Quarterly Report — July 2019

Welcome to the Second Quarter 2019 MCUL Priority Report. This month, we will give you an update on 2019 priorities and what we have planned for the rest of the year.

In a few moments, Patty Corkery will give a more complete summary of our advocacy priorities, but at the federal level, we’re focused on the bankers’ latest attempts to revise the National Defense Authorization Act, the Stopping Bad Robocalls Act, CECL implementation and maintaining CDFI funding. At the state level, current priorities are data breach and military escheats legislation, as well as the financial exploitation and abuse of elders.

We have also seen a relentless series of attacks by the bankers association, to which MCUL responded with a CU Insight article and video. We need your continued engagement on all of these issues, so thank you for taking the time to listen to this summary. Also, you can engage directly with our lawmakers at our next Hike the Hill in October and at other events.

We’re also excited about your continued support for the “Open Your Eyes” campaign in Michigan. Almost half of the full fair-share credit unions are already using their 50% reimbursement to create custom ads that showcase the good works of credit unions. If you’re not a full share contributor, please consider doing so.

In the area of information services, we’ve surveyed our readership for our weekly publication, the Monitor. We sought your feedback on layout, content and delivery method. We have reviewed the results and started to tailor new content and design based on some of your input. Contact magazine shifted focus this year to be more consumer-centric, focusing on stories and insight from our industry that are relevant to both credit union professionals and credit union memberships. You can always let our team know if you would like additional copies to share with your membership but Contact is delivered in a convenient digital flipbook format for easy sharing with consumers.

On the compliance front, we’re excited to be launching the AffirmX risk management platform as a compliment to Complysight and our other compliance services. We know how important quality compliance services are. That’s why we offer fee-based compliance consulting tools, like Complysight and AffirmX and the associated consulting services. Of course, our Destination Compliance site and information hotline also meet the day-to-day needs of credit unions.

On our education agenda, after a successful AC&E, we now turn to our Fall events and hope that you’ll join us for the Executive Summit and Fall Leadership Conferences in September and the Lending School and Call Center Conferences in October. As you prep for this year’s planning season, please consider CUSG’s Planning Pro and Governease products as well as our planning facilitation services. You’ll get a complete update on CUSG services at the end of this report, but we especially want to highlight our newer products, Planning Pro, Governease, AffirmX, the TLC360 learning management system and our newest product, MemberXP to help credit unions with their member experience efforts.

FEDERAL ADVOCACY AGENDA: FY2020 National Defense Authorization Act and Stopping Bad Robocalls Act
Starting with federal advocacy, unfortunately, bankers are attempting to add controversial exemption language of their own to the Fiscal Year 2020 National Defense Authorization Act, a bill Congress must pass to establish policies and an annual budget for our nation’s defense. This language would afford banks the same rent-free access to land and facilities on military installations that credit unions are afforded. In the U.S. House of Representatives, the Armed Service Committee debated, amended and approved the bill in June. The bankers attempted to add their language in committee but I’m pleased to say that CUNA, MCUL and other state leagues worked to successfully defeat it. Following Committee passage, the House version of the bill now heads to the floor, where the full chamber will debate it and consider additional amendments before voting on final passage. This could give banks another opportunity to add their language. We will continue working to prevent the committee from passing a bill with this incorporated language.

On the heels of the FCC’s vote to impose new restrictions on robocalls, Congress appears primed to take action on this issue. The House Energy & Commerce Committee, Subcommittee on Communications and Technology met recently to discuss the Stopping Bad Robocalls Act. Our efforts in this area focus on limiting restrictions that would impact a credit union’s ability to contact members with critical information regarding their account or business relationship. In advance of the hearing, CUNA wrote leadership of the Committee to applaud the bipartisan manner in which the bill was drafted and to highlight key credit union concerns. MCUL will continue to work with CUNA on this issue as developments happen.

As mentioned in June’s Priority Report, U.S. Senator Thom Tillis from North Carolina has introduced legislation that, if passed by Congress and signed by the President, would delay implementation of CECL and require the Securities and Exchange Commission and other federal financial regulators to study the standard. MCUL is preparing a letter to Senators Gary Peters and Debbie Stabenow urging them to support and co-sponsor the legislation. A letter will also be sent to Michigan’s 14 House members requesting they support and co-sponsor a similar bill by Representative Vincente Gonzalez from Texas.

And finally, MCUL is pleased to report the U.S. House Appropriations Committee has approved $300 million in funding for the CDFI Fund and $2 million for the Community Development Revolving Loan Fund for Fiscal Year 2020. MCUL and CUNA will continue to advocate that Congress maintain these funding levels until a final bill is approved by both chambers and signed by the President.

STATE ADVOCACY AGENDA: Identity Theft Protection Act and Military Escheats Legislation
Now onto our state advocacy agenda. Data breach legislation introduced by Rep. Diana Farrington continues to wait for a hearing in the House Ways and Means Committee. The Senate has decided to take a closer look at the issue as well. The government affairs team fully expects the legislation to be introduced this fall. Our team has also begun working in the Senate to get legislation drafted and introduced to address clean-up measures to the existing Identity Theft Protection Act, which currently governs how data breaches are addressed in Michigan. The Act currently only requires merchants who have been breached to provide notification “without unreasonable delay.” That being said, this section of the statute has not been modernized of late and needs some improvements to better address credit union concerns.

Military escheats legislation is expected to receive a hearing and begin moving through the process as soon as the legislature has reconvened following the summer recess. Currently, it is nearly impossible to determine whether the member is overseas or on American soil nor how long to hold on to the dormant account funds. This legislation is important to credit unions because it will provide a more streamlined timeline for escheating dormant account funds to the state regardless of whether the member is active duty on American soil or active duty overseas military.

Our team has been working directly with the Attorney General’s office to address the growing issue of financial exploitation and abuse of elders. Through a series of task force meetings and workgroups with the Attorney General’s office and other interested parties, we have worked to find the best course of action to ensure that, when consumers are victimized, financial institutions have the tools and resources in place to contact the appropriate agencies on behalf of abused elders.

In the regulatory arena, MCUL’s Examination Task Force held its kick-off meeting. Members of the Task Force discussed examination issues and concerns facing credit unions in Michigan. The Task Force will begin reviewing MCUL’s Examination Survey in preparation for distribution to Michigan credit unions. The Task Force will review the data collected from the survey for meetings with NCUA and DIFS leadership.

After significant interest in the Compliance Committee, originally formed in the Downriver Chapter, we are excited to announce we have scheduled the next meeting. It will be held August 23 at CASE Credit Union in Lansing. Keep an eye out for future communications with topic and speaker information. Thanks to everyone for your interest!

At the Federal regulatory level, the NCUA issued a proposed rule to delay the effective date of its Risk-Based Capital Rule to Jan. 1, 2022. The NCUA will have the proposal open to the public until July 26. If you have any comments you would like MCUL to share with the NCUA specific to this delay, please share them with our team as we will incorporate them into our comments to the Agency

As Dave mentioned, we’ve had strong engagement with the “Open Your Eyes” campaign this month. To date, 64 credit unions contribute at the full fair-share level and are eligible to receive a 50% reimbursement of their contribution to spend on integrated advertising under their own brands.

So far, nearly half of our full share credit unions have already been working with our business partners to utilize the reimbursement and place custom billboards, GSTV spots plus mobile and digital display ads into the market. This tremendously expands the reach of the campaign. Credit unions are still coming on board as full share participants and it isn’t too late to participate at that level.

As you may know, all Michigan affiliated credit unions are welcome to download and customize the many creative files from our website, such as social media posts, web banners, postcards and in-branch posters. These are free and available to use for all affiliates. Our records show that hundreds of the free integration files have already been downloaded so we are very encouraged by this engagement.

More creative is launching soon, including a new 30-second television spot about ownership and five additional 15-second digital videos about ATM access, switching to a credit union, local community investment, thousands of neighborhood branches and better banking.

Please let us know if you have any questions about the Open Your Eyes to a Credit Union campaign and how to use the integration material. We thank you for your continued involvement in the campaign.

MCUF: Financial Reality Fairs
Moving on, to our foundation.  Michigan high schools continue to appreciate and request Financial Reality Fairs facilitated by credit unions. With the assistance of the Michigan Credit Union Foundation, 68 fairs were held during the recent school year, helping more than 5,600 teens practice financial decision making and budgeting. A recently developed app to enhance the fair experience for students is now ready to implement. MCUF provides all of the materials and instructions for Financial Reality Fairs and grants to credit unions wishing to develop their own branded fair materials, so don’t hesitate to contact us if your credit union is looking to hold a fair.

EDUCATION: CECL Implementation and the Fall Leadership Development Conference
MCUL continues to follow industry trends and deliver top-of-mind information that credit unions are looking for at our education and networking events. When CEOs and board members gather for the Fall Leadership Development Conference in September, we'll be talking about how credit unions need to act on issues related to Marijuana in Michigan, about practical approaches to simplifying CECL implementation and how financial institutions can remain secure by understanding hackers’ methods. Of course, we are always looking for your feedback on topics and insights you would like to explore, so feel free to let us know what training you'd like us to slate at future events by sending us an email.


LIFESTEPS SOLUTIONS: NestReady integration
Through the transition of the LifeSteps Wallet product line to LifeStep Solutions, LLC, we have focused on improving credit unions’ omnichannel banking services in this age of neo- and challenger banks. The ultimate goal is to be the leader of a mobile product collaboration community that keeps credit unions competitive in the digital banking age. Recent incremental changes to the existing LifeSteps Wallet platform included expanded services and features that consumers are already looking for and expect from their digital banking experience. Integration with company NestReady’s home search and financing platform is only one example of LifeSteps Wallet providing credit union members with a seamless financial and life milestone experience. In fact, after finalizing all go-to-market components, NestReady was unveiled at the 2019 MCUL/CUSG Annual Convention and Exposition in Detroit, where well over a dozen solid initial opportunities were generated. Other imminent partnerships and services include fractional share investing tools, another service that’s drawing the attention of more credit unions as it’s a service that ranks high for Millennial credit union members.

MARKETING SOLUTIONS: Love My Credit Union and Sprint Rewards
Across many of our products and services, the focus has been on streamlined mobile-first designs for improved user experiences. In Marketing Solutions, we’ve made a strategic adjustment to our sales approach across the board and are now focusing on a solutions-based strategy. This has already resulted in enhanced client satisfaction, stronger attributable results from credit union marketing efforts and a 48% year-over-year increase on average contract value. The Love My Credit Union Rewards member-enhancement program has a completely new mobile-first design that represents new value for our corporate partners and revenue streams for CUSG. In addition to existing brand partners Sprint, Intuit and TruStage, we’ve added a member offer from the popular home security provider SimpliSafe, and we’ll continue to add a new deal every two to four weeks for the remainder of 2019. By partnering with in-demand companies like this, we’re committed to keeping the LMCUR partner offerings fresh and relevant, which makes it an attractive program for credit unions and members alike and ensures future growth. Individually, the rewards programs are also hitting and exceeding benchmarks.

The Sprint Cash Rewards program is on track to reach the Q2 our growth targets. We appreciate our credit unions’ promotion of this offer to their members. As we watch to see if the merger with T-Mobile gets DOJ approval, we are working to position CUSG as a partner that continues to benefit credit unions and their members.

CUSG finished another successful tax season with the TurboTax  online member discount offer. CUSG is diligently working to develop new, more effective growth tactics for tax year 2019 to drive increased credit union engagement and member use of the TurboTax discount. We appreciate our Michigan credit unions’ support for this great consumer offer.

Save to Win has signed 16 new credit unions so far in 2019. In Q3, Save to Win will target five states—CA, OH, AL, VA and KY—with state-specific webinars to educate credit unions on the unique value of the program for their members. We encourage our Michigan credit unions to discover or re-discover the benefits of this prize-linked savings program as a mission-driven offering for members.

In our Performance Division, we’re in the process of integrating Performance Pro and The Learning Center, or TLC 360. We’ve acquired about $300,000 in Learning Center revenue from CU Training at the end of April 2019. Through May 2019, we’ve seen lots of interest from Michigan credit unions and we encourage you to check out this great learning management system and how it can integrate with your Performance Pro system. Performance Pro new sales are also doing well, currently standing at around $350,000 year-to-date. So, whether you’re looking for a new performance management system, or looking to customize or enhance the one that you have, let our performance solutions staff consult with you so you can integrate performance, payroll, compensation and learning systems in your credit union.

Moving onto Compease, the reinvention focus has been to create a lite version to allow organizations to import their own salary ranges and still benefit from all the great functionality within the Compease system. Additional reinvention items for Compease include a new dashboard that helps organizations more easily spot potential pay equity blind spots and a tool that empowers managers with a pool of discretionary funds to award based on their assessment of performance. Both features have been heavily requested by credit unions and non-credit unions. Last, but not least, Planning Pro has seen strong sales so far in 2019. The product update focus has been around required features conveyed to us in the sales and implementation processes.  As planning season approaches, check out how Planning Pro can help with both plan development and the tracking of key performance metrics.

STRATEGIC ADVISORY SOLUTIONS: Compliance Officer Boot Camp and Must-Have Compliance Training
Throughout 2019, the Strategic Advisory Solutions team has continued to evolve and build value with repeat clients, new engagements and strong business prospects. Much of their focus has been on driving eAdvisory Services and development and sales of compliance webinars, specifically the Compliance Officer Boot Camp eSeries and the Must-Have Compliance Training sessions. The Boot Camp initiative has seen 21 attendees to date, and generated a lot of positive buzz.

So far, consultative sales have included agreements for 17 strategic planning sessions, 18 keynote/leadership engagements and four executive coaching or governance sessions. Our compliance advisors continued to drive value by conducting 27 website reviews, 9 shared staffing assignments, 11 BSA audits and other custom projects and training with 100% of the business coming from Michigan credit unions.

Thanks for joining us for our Q2 report. As you’ve heard, it’s been a productive year and we fully expect similar strides and results for the remainder of the year. As always, if you’re interested in learning more about any of our solutions, or have any questions about how they can help you grow and serve your members better, please reach out to us.

Thank you once again for joining us!

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