MADISON, Wis. (12/17/14)--When it comes to establishing a value proposition, a credit union can't only talk the talk, it must also walk the walk.
Drawing from six credit unions as case studies, the Filene Research Institute has put together a joint research series with Credit Union Central of Canada to illustrate examples of institutions that have not only devised, but also successfully implemented well-defined value propositions for their members.
The goal of the research is for other credit unions to pick up on these strategies and adopt them at their own institutions, according to Filene.
"We set out to understand the strategies infused in these credit unions and identify the lessons from them that other credit unions seeking to implement a distinct value proposition could implement," Filene said.
Each of the six credit unions highlighted by Filene has chosen one of three general value propositions to assume: operational efficiency, product innovation or customer intimacy. In the research report, Filene explains how each can be executed.
For example, St. Louis Community CU, with $245 million in assets, recently decided to shift its value proposition from operational--striving to offer services at the lowest cost--to one of customer intimacy, which places an emphasis on member service.
To do this, the low-income community-focused credit union catered the entirety of its product line to serve its unique members.
"By serving underserved, unbanked and underbanked individuals, St. Louis Community CU wanted to shift from competing head-to-head with banks to potentially take some pressure off of its balance sheet," Filene said.
Given that serving a low-income population would inhibit the amount of revenue the credit union could generate, it had to get creative and expand on the ways it brought in funding.
In addition to traditional revenue lines, the credit union now receives private sources of funding through partnerships with local banks looking to leverage their resources; through the public support of grants and loans from government programs; and from philanthropic support given to its nonprofit charitable organization.
As a result, St. Louis Community CU can focus on those things associated with member service, such as being convenient and accessible; maintaining a risk tolerance level representative of its marketing position; providing products and services that are in demand by low- and moderate-income individuals; and offering equitable pricing that brings in sustainable profits.
In the end, despite the diversity in credit unions Filene selected as case studies, researchers found a number of similarities in the approaches each has taken with their value propositions, including: