NAFCU Services Blog

Innovation can be hard to define, but you can think of it as "the successful application of new ideas."  ‘Application’ is the key word there – new ideas are the easy part – figuring out which are the good ones, and then applying them successfully, is more difficult.

So innovation is more than just an academic exercise or a tally of patents. The application of a new idea in the real world leads to new products, services, processes, systems, or attitudes that improve something or add value. With all of the changes that are occurring in financial services generally, and in the credit union business model specifically, being (and staying) innovative is more important than ever.

Every year at the NAFCU Annual Conference we recognize the very best innovations among our Preferred Partners that help credit unions thrive in an increasingly crowded financial services marketplace with the 2011 NAFCU Services Preferred Partner Innovation Awards.  No surprise this year, two of the three winners focus on opportunities for credit unions to generate revenue, while the third represents a quantum leap in productivity, leading to significantly lower costs.

We had more entries this year than ever before, and the difficult task of judging was undertaken by the NAFCU Services Advisory Committee, which is composed exclusively of credit union executives. For which they have earned my eternal gratitude, I would not have been able to select from among the applications! :-)

The Advisory Committee assessed each application against four criteria:

1. Degree of innovation (up to 25 points)
2. Impact on credit union bottom line (revenue enhancement, cost reduction, time to payback of any required investment; metrics) (up to 25 points)
3. Overall value/contribution to credit union success (up to 25 points)
4. Creates a sustainable competitive advantage for credit unions (up to 25 bonus points)

The winners:

1. Flex Checking, from Affinion Group - Flex Checking is a powerful way to deliver fee-based checking that carries with it substantial benefits for the member, addressing the ‘fee versus free’ issue in a way that generates benefits for both the member and the credit union.  Essentially, the member pays a fee for their checking account but is able to select a bundle of benefits in exchange – and they are even able to offset their fee by engaging in certain behaviors as set by the credit union. Giving Members both benefits and options backed up by cutting-edge analytics adds a whole new dimension to the ‘free versus fee’ debate.
   • When fee-based accounts are introduced (or free-to-fee account transitions occur), the fee-for-service checking accounts are supplemented with non-financial benefits that have been historically proven to increase member loyalty and brand impression, while providing real value to the member – softening the transition into a fee-based account model.
   • Members have the opportunity to earn-down their monthly fee by exhibiting predetermined behaviors that are convenient for them and cost-effective for the credit union.  Members are rewarded with credits for behaviors such as signature-based debit transactions, signing up for online bill pay, enrolling in direct deposit, or even maintaining a minimum daily balance.
   • Affinion’s analytics team interprets historical performance data and identifies the threshold that delivers the strongest profitability. They then match this hurdle with individual member data to determine the level of “earn-down” each member is eligible to receive.
   • Along with the chance to earn lower fees, members are offered supplementary services (such as identity theft protection, retail savings, and/or travel discounts), to deepen their appreciation, engagement, and utilization of the core checking account.
   • More information at www.nafcu.org/Affinion
2. CenterPoint Risk Management Client Portal, from Allied Solutions - A web-based client portal that serves as a one-stop-shop for collateral management by integrating multiple applications along with services and data from Allied and their partners into a single, easy-to-use interface. The primary application of CenterPoint is delivery of an end-to-end risk management system for any credit union’s automobile portfolio. The web portal contains the following services that are integrated with the Allied Solutions loan tracking system: insurance tracking, claims filing (GAP, CPI and Bond), status and history, and real time access to all associated claim documents, repossession, skip, replevin, collection services and remarketing requests. The website also provides collection processing and automated CPI claim filing.
   • With CenterPoint, there’s no need to move back and forth across multiple applications, everything you need is located in one convenient location making workflow more efficient.  The CenterPoint application condenses the workflow of risk management, reducing the number of steps from 12 down to 4. The application is compatible with any collection platform to help ensure accuracy and speed of input.
   • Creates efficiencies within a lender as they can access their loan file and have all information pre-fill for a majority of risk management assignments. These assignments can then be accessed to get real time status updates. In addition, all CPI claims associated with locating collateral are automatically filed for the lender which eliminates claim filing and document submission requirements that today are the responsibility of the lender.
   • Because the site leverages Allied’s strategic partnerships, vendor research and due diligence burden is significantly reduced. The result is a powerful tool that allows for more effectively manage your collateral portfolio.
   • More information at www.nafcu.org/Allied
3. E-Commerce Enabled Insurance Portal, from Insuritas – Insuritas has created the first scalable application for transitioning a credit union’s web portal from educational, servicing and/or referral functionality into an ‘e-commerce’ site. When Insuritas first introduced its outsourced insurance agency web portal the purpose was to allow members to learn about insurance products online and direct them to fill out an inquiry form to learn more or to speak to an agent. But feedback indicated that members wanted to not just learn about insurance offerings online, but wanted to shop and purchase these products online, without the assistance of an agent, directly on the credit union’s site.  Insuritas converted their referral-based agency portal into a live ‘e-commerce’ site, where members can shop, compare and purchase a wide array of insurance products directly from the credit union’s web page.
   • This approach leverages the tremendous amount of return traffic that credit unions experience as a consequence of online banking, in particular online bill pay services. Since one of the bills a member is often paying monthly is insurance, they are very willing to click on a ‘buy insurance here’ button, and shopping, comparing and buying insurance products online.
   • The willingness of the member to shop and buy insurance online is tied directly to the trust they have in the credit union brand. The result is that members shop, compare and buy financial products online, in effect converting credit union web sites from passive information and learning sites into true ‘e-commerce’ sites.
   • This allows credit unions to monetize those web visits and generate fee income by repositioning their web sites as e-commerce sites – where a member can shop, select and purchase financial products and services online, in an ‘amazon.com’ like experience.
   • Provides a more convenient, online buying experience for the member, and also provides a low cost distribution method, that ultimately generates savings for the member.
   • More information at www.nafcu.org/Insuritas

Congrats to this year’s winners! Follow all the conference activities this week on Twitter at #NAFCUannual.

Check out previous NAFCU Services Innovation Award winners.

Post written by Dave Frankil, President, NAFCU Services Corporation