Remarks by David Mooney

The Business Case for Financial Literacy: Good for Alliant, Good for Industry, Good for the Economy

The Sy Sims philosophy: “An educated consumer is our best customer”.

• Believe that we have a strong offering and that an informed and discerning consumer will recognize value.
• Deception, exploitation, and entrapment are not winning business models.

Financially literate consumers are “better” borrowers and savers

• Less likely to overextend, default.
• More able/likely to use more credit and to save more over time producing a healthy income stream.
• Must be accompanied by transparency and fair practices on the part of financial services providers.
• Proof point: among other factors, lending to uninformed/naive consumers contributed to massive losses by banks and their shareholders.

Service-Profit Chain

• Financially literate consumers will make informed decisions regarding financial services… leading to better outcomes for them… leading to greater satisfaction with their providers… leading to greater loyalty, service usage, relationship tenure and lifetime profit contribution.
• Remove psychic barriers to doing business with “mainstream” financial services providers.
• Greater financial literacy can help overcome lack of confidence/fear of embarrassment that are significant reasons the underbanked avoid banks, creating a substantial pool of new prospects.

Study of employers and employees conducted by Alliant Credit Union and Intl. Society of Certified Employee Benefit Specialists suggests that financial literacy has significant implications for worker engagement, performance and productivity.

• Over 50% of workers describe themselves as living paycheck-to-paycheck.  Less than 20% considered themselves financially secure.
  Employees with financial concerns spend significant work time dealing with personal financial matters: employees’ financial stress costs employers over $7,000 per worker in lost productivity annually.  Also more likely to suffer health problems, take sick days, make poor decisions on the job.
  85% of workers want useful financial information at the workplace to help them manage their finances and become more savvy consumers.
  Only 10% of employers have programs to educate employees on how to manage their own finances.
  
  Temper business/credit cycles: reduce excessive consumer leverage and spending on the upside, effects of de-leveraging, loan defaults and bankruptcies on the downside.
  
  Would the current economic downturn have been less severe if more consumers understood fundamental financial management practices and implications of leverage?
  
  Alliant Credit Union invests substantial financial and human resources in promoting financial literacy… because we believe there is a payoff.
  
  Member-owned financial cooperative, extremely sensitive to productivity and return on spending.
  Alliant board of directors committed $4 Million of members’ capital to fund charitable foundation with primary focus of youth financial literacy.
  Alliant employee volunteers have conducted over 250 Banking on Our Future classes on company time in the past three years.