What does development mean to your credit union?
Graduates from the National Credit Union Foundation’s Credit Union Development Education (DE) program explored that question during their recent hands-on workshop.
“Development definitely has a domestic element,” says Lois Kitsch, program manager of the National Credit Union Foundation’s REAL Solutions program, in a new report on the program, published by the Filene Research Institute.
“To me it means understanding who your members are, and providing products and services that enhance their lives and move them on a path to self-sufficiency and asset accumulation,” she adds.
During their workshop, participants looked for solutions to these “imaginary” case studies. Here’s a brief summary.
Plan a new CU in Iraq.
The country faces an unstable economy, virtually no middle class, limited democracy, ongoing security issues, illiteracy, corruption, tribal factions, Islamic financial regulations, and a lack of trust of outsiders.
Solutions: Develop a middle-class membership of oil workers, their families, and related select employee groups using appropriate products. The credit union would be blessed by local leaders, and would adhere to Islamic lending standards.
Promote CUs as cooperatives.
This aligns with the United Nations’ “Year of the Cooperative” campaign.
Few credit unions advertise themselves as cooperatives, however, and few would invest resources in a program.
Solutions: Take a long-term view: Gain a million new voices by 2017. Request small contributions from many credit unions, and create a rewards card program promoting the slogan “Cooperatives Cooperating Make Cents.” Offer rewards for on-time payments, and 1% cash rewards to stakeholders.
Promote and enhance literacy programs.
This is especially important for young adults. Young consumers love reality shows, spend a lot of time playing video games, prefer simplicity, and buy into branding.
Solutions: Launch a youth-oriented campaign, using channels popular with young people, and a brand message targeted at them. Start a tiered program to help young adults transition into new programs, with incentives for wise financial behavior.
Make up for lost interchange income.
This is a result of the Dodd-Frank legislation and its regulations.
Solutions: Consider new payment options, recapture loans and credit cards, and position the credit union against banks using fees to make up for their lost income. In a more serious situation, credit unions could gain a low-income designation to receive supplemental capital, create third-party partnerships with outside vendors, and consider shared branching.
Reverse stagnating CU growth and an aging membership.
Solutions: Target the large Hispanic population to augment membership. Design a program to transition the credit union from a product-driven culture
to one driven by member services and needs, such as CUNA’s Creating Member Loyalty.
Preserve a small, slightly unstable CU considering merging with a larger one.
Solutions: Pursue partnerships that enhance the credit union’s ability to serve the underserved; increase membership via advisory boards or ambassadors, new member groups and services; and add ATM/branch locations.
Download the Filene Research Institute brief at filene.org. And visit ncuf.org for information on the next DE workshop.
LIBBY VERTZ is an intern in CUNA’s business-to-business publishing department. Contact her at 608-231-4096.
Next: Embrace Employee Innovation