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Get creative to attract new deposits.
If you think the bank across the street is your biggest threat to attracting-and keeping-- deposits, you're wrong.
Kent Stickler, president of Stickler Learning, Clearwater, Fla., says that in 1989 there was $2.8 trillion in FDIC insured deposits. Today there is $4.0 trillion. "That's not even keeping up with inflation," he notes. However, in 1989, mutual funds had about $500 billion. Today, it's at $700 trillion. Where is all the deposit money going? Into the mutual fund market, he responds.
For a number of reasons, members aren't parking as high quantities of cash in the credit union as they did in the past. Brokerages are reaping the benefits and credit unions are feeling the pinch.
And it's not just credit unions that are worried. A survey of the 23 banker members of the American Bankers Association's board of directoys rated funding the top issue for 2001. (See www.banking.com/aba/manage ment_trends.asp.)
To combat this trend, credit unions are getting creative with new accounts, special incentives and trust services to lure-and keep-the cold, hard cash.
SALES CULTURE
To grow deposits, credit unions should embrace sales, says Stickler. "I don't see how a credit union can grow without addressing this issue of sales," he insists.
The best source of business, according to Stickler, is the top 20 percent of members. They are the members who bring in about 90 percent of credit union business and likely over 100 percent of profits, he says. And they all have business elsewhere.
To bring home his point, he told a story that happened when he was speaking to board members at a conference. He asked them, "How many of you have brokers?" Almost all hands went up.
Then he asked, "How many keep more money with the broker than the credit union?" Again, almost all the hands went up. Why should we expect members to do any differently? he asks.
First find out where members have other business, he says. Assign top members to member service representatives and branch managers. And finally, "start talking to those people!" he insists.
This will involve some training, he says. "So many of those top members are not happy anymore with the traditional CD. They're more and more...