Navy Federal: Big Credit Union. Narrow Focus.

In time for Veteran’s Day, the nation’s largest credit union offers lessons learned during its decades of success building long-term member relationships.

Top-Level Takeaways

  • Navy FCU, the nation’s largest credit union, serves members of the U.S. military, employees of the Department of Defense, veterans, and their families.
  • Although large, the credit union still embraces the foundational values shared by cooperatives everywhere.

By sheer size, Navy Federal Credit Union ($131.6B, Vienna, VA) has no peer in the credit union industry. Its $131.6 billion asset size nearly triples that of the nation’ssecond-largest credit union and accounts for more than 7% of the assets for the entire industry.

But by mission? Navy’s laser focus on active duty military members, veterans, Department of Defense employees, and their families, has built a strong member bond similar to many SEG-based credit unions across the industry. That focus has helpedNavy add some 4 million new members during the past five years.

Carl Schwab, Vice President of Membership, Navy FCU

In this Q&A, Carl Schwab, vice president of membership at Navy FCU, discusses how the juggernaut ensures its operations align with its mission and membership.

Navy FCU’s membership includes servicemen and women, DOD employees, and their families. What do these populations need from a financial institution?

Carl Schwab: First, ease of access. We have more than 342 branches 75 are on military installations and 26 are overseas. We have a 24/7 contact center and excellent digital channels. We give our members a variety of ways to interactwith the credit union and focus on making it easy for our members to do business with us.

Additionally, many of our members are eager for financial education. Through our branches, our website, and service interactions, we make sure our members understand the options available to them and how we can help them build wealth and financial security.


Navy FCU
Data as of 06.30.20

HQ: Vienna, VA
ASSETS: $131.6B
MEMBERS: 9,706,687
12-MO LOAN GROWTH: 10.1%
ROA: 0.46%

How much pride does the credit union take in serving the populations it does?

CS: We take a great deal of pride in it. We were founded in 1933 by seven Department of the Navy employees. [Editor’s note: Navy FCU received its credit union charter in 1947.] Since then, our mission and focus on the military hasn’tchanged. Our field of membership has changed a bit. We first served members of the Navy. In 2008, we added enlisted members of the Army and Air Force, and in 2017 we added veterans. The umbrella has widened, but our focus on the military hasn’t.

We exist to be a financial partner to the men and women who serve our country. Without that focus, we would be just another financial institution and no different from your average bank.

Has the credit union’s mission changed with the additions to your field of membership?

CS: I’ve been with Navy for 13 years, and the core of what we’re about, which is service, financial partnership, and long-term relationships, hasn’t changed. Our mission hasn’t changed, but technology and servicechannels have, and that’s allowed us to grow. Ten years ago, we didn’t have a mobile app; now digital is our No. 1 channel. Twelve years ago, we had half as many branches as we have now.

How have the needs of the average military member changed in the past 10 years?

CS: The nature of the partnership we have with them has shifted. A few years ago, for example, the Department of Defense changed the structure of its retirement plan, and there was a period of time when enlisted service members had achoice between the old and new plans. We didn’t recommend which plan to choose, but we delivered important information digitally and even partnered with command on several military bases to deliver in-person education.

That was in a period of economic growth, when financial conditions were different. Today, because of the pandemic, things are different. There is more uncertainty, which has led to an increase in savings and responsible financial behavior for many ofour members. Circumstances change, and so do the ways we assist our members.

We are large, but we have an occupationally focused field of membership. We’re narrowly defined in a way that allows us to focus on their needs.

Carl Schwab, Vice President of Membership, Navy FCU

How do you stay connected to your members and their needs?

CS: We have more than 9 million members that’s a lot of people to get feedback from. We use focus groups and surveys and continually monitor sentiment among our members using third-party satisfaction scores, as well.

At the same time, we collect informal feedback through social media and the service interactions our front-line or call center representatives have with members. Those folks do a great job of letting leadership know what they are seeing and providingassessment reports. That’s helped shape our operational strategy in various ways.

Do you have an example?

CS: One of the first things we talked about at the start of the COVID-19 pandemic was direct deposits. Was there a decrease, which might suggest unemployment was on the rise?

Members were asking what we could do for them in terms of outstanding loans. We’ve made more than 440,000 extensions or forbearances, but the point is, we took what our members were telling us and changed our business model to make sure our membersfelt supported by the credit union.

Navy is the nation’s largest credit union. How do you compare yourself against the rest of the movement?

CS: We are large, but we have an occupationally focused field of membership. Although we have 9 million members, we’re narrowly defined in a way that allows us to focus on their needs.

How are you so successful at turning military servicemen and women into Navy members?

CS: Ninety-six percent of our growth is organic, but growth isn’t the goal, it’s a byproduct of the service we provide. When new servicemembers enter the military, they are looking to their peers, their commanding officers,or their relatives with military association and asking for advice. Because we have such longstanding relationships, we are often recommended. We love our TV commercials, but word-of-mouth is more important to us.

We also offer specific products that target the military. We offer an active duty checking account where members get rebates and early access to their military pay. And, we’re proactive. We look at our data, and if we think a member qualifies fora better loan or better checking account, we make that offer. That helps to strengthen the relationship, so it can really benefit us in the long run.

What could other credit unions learn from Navy, knowing they are likely unable to invest the same amount of money you do in technology and facilities?

CS: My advice would be for them to focus on long-term relationships. Because we don’t have shareholders, credit unions are able to take a longer-term perspective. Investing in technology is important, as well, but there are waysto invest in technology that isn’t prohibitively expensive.

How has the COVID-19 pandemic changed your work with members?

CS: There was no question we would help our members through this time. We waived $17 million in fees, offered 24,000 emergency relief loans, and made loan extensions or forbearances on 450,000 accounts. We were there for our members experiencingfinancial distress because of the pandemic. Our mission made it easy for our leadership and our staff to jump into action.

What is your outlook for the future of the credit union?

CS: Approximately half of our members are 35 years old or younger. So, that millennial and Gen Z population who loves to do their business digitally. Because of that, we will continue putting tools and resources on our digital platforms.But at the same time, our research has shown these groups enjoy the option to do business in person. We’re not going to stop building branches, and we’re not going to stop investing in our call center or front-line staff.

To circle back to something I said earlier, financial education is a focus for the military especially for its younger members. As long as we continue to invest in service and keep financial education top of mind, our outlook is bright. Despitethe turmoil the world has gone through this year, we’re going to continue the type of growth and success in the next 10 years as we had in the previous 10.


November 9, 2020

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