The CU Water Cooler Symposium 2011

If you’re a financial services professional trying to choose a conference to go to, you can flip a coin to make your choice.

Heads, you go to some large industry-wide boondoggle in Las Vegas with a thousand other attendees and see Sully (oops, I mean CAPTAIN Sullenberger) in the 43rd minute of his 15 minutes of fame. Tails, you go to a smaller functionally-focused conference with 150 other attendees and see your colleagues talk about what their firms are doing (if you can stay awake through their entire presentation, that is).

If you’re lucky, however, the coin will land on its edge. And then you can decide between Finovate and the CU Water Cooler Symposium.

I wasn’t able to attend Finovate last week, but I did get to go to the CU Water Cooler conference. Even better, I got to present there.

When Tim McAlpine told me a few months ago that he was selecting me to speak, I asked him what he wanted me talk about. He said “I don’t know. I like the way you bring humor to your blog, and want you to bring that to the Symposium.” I told Tim that I don’t do stand-up comedy, so he said “Do what you want.”

I chose to speak on Quantipulation, and tried to debunk a few marketing myths. CU Times wrote that I have a “simple message for credit unions, ‘Don’t believe any numbers without question.’”

Not to make a mountain out of a molehill here, but that’s not quite accurate. Instead, I told the conference attendees not to believe any number they heard over the course of the conference without questioning the number’s assumptions.  But I’m quibbling here.

With no intended disrepect to the speakers I’m not mentioning below (I didn’t actually get to hear all of the presentations), here are the three highlights for me, in no particular order:

1. Demystifying Creativity. Someday Charlie Trotter (the one living in Foat Wuth Texas, not the restaurant owner) is going to be well known, and I’m going to get to say “yeah, I know Charlie.” It’s OK if he doesn’t admit to knowing me. Charlie talked about what creativity really is. Charlie helped me (and I hope everyone else) to better see how creativity is not synonymous with imagination. Imagination is the ability to imagine. Creativity is about DOING something. According to Charlie, you aren’t creative until you’ve actually created something. The third concept Charlie hit upon was talent. Talent + Imagination + Creativity = Success. Charlie didn’t actually say that, I’m just quantipulating.

2. Boomification of Credit Unions. Damn, that Denise Wymore is a good speaker. I truly wish that I had her ability to connect with an audience. On the other hand, I’m glad that I’m not wrong about stuff like she is. Denise’s presentation truly was excellent — engaging and compelling. Problem is, her ideas are just simply wrong. Ideas like getting rid of FICO, and judging loan applicants based on their “character.” They have a name for that, Denise: Discrimination. And it’s illegal. Or the idea that profit-driven is somehow the antithesis of people-driven. A false dichotomy, Denise. Denise’s cumbaya makes for a great presentation, but cumbaya won’t sustain a credit union, nor the credit union industry.

3. Future of Payments. As I listened to Jeff Russell, CEO of The Members Group, a little voice inside my head was screaming “ARE YOU LISTENING TO THIS, PEOPLE?!” My perhaps skewed perspective on the things I hear from credit union professionals lead me to believe that too much of the conversation is about lending. Jeff’s message, if I’m interpreting it correctly, is that payments is where the focus should be. If I’m getting him right, I couldn’t agree more. There’s no better way to help a credit union member best manage his/her financial life than to help them make smart everyday spending decisions. You simply can’t do that if their primary spending account is a checking account or credit card held at some other financial institution. On top of that, the future of cross-sell marketing for banks and credit unions will come from payments-related and payments-triggered transactions. If your credit union is a payments laggard, good luck. You’re not going to make it up on car loans.

I do wish, though, that Jeff hadn’t said two things that he did. The first being that mobile payments will be the dominant form of payments in five years. I’m willing to bet a LOT OF MONEY that that won’t be the case. In the past 15 years, I’ve NEVER been wrong underestimating the rate of technology adoption.

Second, I’d argue with Jeff regarding his view that free checking is dead. Free checking isn’t — or shouldn’t be — dead, and for two reasons. First of all, unlike Jeff said, debit interchange doesn’t fund free checking accounts. Free checking accounts have been around for a lot longer than the increase in debit card activity.

The advent of free checking was born out of the the belief that getting someone’s checking account was the steppingstone to getting more of their financial accounts. If that belief is true — and it’s certainly a discussion for argument, since so few financial institutions have done a good job of successfully cross-selling — then a cut in debit interchange shouldn’t portend the complete death of free checking.

The other reason why is free checking isn’t dead is because it never really was alive. When we say “free checking” what we’re really saying is “no monthly fee” checking. Tell the people who don’t pay a monthly fee, but pay out hundreds of dollars in overdraft, foreign ATM, and safety deposit box fees that their checking account is “free.” I hope you don’t get punched in the face.


Beyond the presentations themselves, the other thing that makes this conference top-notch is the attendees.

I wonder how it felt for first-time attendees who aren’t tied in to the credit union twittersphere. I wonder if they felt like this was some party they were crashing. I certainly hope not. But the conference really is a gathering for a lot of credit union professionals who actively engage with each other on a daily basis. And of course, some of the attendees have known each other for a long time. Denise Wymore and Janine McBee told me they’ve known each other for….

Oh, hey, did I tell you that I finally met Jimmy Marks in person? I’ve never hugged a man the first time I met him. But I gave Jimmy Marks a hug when I “met” him. (It’s OK, it was one of those male “shoulder bump” hugs). Although I had never met him in person before this week, I’ve been tweeting with him for at least two years. And I “know” him better than I know a lot of my colleagues at work.

It was also a treat to see Rob Rutkowski and Jeff Hardin at the conference. For two reasons: The first, because I had met the both of them at the Forum Symposium in 2007, and hadn’t seen either of them since; and second, because the two of them make me feel like I’m not the only “old” guy at the conference (even though both of them are younger than I am).

Bottom line: Love this conference. Thanks to the CU Water Cooler editors — Carla, Matt, Kelley, William, Gene, Doug, Brent, Christopher — for their time, effort, and brainpower on doing what they do. And huge thanks from me to Tim McAlpine for giving me the opportunity to present and attend the conference.


20 thoughts on “The CU Water Cooler Symposium 2011

  1. Great to see you at the conference, Ron, and to catch up. I appreciate the “old” commentary – it’s easier to be a radical when you’re younger – not so much when your hair is “turning gray and turning loose.” So we’ve got that working for us. 🙂

    It was great to meet so many remarkably gifted young credit union professionals. It makes me feel incredibly reassured about the future of credit unions.

  2. It was great meeting you in person, Ron. I couldn’t agree with you more about the concept of Free Checking being dead. My mouth dropped open when I heard this- and if credit unions don’t get members with free checking and debit cards (in light of B of A announcement), then god help us- credit unions certainly aren’t bringing in the loans (including credit cards). A well run credit union with a high loan to share ratio- should welcome the opportunity to maintain no fee/free (whatever you want to call it) checking accounts….and lend that money out. It really is very simple.

  3. Ron it was great to see you at the Symposium. As always you make some great points. Probably the biggest problem we all have is the lack of time to fully discuss or argue any issue. One of these days someone is going to ask a loaded question and instead of getting the answer they want are going to get the exact opposite.

    Charlie Trotter’s presentation was a classic. Anyone with a smidgeon of imagination needs to hear his message. Denise is a person who delivers such an enjoyable delivery you sometimes forget to disagree. That is one of the strengths of that Symposium, the variety of the speakers in what they present and how they present it. What I really thought was a lot of fun was the meme trading cards. For some of us that always forget names but not faces, those pieces of cardboard are close to genius. Matt and Tim are to be congratulated once again for a very remarkable event.

  4. You’re welcome. Judging by your presentation and the crowd’s feedback, I made the right pick. You did a great job kicking things off and setting the tone.

    I agree with your highlights above and also questioned Jeff’s assertion that free checking is dead. For some north of the border perspective, debit card use is much more pervasive in Canada compared to the US and credit unions have always made zero interchange income (plus they are taxed to boot). Because of these factors, generally they have charged $8 to $20 per month for a checking account. When our first Young & Free partner credit union merged with another, we had a year of data to compare 1,000s of members in free accounts versus members from the other two merging credit unions with accounts that they were paying about $10 per month with. After careful analysis, it turns out the free checking account holders where 2.2 times as profitable because the share of wallet was nearly two times as deep. I don’t know if this is an anomaly, but it made for a very compelling business case to roll the free account out to the full 100-branch network of the merged credit union.

    Also, if you do want to a deeper connection with your audience, you should try wearing an animal print jacket and adding some bold highlights to your hairdo.

  5. First, meeting Charlie Trotter and Jimmy Marks is on my list of things to do before I die. So, count me jealous. Second, Great insight into the conference.

    Third, Free checking should not be dead in any way. Large financial institutions are shooting themselves in the foot with debit card charges. If credit unions follow suit they would simply be following the lemmings off the cliff.

    Pardon the overuse of cliche’s, but if financial institutions can get away with a $3-5/month fee on for debit card use, I should be able to abuse a few phrases.

    Banks have been handing credit unions incredible marketing and differentiation opportunities over the last few years. I can only hope CU’s take advantage of them and a) don’t over do it with the bank vs cu ads, and b)don’t eventually follow suit in search of a higher profit margin.

  6. Thank you, Ron, for such a great presentation. You’re not only one of the best writers in financial services, you’re one of the best friends a credit union nerd like me could have. Thank you for all you do to keep us thinking, laughing, and questioning.

    One thing that really stuck out to me this week was how our collective tone has changed. In 2007 the tone was “look at these cool new things…they’re going to change everything”. This week it was closer to “things are changing, and if we don’t keep up or get ahead we’re screwed.” I heard very little boo hooing about the economy, regulators, and other factors largely out of our control. Instead it seemed like we were all challenging one another to do better, take more chances, solve problems for consumers, and work together to make it happen. Call me crazy, but I think that group will ultimately be credited for righting our ship.

    Some other takeaways for me:
    1. We need to have more roundtable discussions.
    2. 144 attendees is a perfect size.
    3. Reasonable minds can disagree…and still be friendly.
    4. Theme: By avoiding risk, credit unions risk becoming irrelevant
    5. We may have too much content, and not enough time to digest, debate, and create.
    6. Canadians are smart.
    7. FORUM Credit Union hires the nicest and most selfless people on the planet.

    I’m short on sleep, so pardon my sloppy writing. Mostly, I just wanted to say thank you…to you and to everyone else that made this event what it was.

  7. Ron,

    You said: Ideas like getting rid of FICO, and judging loan applicants based on their “character.” They have a name for that, Denise: Discrimination. And it’s illegal.

    Thanks for the mention but I’m not sure where you get your information on lending practices. If lending to character is illegal than credit unions broke the law for the first 80 years. If anything FICO scores are discriminatory. Before “technology” we only had the three C’s (sadly you only picked up on ONE of them from my speech) Character, Capacity and Collateral.

    As cited in this publication about FICO scores and Insurance policies:

    The potentially most controversial issue in credit scoring in general, and insurance scoring in particular, is the impact on certain minority groups. Ever since credit scoring became prevalent, there have been concerns that scoring systems contain biases that disproportionately impact minorities and other disaffected groups. These concerns turned out to be justified, as study after study found that certain racial and ethnic groups tend to have lower credit scores than whites.

    Good day to you sir.
    Denise Wymore

  8. Thanks for the kind words, Matt. Your list is spot on. There’s something else I would add: CU ppl need to stop positioning banks as the evil empire with which they’re fighting. Wymore said “corporations don’t have values, people do.” If that’s true, then banks aren’t inherently evil, but bankers are? Nonsense. Chad’s video showing CU ppl bragging about their good deeds prompted someone to tweet “I bet banks can’t say these things.” Sigh. Yes they can.

    Jeff Hardin tweeted “CUs should focus less on what they are – and more on who they serve.” Amen. That also means knowing who they should serve.

  9. Thanks so much for the kind words and encouragement, Ron, I’ve got a crapton of respect for you as a speaker and thinker, so it means a lot to have made the short list. I’ll believe in my some-day fame when I see it, until then – especially then – I’ll continue to claim you. People I can trust to tell me when I’m full of gas are worth a mint. As always, it was fantastic to see you. And I’m also glad to have finally scratched “Bear Hug with Jimmy Marks” off my bucket list. One of those is good for what ails you.

    The gang at CUWCS is magical.

  10. Believe you me, there’s nothing more I would’ve liked than to tear your presentation to shreds. 🙂

    p.s. Check out Urban Dictionary’s listing for “crapton”. Very funny. Thanks for choosing “crapton” over “poopypound” and “dookyounce”.

  11. Really, Denise, really?
    1, Credit unions weren’t breaking the law for 80 years, because the LAWS DIDN’T EXIST 80 years ago. Because of allegedly widespread discriminatory lending practices, the laws were enacted.
    2. Don’t accuse me of not picking up on the three C’s: In the Q&A, I asked you “if we were to get rid of FICO what we would use to make lending decisions?”, and you said “character.” You made no mention of capacity and collateral. And if you had, what you would’ve described is a FICO score.
    3. The reasons certain racial and ethnic group tend to have lower scores than whites is that, as a group, they earn less money. There’s no question that some lenders engage in discriminatory lending practices. First off, these practices aren’t CAUSED by FICO scores. Second, your proposal to based lending decisions on “character” is not only ridiculous, but ignores something you failed to mention in your presentation. While you might make a compelling case for why Boomers have screwed up CUs and the world of financial services, you failed to say what Boomers actually DID to screw it up. Let me give you one answer: They gave loans to a lot of people who should never had received a loan in the first place. As a result, many people defaulted on their loans, helping to fuel the financial crisis. In your little cumbaya delusion, you offer no viable alternatives.

  12. 1. FICO is not a law. It’s a choice.
    2. Roll the tape Ron. You’re wrong. I called out the Three Cs – Character, Capacity, Collateral. And that doesn’t describe FICO at all. Maybe capacity, but FICO doesn’t tell you the story of the score. It doesn’t tell you about the child the member had born premature and was in NICU for so long their insurance ran out. It doesn’t tell you about the sudden death of their husband, and the fact that he had cashed in his life insurance policy without the spouse knowing. I know you love numbers, so FICO must be exciting for you. I’ve found it gets in the way of listening to people.
    3. Again – may I send you a copy of my presentation? Did you get up and go to the bathroom during it? I cited the real estate bubble bursting and I said (again, roll tape) that the American Dream was OWNING a home – not having a mortgage you couldn’t afford. I also said “Economics is the study of human behavior – if the economy is in the crapper, it’s because humans have been behaving badly.” I called out a participant for having a VISA credit card tied to the equity in their home – for encouraging people to use their equity as an ATM.

    But let me add #4.

    Ron, I’m not sure why you have chosen to bully me, but I’m growing weary of it. I’ve decided that you aren’t the kind of kid I want to play with on the playground. I want kids that have fun. Not ones that keep pulling my hair.

    So instead of wasting anymore time trying to convince you that credit unions are worth saving and service, differentiation and good old fashioned compassion will go along way – I’m going to just go do it.

    You see I can. I WORK for a credit union. You can stay on the sidelines and keep on telling people why they’re wrong. I plan to show people why I’m right.

    Koom Bye Ya.

  13. Denise: I’m weary too, Denise. Weary of hearing people give credit unions bad advice based on populist feel-good pablum.

    I’m not looking to bully you. I’m looking to get into an argument. An argument that produces concrete ideas for how credit unions move forward and deal with the present and future. I’m calling out your suggestions as unrealistic and wrong. If you choose to not argue with me, I can understand that.

    As for me being on the “sidelines”, that’s very disingenuous. Should the message that Charlie Trotter left with the conference attendees be ignored because he doesn’t work for a credit union? Should Jeff Russell’s advice be discredited because he works for a firm that make money off credit unions? I don’t hear you dissing them because they don’t work for a credit union. Probably because they’re not publicly arguing with you. If they did, I imagine you would dismiss their advice as well.

    Funny you should evoke the playground analogy. Sounds like you’re one of those kids who when they started losing at whatever game we were playing, took their ball and went home.

  14. It’s pretty hard to argue that “character” hasn’t become the odd “c” out in lending decisions…especially for people who have thin or non-existent credit profiles. I don’t want to put words in Denise’s mouth, but I think her key point was that if we blindly use credit scores to make lending decisions we are missing opportunities to serve worthy borrowers. While it’s true that smart lenders use FICO as merely a component of their underwriting process, it’s also true that way too many make cut and dry decisions based off of score alone. Credit scores are flawed measures of creditworthiness. While often reliable predictors of repayment behavior, they only tell part of the story.

    Here’s why I think Denise is absolutely right. Credit unions won’t survive if they approach lending in the same way banks do. We have a fiduciary responsibility to make smart loans and a moral obligation to extend help to borrowers who can’t get help anywhere else. Help doesn’t always mean a loan, mind you, but it does mean taking a deeper look at applicants than a cursory view of a credit score. The pendulum has swung from financial institutions making loans to everyone with a pulse to an environment in which only the elite borrowers have access to credit. When consumers have needed credit unions the most, we’ve ducked and covered to save ourselves. That’s not the promise of credit unions.

    Denise’s presentation was absolutely amazing…as was yours. I’d rather sing cumbaya than watch two people I respect and admire unnecessarily tear each other down.

  15. I am the first to admit that LENDING is not my forte-so don’t jump down my throat. I too don’t like to see this scuttlebutt going on. But I need to support Denise on this one. For what it is worth, I have listened enough to my mentor, Rex Johnson (founder of Lending Solutions) over the past 25 years. Rex has educated over 12,000 credit union professionals on lending and underwriting practices since 1995 (while at the same time, increasing the ROA of hundreds of credit unions back to pre 2007 levels, while decreasing delinquency and charge offs). I’ve learned by listening to Rex’s approach and seeing these credit union results- as many of Rex’s clients are also mine. Credit Unions differentiate themselves by the relationship with the member- including character- and ability to repay. Bad things happen to good people- that is life. FICO Scores do not reflect income or assets- so even someone with a low income, can have a GREAT credit score. There is much more behind the credit score- and I must say, I agree with Denise on this one- this IS the credit union difference- people are not just a mere credit score- they have good times and bad times- and credit unions are there to LISTEN as an approach to assess the risk involved with lending to a member.

  16. I was in the room as well and what I heard from Denise was, “We have to look beyond JUST the credit score and INCLUDE character, capacity and collateral. This makes sense to me, especially for young adults that have not established credit yet. Denise also said that lenders should use common sense and not be lending $35K to a young adult for a brand new truck, but rather $5K to $8K for a used vehicle. This also makes sense to me. It is imperative to attract the next generation of credit union member and a really good strategy is through that first car loan.

    Ron kicking off day one and Denise kicking off day two was perfect. Can’t we just go back to this?

  17. Ron, connections run deep and passionate in the credit union industry. Yes, Denise and I have known each other longer than either of us will admit. Here fresh perspectives and energy always amaze me. Appreciate the dialogue you stir via your blog. Strongly believe it’s important to challenge and encourage each other forward. Kudos to the CU Water Cooler Symposium team for providing a forum where presentations lead to further discussions as we work together to inform and challenge credit unions forward.

  18. This makes me so happy. The stress of seeing you two fight was about to make me regress back to bed-wetting. I love you both. Let’s go out for ice cream.

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