How do you stand out in a sea of financial service providers? Being big might make you noticeable, but size alone won’t distinguish you from Chase or Bank of America. Instead, exceptional products and services have emerged as differentiating factors for cooperative financial intuitions of all sizes, blending old-fashioned service with modern delivery.
“I’m fond of saying ‘if you walk out our front door and yell, three banks will hear you,’” says JB Hoyt, chairman of the Board of Directors at United Federal Credit Union ($1.3B, St. Joseph, MI). “We have to be different, and member service is a key part of that.”
The credit union partners with its largest select employee group, Whirlpool, and other local institutions to donate time and money to community projects.
“Whirlpool sponsored the 100th Habitat For Humanity home for Benton Harbor [where Whirlpool is headquartered] and we sponsored home 101,” says Gary Easterling, CEO of United.
To encourage both corporate and individual philanthropy, the credit union gives employees eight hours a year of paid volunteer work to use as they see fit, in whatever fields they see fit. Corporate commitment, employee activities, and word-of-mouth communication helps United establish its brand in the communities it serves. Where that leaves off, marketing materials pick up the torch and fan the flames.
United tends to spend more on traditional broadcast media in regions with lower brand recognition, says Tim Bennett, vice president of marketing. For example, the credit union launched a new TV commercial – the first in a number of years – and member referral campaign to maximize the impact of its branch presence in several new markets.
Organic growth remains a major area of opportunity for United, driven primarily by grassroots promotion of ancillary products and services by branch staff.
“We have about 3.1 services per household,” Bennett says.
It takes a balanced blend of rigidity and flexibility to generate products and policies that serve individual needs without putting membership at risk. For United, that balance unlocks its true potential for organic growth.
To decide what stays the same in its own product mix, the credit union begins with identifying what works. “We had phenomenal growth in loans last year, in the midst of a recession when no one was lending,” Easterling says. “It happened because we stuck to our knitting and didn’t violate our underwriting standards, so we didn’t have baggage on our balance sheet.”
Saying “No” to members is an important part of looking out for their financial well-being. Be prepared to follow up with an explanation of why a product or service isn’t a good fit and provide alternatives.
Layoffs within your SEGs or communities mean financial issues for everyone ahead. Make your battle plans early and physically get in front of members to address concerns before they become long-term problems.
That growth was not all rate-driven, as the credit union’s strategy is not all about a race for the best rate. “We are constantly asking how [other institutions] are making it work with that rate?” says Tim Gray, vice president of finance and accounting. “In some cases they are [making it work] and in some cases, maybe they aren’t. But there’s a reason we stick with our underwriting standards. It’s good, sound businesses decisioning we work with.”
Once it has locked down its must haves, United asks how it can make those products better.
“Consumers’ needs evolve and you have to be willing to evolve with them,” Easterling says. “What worked two years ago isn’t going to work two years from now.”
“We run a 120-130% loan-to-share ratio, which scares the daylights out of some people, but we know how to do loans,” says Mark Weber, vice president of national sales and service.
A key portion of this loan generation is United’s indirect lending program. Its delinquency is currently at par with direct lending at less than 1%, but it far exceeds direct lending in volume, Weber says.
When it comes to the real estate portfolio, the institution consistently ranks as one of the top players in its Michigan market. Nearly half of the mortgages in United’s portfolio are in Michigan, but the credit union also has mortgages in 36 other states and can service members’ mortgage needs anywhere in the country, says Jeff Leep, director of sales strategy and development for mortgages. As such, the credit union is becoming more top-of-mind in other regions, too.
In addition to the ARMs and fixed-rate products members most prefer, the credit union is seeking opportunities in niche and underserved areas of its newer marketplaces, including construction lending in Arkansas, where the industry was not as hard hit as elsewhere, and FHA and VA loans in areas that attract first-time homebuyers, Leep says.
“We have about 4,000 mortgage loans and more than 65,000 households,” Leep says. “With national homeownership rates at about 65-66%, there’s an opportunity for us to expand within our existing membership, let alone membership from the regions we acquire.”
The same potential for growth is true of cards, says electronic delivery systems manager Nada Kramp. The credit union currently has 23,000 credit cards accounts and 70,000 debit cards, with active usage at 83% and 80% respectively.
The 2006 merger of United Federal Credit Union and First Resource Federal Credit Union bumped up the card portfolio by nearly 50%. Acquisitions such as Clearstar Financial in 2009 brought mostly debit relationships, so the potential for growth in these markets is strong.
Beyond the consumer side, the credit union is developing opportunities to become a stronger commercial lender in its markets, says Steve Downs, director of business services.
Although offering responsive business products such as business checking and ACH direct deposit is important, the main competitive advantage United has as a local lender is its ability to offer credit when banks can’t or won’t.
Credit is the life line for a company, for its growth and its operations. So I see business lending as one of our key products.
“Credit is the life line for a company, for its growth and its operations,” Downs says. “So I see business lending as one of our key products.”
When it comes to bolstering sales, United identifies needs before they arise and then gets in front of members. Many times, a sale comes about not because the member was aware they had a need but because the credit union presented an opportunity or solution the member wasn’t even thinking about.
“If we know when your expiration date is for your insurance policy, we can send you information prior that shows our alternative and how it can save you money,” Weber says. “That’s how sales happen.”
Convenience is critical in United’s online suite because even the best products go unused unless they are easily accessible. To keep up with growth and demand, United is upgrading its website, phone service, and online banking suite to offer expanded options for bill pay, business banking, online account opening, and mobile banking, says Carly Eldridge, eCommerce manager.
The credit union moved from an extensive network of vendors who offered singular services to a small umbrella of more diverse providers. In doing so, the credit union hopes to create a seamless brand for its online experience.
“We looked at spending levels and efficiency in our digital media and we’ve increased that percentage of our budget two or three times over in just one year,” Bennett says. “At some point, spending for digital media will probably eclipse offline media.”
Such investments are paying off. Since unveiling its redesigned website in April, United has increased the amount of time visitors stay on the site 40-50%. But it’s not just high-tech investments that are wowing members.
“One product we weren’t sure would take off but worked out really well was text banking,” Eldridge says. Members latched onto text banking because it was easy to type in a command and get basic account info, such as balances, it didn’t require an expensive Smartphone, and it had minimal wait or loading times, she says.
Above And Beyond
United developed its budget counseling program, initially referred to as loss mitigation, to ensure that even when the credit union has to say “no,” it’s not the end of the member’s involvement.
“We teach you how to manage your finances, we put you in a budget, and we work with you as your family adapts,” Weber says. “If you follow the program, we’ll be able to give you the loan you need.”
And if a member can’t come to United, United is willing to go to them.
“We have a factory in one of our markets laying off a bunch of people for the third time,” Weber says. “We’ll be sending budget counselors out to that market and have them work with those employees to help them with that transition.”
You never know how going the extra mile with a member will pay off, whether it is a delinquent loan paid in full or a champion for your cause.
“I got involved with United and the Board because they let me live in my house as long as I made the payments and were willing to take a risk on me,” says Mike Hildebrand, vice chairman of the Board of Directors. “It wasn’t just all about the almighty FICO score.”