CHAMPAIGN, Ill. (10/21/13)--When the University of Illinois Employees CU submits its request for proposal to become the exclusive banking partner of the University Illinois in first quarter of 2014, E.J. Donaghey, UIECU president/CEO, hopes to stress the difference between credit unions and banks to university officials. TCF Bank, the university's current partner, has made that task a bit easier for Donaghey and the credit union.
The U.S. Public Interest Research Group analyzed complaints submitted to the Consumer Financial Protection Bureau (CFPB) and found that TCF Bank customers are the most likely to complain about their banking experience (Chicago Tribune Sept. 17). Wayzata, Minn.-based TCF ranked No. 1 nationally, with 24.9 complaints per billion dollars of deposits. That's nearly three times the ratio of the No. 2 bank, Sovereign Bank in Boston.
Donaghey has worked with students who have been less than pleased with the TCF banking experience. He told the story of one student who was hit with $400 in inactivity fees when she returned home to India for a couple of months. "And TCF will not reverse those fees," Donaghey said.
The CFPB has opened an inquiry into the deals between universities and big banks (ABC News Sept. 5). Banks often see students as little more than "dollar signs in backpacks," said Rohit Chopra, CFPB student loan ombudsman and assistant director.
Donaghey believes his credit union offers an alternative to that approach. "Part of our offer to the university will be that because we are a cooperative, because we are a credit union, we are going to provide low-fee accounts and we're going to be more flexible," Donaghey said. "We currently have a plan in place where we provide on-campus financial literacy. We'll certainly emphasize that we will give students a second and third chance, whereas these banks really do gouge students because they assume Mom and Dad are going to pay the bills."
The credit union established a strong link to the University of Illinois Alumni Association (UIAA) when it won the contract to provide a Visa-branded card to the association's 625,000 members. The contract replaced the alumni association's relationship with Bank of America.
According to an annual report on college credit cards, submitted in October by the CFPB to Congress, UIECU opened the largest number of new college credit card accounts during 2011 (News Now Nov. 28, 2012)
During 2011, the credit union opened 3,452 new accounts, which moved it up four notches to the top spot. That compares to 779 new accounts it opened in 2010, when it ranked fifth in the nation. UIECU's affinity card is marketed to the university's alumni, fans and credit union members, but not students.
The UIAA sought a financial services partner with a "clean" image in the wake of the Wall Street meltdown when it partnered with the credit union in 2010, said Greg Anderson, UIECU's chief operating officer.
"A lot of our success in earning the alumni association's business was saying, 'Here's how your members will be taken care of,'" Anderson said. "The same holds true in this RFP process. We can tell them, 'This is how we're consumer friendly. This how we built our fee structure. Not because we're changing to accommodate students, but because this is how we've built this credit union over the years.'"