When Martin Carter, president/CEO at $202 million asset Astera Credit Union in Lansing, Mich., launched the EmpowerMe! financial wellness program, he wanted to improve members’ financial lives.
But in doing so he knew those members would qualify for more of the credit union’s products and services.
“We were turning down one out of every two loan applications, and we were turning down almost the same number of checking account applications,” Carter says. “We realized we were dealing with a lot of people from low-income households who were struggling with their credit scores and with making good financial decisions because they lacked knowledge and financial literacy.”
Because the credit union wanted to improve its performance as well as that of its members, Carter says it was critical to implement an outcomes-based financial literacy program.
Through EmpowerMe!, Astera members work one-on-one with credit union counselors certified through the CUNA Financial Counseling Certification Program. The goal is to improve members’ credit scores by at least 100 points and build up their emergency savings by establishing regular savings habits.
“We also want them to have a small dollar line of credit or a credit card they can fall back on,” Carter says. “And if they were relying on payday loans, we want them to be out of that cycle by the time they leave the program.”
The final measure Carter employed was the Financial Health Network’s Financial Health Score, which uses eight indicators of financial health. To develop the indicators, the Financial Health Network consulted data from 20 consumer finance studies and more than 85 financial services providers and industry experts.
The program has improved outcomes for both Astera and members. “Right now, in addition to the expected outcomes, we’re moving people into home loans that I never thought possible before,” Carter says. “It’s an extension of the credit union philosophy.”
EmpowerMe! requires a signed commitment from enrolling members. Currently, the program has 18 participants.
“We get a lot of referrals, but it does call for major behavioral changes,” Carter says. “The coach-guided program isn’t for everyone.”
Carter also wanted a self-service program for members who weren’t quite ready for that level of commitment. In addition, he wanted to offer a gamified form of financial education that was smart phone- and tablet-friendly, and engaging to users.
Working with a fintech company, Astera launched the LifeCents app in March 2022. The Financial Health Network score is incorporated into the app, and users earn badges and receive messages that keep them engaged.
Carter has also developed products around empowering financial well-being. The credit union’s 50-50 loan consolidates debt and is designed to extricate members from the payday loan cycle.
For every six badges members earn in the LifeCents app, their loan rate drops one percentage point. Members can also lower their rate if they make six consecutive on-time payments.
“On top of that, part of the loan dollars we lend out are put into a reserve for emergency savings,” Carter says. “When somebody applies for a $1,000 loan, we'll put another $500 into emergency savings.”
Astera has increased the number of its certified financial coaches from three to eight. Carter says EmpowerMe! will continue, mainly through referrals, because of the remarkable results participants achieve through the program.
“I meet with the coaches every month,” Carter says. “We track deposits and loans, and how those relationships are growing. With the LifeCents program it’s different. We’re tracking engagement and Financial Health score improvements. Regardless of the program they’re in, that Financial Health Score is important.”
Carter says focusing on financial well-being helps the credit union stand out in a market that’s saturated with financial institutions.
“I have people coming in who never had a bank account who are now establishing savings habits and building credit,” he says. “It's outcome based. We’re not just throwing education at people.”