4 Success Stories In School Branching

Credit unions are integrating branches into schools as a way to connect with the community.

In-school branches don’t provide a windfall of profits or deposits and they require additional costs and ongoing attention. But credit unions that have opened branches in schools in recent years say the rewards of helping their local youth become savvy about their finances makes the effort worth it.

Credit unions have been connecting with schools to offer on-campus locations for more than 10 years so students can get hands-on practice in money management. Lately, more schools districts have been trying to draw credit unions to their areas as creditunions have expanded their school roles from a basic branch to an ingrained part of a student’s curriculum.

We’re trying to get them ready for life that’s our ultimate goal, says Cathy D. Olague, vice president of marketing for Gesa Credit Union ($1.2B, Richland, WA), which has seven branches in high schools and an average 51% penetration rate at them. An eighth location is under proposal to open this year.

1. Gesa Credit Union

Like many credit unions, Gesa CU is finding in-school branches bring more new young members who remain loyal to the credit union and who might even draw family members in. But its true reward is the financial education service to the community, says Olague.

Gesa CU dedicates one full-time education specialist employee to its schools branches program, which began in 2000. Nearby Gesa CU branch managers work closely with theirhigh school locations and Gesa employees are encouraged to use their work time to make financial literacy presentations to classes. The program educates students on the difference between banks and credit unions and incorporates its high school studentmembers into commercials and social media marketing.

We developed a blue print model of what these student-run branches look like, and we know the expense we incur as a result of supporting this, Olague says. But we look at this as a community giveback.

2. First Catholic Federal Credit Union

Like Gesa, First Catholic Credit Union ($145.2M, Taylor, MI) is banking on its student members to engage other students in its 10 in-school credit unions, withone in high school and nine in middle and elementary schools.

But now the credit union is evaluating the cost-benefit of it program, which its been running as a bare boned operation for the past 10 years, and will downsize this fall to six in-school branches, including a new high school, says MaryRose Giles, Business Development Manager.

The main reason for downsizing is because we wanted to be able to invest more time in the schools and develop the program and beef it up, Giles says.We want to bring in a lot more financial literacy and make it more than just a program where we go in and the kids make deposits.

Giles, who evaluated the program, found that some schools only made a few transactions per day, which wasn’t cost-effective. She began speaking with school executive to gauge the interest in expanding the branch presence to more of a financial literacyprogram.

At its new high school location this fall, the credit union will work with a class of students in life management skills course, a curriculum its helping do develop along with the teachers. The class of 25 students will run the credit unionin their high school and in their elementary school.

In other change, First Catholic FCU’s school credit unions will now have committees comprised of a student branch manager, parents, credit union staff members, and a couple school administration officials. They’ll meet about twice per year.The in-school branches will have a more formal selection process of student tellers, who will be a smaller team of about nine to 10 students, and a student branch manager.

Investing in school branches is a way for us to look to the future and look to establish a foundation for future membership. It increases good will toward our younger members and theirparents, Giles says. It’s a way for us to show them, Look, we’re investing in the community. We’re investing in your kids.’

3. Members 1st Federal Credit Union

In her senior year in high school, Lauren Podolsky worked at Members 1st Federal Credit Union’s ($2.2B, Mechanicsburg, PA) first high school branch, whichopened in 2004. Now, she’s the credit union’s financial education coordinator, a fulltime position that has her serving as a liaison between the institution and schools.

The in-school program has had a snowball effect, Podolsky says, as the schools learn of each other’s successes and want their own credit union for students. Members 1st FCU has added a new credit union branch in a school each yearand has had to turn some schools away. Every school seems to want a branch in their high school, Podolsky says.

Members 1st FCU invests less than $50,000 per branch in its in-school branches, with main costs being counterspace, a small safe, a PC and signage, and operates them under the philosophy of promoting financial literacy at a young age, Podolsky says. Itdoes not aim to make money through the school locations.

High school students who participate in running the credit unions are required to meet certain expectations. They must craft promotions materials, network with their peers about the benefit of credit unions among other goals. They really take ownershipover their branches, Podolsky says.

Each year, Members 1st FCU develops a curriculum to help build financial literacy, teaching students about checking,credit and debit.

We don’t promote any of our products or services, Podolsky says. It’s more about gaining sound financial young adults in the future.

4. CFE Federal Credit Union

There are no ATMs at CFE Federal Credit Union’s ($1.4B, Lake Mary, FL) four school branches to encouragemore face-to-face transactions. Members hold debit cards with their mascot on them. And students enroll to run their credit union as part of their curriculum.

It cost CFE FCU about $100,000 to set up each credit union, renovating a room into a branch and establishing teller stations. Now, after four years of operating school locations, it has more than 1,500 accounts in its four high school branches with $244,000for total assets, and expects to continue growing, says Nancy Lee Whitecavage, public relations manager. CFE FCU has found that the program was particularly valuable in the school branch in an underserved area.

You’ve got to be out there reaching out the students all the time and reaching to the parents, Whitecavage says. One of our goals is to connect with a younger generation. We’re trying to bring in Gen y. Once you get someoneas a member, they want to stay loyal to you.

The credit union trains the students to run the branch with only occasional oversight. One student is a paid CFE FCU employee but all others are enrolled as part of their school curriculum. The branch is set up so that the student tellers do not haveaccess to personal information of faculty and staff, who are also members.

Five of CFE FCU’s former high school tellers, now in college, are working at a CFE FCU branches, four part-time and one full-time.

Branches have basic banking functions of checking and savings but do not offer loans. Every student is eligible for a checking account with or without parent signature but accounts are modified to protect them from overdraft fees. Students can elect to have the special school Visa debit card.

It’s expensive for us to set up and they really don’t bring any money in from a financial perspective, Whitecavage says. But the rewards are strengthening relationships and serving the community and serving the schooldistricts.

May 27, 2014

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