis Lounge concept was also shared with            Transportation Security Administration to provide
a large number of industry business partners at CUNA’s           expedited security screening for credit union
2008 Governmental Affairs Conference in Washington,              members.
DC. Financial Services Center Cooperative leadership          •	 Individual	 airlines	 may	 be	 willing	 to	 negotiate	
expressed interest in the concept and helped to develop a        a low-cost flat-rate upgrade fee for credit union
shared branching kiosk model that could be used in the           members or a deal that allowed member access to
lounge setting. Interchange fees derived from the shared         existing airport lounges.

                                                                  a ll k in d s o f o p t io n
branching kiosks could contribute to overall lounge
operating expenses.

                          Blueprints for Innovation     | Section 4

                          Time Spent in the Airport Terminal

                                                                                     Less than 30 minutes
                                                                                     30 minutes to 1 hour
                                                                                     More than 1 hour
                                                                                     Don’t know


               Base is Americans who have used airline travel in the past year.
                   Source: The Arbitron Airport Advertising Study, 2004

            Percentage of Americans Who Notice Advertising at the Airport




                         Air Travelers                         Frequent Flyers

                  Base is Americans who have used airline travel in the past year.
                   Note: Frequent flyers make four or more round-trips per year.
                       Source: The Arbitron Airport Advertising Study, 2004

                                      Make Community Connections | Airport Oasis Lounge

GEttInG StartEd

1   Consider applying this concept to other areas—                             2        Contact BAA USA and BWI for guidance and
    like shopping malls, train stations, stadiums,                                      to explore codevelopment opportunities.
    or festivals. Wherever there are large gatherings
    of people, there is an opportunity for a credit                                   Visit for the
    union to create a member oasis.                                                   complete concept document.
    aIrPort oaSIS LounGE

                           David Snodgrass, Affinity Federal Credit Union, Basking Ridge, NJ; Troy Stang, Credit Union Association of Oregon, Beaverton, OR;
                                                                David Faleski, Coastal Federal Credit Union, Raleigh, NC

                   Blueprints for Innovation   | Chapter 4

     uncoverIng tHe opportunIty to serve
     tHe unbanked and underserved.

tHE oPPortunItY

In the united States, an estimated 52 million consumers are considered to
be unbanked and an additional 55 million are considered underbanked.26
This group of consumers can be taken advantage                                  alone. Many of these consumers avoid traditional
of by businesses such as check cashers and payday                               financial institutions due to cultural bias; a lack
lenders. While these businesses legitimately offer a                            of financial education; or the view that banks and
needed service, they continue to thrive by charging                             credit unions are unwelcoming, inconvenient, or
exorbitant rates and fees to cash checks and provide                            untrustworthy. Community-based organizations
payday loan advances. Over a lifetime, the average                              recognize the challenges that many unbanked
full-time, unbanked worker can expect to spend                                  consumers face. Most importantly, they have the
more than $40,000 in check-cashing fees alone.27                                trust of their clients. The challenge is that, like most
                                                                                nonprofit community-based organizations, they
Credit unions have a crucial role to play in the                                have limited resources. In addition, their primary
efforts to educate and serve the unbanked and                                   focus may be housing, job placement, etc.—not
underbanked, but they can’t solve the problem                                   consumer financial services.

tHE SoLutIon

The First Step Program proposes a win-win-win                                   financial service providers. The key is to seek out CBOs
situation for credit unions, community-based                                    in close proximity to a credit union branch that offer
organizations (CBOs), and consumers.                                            support programs for families, the underemployed,
                                                                                immigrants, and minority populations. Working with
Through a partnership, CBOs—such as Goodwill                                    local government officials may be critical to gaining the
Industries, Ecumenical Social Ministries, the Salvation                         support of local CBOs. They can help to bring on other
Army, Lutheran Social Services, and many others—can                             partners, give the effort credibility, and attract media
help credit unions to attract new members. In exchange,                         attention.
credit unions can help CBOs by providing their clients
with financial education and by offering a step-by-                             Participating credit unions work closely with an
step process that will ease them into credit union                              appropriate CBO partner to offer financial education
membership and away from high-cost and predatory                                at a venue that is neutral and nonthreatening and

     Unbanked consumers are those with no checking or savings account. Underbanked consumers are those with a checking or savings account who have
     made one or more nonbank financial transactions in the past 30 days (Center for Financial Services Innovation, Underbanked Consumer Study, 2008).
     Matt Fellowes and Mia Mabanta, “Banking on Wealth: America’s New Retail Banking Infrastructure and Its Wealth-Building Potential,” Metropolitan
     Policy Program, Brookings Institution, 2008.

                                                     Blueprints for Innovation       | Section 4

tHE SoLutIon contInuEd

leverages the trust between the client and the CBO.                              2. Products:
Typical educational course offerings include English
as a second language, employment preparation and                                    The credit union should offer a low-cost,
workplace education, parenting skills, computer basics,                             nonmember check-cashing service. Priced below
basics of personal finance, and others.                                             market cost at 1% to 2% for payroll checks, this
                                                                                    introductory service establishes the value of credit
The extent of existing educational offerings at CBOs                                union involvement and slowly builds trust with
will vary. Some community-based organizations may                                   unbanked clients.
already have financial education programs in place.
As a partner, the credit union could then offer to                               3. Credit Union Membership:
teach classes. Others may have computer labs where
consumers can complete online classes if the credit                                  •	 A	 First	 Step	 savings	 account.	 One-half	 of	 the	
union provides the educational modules. Many                                            check-cashing fee is deposited into this account
however, will not have a financial education program in                                 each time a member cashes a check, building
place. Credit union partners can then design their own                                  over time to a savings goal of $100.28
programs as a prerequisite for the First Step Program                                •	 Optional	 First	 Step	 prepaid	 debit	 card.	 The	
using open source curricula like those offered by the                                   member is offered an option of loading the
National Endowment for Financial Education.                                             remainder of his or her check onto a prepaid debit
                                                                                        card, which will provide added safety for those
Whether a credit union decides to partner with an                                       who routinely carry large amounts of cash.
organization that already has a program in place or                                  •	 Free	 money	 orders	 or	 cashier’s	 checks	 to	 pay	
decides to create a program, financial education is a                                   bills such as rent.
critical component of the First Step Program.                                        •	 After	 saving	 $100,	 members	 can	 open	 a	 First	
                                                                                        Step checking account and stop paying the
     1. Outreach:                                                                       check-cashing fee. The $100 will serve as
                                                                                        overdraft protection to eliminate nonsufficient
        A key goal of the First Step Program is to make                                 funds and courtesy pay fees.
        clients feel comfortable in a credit union. To ease                          •	 Ongoing	 financial	 education	 such	 as	 how	 to	
        unbanked and underbanked consumers into the                                     clear a ChexSystemsSM record, the importance
        prospect of developing a relationship with a financial                          of savings, understanding loan terms, and
        institution, credit unions can provide their partner                            improving credit scores, in conjunction with
        CBOs with a welcome card or brochure that can                                   the CBO.
        be offered when the time is right. The welcome
        material offers recipients a sense of belonging and                   The intent is to help consumers improve their financial
        also provides a continuum of products designed to                     lives and provide financial stability by moving through
        introduce them to credit unions.                                      the First Step Program.

    “Partnerships between established credit unions and community
organizations can be mutually beneficial, fulfilling a community group’s
goal of increased access to financial services for lower-income
families, and helping credit unions expand their membership.” —the
Woodstock Institute

     Peter Tufano and Daniel Schneider, “Using Financial Innovation to Support Savers: From Excitement to Coercion,” Working Paper, 2008.

                                   Make Community Connections | First Step Program

                                        U.S. Adult Population by Banked Status



        Note: Unbanked consumers are those with no checking or savings account. Underbanked consumers are those with a
            checking or savings account who have made one or more nonbank financial transactions in the past 30 days.
                                       Source: CFSI Underbanked Consumer Study, 2008

tarGEt MarkEt
                                                                   MEMBEr BEnEFItS
Consumers who use the services provided by CBOs are                    obtain tools to improve their
the target market for the First Step Program, as they are
                                                                       financial lives.
often in need of affordable financial services.
                                                                       access affordable financial services.
MarkEtInG tactIcS
                                                                   crEdIt unIon BEnEFItS
Promotion of the First Step Program will be closely tied
with outreach offered by the partnering CBOs. Each                     recruit new members.
credit union’s tactics will differ, depending on local
demographics and service needs. Credit unions should                   demonstrate commitment to serving
customize and print the standard First Step Program                    the underserved and people of
welcome card/brochure for CBOs to use with their                       modest means.
clients. It will also be important to develop contacts
and relationships with institutions that could serve                   contribute to local economic
as messengers to the unbanked demographic such as
schools, unions, churches, county welfare programs,
community colleges, and businesses with significant
numbers of entry-level jobs.

oPEratIonaL and otHEr conSIdEratIonS

Compliance and technical issues surrounding the First           on the host system to accommodate the product—
Step Program that need to be addressed include the              for example, specific overdraft limits and minimum
need to set policy for accepting foreign identifications        balances. In addition, the credit union may wish to
to open accounts and the need to set up parameters              select and contract with a prepaid debit card provider.

                                         Blueprints for Innovation   | Section 4

ProoF oF concEPt

This program is a natural fit with the National Credit        is currently under development, and check-cashing and
Union Foundation’s REAL Solutions program. In                 individual development accounts are being considered.
fact, some REAL Solutions partner credit unions               CEO James Blake indicates that the purpose of
have successfully implemented programs that involve           establishing these partnerships is to get local minority and
partnering with community-based organizations:                immigrant populations to trust HarborOne, enabling
                                                              the credit union to combat various predatory financial
HarborOne Credit Union ($1.6 billion) in Brockton, MA,        practices. HarborOne was able to track $1,170,331 in
established a MultiCultural Banking Center connected          deposits and $11,286,046 in loans in the Center’s first
to one of its branches. HarborOne Credit Union                year as a direct result of its opening.
has partnerships with 14 CBOs such as the Brockton
Workforce Investment Board, Training Resources of             Prospera Credit Union’s GoodMoney program is a
America, and Signature Healthcare-Brockton Hospital           collaboration between the credit union ($145 million)
that use the facility as a meeting place and a base for       in Appleton, WI, and Goodwill Industries of North
distributing social services. The Center offers courses       Central Wisconsin. Two specialized service branches
in the basics of personal finance, English for speakers       located in Goodwill stores deliver payday loans,
of other languages, credit and foreclosure counseling,        bill payments, and wire transfers at affordable rates.
and first-time homeownership. Community partners              GoodMoney also provides access to the Menasha-
that occupy office space in the MultiCultural Banking         based Financial Information & Service Center, where
Center include Neighborhood Housing Services, South           financial workshops, money/budget counseling, and
Shore Housing, and Self Help. After completing the            debt management plans are offered to help people
eight-week financial education class, the student receives    better understand and manage money. The combination
a credit review, a second-chance checking account, and a      of reduced-fee services and financial education
$500 line of credit. Other products designed specifically     opportunities makes GoodMoney a unique concept and
for MultiCultural Banking Center visitors include micro       an innovative model for similar endeavors throughout
loans, a citizenship test loan, and volunteer income tax      the credit union industry.
assistance. In addition, a payday loan product alternative

     “community-based nonprofits make strong collaborators. Being
on the ground gives them a unique advantage because of their close
contact and deep relationships with underbanked consumers. they
have a strong read on underbanked consumers’ needs and preferences
and often play the role of trusted adviser with their clients.” —center
for Financial Services Innovation

                                  Make Community Connections | First Step Program

                                                Unbanked Account Preference


                                                                                                                           Prepaid card
                                                                                                                           Checking account


                         Note: Unbanked consumers are those with no checking or savings account.
                                    Source: CFSI Underbanked Consumer Study, 2008

GEttInG StartEd

1    Explore opportunities to develop partnerships                       4        Design products and services appropriate for
     with appropriate CBOs.                                                       CBOs’ clients.
2    Take advantage of existing educational materials                           Visit for the First
     available through the National Endowment for                               Step Program concept document.
     Financial Education, CUNA, and others.
3    Create additional materials and train instructors
     as needed.
    FIrSt StEP ProGraM

                            Blake Griffin, Firstmark Credit Union, San Antonio, TX; Chad Graves, Ent Federal Credit Union, Colorado Springs, CO;
                                       Kevin Johns, TruWest Credit Union, Austin, TX; Kim Vu, Technology Credit Union, San Jose, CA;
                                                Laura Campbell, Farmers Insurance Group Federal Credit Union, Los Angeles, CA

              Blueprints for Innovation   | Section 4

n    ot e s

sectIon 5
How to Help members…
  Interest Refund Loan

     Blueprints for Innovation   | Chapter 5

           wHat If members kept tHeIr
           cars and car loans longer?

rEFund Loan
tHE oPPortunItY

conventional wisdom holds that, after age 45, consumers begin moving
from their peak borrowing years into the saving stage of their lives.
However, the youngest baby boomers may very well be an exception to
this rule as they find themselves still enmeshed in debt, parenting young
children later in life, caring for aging parents, and providing for children
now living back at home after college.
One significant factor impacting their budgets is that                     be sure to get the new loan? Beyond that, how can the
they are often in perpetual debt for automobiles.                          credit union be sure the loan meets the risk tolerance
Consider the scenario of consumers who like to                             of standard lending guidelines and is actually a prudent
purchase new cars every few years, but with financing                      financial decision for the member?
that stretches out five years or more. Rapid auto
turnover can have serious negative consequences for                        For the member, the trade-in cycle escalates a rising
the financial situation of member-borrowers and be                         problem of upside-down equity in their vehicle. Each
problematic for lenders, too.                                              time they trade in a two-year-old car for a newer model,
                                                                           a little more of the negative equity is piled onto the loan reports that 40% of consumers are                             for the new car. This means higher payments and an
upside-down with their car loans, meaning that they                        even greater loss of value on the collateral. Additionally,
owe more than the car is worth.29 Survey results show                      these loans may be lost to less responsible lenders who
that 26% of those who responded feel that refinancing                      care little for the loan to value proposition, mitigating
the deficit from the previous car into the new car loan                    the risk by charging significantly higher interest rates.
is “just part of buying a car.”30
                                                                           For those in the baby boom generation, this cycle creates
For the credit union, the concern is that, as the car                      an even greater risk as they creep closer to retirement
loan is paid off, the borrower is probably trading the                     and the almost inevitable reduction in income.
vehicle in for a new one. How can the credit union

     Lucy Lazarony, “In a Hole with an Upside-Down Car Loan,”
     Philip Reed, Senior Consumer Advice Editor,

                                             Blueprints for Innovation   | Section 5

tHE SoLutIon

The Interest Refund Loan is designed to end the early              The member would have the option of receiving the
vehicle trade-in cycle, ensuring the loan stays at the             rebate as cash or depositing the rebate along with
credit union, rewarding the borrower for loyalty to the            additional funds into a special rate savings certificate.
credit union, and setting the borrower on the path of              This allows the member to initiate a savings program,
fiscal responsibility.                                             thereby adding value to the credit union relationship.

With an Interest Refund Loan, the borrower is promised             When the loan is paid off, the credit union sends a
a return of all the interest he or she pays in the final year of   congratulatory letter to the member indicating the
the term of the loan. For example, on a five-year car loan,        disbursement of the refund. This communication may
a borrower would be required to make every payment                 also include a preapproval for another vehicle loan, since
on time through the sixtieth payment. At that point the            the member will then have a paid off vehicle to trade in,
credit union would refund the total interest paid on the           eliminating the need for overfinancing a new vehicle.
loan during the final twelve-month period (payments 49
to 60). If the member ends the loan relationship early, the        Today borrowers have fallen victim to the spiraling cycle
interest refund feature becomes void.                              of ever-increasing indebtedness related to overfinancing
                                                                   new cars. The Interest Refund Loan presents an
Several variations of the offer are possible, depending            opportunity to break the cycle, with credit unions
on the desires and needs of the individual credit                  educating members about the responsible handling of
union. For example, to be eligible, the member could               their personal finances. Member education is unique to
be required to use automatic payments, e-statements,               the credit union philosophy and a good fit for materials
and/or have a checking account.                                    produced to promote the Interest Refund Loan.

    a recent analysis of 2.4 million credit union auto loans conducted
by raddon Financial Group reveals that new auto loans remain on
the books for 27 months, while used auto loans have an average
duration of 22 months. data from i3 team member credit unions
confirm that auto loans are turning over every 26 months.

                                                         Borrow | Interest Refund Loan

tarGEt MarkEt

Between 1999 and 2000, those aged 45 to 64 accounted                         Although it is targeted to leading-edge baby boomers
for 35% of all vehicle acquisitions, and the average age                     about to enter retirement (age 56 to 62), the Interest
of consumers who purchased new vehicles was 47.31                            Refund Loan can also apply to any age group.
More recently, a blog posting on reported
that “the average age of new-vehicle buyers was 48 by
year-end 2007.”32 Clearly, a significant percentage of
those purchasing new cars are baby boomers.

                                                                              oPEratIonaL and
MarkEtInG tactIcS                                                             otHEr conSIdEratIonS

Because baby boomers are the target market for this                          Several operational, compliance, and legal issues were
product, messaging for the marketing pieces emphasizes                       discussed with credit union experts. Their opinions are
the loan refund—that is, “getting something for free.”                       outlined below. However, prior to implementation,
This is a proven motivator for this market segment.                          each credit union is encouraged to obtain its own legal
                                                                             counsel with regard to these items.
The Filene i3 pilot utilized direct mail to the target market
based on age and geography. Electronic marketing and                            •	 This	 refund	 does	 not	 affect	 the	 APR.	 The	 loan	
branch point-of-sale materials were also used.                                     would advertise at the stated APR, and the refund
                                                                                   would only be given if the car loan was paid as
Additional marketing tactics could include the                                     agreed to the full term of the loan.
following:                                                                      •	 The	name	Interest Refund Loan presents no legal or
                                                                                   compliance concerns.
  •	 Partner	the	Interest	Refund	Loan	product	with	an	                          •	 A	1099-MISC	needs	to	be	filed	if	$600	or	more	
     auto loan promotion or car sale.                                              is received by the member from this type of
  •	 Feature	the	product	in	conjunction	with	a	one-day	                            promotion (where something of value or money
     sale on repossessed vehicles.                                                 is given to the member). However, amortization
  •	 Preapprove	a	select	group	to	receive	the	offer.                               calculations on a variety of loan scenarios reveal
  •	 Direct	mail	to	borrowers	with	auto	loans	reaching	                            that the final year’s interest on the majority of
     24 months of maturity.                                                        vehicle loans will not exceed this amount.
  •	 Combine	 with	 a	 “going	 green”	 promotion	 to	
     emphasize the longer life on consumer goods.       The credit union will also have to develop the means for
                                                        tracking the Interest Refund Loan. Potential tracking
Finally, the credit union should communicate directly mechanisms could include setting up a new loan type
with borrowers nearing the end of their Interest Refund or assigning a purpose code. Tracking would depend on
Loans encouraging them to finance their next vehicle a credit union’s computer system capabilities.
through the credit union.

     Laura Paszkiewicz, “The Cost and Demographics of Vehicle Acquisition,” Consumer Expenditure Survey Anthology, Bureau of Labor Statistics, 2003.
     Kicking Tires—The Blog for Car Buyers, “Down Economy Moves Car Buyers’ Age Up,” January 18, 2008,

                                           Blueprints for Innovation   | Section 5

ProoF oF concEPt

The Interest Refund Loan is currently in the test pilot          Air Academy Federal Credit Union is currently
phase at Air Academy Federal Credit Union ($385                  monitoring the target market’s response to Interest
million) in Colorado Springs, CO. The operational                Refund Loan advertising. Due to the lengthy timeline
details of the pilot include:                                    associated with the Interest Refund Loan product (60
                                                                 months), the pilot results do not include data on whether
     •	 A	 60-month	 term	 at	 current	 posted	 rates	 for	 borrowers prefer the cash refund or the one-year share
        new and used vehicle loans. These rates range certificate with a relatively high dividend rate.
        from 4.99% APR to 9.94% APR depending on
        a member’s creditworthiness, percent of retail The World Council of Credit Unions notes that Caja
        price financed, and whether the borrower chooses Morelia, Mexico’s fourth largest credit union, offers
        to have automatic transfer of loan payment and interest refund loans on short-term consumer loans as
        direct deposit.                                          an encouragement for members to pay back on time.
     •	 Loans	 are	 assigned	 a	 purpose	 code	 rather	 than	 a	 Depending on the terms of the product, the final loan
        new loan type.                                           payment is based on principle only or is reduced by
     •	 Once	the	Interest	Refund	Loan	requirements	are	 a preset amount if all the preceding payments are
        met, the member can choose to either receive the received on time.
        interest from payments 49 to 60, or open a one-

                                                                                            in t e r e st in g
        year term-share certificate (up to $20,000) that
        pays 1% APY above the credit union’s current
        posted rate.

      MEMBEr BEnEFItS                                            crEdIt unIon BEnEFItS
          Eliminate the need to overfinance.                           Increase interest income.

          receive a refund of interest paid.                           decrease loan-regeneration cost.

          Learn prudent borrowing habits.                              Increase ability to retain member
                                                                        auto loan business.

                                                      Borrow | Interest Refund Loan

GEttInG StartEd

1   Define the product parameters and                                         3        Establish a tracking mechanism.
                                                                                      Visit for the
2   Identify the target market and create a
                                                                                      Interest Refund Loan concept document.
    marketing plan.
    IntErESt rEFund Loan

                           Lori Hall, American Airlines Federal Credit Union, Ft Worth, TX; C. Lee Brice, Desert Schools Federal Credit Union, Phoenix, AZ;
                             Karin Kovalovsky, Air Academy Federal Credit Union, Colorado Springs, CO; Lisa Renner, Mazuma Credit Union, Lenexa, KS

               Blueprints for Innovation   | Section 5

n     ot e s

                                       New i 3 Members

these credit union executives are beginning a two-year commitment
to i3, during which they will contribute their talents to four idea creation
teams. they continue a tradition of excellence established by the
over 70 former and continuing members of i3 who have generated
countless open source innovations for the credit union system (see
pipeline pages 4-5).

                   Jenny Casselman
                   Regional Manager
                   Greater Nevada Credit Union ($547 million)
                   Carson City, NV
                   “I am thrilled to be part of a group that will challenge the status quo in a way that
                   positively impacts the business environment in which we operate.”

                   Jeanne Denton
                   Director of Marketing and Training
                   Nikkei Credit Union ($63 million)
                   Gardena, CA
                   “I am honored to follow the footsteps of my role models in the credit union
                   movement. It’s sure to be intellectually stimulating!”

                   Eric Dillon
                   Senior Vice President, Strategy
                   Servus Credit Union ($9.5 billion)
                   Lloydminster, AB, Canada
                   “As credit unions, we need to use the advantage of our smaller size to be nimble and
                   receptive to the unique needs of our members. Being part of Filene i3 provides an
                   opportunity to collaborate on innovation across a larger scale with people committed
                   to the credit union system and our shared values.”

                      Blueprints for Innovation

      Linda Garboczi
      Vice President, Member Relations and Marketing
      AmeriCU Credit Union ($654 million)
      Rome, NY
      “Having the opportunity to work with the Filene Research Institute, along with top
      credit union professionals who come together to share ideas, discuss new concepts,
      and implement new levels of excellence, is a dream come true for me. In our field,
      I believe the best is yet to come and that innovation is a key component to enhance
      the lifetime value of credit union membership.”

      Earl Hodgkins
      Vice President, Information Technology
      Carter Federal Credit Union ($130 million)
      Springhill, LA
      “I am excited to be part of a group looking to move credit unions forward. This is
      such a great networking opportunity to get our ‘wild ideas’ out there for i3 teams to
      mold into usable products that we can take and provide to our members.”

      C.J. Meyers
      Senior Vice President and Chief Financial Officer
      Teachers Federal Credit ($2.6 billion)
      Farmingville, NY
      “The ability to be part of a consortium focusing upon the future direction/
      services/products our industry will face/encounter is an intriguing and challenging
      opportunity. I look forward to participating and collaborating with a group of
      individuals with diverse credit union backgrounds and experience.”

      Bob Morgan
      Vice President, Lending and Administration
      NorthCountry Federal Credit Union ($218 million)
      South Burlington, VT
      “I am excited to be a part of the i3 group as it gives me the opportunity to work
      with highly motivated and skilled credit union executives from across the country to
      develop new products, services, and solutions that benefit members and our credit

                     New i 3 Members

Kelley Parks
Vice President, Marketing and Business Development
Call Federal Credit Union ($276 million)
Richmond, VA
“I have long been a fan and inspired by many of the innovations of the Filene i3
group. Now it’s truly an honor to be part of this dynamic, passionate and creative
team of leaders. Edward Filene once said, ‘The door to success is always labeled push.’
We have an amazing opportunity to ‘push’ the credit union movement through new
doors of advancement and innovation.”

Jason Peach
Chief Financial Officer
West Community Credit Union ($109 million)
O’Fallon, MO
“It is an honor to have the opportunity to work alongside so many peers who bring
a wealth of experience and talent to the team. It is exciting to contribute to a cause
that is important to us at a national level. The knowledge that this could make a
difference in the long run for so many people, whether it is members or people who
work in credit unions, is very motivating.”

Jon Reske
Vice President, Marketing
U-Mass/Five College Federal Credit Union ($239 million)
Hadley, MA
“I am excited to be part of i3 for several reasons: (1) it is a great opportunity for not
only me but also my credit union to step it up a bit in being innovators, (2) it allows
me to interact with some great professionals and grow as an individual, and (3) it
offers a way to give back to the movement.”

Brandon Riechers
Director of Consumer Lending
Royal Credit Union ($910 million)
Eau Claire, WI
“It is energizing to be a part of any group looking for new ways to enhance the credit
union movement. The competitive challenges facing credit unions can sometimes
seem daunting, so groups like i3 can help keep ideas fresh. I am excited for this
opportunity—for both myself and my credit union—to take an active role in i3.”

                       Blueprints for Innovation

       Charlie Roberts
       Chief Information Officer
       State Department Federal Credit Union ($965 million)
       Alexandria, VA
       “I’m excited to be working with some of the best and brightest minds in the
       credit union industry and for the opportunity to work with the Research Council.
       Networking and sharing ideas with Filene i3 members will enhance my credit union
       knowledge and allow me to bring collective ideas back to my credit union.”

       Ginger Salt
       Senior Vice President of Markets
       Truliant Federal Credit Union ($1.2 billion)
       Winston-Salem, NC
       “I am so excited to be a part of i3 because it provides a chance for me—in collaboration
       with the group—to give back to an industry that has given others so much in so many
       ways. The credit union movement for me is truly a marriage of my personal and
       professional values and I am delighted to be a part of this energetic, evolving force.”

      Here s to Innovation!

ideas grow here

PO Box 2998
Madison, WI 53701-2998
Phone (608) 231-8550
                         Publication #178 (01/09)           ISBN 978-1-932795-57-8