BECU Busts Out Digital Envelopes To Help Members Build Savings

Envelope budgeting, or cash stuffing, is a time-honored way to divvy up income to ensure enough money is available to cover expenses. Traditionally, it involves putting cash into paper envelopes to budget for monthly needs and savings goals.

BECU ($28.8B, Tukwila, WA) has taken that idea virtual with BECU Envelopes, embedding in its online banking platform a digital tool that allows users to create up to 12 different “envelopes” within their savings or money market accounts.

“Members can create savings envelopes for a future vacation, emergency fund, down payment, education — virtually, any savings goal the member wants to achieve,” says Charlie Sy, BECU’s director of product strategy — financial health products. “It’s an efficient alternative to opening multiple savings accounts.”

Like so many innovations in the credit union space, BECU Envelopes was conceived in response to the COVID-19 pandemic. Sy says many members told BECU they wanted to be financially prepared for unexpected events. The credit union turned that member goal into an opportunity to improve service and deepen engagement.

“As a financial cooperative, we wanted to help our members navigate the economic impacts of the pandemic with the right tools for the job,” Sy says. “Having money set aside and building an emergency fund to cover unexpected expenses create an important buffer that can keep people afloat in times of need.”

BECU’s thinking quickly expanded beyond saving up for a rainy day, and the Seattle cooperative added an integral financial wellness piece.

“Saving money continues to be a challenge for many people,” Sy says. “Our goal was to not only provide our members with tips on how to save money but also make the actual act of saving money more frictionless. We wanted to develop a product that enables members to improve their savings behaviors.”

The system is easy to use. After a member creates an envelope, they can organize and monitor multiple savings goals in one account, add and remove money from their envelopes, and track their progress on each savings goal. BECU Envelopes does not affect a member’s access to their money or any interest earned on their accounts.

“Think of it as a tool that sits on top of your existing savings account to give you additional savings features,” Sy says.

The savings features include:

• Automatic Allocation: Members can set up automatic transfers (either by a certain percentage or dollar amount) from their savings account to the envelope of their choice. “This helps our members save time by setting a schedule and a budget that makes sense to them based on their financial situation,” Sy says. According to the BECU director, 25% to 30% of BECU Envelope users go that route.
• Savings Goals: Members can set custom targets to specify how much money they want to save by specific dates. “Envelopes will not only automatically track their progress but also do the math for them and provide dollar recommendations needed to keep them on target,” Sy says.

Approximately 25,000 members have collectively put aside millions of dollars in the digital folders since the rollout last year. Members can name their own envelopes, Sy says, and the top four uses so far are for vacations, emergency funds, and car and home purchases.

The average user has 2.6 envelopes that contain nearly $2,000 each. The service is currently available only through online banking, but the credit union expects to complete an integration into the mobile app this year, which Sy says should drive further engagement.

Cross-Functional Development

Envelopes emerged from a cross-functional team created in 2020 called the Financial Health (FinHealth) POD. Its mission: develop new products in a timely manner that help improve the financial health of BECU members.

“The idea was to create a small team of employees separate from traditional BECU operations to brainstorm opportunities for streamlining operations, overcoming obstacles, and speeding product development,” Sy says. “Simultaneously, we wanted to make sure the FinHealth POD remained hyper-focused on our members’ needs. The envelopes are one of the concepts we came up with.”

The team designed BECU Envelopes as four separate applications — including a front end, two API interfaces, and a database solution — and intentionally decoupled it from other internal systems.

“We used a modular approach for our architecture and code,” Sy says. “Rather than building BECU Envelopes with a single, large batch of code, it had many modular components. This approach helped us create smaller frameworks that we bundled together to deliver an end-to-end solution.”

The approach also prevents the code and architecture from being too difficult to modify or scale, allowing BECU to update individual components of the application without impacting the entire solution.

According to Sy, agile development and lean principles helped the credit union ensure the new take on an old savings strategy would be successful. Regarding agile development, BECU worked in two-week sprints and adjusted the application based on user feedback. As for lean principles, the credit union focused only on value-driven activities that minimized unneeded work.

Sy adds that the FinHealth POD did not have preconceived notions about the final product. Instead, it focused on aligning around a product for a target member group based on a human-centered design process that included journey mapping, brainstorming, concept development, and validation with regular, ongoing user research.

“The goal was to learn as we went, modifying and improving the product’s design based on member feedback,” Sy says.

The director also notes that most of BECU Envelopes’ features originated from member feedback, including the idea of embedding them within checking accounts in the first place. And now, members can provide real-time feedback within the product itself.

“We built in a feedback tab that gives members an easy way to provide direct commentary whenever they wish,” Sy says.

More recent suggestions include putting BECU Envelopes on the app, which is in development now.

Possibly most important of all, the tool integrates not only with BECU’s technology but also with the cooperative’s principles and purpose.

“As a credit union, BECU is committed to helping our members build healthy savings habits and is continually investing in products and tools to make this easier for them,” Sy says. “BECU Envelopes is part of a larger savings ecosystem the credit union is building to make it easier for members to save.”

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