Increasingly, they also are delivering predictive analytics for deeper insights and focusing on governance to help safeguard member data. And on the horizon: a host of artificial intelligence and machine learning tools expected to ripple throughout the organization.

With demand for data at an all-time high, credit union analytics teams generally are taking one of two shapes: employees that work together as a centralized, enterprise-level unit or embedded analysts that concentrate on specific areas of the business.

Cole Nuyen, director of analytics at Advia Credit Union ($3.0B, Kalamazoo, MI), leads a nine-member team consisting of data engineers, analysts, and data specialists. The data engineers focus on complex system integrations, data warehouses, and data marts. The analysts collaborate with business units on various projects, whereas the junior-level data specialists handle simpler, low-touch reports.

Nuyen, who joined Advia two years ago to lead the enterprise team, says he has worked under both organizational models — centralized and federated — and both have their advantages and disadvantages.

“It depends on what the rest of the organization looks like,” Nuyen says. “If you have an organization full of people who understand how to use data to make decisions, then a centralized model can work pretty well.”

Lee Brooks, senior vice president of data enterprise analytics at Virginia Credit Union ($5.3B, North Chesterfield, VA) joined the cooperative in 2017 to organize and build an enterprise data team. Today, he leads an 11-member team that handles data engineering, business intelligence, business analytics, and data science.

The team also supports analysts embedded in the marketing and credit risk teams, providing them with data to analyze and run reports on. The marketing analysts specialize in areas such as market segmentation, whereas the credit risk analysts focus on the portfolio. Both jobs require close coordination with their business units.

Brooks says a centralized data team offers many advantages. From a practical standpoint, it provides coordinated support of a large data ecosystem with a small team. Teamwork ensures continuity and also allows for coverage during employee vacation or in-between hires. It also helps ensure consistent data governance processes. Various parts of the organization might create their own spreadsheets, but the enterprise analytics team ensures there’s a single version of the truth.

“Group interactions also are important because we’re always focused on data and always pushing for continuous improvement,” Brooks says. “We as a team learn from one another. If somebody finds a better way to do things, we’ll share it with one another.”

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The Demand For Analytics

The U.S. Bureau of Labor Statistics predicts the number of data science jobs will grow 36% by 2031, one of the highest areas of job growth. Big tech companies such as Google, Meta, Microsoft, and OpenAI are hiring thousands of data scientists and paying top wages — making it a competitive market.

One way Advia assures it has the right people in the right seats is to build talent from inside the organization. For example, it has data specialist roles designed to be entry-level jobs that can provide support for basic reports.

“If we lose an analyst, we typically have a specialist ready to step up into that role,”
Nuyen says. “And if we lose a specialist, we have someone internally ready to step up. We pull people that have business knowledge into those junior-level roles and then develop them technically.”

Another key element in meeting the demands of the business is automation, Brooks says. Every night, approximately 1,500 data load jobs pull in data from multiple systems and load it into data tables, data marts, and reports.

“For a team our size, the only way we could support 1,500 jobs is to automate it,” Brooks says.

At Virginia Credit Union, which just merged with Member One FCU ($1.6B, Roanoke, VA), all source data, plus nearly all business intelligence dashboards, is captured and sourced from the enterprise team.

“Other areas certainly build reports, but to be displayed on our enterprise portal, dashboards must meet governance standards and be published by our team,” the SVP says.

The credit union’s automation has saved time and created new opportunities. For example, its front-line organization used to create its own spreadsheet with monthly performance metrics on branches and individual associates that was used to support staff performance.

“We said it is probably a better model if you can automate the whole process and give the branches and the associates their data on a daily basis,” Brooks says. “So then they know how they’re performing throughout the month.”

Under the revised process, an automated overnight process populates the data warehouse, which then populates Tableau dashboards that can be viewed over the intranet.

“It’s automated daily, which is great source for coaching staff,” Brooks says.

The ‘Cool Stuff’

Prioritizing projects across various parts of the business is another major focus of enterprise analytics. The analytics team at Virginia Credit Union has its own prioritization model that allows it to immediately fix issues or problems with data. Large projects use a different model.

“For business requests, I host a quarterly data steering committee where I meet with all the executives and share with them all the bigger items that we have to work on,” Brooks says. “I’ll get their input, and we make changes as an organization.”

Although meeting the day-to-day analytics needs of an organization is crucial, teams also should allocate time exploring new possibilities.

“How do we do cool things?” is how Nuyen describes it. “How do we do important things for the business?”

For example, in recent months, Advia’s team has been focused on integrating the credit union with fintech marketplace firms to widen the reach of the credit union. Advia has been growing geographically, but as a low-income-designated financial institution, the analytics team must closely track the impact of growth on the financial demographics of the membership and borrowers.

Virginia Credit Union has been looking for ways to incorporate predictive analytics into its processes. For example, the team created a “next best product” field delivered through its CRM application that predicts the product a member is likely to open next. Another predictive tool for check holds helps tellers determine how much funds should be available to a member when cashing or depositing a check from another institution. A scoring system sets the amount and displays it in the core system.

“It creates a consistent and automated process across all the branches,” Brooks says.

The New Frontier: Data Governance

Although institutions have used frameworks to manage their data practices for decades, government regulations, privacy concerns, and growing cybersecurity threats have pushed data governance to the forefront.

“Every day there’s another breach here and a leak there,” Nuyen says. “Working in a financial institution where you have this level of transparency into people’s lives and their data, it’s critically important to safeguard it and make sure you’re using it responsibly.”

Advia recently stood up a three-member data governance team that is separate from Nuyen’s team. The analytics director says there’s a good reason for that.

“We want to make sure it’s an independent function that’s not inappropriately influenced by anyone,” Nuyen says. “It’s sort of our partner in arms on a lot of different projects.”

Data governance will also be a critical function as enterprises implement emerging generative AI tools and large language models into the workplace and eventually deploy them on public-facing applications. These tools need to ingest huge amounts of data for training, so data quality is crucial.

“With AI taking center stage, it is incredibly important to have good quality data to feed into those models,” Nuyen says. “As with any process, it’s garbage, in garbage out. There’s going to be a ripple effect as it starts proliferating, and now the whole industry starting to realize the inputs are not optimal. Everyone needs better data – and clean data.”

The promise of AI is that it will enable individual users to fulfill their own requests. That day might be coming sooner than later. Power BI already comes with Microsoft Copilot, and Tableau offers Einstein, which means users don’t need to understand how to write a query or use the drag-and-drop fields.

“Already this space is getting where you can take a proficient business user, and if they know the question they’re trying to answer, and they know how to articulate it, the answer is already baked into these platforms,” Nuyen says. “If I want to know the top-producing loan officer in this region last year, it spits it out in a report.”

That level of self-service could answer many basic requests, which would free up time for engineers, analysts, specialists, and more to work on things that push their organizations forward.

The post The Benefits Of A Centralized Analytics Department appeared first on CreditUnions.com.

One of the biggest shifts has been how lending and finance leaders consider qualitative and environmental factors in anticipating loss reserves.

CECL adoption drove huge increases in allowance for credit losses (ACL), and it came at a time when earnings were drying up due to economic factors such as inflation and rising interest rates. Delinquencies and charge-offs are consequently on the rise, making the job of allowing for credit losses even more challenging.

“For ages and ages, and for ages yet to come, how you measure credit on the balance sheet is really important,” says Daniel Smith, CFO at Wright-Patt Credit Union ($8.6B, Beavercreek, OH). “It’s one of the most critical measures, but it’s also one of the most judgmental measures. No matter how much people try and box it into a model number — old method, new method — at the end of the day it still requires management oversight and analysis.”

The move to CECL accounting helped shine the light on lifetime losses in portfolios, which will help credit unions recognize credit losses in a more timely fashion through the use of an expected-loss model instead of an incurred-loss model. CFOs say CECL has created clear processes, more collaboration between finance and lending, and more focus on forecasting — but it has also added more work to an age-old process.

“It is a little bit more work, but when you think about an organization with a balance sheet where 90% of our assets are in loans, this is what we do,” says Rhonda Pavlicek, executive vice president of finance and risk and chief financial officer at University Federal Credit Union ($4.2B, Austin, TX). “We have to be on top of managing that risk and making sure we’re pricing and reserving those appropriately. Banks implemented CECL in 2018 and 2019. We’ve had a lot of opportunities to learn from the banking industry’s experience.”

Both Wright-Patt and University moved to CECL on Jan. 1, 2023, and the impact on was immediate: Loss reserves doubled at University and increased 41% at Wright-Patt. Additionally, Wright-Patt experienced nearly $1 billion in loan growth in the past 18 months, so its credit reserves-to-loans ratio grew from 0.81% to 1.45% reflecting both the adoption of CECL as well as portfolio changes.

“Part of that growth came from volume, but part of that also came from changes in credit risk – some good, some not so good,” Smith says. “Credit card losses, for instance, are higher now than they were at the time we made the transition, as are our auto losses. Commercial, on the other hand, is probably the same, or a little bit better, based upon the mix of credit that that we actually have.”

What’s Inside The ‘Black Box’?

The transition to CECL was a boon for financial consultants and specialized modeling software, but off-the-shelf products can only go so far. For example, the consultant University worked with provided multiple options for models and calculations.

“The team did a lot of work to really try to understand which methodology we should use for which portfolios,” Pavlicek says. “They sliced and diced it multiple ways. We didn’t do an across-the-board approach; we did different types of modeling and different types of approaches for different portfolios.”

By contrast, Wright-Patt initially used a vendor’s model and compared the results to in-house estimates. However, Smith says some results didn’t seem consistent with what it expected the credit risk in the portfolio to be, based on different alternate views. For example, the credit union used static pool losses for its auto loan portfolio, and the results were not consistent with the third-party model.

Wright-Patt ended up using a combination of both vendor-provided and in-house models, and often uses the alternate views as a challenger to provide a reasonable balance. The problem? The model was too opaque to justify.

“It’s the infamous ‘black box,’” Smith says. “At the end of the day, we’re responsible for all the numbers that go onto our balance sheet, black box or no black box. So, that proved to be difficult for us to address.”

Smith says the credit union reviews loss experience going back 10 years or more for various loan types, looking at changes for both the current month and on an annualized basis. He also uses Peer Suite from Callahan & Associates to pull in proxy data as well as charge-off rates at small community banks, Blue Chip Economic Indicators reports, and the Wall Street Journal Economic Forecasting Survey.

When you think about an organization with a balance sheet where 90% of our assets are in loans, this is what we do. We’ve got to be on top of managing that risk and making sure we’re pricing and reserving those appropriately as we need.

Local and national unemployment rates are also key indicators, Pavlicek says, and University considers inflation, consumer spending, and other factors in its calculations, including trends in home and car prices.

“As we know, when someone goes into delinquency and charge-off, the prices could impact those pieces,” she says. “So we use that for all macro views to determine where there’s some risk, and then we determine how we use that within the qualitative components.”

The mix of loans within the portfolio impacts the sensitivity to these economic changes. For example, nearly 42.6% of University’s portfolio consists of new and used auto loans, which carry shorter terms and are less susceptible to economic swings. In comparison, first mortgages and other residential loans account for 42.9% of the portfolio.

“The model is one input that we use, and we think about our loan portfolio and the attributes within that,” Pavlicek says. “As an organization, has our risk shifted? Has underwriting shifted? We anchor to what internally is going on from a micro level, and then we look at the macro environment. And that’s where the qualitative and the environmental factors come in.”

At Wright-Patt, auto lending makes up 38.5% of the portfolio, compared to mortgages and other residential loans (36.7%) and commercial loans (12%).

“You need to have a good, reliable model that takes into account not just your loss estimates, but all the other things that happen — like prepayments and so on — that can have an impact on how much you need to reserve,” Smith says. “That’s especially important for longer-tenure products.”

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An Ongoing Dialog With Lending

The transition to CECL has also spurred a closer working relationship between finance and lending. Both credit union CFOs meet at least quarterly with their respective chief lending and risk officers. University also formed a CECL council that meets quarterly. It is made up of the chief risk officer, chief lending officer, and vice presidents of operations, finance, retail, and lending.

“We have a cross-functional group across the organization looking at this to make sure if there’s anything we need to be thinking about or approaching from an analytical perspective,” Pavlicek says. “We’ve got the qualitative dialogue happening. That’s been our approach, and it’s served us well so far through the last 18 months.”

It’s also important to keep the board informed of any changes to the model, adds Smith.

“We have a quarterly reporting channel where we provide that information, but [if something happens] where we have a big change, we’ll escalate that not only to the CEO but also to the board so that they’re aware,” he says.

Looking Ahead

The shift to CECL has spurred University to not only actively review pricing but also work closely with the collections team to understand headwinds that could cause problems for borrowers.

“It’s working both within lending and the collections team to really to make sure we’re being prudent and lending appropriately but also not putting people in positions that really can’t afford,” Pavlicek says.

Although the data being reviewed is in the past, Smith says he hopes to apply CECL to more forward-looking decisions. Historically, the credit union has offered a product and then waited to see how it performed in the marketplace.

“I’d rather be at the point of saying, ‘Well, let’s see, we want to go and help serve this segment, so I wonder how that will impact for credit reserves?’” he says. “We need to advance that, and we’re not there yet. But it starts with examining what has happened when you make decisions and then looking at the subsequent results.”

The move to CECL has prompted credit unions to look at their loan portfolios in new ways. For example, although University isn’t segmenting its portfolio by age, it is looking at the potential impact of economic changes on credit cardholders ages 18 to 24, who experience higher delinquency rates.

Was moving to CECL worth the effort? Well, it’s a mixed bag, Smith says.

“I love the fact that we are looking at a lot more data and talking about credit in a much deeper fashion, but it does consume a lot of resources and a lot of time to go through that,” he says. “I guess that’s the blessing and the curse: You get a lot more great information that you have to look at. I think we’re still learning at this point. Actually, I dare say we’ll always be learning.”

The post Putting CECL Accounting To The Test appeared first on CreditUnions.com.

Top-Level Takeaways

• Strategic Social Media Management: Financial institutions now hire dedicated personnel to manage corporate social media, reflecting its essential role in driving sales and brand visibility.
• Balancing Risk And Compliance: Engaging on social media requires navigating regulatory compliance and setting clear guidelines to mitigate risks while maintaining a strong presence where members are active.
• Quality Engagement And Targeted Advertising: Emphasizing engaging content and targeted ads helps institutions like BCU and Interra Credit Union effectively reach diverse audiences, increase traffic, and foster meaningful interactions.

Social media isn’t just for status updates anymore. These days, Facebook, LinkedIn, Instagram, and others are central to marketers’ ability to drive sales and increase brand visibility.

“This is my twenty-sixth year working in the financial world, and I was part of the early discussions of whether you should even dip your toes into social media,” says Meegan Siegwarth, vice president and senior marketing manager at Interra Credit Union ($1.8B, Goshen, IN). “Now we’re hiring people specifically to manage corporate social media, strategy, and plans. Things certainly have expanded.”

Engaging via social media comes with risk, but so does abstaining. Credit unions need to be where their members are. That’s why a growing number are navigating regulatory compliance, setting guidelines, and establishing approval processes to help mortgage, investment, and deposit teams establish a presence on social.

Interra allows its mortgage staff to post on social — after completing a 90-minute training course on social media do’s and don’ts and sending the post for review and approval.

In Illinois, BCU ($6.0B, Vernon Hills, IL) has revamped its social media policy to include online-exclusive offers and lead generation forms that track members and prospects coming in through social.

“Paid social campaigns are a great way to drive brand awareness, increase visibility, and reach potential new members,” says Erin Macasek, senior director of integrated marketing at BCU. “It is a lower cost paid media channel and has become one of the top drivers of traffic to our website, which is a key engine for member growth.”

BCU is assessing a variety of online ad formats. The ability to target specific demographics to make the most of ad purchases is a major benefit of advertising on social.

 

Interra shares information about community activities, fraud, and finances alongside the occasional post about product information.

 

Social As A Vehicle For Service And Engagement

Interra boasts a social following that includes 10,600 Facebook followers and 5,000 LinkedIn connections, and its weekly Facebook postings have increased 28% as the credit union shares information about community activities, fraud, and finances alongside the occasional post about product information.

“We also share information individuals might not know, such as ways to make good financial choices and great ways to save,” Siegwarth says. “With inflation and the cost of living increasing, we’re trying to make sure our social media messaging is more informative to help people through some of the challenging times.”

For its 26,071 Facebook, 18,648 LinkedIn connections, and 1,855 Instagram followers, BCU focuses on quality engagement across platforms versus simple volume, which, Macasek says, is a departure in the past year from its past strategy.

“We prioritize engaging content, especially video, which has proven to be highly effective in capturing attention and fostering interactions,” Macasek says. “This change reflects our recognition of the diversity of our audience. While we continue to create content that resonates with our current followers, we are also strategically growing our presence on platforms like Instagram, where there is a significant opportunity to connect with a younger demographic.”

BCU is assessing a variety of online ad formats, including animation and video. The ability to target specific demographics to make the most of ad purchases is a major benefit of advertising on social, and BCU’s marketing team is particularly encouraged by the results of one recent animated ad, which returned an above-average click-through rate of 2.42% and a low cost-per-click of $0.19. This summer, the credit union will post its first social-exclusive offers.

Notably, although TikTok is viewed by marketers as the premier social platform for young people, Interra has a small presence on the platform and is taking a wait-and-see approach to determine whether it will dedicate more resources to the short-video platform. Siegwarth says a credit union’s voice and engagement must be in sync with whatever social platform it’s on, and dedicating resources to TikTok, which Congress might ban in a few months, might not make sense.

“Instagram and X require instantaneous responses and capabilities,” Siegwarth says. “We want to make sure we have staff that can handle the appropriate responses that match the company’s voice. TikTok has different messaging and different mediums, more videos and more reels than just a straight message.”

Social As A Vehicle For Sales And Employment

At Interra, mortgage and investment teams have their own pages on LinkedIn and have been anxious to use the platform to build relationships and uncover leads.

“Our mortgage team uses social media to tout their relationships along the same lines of how real estate agents use their social media,” Siegwarth says. “We have lenders who love to post pictures that show a recent closing or a new business partnership.”

Before taking advantage of social media opportunities, however, Interra first had to ensure it had the right resources in place to monitor an environment in which posts appear 24 hours a day. After learning about a social media management company during a Callahan & Associates roundtable, Siegwarth turned to the third-party service for support reviewing  content before posting it for staff members and monitoring media channels for coverage of Interra.

To address regulatory requirements surrounding lending, last year Interra put its mortgage lenders through an hour-and-a-half training course on proper protocols for posting on social channels while staying compliant. For example, they can’t use the words “free” or “guaranteed.” Posting rates is prohibited, as is altering branding, logos, or font. And all images must be approved.

“When posting an image of a home, the image has to represent the general public we’re serving,” Siegwarth says. “A lot of our 24 counties do not have multi-million-dollar homes, so when we’re posting images of homes, we need to have homes that represent us.”

Like Interra, BCU’s social media policy helps maintain the integrity of the brand by ensuring employees remain compliant with privacy laws and protect sensitive information.

“It provides clear guidelines for employees on what they can and cannot share, which fosters trust and consistency across all online interactions,” Macasek says.

BCU does urge employees to share positive experiences and accomplishments to create a relatable, trustworthy presence in the digital landscape. Interra encourages the same types of posts, particularly on LinkedIn where job seekers are likely to visit.

“People look at social media to say, ‘How do they treat their employees? What can I find out about the culture of the company?’” Siegwarth says. “So, we’re deliberate in sharing and celebrating employees’ successes, our hiring standards, even some of our benefits.”

The post The Art Of Selling On Social Media appeared first on CreditUnions.com.

In the bustling landscape of credit unions, the mantra of “focus on the member” rings loud and clear. But as preferences evolve toward digital interactions and multifaceted needs emerge, who takes charge of ensuring exceptional member experiences?

PSECU ($8.2B, Harrisburg, PA) has given member experience a chief designation in the org chart, as well as added new staff to support member experience, including two member journey analysts and three experience product owners assigned to account origination and deposit products, consumer lending, and real estate lending.

“If everybody owns member experience, then nobody owns it,” says Lindsay Oparowski, associate vice president of digital member experience at PSECU. “That’s why the experience product owner role is so important. It’s the everyday job of this person to make sure all the pieces come together.”

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MX For The Life Cycle

PSECU treats member experience as part of the product. For example, a major component of a loan product is the rate, but so is the ease of use of the online loan application and the number of clicks needed to make a payment.

“How a member gets a product, especially in a digital-first credit union, is as important as the features of the product itself,” Oparowski says. “The experience they have in the digital spaces plays a vital role in their loyalty and retention.”

To ensure MX encompasses the entire life cycle of a product begins with the member journey analysts, who use a prototyping tool called Figma to create journey maps. These maps serve as an outline for a member’s experience with a product or service and highlights opportunities to reduce friction as well as root causes across systems and internal business units.

Member journey analysts share the maps with the business units to gain alignment and common understanding. The next step is when the experience product owner takes over, meeting with impacted teams to determine how to address root causes and solve challenges.

“The product owner determines how we do it,” says Emily Lingle, PSECU’s member experience manager who leads the team of product owners. “How do we make it the most efficient and deliver the most value? Are we engaging the members in the right way? Are we optimizing the experience overall and not just in this small silo? Are we creating friction in other places? Even the valuation: Should we do the work? That comes into play a lot for the experience product owner.”

PSECU uses a collaborative tool to design prototypes and collect feedback on complex processes and projects, but credit unions without advanced technical tools needn’t worry. Oparowski says what’s really important is the ability to translate concepts, communicate well, and forge alignment. In identifying people to fill experience product owner roles, the credit union has placed a premium on analytical and collaborative skills in addition to financial services experience.

“Because those roles are tasked with determining the best approach, they need to have strong communication skills and be able to think forward enough with their analysis to answer questions stakeholders might not have asked,” Oparowski says. “They need to understand their stakeholder values, support that with data, and bring that data to the table to make the case that we’re solving the problem the best way.”

Spotlight Project: Onboarding Experience

Starting last November, PSECU began working on a high-profile project to replace its digital account origination and onboarding platform.

“That’s the first digital interaction with PSECU,” Oparowski says. “We want this experience to set the stage for their relationship with the credit union — quick and easy to navigate, convenient, and safe.”

For this project, the member experience team has led not only the cross-disciplinary implementation team but also the RFP process and selection of the vendor. The experience product owner has worked across IT, member services, fraud prevention, and more to ensure the credit union can launch the new system later this year.

“We’re reducing the number of screens and the amount of data applicants have to enter and using technology and new data sources to allow members additional funding options all under five min,” Oparowski says.

It’s a major undertaking, and the credit union already is looking for opportunities beyond this year’s rollout.

“We have innovative places to go with this platform even after we launch it,” Oparowski says.

It takes a balancing act to meet all of the needs of the organization while streamlining the member experience at every turn. Today, the member experience process is baked into multiple layers of PSECU. For credit unions that aren’t so far along in their member experience journey, Lingle suggests starting with gaps in processes as potential areas of improvement.

“Examine your workstreams and then start looking at your stakeholders that belong to those workstreams,” Lingle says. “Find the gaps and where you have to make up the difference.”

Oparowski advises credit unions to tap into member feedback to help prioritize potential projects.

“Make sure you’re spending your time where it’s going to make the biggest impact for the member,” Oparowski says. “There are hundreds of things you could be doing, but are you working on the most impactful few, the things that are going to really bring satisfaction and ease to the member experience?”

The post Charting The Course For Member-Centric Excellence: PSECU’s Organizational Evolution appeared first on CreditUnions.com.

Like many people, Juan Jimenez stumbled into the credit union business by chance.

In 2016, he was working in senior analytics role as a reporting consultant for Verizon’s Southwest region, focusing on call center metrics, when he learned his job had been eliminated. That’s when he learned from a friend about a job opening at FirstLight Federal Credit Union for a portfolio analyst.

“I took him up on it,” Jimenez says. “I applied, and I got the position with no experience in credit unions or finance — and immediately fell in love with credit unions.”

Over the past eight years, Jimenez has worked with CFOs, EVPs, CMOs, and lending execs at three large credit unions — FirstLight ($1.6B, El Paso, TX), GECU ($4.4B, El Paso, TX), and SF Fire Credit Union ($1.8B, San Francisco, CA) — who helped him learn the business so he could deliver the right insights.

At each credit union, Jimenez has helped move the needle from analytics reporting to full-fledged business intelligence programs. He joined SF Fire Credit Union 18 months ago as assistant vice president of business intelligence, with the mission of transforming the program — moving disparate data warehouses to the cloud, cleaning and making sense of vast stores of data, and communicating insights with the organization.

“I’ve always been a huge believer that data drives every business,” he says. “It’s such a great feeling being a part of the department that handles the data that helps drive these decisions.”

According to Jimenez, it takes the right people, the right tools, and the right processes to build a BI department and develop a data-driven culture that runs throughout the organization. Here, he provides credit union leaders 10 steps to do that.

Step 1: Define Objectives And Goals

A credit union must clearly outline the objectives and goals of the division to align it with the organization’s overall strategic objectives. This includes identifying the key stakeholders and their requirements for data and analytics.

Jimenez recommends looking at the organization itself. If the major goals are around lending, it might make sense to embed the BI team in the lending and product marketing group. If the goals focus on income, risk, and costs, put the program under the chief financial officer. If data centralization is important, put the BI program under the IT department, he advises.

Jimenez has worked under each of those models and sees advantages in each one.

“Here at SF Fire, we do everything,” he says. “This is the only credit union I’ve been with so far that BI falls under the umbrella of the IT department. It’s great because we have access to great technology and the budget of the IT department.”

Step 2: Assess The Credit Union’s Current State

Evaluate the credit union’s existing data infrastructure, systems, and processes with an eye toward identifying its strengths, weaknesses, opportunities, and threats (SWOT analysis) related to data management and analytics capabilities.

Then, assess the credit union’s current state. What’s the budget? Who does BI staff report it?

“Do you have an existing data infrastructure?” Jimenez asks. “Are you using just what came out of the box with your core system? Do you have any existing processes? Do you have anybody doing any reports? Identify those strengths.”

Many organizations, for example, already have personnel doing analytics for various business units. Those resources might have greater impact as part of a centralized BI team sharing the same tools and processes.

Step 3: Develop A Roadmap

Create a comprehensive roadmap outlining the steps and milestones required to build the BI division.

Define the scope, timeline, budget, and resources needed for each phase of the project. The size of the credit union and the budget it’s willing to commit to BI will affect key decisions about the roadmap. For example, a fully functioning BI team needs analysts, database administrators, architects, engineers and data scientists. The job market for these roles is highly competitive. Big Tech firms such as Google, Meta, and Microsoft pay up to $250,000 for technical resources.

“For credit unions, not-for-profit organizations, it’s difficult for us to compete with the bigger institutions,” Jimenez says. “It’s even more difficult for the smaller credit unions to hire talent that can drive that transition. The board has to approve the positions, and the CEO has to create the positions and the pay scales. Sometimes it’s hard to convince folks that you need an engineer, and that engineer is not the same as the architect, and the architect is not the same as an analyst.”

Even the BI tools a credit union chooses can affect its roadmap, he adds. Tableau is one of the most popular tools used for data analysis and visualizations, but finding skilled analysts to use the software can be challenging. Many smaller organizations might be better served with Microsoft’s Power BI tool, he says, because the software comes free with Office 365 licenses.

Step 4: Establish A Governance Framework

Define data governance policies, standards, and procedures to ensure data quality, security, and compliance. Establish roles and responsibilities for data management, including data stewards and data custodians. Don’t be discouraged if the BI team faces competing demands and shifting priorities from various parts of the business.

“Once you have a governance framework, it’s harder for anybody to be upset over how you’re running the department,” Jimenez says. “You have clearly defined responsibilities for everybody.”

Step 5: Build The Data Infrastructure

 Invest in the necessary technology infrastructure to support BI initiatives, including data warehouses, data lakes, ETL (extract, transform, load) tools, and BI platforms. Ensure scalability, reliability, and performance of the infrastructure.

Step 6: Integrate And Manage Data

Integrate data from disparate sources across the organization to create a single source of truth. Implement data quality processes to ensure the accuracy, completeness, and consistency of the data.

Integrating data from other systems such as credit card processing or separate mortgage or lending applications is important for getting the whole picture for analytics.

Step 7: Develop Analytical Capabilities

Train staff on BI tools and methodologies and build analytical capabilities within the BI division, including data modeling, data visualization, and advanced analytics such as predictive analytics and machine learning.

Jimenez says one of the most powerful reports he used in El Paso helped predict when members dealing with financial problems needed early intervention by collections. By assigning a point value to members for lower-than normal checking account balances and higher-than-normal credit card balances, the system can show when the borrower is late but not yet in delinquency. A representative can call the borrower and offer to skip a payment for a modest fee.

“You have a member that’s happy because the credit union reached out to them to offer help,” Jimenez says.

But that’s not all.

“You potentially made a couple hundred dollars or thousands of dollars in fee income during a time when there are no deposits. You still grow that interest income, your delinquency ratio is low, and you have less of your membership going into delinquency,” he adds.

Step 8: Foster A Data Culture

Promote a data-driven culture within the organization by educating stakeholders on the value of data and analytics. Encourage collaboration and knowledge sharing across departments to leverage insights for decision-making.

Jimenez says fostering a data culture across the organization is his favorite part because the availability of data across multiple departments helps spur collaboration throughout the enterprise.

“When you have a meeting with your heads of departments and they all know what the data looks like for everybody else, it’s easier to make decisions,” the AVP says. “You get less pushback on these decisions.”

Step 9: Focus On Continuous Improvement

Monitor and measure the performance of the BI division against predefined key performance indicators (KPIs). Solicit feedback from stakeholders and adapt the credit union’s BI strategy as needed to address evolving business needs.

After creating the reports and visuals, however, the job isn’t done. The BI team should continuously monitor success against KPIs and ensure the metrics are addressing the right questions. A good practice, Jimenez says, is reviewing which reports are being used and which ones are gathering dust.

“If I see the report hasn’t been used in two weeks, I will email the end user and say, ‘Hey, I noticed you didn’t use the report. Are you focused on something different now? Would you like me to change the report? Is there something wrong with the report that no longer fits your needs or the needs of the department? Can I help to make this report more useful for you again?’” Jimenez says.

Step 10: Communicate The Results

Communicate insights and findings derived from BI initiatives to key stakeholders in a clear and actionable manner. Demonstrate the value of BI investments through tangible business outcomes and return on investment (ROI) analysis.

For example, if members are transacting more business through the mobile app, the data might justify the credit union investing more in mobile banking. If the data shows call center volumes are up and branch visits are down, perhaps the credit union could invest in call center staff and tools or consider reducing branch hours.

“It’s not just about profit or lending or collections data, it’s about having transaction data on your members to know how they’re spending their money,” Jimenez says. “If you’re going to have a rewards credit card, where do you want to put those rewards — in groceries or fuel? What are your members doing? How are they transacting? We’ll have of this information with good business intelligence.”

The Future Of Analytics

The past is littered with poor decisions made without checking the data. Jimenez recalls a Texas credit union that had just opened its first virtual branch in a growing part of town. The branch was so successful the credit union decided to retrofit another branch across town with interactive teller machines.

That branch across town, however, supported older neighborhoods. In fact, a nearby retirement home regularly brought residents to do their banking at the branch. Without warning, the credit union was flooded with calls from members who didn’t know how to use the ITMs. The credit union dispatched customer service representatives, and years later, they’re still staffing that virtual branch.

“If they had a report of the demographics of who transacts here — and the age groups of the members — they could have said, ‘Hey, we should probably not touch that branch,” Jimenez says.

For more than a decade, analysts have dreamed of the “democratization of data” — when anyone in the organization can pull the information they need to get insights. The tools, however, are still too complex for most employees to create their own reports. But that’s changing with the emergence of generative AI tools such as ChatGPT, Jimenez says.

Jimenez already sees promise in ChatGPT creating queries that can be created through a conversation with the chatbot and then plugged into analytics tools. It’s only a matter of time before employees outside of the BI team will be able to access their own data through an AI bot, he predicts.

“It’s really exciting that other people are going to be able to do queries as much as I do,” the AVP says. “Conversational AI is going to be huge. You might even get ideas from an AI model. For example, you might tell it your collection ratio is high this month, and it might say, ‘Have you considered this?’ No, I hadn’t considered that. How can I go about implementing it? ‘Here are 10 ideas on how you can do that today.’”

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Top-Level Takeaways

• First Harvest Credit Union created an in-house call center to provide seamless, personalized member service.
• The new call center integrates chat, online account opening, and concierge services.
• The credit union also made updates to its leadership structure.

Three years ago, during the height of the COVID pandemic, South Jersey Federal Credit Union embarked on a major experiment. The credit union, founded in 1940 to serve shipbuilding manufacturing employees, rebranded to First Harvest Credit Union ($462.0M, Deptford, NJ) and outsourced its member service center and marketing program.

There were practical reasons for these changes — including the area’s slow recovery from the pandemic and labor market challenges. Plus, the credit union wanted to enhance its infrastructure and ultimately create a better growth platform. But by the time president and CEO Mike Dinneen joined in July 2023, the credit union had suffered net membership losses for several years.

“There were many operational and brand familiarity changes at once,” Dinneen says. “Outsourcing our member service center had both a material and an emotional impact on staff and membership. When I arrived, this was a clear pain point for our credit union. We needed to reconstitute our own in-house call center and reinvigorate the member experience.”

In less than six months, the credit union made some significant changes, most notably jettisoning its outsourcing arrangement and hiring more than 20 local employees to create First Harvest Direct, an in-house member service call center that also oversees chat, online account opening, member concierge calls, and new member onboarding.

Dinneen also reorganized the credit union, bringing together lending, branches, ATMs, mobile, online, call center, and key SEG functions together under Justin Hendrickson, executive vice president and chief member experience officer.

“This will make the member experience more seamless and reduce the friction and time it takes for members to transact or resolve problems,” Hendrickson says. “At the end of every channel, every decision, every policy, and every operation is a member with a real-life experience and a real-time need.”

Constant Change

Like many credit unions, First Harvest has navigated a lot of change. It has built up a SEG business with more than 700 companies and municipal agencies, serving as the largest credit union in southern New Jersey and second largest in the state by membership. It has rebranded four times during its history and responded to market changes brought on by the pandemic.

Dinneen, who previously served as senior vice president of marketing and business development at the much larger American Heritage Credit Union ($4.7B, Philadelphia, PA), knew the value of member experience, particularly in-house call centers.

“There’s an intrinsic benefit to having your own staff, who are generally also members of the credit union, directly handle member inquiries,” he says. “Secondly, good call center employees are also subject matter experts and generally know which peers can quickly assist in a member issue. Thirdly, many of our branch and back-office team members were promoted from call centers, so it also becomes a fertile ground for cultivating future credit union leaders.”

Although the outsourced call center maintained a respectable answer and abandon rate and addressed many service issues, it simply did not have the cultural or institutional knowledge to address deeper member needs or inquiries, Dinneen says.

According to the CEO, a high-performing credit union call center should be able to address service and sales needs and provide downstream member consultation. It should facilitate a member’s journey across branches, the website, the mobile app, the SEG workplace, and more.

Dinneen also restructured his executive leadership team around four main areas: Member Experience, Safety and Soundness, Employee Experience, and Administration. Hendrickson, who most recently served as senior vice president at the New Jersey-based CUSO Member Support Services, joined First Harvest on Dec. 1 to lead the new member services organization. Among those reporting to Hendrickson are Kim Montgomery, recently promoted to senior vice president of retail banking, and Erik Young, recently promoted to senior vice president of direct banking.

Dinneen says the new organizations recognizes the “distinct yet intertwined delivery channels” and helps the credit union move away from being operationally driven.

“We have aligned all of the member touch points, and potential member entry points, under the MX area,” he says.

Although the industry has been moving toward digital banking, First Harvest maintains services at more than 700 workplaces and 20 ATM locations as well as eight branch locations spread across seven counties in New Jersey. This physical distribution channel alone requires its own focus and resources, and it must work hand-in-hand with the call center.

“Both the branches and our call center remain critical member touchpoints,” Montgomery says. “These areas must be well-versed in all aspects of the credit union, including being able to give guidance and offer a range of products, often based on a personalized picture of a members’ financial circumstances. These areas work together to build member trust and solve member issues, so it just makes sense to organize them under the same umbrella from a member experience standpoint.”

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First Harvest Direct

The credit union began running digital campaigns in August to promote the launch of First Harvest Direct in November. A lot of preparation went into the project, dating back to the implementation of a new core banking system in 2022 and new card issue system in early 2023. With the launch of First Harvest Direct, the credit union rolled out the ability for current and prospective members to open additional deposit accounts online.

“Many members are simply not able to make it to a branch during working hours, and the online account opening allows us to grow into other areas of New Jersey beyond the branch footprint,” Dinneen says. “Many individuals like to begin, or deepen, their membership journey online. However, sometimes an additional step that involves a personal interaction with a staff member arises. This is where the partnering of the call center and digital banking can thrive.”

In a relatively short time, the combined group originated several million dollars in deposits and helped grow net membership by several thousand members in 2023. To provide a seamless experience to all those members, the new call center oversees phone, chat, and digital touchpoints.

“Our new call center team members are doing a great job in living true to our mission of providing world-class service to our members,” Young says. “We’ve been able to be more attentive to our members needs with a quicker response time toward problem resolution. Focusing on our members will get us there, and being active listeners to our members’ needs and concerns will help us grow in the years to come.”

Foundation For The Future

A dedicated area for virtual interactions with members also opens up opportunities to layer in ITMs, additional chat, and other video and virtual banking solutions, Dinneen says.

“It allows us to grow more quickly across the state without needing to construct branches,” Dinneen says. “However, in the immediate term, we can offer our members a seamless concierge membership experience. Like any credit union, we want to grow responsibly because we believe we are a better local banking alternative to banks.”

In addition to insourcing its call center and marketing department, First Harvest also expanded its training and development team and enhanced its SEG relationships — reinstating its government banking area that serves more than 100 New Jersey municipalities as a SEG partner. At the same time, First Harvest has adjusted its loan portfolio — reducing its concentration in long-term mortgages from 62% to less than 55% today — by focusing on auto, home improvement, and home equity loans to diversify the portfolio and working with local dealerships to introduce indirect lending.

“COVID certainly had a longer impact on business operations in our section of the country than perhaps in others,” Dinneen says. “We’ve let some of our recent changes season and come to fruition, but we’ve also been able to revisit some of those decisions in a more positive way for members.”

Running a credit union is becoming increasingly expensive, he says, with costs grouped around three things: people (staffing), places (buildings), and things (systems, equipment).

“While all are necessary, the people expense is always the best investment,” the CEO says.

The post First Harvest Takes Charge Of Member Experience appeared first on CreditUnions.com.

These are important questions for Pennsylvania State Employees Credit Union ($8.3B, Harrisburg, PA), which bills itself as a digital-first credit union. In 2021, PSECU released a redesigned online banking platform that better aligns with its mobile app and in doing so now presents a modern, unified face for its nearly 580,000 members.

At that time, CEO George Rudolph, who had joined PSECU in 2019 from Alliant Credit Union ($19.0B, Chicago, IL), unveiled a sweeping reorganization plan that placed six lines of business under chief officers — finance; human resources; member experience; revenue, growth, and lending; risk; and technology and operations.

Notably, Rudolph introduced a chief member experience officer who is responsible for all member-facing services, including the contact center and branches as well as marketing, sales, and a new member experience group. All told, the member experience function now encompasses approximately one-third of the credit union’s 835 employees. The reorg demonstrates PSECU’s commitment to moving away from functionally focused teams and siloed thinking, says Barb Bowker, the credit union’s chief member experience officer.

“Now, we start with questions around, ‘What is the member’s journey?’ ‘How would the member react?’ ‘What steps would the member take?’” says Bowker, a 30-plus year veteran at PSECU who formerly served as vice president of marketing and membership development. “Instead of leading with a technology product, we lead with creating a best-in-class member experience and then seek out technology necessary to drive the desired end state. We haven’t mastered this process yet, but we are well into our journey.”

A Broader View Of Member Experience

Founded in 1934 by 22 state employees who pooled a $90 investment, PSECU is Pennsylvania’s largest credit union. Although most members live in or around Harrisburg, the seat of state government, the credit union serves members throughout the state and has a growing membership of retirees in Florida.

PSECU is a SEG-based cooperative that serves employee groups encompassing universities, healthcare, media firms, convenience store chains, and more. As such, it must cater to every part of the member spectrum — from college students opening their first checking account to retirees managing their wealth — across all channels. Plus, the organization is moving into new regions such as the Lehigh Valley in Pennsylvania as well as other states where it has no physical presence.

Prior to the 2021 reorg, PSECU had one dedicated role to member experience. Its member experience manager was part of the marketing analytics group and poured over NPS feedback to map projects to improve the member experience. But, the credit union realized it needed more.

“Since then, we’ve realized one person is not enough to orchestrate the enterprisewide effort to focus on and bring about substantive changes to the member experience,” says Lindsay Oparowski, assistant vice president of digital member experience at PSECU.

Although providing a great member experience is arguably a priority for all employees, Oparowski says the reality is organizations need a constant advocate for the member.

“We want [members] to have a frictionless experience, and to do that, we really need to be mindful and put focus on it,” she says. “We need someone to internally coordinate, meeting with all the different work groups, including those behind-the-scenes support functions, to identify and resolve gaps. It’s important the member doesn’t have to find their way through our internal processes.”

Member Experience As A Product

Naturally, the technology organization is a key part of PSECU’s member experience goals. Prior to 2021, the call center, cards, and other operational and technology services were part of the transaction services organization. External-facing services were transferred to member experience, which became technology operations.

A key part of that change was the creation of application service delivery managers, or ASDMs, who serve as liaisons between application developers and the business.

“Those roles really helped us better organize our work, prioritize, understand, and track all of the work that’s going through the different pipelines,” Oparowski says. “They help us work together.”

The digital member experience team focuses on three areas: digital banking; innovation, which includes longer-term transformational projects; and journey mapping, which analyzes member feedback and other data. Currently, Oparowski is hiring three individuals to join the journey mapping team as experience product owners.

Many credit unions, including PSECU, have had digital banking product owners for years, but member experience extends beyond channels or individual products. So, at PSECU, the experience product owner will address overall processes and problems, such as how to make it easier for new members to join or borrowers to make payments.

“We’re putting structure around experience and calling it a product because it really is the way we show up to the member,” Oparowski says. “We are looking at how we can tie experiences together across channels and products, like we do in digital banking, in other key experiences like the new member application experience or the experience of making a loan.”

Member Experience Innovation

For the past 18 months, the digital member experience team has been busy influencing projects that drive member self-service and overall improvements in member experience. For example, the credit union identified what was driving the highest member calls and redesigned those experiences to reduce friction. Recently completed or soon-to-be completed projects include:

• Giving members the ability to edit the maturity options for certificates of deposits.
• Adding a spending summary on the online banking home screen to give members an at-a-glance view of all loan and share account balances.
• Giving members an online option to digitally access letters from the credit union.
• Providing members an easy self-service process for unlocking digital banking.
• Providing members the ability to reorder a debit/credit card in digital banking if it is lost, stolen, or damaged.
• Allowing members to move mobile deposits into any share account — not just checking.

“Although each of these enhancements might seem small, but, together, they make a big difference in the overall experience,” Oparowski says. “Moreover, since they were selected based on member demand and feedback, we’re confident that’s where our members want us to focus our efforts.”

A future project, part of the longer-term, multi-year projects under the innovation manager, is to provide personalized digital access to members with joint accounts. The project requires a significant amount of design and coding work, but it will allow members with joint accounts to consolidate their credentials to access account information.

The digital member experience team works with all teams across the organization that have a direct or indirect impact on the member experience. For example, the team meets weekly with finance to support rate change strategies. It also meets with the lending team to improve the member experience for taking out loans and onboarding new members.

“Of course, the member experience starts with trust,” Oparowski says. “That’s why our focus on the experience must also include ways to help our members avoid the ever-increasing fraud schemes popping up across the industry while doing so in a way that doesn’t make it difficult for them to use PSECU’s services.”

Finally, even for a digital-first credit union, a great member experience wouldn’t be possible without people support. That’s where PSCU’s human resources group comes into play. It finds and retains talent while making sure employees are equipped with the technical and soft-skill training necessary to provide great member experiences for PSECU members.

“It’s about working with every group and trying to understand how we can have that member feedback be the central piece, the guiding force,” Oparowski says. “What are our members saying? How can we bring their voice to the table? In those internal meetings and the operational decisions we’re making, we want to put the member at the center.”

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Randy Stolp, chief information officer at My Community Credit Union ($511.1M, Midland, TX), is the go-to person at the credit union for advice on negotiating vendor contracts. In part that’s because he’s been on both sides of the relationship. During the past 22 years, he has worked for three credit unions and served as vice president and account executive for PSCU, a payments CUSO that serves more than 2,400 financial institutions. But also, within his five years as CIO at My Community, he shaved $2 million off the cost of vendor contracts.

“I look at some of the bigger relationships, like your core processor, as a marriage,” says Stolp, an industry speaker on vendor management and technology, recognized in 2021 as a Credit Union Rock Star by CUNA’s Credit Union Magazine. “You want to be married forever. You want to be celebrating your 50th anniversary together. You go through a lot of counseling sometimes to make that relationship work, but sometimes it just doesn’t work.”

Since Stolp joined the credit union eight years ago, he has experienced the boom-or-bust Texas oil field economy as well as an expansion north into Dallas. With the credit union teetering on $500 million in assets, IT is a critical part of My Community’s growth strategy, and Stolp says vendors play a big part in supporting his team of six including himself.

He manages approximately 10 technology vendors and estimates the credit union would have to add at least another five staff members to cover the workload, which includes debit credit card processing, core processing software and online banking software, network services, and part of IT security.

Stolp recently took some time away from his latest vendor project — migrating the credit union’s entire data center to the Amazon Web Services cloud — to share some tips on vendor management with CreditUnions.com.

Tip 1: Look for ways to consolidate vendor management.

Stolp initially applied to be chief operating officer at My Community, but CEO Donna Neal told him the credit union needed him to lead its technology program. He became the credit union’s first CIO and immediately began focusing on how to build a service-oriented culture for IT. As part of the new job, he inherited numerous vendor relationships — with no centralized vendor management function.

“Our vendors were being managed all over the place,” Stolp recalls. “We did not have a CIO, and we didn’t really have a vendor management department, either. Compliance did a little bit and each of the individual departments managed their own vendors. I pulled that in at a strategic level.”

Each player had varying degrees of experience in contract negotiations, resulting in a wide range of terms. Stolp, nicknamed “Chief Negotiator” by his CFO, now consults on all major contracts. And one of the things Stolp recommends to any size credit union is to focus on vendor management.

“Try to consolidate vendor management into a smaller group of people or a person, depending on the size of your organization,” he advises.

Tip 2: Never, ever let contracts renew automatically.

One of the biggest mistakes organizations make is to let contracts renew automatically, Stolp says. Every renewal date marks an opportunity to negotiate a better contract. This was the primary secret to his success in lowering costs in his first few years with the credit union.

“That’s the biggest opportunity you can miss by letting contracts auto-renew,” he says. “There is something you can do with adding additional services, signing bonuses for extending your term, or cutting some of the processing costs.”

When negotiating renewals, always bear in mind: “No matter what kind of vendor it is, they want to keep your business.”

Tip 3: It’s not always about the lowest cost.

Although cost is a factor, Stolp says credit unions also should consider the quality of the service and the level of partnership.

“You do sometimes get what you pay for when you drive to the lowest cost,” he says. “You have to drive to a fair cost, and you have to be willing to hold them accountable and to stand firm when you get an unreasonable cost increase.”

He likens it to buying a low-cost $500 computer but then having to add components to turn it into a higher-end $1,500 model. You may have been better off just buying the higher-priced computer.

“You have to look harder so you can make sure you’re still going to get a comparable product and service,” he says.

Ultimately, the decision should align with the credit union’s business goals.

“A lot of this stuff goes to making it easier for our members to bank with us, making it easier for our people to serve members,” Stolp says. “We can’t have those barriers, and that’s where these relationships come into play. If you undercut it, just drive down to the lowest price and not pay attention to service and all the other things you get, then you could be spiting yourself.”

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Tip 4: Look for vendors that can add more horsepower.

In recent years, My Community has invested “pretty heavily” in the cloud, Stolp says, from Microsoft Office 365 to managed services vendors supporting the credit union with off-premises private clouds. So, after speaking with the credit union’s network services vendor, it wasn’t a difficult decision to move all workloads in its data center to the AWS cloud.

The six-month migration is a major project, but the vendor is doing a considerable amount of the heavy lifting, Stolp says. The My Community team is making sure everything goes smoothly on its side.

My Community was facing major capital costs to upgrade its data center. Although the credit union expects the cost of operating on premises versus operating in the cloud to be even during the first three years of the contract, Stolp says the credit union should save more than $1 million by using AWS for redundancy and backup servers, compared with building and managing its own backup site.

The major benefits going forward will be the ability to take advantage of AWS’s scale, reliability, and built-in services such as security, redundancy, services, and automation.

Tip 5: Don’t get locked into a single vendor.

Vendor lock-in can occur with any type of vendor relationship because abrupt changes in technology, in particular, have the potential to impact platforms and services across the organization. That feeling of lock-in can lead to complacency and higher costs.

“When you’re talking about vendor management in general, whether it’s IT-specific or not, we’re in a better position today than we’ve ever been to not let them hold us hostage,” Stolp says.

Stolp advises taking a hard look at vendor relationships every three to five years.

“If you’ve got a long-term relationship and it’s not working, look at it and work it out,” he advises. “But if you can’t, then you have to consider switching vendors.”

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Tip 6:  Don’t be afraid to look outside for innovation.

Stolp says he and many of his colleague CIOs in the credit union industry are exploring relationships with fintech companies to inject innovative technologies and thinking into their technology programs.

“The smaller fintech companies are hungry to work with credit unions,” says Stolp, a CUNA management school graduate and vice chair of the CUNA Technology Council’s Executive Committee. “I’m scratching the surface with our stuff, but some of them come to us with some really unique ideas and some things to test out for them because they want to do more, and they see there’s an opportunity to do that.”

Stolp says he sees small wins every day with his existing vendors as well — all aimed at improving services to members. Innovation is needed, he says.

“We put so many roadblocks in front of people to join credit unions and make it difficult, and we just perpetuate the rumor that we can’t do certain things.”

Tip 7: Relationship problems? Seek counselling, not a divorce.

The secret to getting the most out of a vendor relationship is to actively manage it day to day, Stolp says. Sometimes, the vendor’s relationship manager might not be a good fit from a personality or culture standpoint, and that can cause problems.

“We’re a little high maintenance,” Stolp says. “We are small and mighty. We do a lot. We run very efficiently and lean on people, so we have some pretty high expectations. Sometimes we get somebody that’s managing the relationship on their side that’s running at a different speed from us.”

The answer to that type of challenge oftentimes is relationship counselling, not a divorce. Stolp advises escalating continual problems to a higher level and asking the vendor to find someone else to do the job.

“Don’t be afraid to ask to rotate and try out a different account exec,” Stolp says. “Sometimes, that can make a difference before you feel forced to switch vendors.”

A true partnership, he says, means both sides realize they need each other.

“You have to have good partners,” Stolp says. “You have to have good relationships, and you have to realize you can’t do it alone.”

— This originally appeared on July 3, 2023, on CreditUnions.com.

The post 7 Tips To Straighten Out Vendor Management appeared first on CreditUnions.com.

“As a practitioner in the space, it’s disheartening how reactive our world is,” Larson says. “But I’m not naïve, either. I know that’s how people work. We’re procrastinators. We only care when it matters.”

That makes it all the more difficult for Larson to be the voice of reason, encouraging people to think about the unexpected and put money aside when times are good. But that’s exactly what he does at BCU ($5.8B, Vernon Hills, IL). Larson joined the ranks in 2019 as the executive director of Life. Money. You., the credit union’s financial wellbeing program. That effort serves more than 350,000 members who work for company partners that include Target, UnitedHealth Group, GEICO, and HCA Healthcare.

Unfortunately, Larson says that’s only a fraction of the people who need help.

“People are struggling,” he says. “They carry that into work, and it impacts their performance. So, helping our companies to be more productive, to have happier employees, to retain those employees, that is a huge focus for what we’re doing here.”

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BCU has offered financial wellbeing services to members since 2012 and has formally adopted it as part of its top-level purpose statement: “Empowering people to discover financial freedom.” In April 2022, BCU spun off Life. Money. You. as a CUSO that provides those same services to non-members, including one-on-one financial counselling, online and in-person webinars, and a new mobile app called MoneyTracks, which launched in June.

Rather than just another budgeting app, MoneyTracks guides users through major financial milestones and struggles in their lives. It includes a virtual coach with whom users can text about good savings habits, insurance, estate planning, buying a home or car, and more. The app also includes free access to credit scores and the ability to simulate changes in credit status. Users can link the app to their accounts

for a snapshot of their current financial status, and they can store financial records in an online document organizer. For further help, the app includes links to contact BCU financial counsellors and to learn about relevant products and services at BCU.

“The focus has been on employees who are working in warehouses, call centers, stores, hospitals — all those folks who don’t turn to the computer every day but have a smartphone and we can provide financial wellness on the go for them,” Larson says. “Maybe they’re planning ahead for a life event. Maybe they’re in a crisis mode and they need to learn quickly about something. So that’s either on-demand or something that’s done virtually or in person.”

So far, the credit union has rolled out the app to approximately 3,000 BCU employees and employees of

Cardinal Health, but Larson says plans are underway to make it available to all employees of company partners.

Within its community charter, BCU operates six branches in Northern Illinois and Wisconsin and has extended its financial wellbeing services to local Habitat for Humanity programs. The app, Larson says, gives the CUSO the ability to scale up nationally for organizations such as Habitat for Humanity and Junior Achievement. “This program with these tools can be a way to live out the purpose and mission of BCU on a whole new scale,” Larson says. “That’s what I’m most excited about — getting it out to more employees of corporate America because I know many, many employees are in major financial stress, and they keep it below the surface.”

This is part of the “Anatomy Of A Credit Union” series, presented every quarter by Callahan & Associates. Read more about BCU or dive into a decade of archives. Contact Callahan to learn about gaining access today.

The post Financial Wellbeing For Members. Financial Wellbeing For All. appeared first on CreditUnions.com.

The Illinois-based cooperative has built the bulk of its business around scaling to meet the needs of some of America’s most formidable companies, including Target, GEICO, UnitedHealth Group, Cardinal Health, and HCA Healthcare. The credit union serves nearly 350,000 members, and its top six company relationships alone translate to 1.2 million employees eligible for membership.

“Relationships are our secret sauce,” says president and CEO Mike Valentine, who has led the cooperative for nearly 30 years. “Relationships we built with people we knew in the ’80s and ’90s who went off and ran other companies. They had been a member of our credit union, they liked what the credit union was, and said, ‘Can you do this for my company?’ It’s kind of a fairy tale story.”

To be sure, BCU has faced the same challenges as other credit unions: the post-pandemic shift to remote work, the mortgage bust, inflation, and interest rate volatility. But the credit union continues to add company partners, and its seven community branches have collectively grown to $1 billion in assets. A newly launched CUSO focused on financial wellbeing has brought in 1,300 new members so far this year.

“We have the trifecta of charters,” says Jill Sammons, senior vice president of marketing, wellbeing, and wealth advisory. “We have our company partners, we have our community charter, and we have our new associational charter.”

Sales-Driven Culture, Strategic M&As

Founded in 1981 as Baxter Credit Union, BCU began by building deposits and eventually making loans. In 1984, founding CEO Rex Johnson hired a young Valentine — then a branch manager at Household Finance in Waukegan — to manage loan collections and two salespeople.

“Rex’s vision was to create a great lending culture and be really good at lending and really good at sales,” Valentine says. “At that time, sales was not a good word, but it was selling that we were doing.”

After 10 years, Johnson left the credit union and took Valentine with him to form the consultancy Lending Solutions. Valentine passed up a chance to be CEO by leaving, but six months later, he was invited back to compete for the job against three other candidates. Valentine quips that he was selected probably “because it’s the devil you know.” When he took the helm in 1994, Baxter Credit Union had approximately $225 million in assets and one large company partner, Baxter International.

“Our big thing in the late ’90s was to say, ‘how do we get to $1 billion? What does that look like?’” the CEO says. “One of the first things we did was open an office in Crystal Lake, IL, and said, ‘let’s try to be in the community.’”

Also in the 1990s, Caremark International, the forerunner of pharmacy sales giant CVS Caremark, was spun off from Baxter International as a publicly traded company. Leveraging existing relationships, BCU began offering financial services to Caremark employees. In the 2000s, BCU added even more large SEGs from the medical field, including CardinalHealth and Boston Scientific.

The credit union achieved a major milestone in 2011, when Target Credit Union, a $30 million-asset credit union based in nearby Minneapolis, MN, extended a request for proposal (RFP) looking for a buyer with the scale to expand services to some 400,000 employees working at nearly 2,000 stores, distribution centers, and corporate offices spread across all 50 states.

Target Corporation was also committed to supporting the physical, mental, and financial wellbeing of its employees, and BCU’s well-established financial wellness program — already integrated into many other client wellness programs — was a major bonus. BCU won the bid to acquire Target Credit Union and helped it grow to $1 billion in assets during the next decade while operating as a division of BCU.

Acquiring a credit union in the retail sector marked the first time BCU stepped outside the health care field, but it opened opportunities for new relationships with insurance and financial services firms.

“That was a pivotal moment for BCU and our board,” Valentine says. “We always justified our expansion because we went with many companies that had a relationship with Baxter. We were in a whole new relationship with a company, but we won on the merits of who we are, what we are, and what we promised to do.”

Leveraging Well-Known Brands

BCU’s next big opportunity came in 2017 with UnitedHealth Group, one of the world’s largest health insurers, with more than 300,000 employees in the United States. Headquartered in Minneapolis, UnitedHealth Group’s leadership had already heard how their colleagues at Target were benefitting from the merger with BCU — particularly through financial wellbeing offerings — and they wanted to learn more. BCU pitched a plan to the insurer and ultimately won an RFP to be its employee credit union.

Then came the 2020 acquisition of $146 million-asset GEICO Federal Credit Union. Like Target, GEICO wanted to expand nationwide, and the two parties completed the deal during the height of the pandemic, even closing the transaction virtually.

Two years later, HCA Healthcare, which operates 184 hospitals in the United States and United Kingdom, also signed a contract with BCU to extend financial services to more than 200,000 employees. Not surprisingly, HCA’s longstanding relationship with Baxter International once again helped BCU get its foot in the door.

Importantly, BCU allows these credit unions to retain their original names on website, signage, correspondence, and all other external indicators, incorporating an endorsed brand strategy that includes “A division of BCU” beneath each logo. That started when Target insisted on keeping its name — contrary to the rebranding that is usually inevitable in the wake of an acquisition — and become a major point of differentiation for BCU in negotiations with future large accounts.

“There’s a lot of brand value, as you can imagine, that comes with the Target name,” Valentine says.

Scaling To Meet Demand

Offering services for and recruiting new members from a SEG can take years of discussion and relationship building, with Valentine typically involved at the CEO level while team members work with HR, pay and benefits, finance, and other departments to communicate the credit union’s financial and wellbeing value to employees.

“For instance, we rolled out UnitedHealth Group in 2017,” says Dave Blum, the executive vice president responsible for corporate relationships, business development, branches, digital banking, and marketing. “They did not have a credit union, so we started from ground zero. But we had conversations with them for two years before we rolled them out.”

The launch at UnitedHealth Group was so successful that 17,000 members joined in the first three months.

The market, social, and workplace changes that have taken place since the Great Recession also influence SEG relationships. For example, in a post-COVID world, large corporations are starting to provide comprehensive employee benefits that include ways to improve physical, mental, and financial wellbeing. Blum says BCU looks for partners who rally around those principles.

“That’s what success looks like — if they’re committed to financial wellbeing for their employees,” says Blum, a self-described “recovering banker” who joined BCU 10 years ago.

As the credit union’s SEG base diversified, so did the financial needs of employees across these companies, from front-line associates and warehouse workers to medical professionals and C-level executives. BCU has found that while paycheck sizes differ widely among those groups, the need for sound money-management support and valuable financial products does not.

BCU divides its services to members across three major categories — known internally as Corporate America, Middle America, and Working America — with each segment classified with average credit scores, household incomes, key product offerings, and more. BCU maintains a large portfolio of loans for auto, personal, home, students, and more, plus multiple credit card products ranging from a credit-builder card to cash and travel rewards cards.

“Before we do anything with company partners, we listen,” Blum says. “We try to understand what the need is. We’ve learned a lot over the past 40 years, and we’ve increased our offerings to make sure we have relevant products for every single segment of our company partners’ employees.”

Last year, the credit union increased its support for members who lived paycheck to paycheck. That started by significantly reducing non-sufficient funds and overdraft protection fees and creating Life, Money. You., a CUSO focused on financial wellbeing. The latter effort builds upon a wellness program available to members for years and now available to non-members, as well, by visiting the CUSO’s website or downloading a separate mobile app.

BCU has trained and certified more than 130 financial counsellors across the organization, but in-person seminars and one-on-one counselling are hard to scale to a national level, Sammons says. The new CUSO is investing in technology with the ultimate goal of providing tools to leverage transactional intelligence to help users make better budgeting and spending decisions and ultimately change behaviors.

“That was the impetus for the CUSO — for us to keep a focus on this area and not let financial wellbeing get drowned out in the day-to-day minutia of the rest of the operations of the credit union,” Sammons says. “We wanted to give it its dedicated investment and resources.”

Changes Starting At The Top

Another ingredient in BCU’s “special sauce” for large deals is the credit union’s board of directors. In recent years, as BCU brought on large accounts, C-level executives from those companies have joined BCU’s 11-member board.

Today, only two Baxter International reps sit on the board: Christine Fleming, assistant treasurer, and former Baxter CIO Paul Martin, who serves as vice chairman. Other board members hail from SEG partners and the wider community.

Since 2017, the board has updated its governance policies, established term limits for members, and focused on increasing diversity. Four women now serve on the board, and members represent a range of disciplines, including IT, cybersecurity, HR, legal, risk, and accounting.

“Our board has done an amazing job reinventing itself over the past six years,” says Valentine, adding that a more diverse cohort there has helped BCU talk to new companies and evolve its culture with a greater focus on DEI.

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Navigating The Future

BCU set an ambitious goal of growing membership by 10% this year despite facing a variety of economic headwinds. The credit union operates 42 branches in company partner locations across the United States and in Puerto Rico. Those have historically been a major resource for enrolling new members, but the shift to remote work during the pandemic changed that.

“Pre-pandemic, when we had a branch location at a company partner site, we would probably get up to 50% penetration at that site,” Blum says. “If we didn’t have a branch, it dropped down to 10% or 15% penetration. With the hybrid workforce, there’s less traffic.”

To counter that trend, BCU is exploring ways to offer consultative services and increase financial wellbeing through cashless branches that can be run by a single employee and virtual relationship managers for the 65% of members who don’t work at a location with a branch. Meanwhile, BCU branch managers are reaching out to employees through webinars, direct mail, and employer-sponsored events.

“Our company partners are having the same challenges of how to get engagement at the company level,” Blum says. “We’re a trusted partner, so they are allowing us to use different channels post-pandemic.”

The credit union is using any communication channel its partners allow but also has been investing heavily in digital banking. Last year, the credit union updated its platform with a full line of services that rival those of Bank of America and Chase. Eighty-six percent of members use digital banking.

“We are embracing that digital experience that our members are looking for,” Blum says. “If they want to come into our branch, if they want to call us through the call center, or if they want to go to our app, we want to make sure every experience they have is what they expect at BCU.”

BCU tracks member experience with Net Promotor Score surveys of both members and employees. Member NPS scores have risen from 70.43 in 2011 to 79.16 in 2022, with individual branches scoring as high as an 85.

All 850 employees have gone through a 90-minute exercise to understand the member journey and how BCU can build member relationships, serve as a guide on that journey, and help members through life’s major milestones.

Earlier this year, BCU received the 2023 Gallup Exceptional Workplace Award, which recognizes the most engaged workplace cultures in the world based on a wide range of criteria. As part of its workplace efforts, BCU is focusing on diversity, equity, and inclusion through a DEI council, culture training, and a course for the entire enterprise on the power of leading inclusively.

“If you have happy employees and engaged employees, that equals happy members and engaged members,” says Lisa Baron, executive vice president and chief human resources officer. “We’ve put a lot of time and effort into developing our staff, making sure we have great benefits for them, and that they enjoy their work and their workplace.”

Valentine credits front-line employees — or financial first responders, as they’re known internally — for building relationships with members.

“It starts with employees and the right attitude,” he says. “We hire for attitude versus skill. You can teach skills, but it’s hard to teach the desire to help people, to serve.”

Like the rest of the financial services industry, BCU is navigating the current economy of high inflation and 22-year-record-high interest rates. The credit union’s mortgage business fell sharply when the Fed began raising interest rates in 2022. Delinquencies on credit cards and indirect loans are creeping up while share growth contracted by 1% in June 2023 as inflation ate away at member savings.

Despite those challenges, Valentine reminds cooperative leaders that, unlike the banks that failed earlier this year, credit unions aren’t governed by stock prices or investors. As a result, BCU can sustain losses and still serve members across middle America when the economy is down.

“We have strong capital, we feel we’re doing the right things, but we’re trying to position ourselves for the recovery,” Valentine says. “It’s been a really good, reflective time for us to say, ‘How are we doing? What are we doing? What have we said ‘no’ to? Are we investing in the right things?’ Two years ago, we could invest in a lot of different things. Now, we’ve got to be laser-focused, so we’ve got to be good at picking the bets.”

This is part of the “Anatomy Of A Credit Union” series, presented every quarter by Callahan & Associates. Read more about BCU or dive into a decade of archives. Contact Callahan to learn about gaining access today.

The post BCU Builds National Reach One Relationship At A Time appeared first on CreditUnions.com.