Last summer, the credit union movement hit a major milestone, with more than 100 million memberships nationally. Credit unions regularly outperform banks on fees, rates, and service, according to well-respected national surveys. And the big banks’ reputations continue to suffer from their lack of consumer focus, role in triggering the Great Recession, and aversion to consumer lending in the aftermath.
In sum, the timing has never been better for credit unions to expand their base of members, and also their total deposits, which still account for less than 7% of holdings across all financial institutions.
Yet in an increasingly competitive and complex environment — with a flood of new regulations, consumers hungry for new technology, and the rise of nontraditional banking options — this growth doesn’t come easily.
So what can your credit union to do sustain and grow its membership, both in quantity and quality? Consider these seven keys, which address the issue from operational and strategic perspectives.
Strive for stellar service
Who doesn’t want to be treated as a name rather than a number? A great starting point is acknowledging members by their names. But don’t stop at the superficial. Create a culture in which staff engage new and existing members in conversations about their current financial situation and needs, as well as their life ambitions. Instill in members the trust that you are their financial partner, and that you’ll guide them through important decisions. Offer financial education courses, resources and counseling. Engaged members aren’t just loyal, they’re brand ambassadors.
Offer attractive products
Yes, you need to be competitive on rates, and offer a full palette of traditional investment and lending options. Pay close attention to overall market trends, such as the massive growth in new- and used-car loans. But don’t cater to rate-chasers, who will jump ship at the next more attractive offer. Instead, look for novel ways to meet the needs of your individual market — such as extended-term vehicle loans that make monthly payments more affordable, the heating-oil loans that help many Northeasterners survive the winter without ballooning energy bills, or quinceañera loans to cover costs of the traditional Hispanic celebration of a girl’s 15th birthday. And figure out ways to compete with the ease of applying for and obtaining personal loans from nonbank competitors.
The only thing consumers love more than technology is having options. Digital banking has become a necessity, and you should constantly improve and expand your mobile and tablet banking platforms. But don’t sacrifice investments in your branches or ATM networks, including conversion to the EMV (Europay, MasterCard, and Visa) smart cards that will increase security at point-of-sale transactions. Instead, strive to create a true omnichannel environment, where members have a seamless, integrated experience regardless of touch point. Many credit unions have successfully transformed branches into interactive facilities where members conduct routine transactions on kiosks, and built mini-branches or installed stand-alone kiosks in high-traffic areas. Make it as easy as possible for members to do business with you, wherever and however they wish.
Diversify your membership
Many credit unions remain successful by relying on a single select employee group (SEG), and there are definite advantages to that approach. But for the majority of credit unions, expanding the field of membership — by adding SEGs, obtaining a community charter, or switching to a state charter from a federal charter — creates a wealth of opportunity, with thousands more prospective members. Beyond appealing to the masses, consider initiatives to attract promising underbanked or unbanked demographic groups such as Hispanics and millennials. Adding members from these segments addresses one of credit unions’ pressing issues–an aging membership whose average age is 48.5, according to Credit Union National Association statistics.
Marketing works. That’s a fact. But skeptics legitimately question the scattershot nature of many efforts. Give your marketing and cross-selling initiatives punch by mining data to determine which members will be most interested in your offers–and conversely, whether programs that have worked in other markets might take fire within your field of membership.
Use analytics to manage loan portfolios
On a macro scale, loan portfolio software enables you to find hotspots and trouble spots, which can be helpful in strategic planning and tactical campaigns to increase loan growth, and thereby add members or intensify existing relationships. On a micro scale, you can proactively identify members who would benefit from refinancing or are due for another vehicle loan, or who demonstrate signs they’re becoming vulnerable to delinquency or default and might be in need of assistance. Reaching out to members in either situation demonstrates your commitment to their well-being.
ADVOCATE FOR THE GREATER GOOD
Sometimes, it’s difficult to think beyond day-to-day matters within your credit union’s walls. But for the movement to flourish long-term, it’s crucial to demonstrate credit unions’ collective strength to defend existential issues such as the federal tax exemption, earned because credit unions are cooperative, nonprofit entities. Establish and deepen relationships with your local and national legislators to ensure they understand how your credit union is uniquely positioned to serve your member-owners.