The analysts at Callahan & Associates field all kinds of queries from clients and curious credit unions regarding data and trends across the industry, within the field of financial services, and among the U.S. population.

A couple of weeks ago, we quizzed our readers on how well they know the Gen Z economy. This week, we’re examining how this digitally native cohort — whose members span from early teens through late twenties — is pushing the payments boundary. Bottom line: Gen Z isn’t waiting for stablecoins to reshape payments; it’s already changing the game with a flourish of clicks, swipes, and shares. From digital wallets to real-time rails, Gen Z habits are redefining how money moves.

What are the notable payment trends among the members of Gen Z?

Andrew Lepczyk: There are a few top-level trends credit unions should be tracking when it comes to payments.

First, members of Gen Z are more likely to use a digital wallet. A 2024 survey by PYMNTS Intelligence found 79% of Gen Z uses a digital wallet. A 2025 report by Billtrust found that number to be even higher — 91%. That same report pegged the percentage of Gen Zers who use a mobile wallet or peer-to-peer payment systems like Venmo and Zelle at 41% and 40%, respectively. Meanwhile, cash usage among zoomers has fallen to 7%.

Debit cards are also popular among younger Americans. According to consulting firm EY, 69% of Gen Z uses debit cards, whereas 39% uses credit cards. By comparison, 51% of older generations use credit cards.

Lastly, Gen Z is flocking to subscriptions, giving this centuries-old payment method new life. In another 2024 PYMNTS Intelligence survey, 26.9% of Gen Z reported using a monthly online grocery subscription while 15.2% used a weekly subscription. Meanwhile, 32.3% reported using an online retail subscription in the past month and 15.2% reported using one in the past week.

What are the benefits of these new platforms?

AL: Easy-to-understand products that require fewer steps is a significant value-add to any kind of payment technology. This goes for any generation, but Gen Z demands it.

Case in point: Easy online access and flexible payment structures has made Buy Now, Pay Later a popular substitute for credit cards, especially for large-ticket items. In a March 2025 Bankrate survey, 54% of Gen Z respondents said they used BNPL because they “wanted to pay in installments/spread the cashflow. 33% cited ease and 28% cited interest rates.

As a mobile-first technology, digital wallets are also popular among younger Americans. Gen Z is the first generation to be born into the cell phone-era, so it makes sense its members consider carrying a phone and a wallet redundant.

Finally, subscriptions allow consumers to automatically purchase routine items, which then arrive at their home without even clicking a button. Many subscriptions offer product discounts to boot, which appeals to financially savvy Americans trying to stretch their dollar.

What are the drawbacks to these new technologies?

AL: New technologies always present risk with respect to data privacy, but Gen Z has grown up sharing data via the internet, apps, and more, so privacy is not a significant detractor. In the EY survey, 40% of Gen Z versus 65% of non-Gen Z rated data and privacy as extremely important.

Still, it’s important to note that accessibility and fewer friction points make spending cash a whole lot easier, which isn’t always in the best interest of the consumer. In the March 2025 Bankrate survey, 30% of Gen Z respondents said they spent more using BNPL than they should have and 26% said they regretted a purchase. Those problems can occur with any payment method, but the frictionless transaction associated with BNPL adds an additional sense of free money.

Likewise, subscription users also run into a few payment-related issues. Namely, it’s easy to sign up for a free trial and forget to cancel, which often results in unwanted debits. Secondly, unannounced or lightly announced price hikes can make the cost of subscriptions pile up. Finally, subscriptions are notoriously difficult to track. If users are unsure of how many subscriptions they pay for, the resulting runaway finances can easily blow through budgets.

Do you have questions of your own? Ask an analyst! Drop us a line, and we might feature it in a future post.

The post Ask An Analyst: How Is Gen Z Reshaping Payments? appeared first on CreditUnions.com.

The 2025 Innovation Series from CreditUnions.com and Callahan & Associates is underway. Every year since 2018, this series has offered a select group of suppliers 10 minutes each to impress an audience of credit union decision-makers. It’s simple: Each vendor pitches its offerings and attendees vote on their favorites.

The Innovation Series was a hit from the get-go and continues to grow in popularity. This year’s focus areas include financial wellness, member experience, lending, digital, analytics, and member engagement.

Read on for more from this year’s lending finalists Exagens — MoneySparxs, Prizeout, Pulsate, and Spiral. Plus, make sure to join us for the Innovations In Member Engagement webinar. Register today!

Exagens – MoneySparxs

Describe your innovation.

Behavioral Banking enables emotionally significant relationships to be created and nurtured, cost-effectively, individually, and at scale, with the growing pool of members who now rarely interact with your credit union in-person. It makes possible the benefits of customer engagement, loyalty, and financial wellness in an era when most interactions and transactions occur through digital channels. MoneySparxs, exagens’ latest Behavioral Banking solution, fuses behavioral economics, neuroscience, advanced data analytics, psychology, and AI to understand the financial decisions of individuals, and then effectively engage and influence them to make smarter financial decisions. It adds incredible new value to your existing data and enriches it further. Behavioral Banking is needed because people are constantly being swayed by cognitive biases, emotions and social factors, and therefore rarely make rational decisions when it comes to their finances. Behavioral Banking solutions enable credit unions to grow with their members by catalyzing them to save, spend, invest, and borrow wiser both through their digital channels as well as in-branch.

What opportunity or challenge does it address?

• The Challenge: The ease and convenience of digital banking has yielded an explosion in the frequency of banking interactions and significant cost savings for financial institutions. It has also fractured financial relationships and their benefits. People who primarily bank through digital channels report being significantly less engaged with their Financial Institution, resulting in lower share of wallet, reduced loyalty, decreased customer satisfaction, and an adverse impact on financial health.
• The Opportunity: This disconnect provides credit unions with a unique opportunity to differentiate and grow by leveraging their historical strengths to differentiate their member experience and compete with big banks who otherwise far outspend them on technology. Exagens MoneySparxs enables credit unions to elevate their digital and in-branch experiences and move beyond providers of mostly commodity products and services to trusted and valued financial partners in the lives of their members.
• The results: Credit unions utilizing Behavioral Banking have benefited from increased deposits, expanded wallet share, higher card utilization, membership growth, and great loyalty, all while helping improve the financial lives of their members.

How does it increase member value?

MoneySparxs enables credit unions to grow financially with their members by delivering Behavioral Baking at scale through their digital channels. It delivers emotionally and financially engaging Sparks* (personal and community money-related tips, wisdom, suggestions, and fun insights) which catalyzes individuals to save, spend, invest, and borrow wisely.

What differentiates this innovation from competitors?

Based in behavioral science and leveraging AI, MoneySparxs goes well beyond traditional methods of segmenting, personas, and journey mapping by treating and interacting with each individual member in terms of their unique financial situation. With a deep understanding of human behavior and financial decision making (why decisions are and are not made), MoneySparxs is able to catalyze members in ways beneficial to them and their credit unions. Exagens designed MoneySparxs from the ground up with the sensibilities and realities of credit unions in mind. It is cost-effective, requires no PII, produces results quickly, and does not require any additional credit union resources to operate – exagens does most of the work, credit unions and their members get all of the benefit.

Prizeout

Describe your innovation.

CashBack+ is the first platform to centralize all cashback rewards into a single balance within credit unions’ online and mobile banking platforms. Unlike traditional rewards programs that redirect members offsite or rely on confusing points systems, CashBack+ provides a seamless, co-branded experience that keeps credit unions top of wallet. There are three different ways to earn cashback, each designed to maximize member engagement, loyalty, and non-interest income. Built by credit unions for credit unions, CashBack+ enables institutions of all sizes to compete effectively against larger banks.

What opportunity or challenge does it address?

Credit unions face increasing competition from large financial institutions, as they don’t have the same access to digital tools and talent. Traditional rewards programs often fail due to complexity, poor user experience, and limited accessibility to debit cardholders.

CashBack+ solves these issues by offering an embedded rewards platform directly available to members from their account page within online banking, making rewards easy to explore, access and use. This innovative program helps credit unions retain members, grow engagement, and boost revenue without requiring significant infrastructure changes.

How does it increase member value?

For members, CashBack+ simplifies earning and redeeming rewards. Instead of tracking points or navigating multiple platforms, all cashback earned flows into a single, growing balance within their accounts. Members can earn cashback when they shop with their credit union account, complete incentived actions and pay at checkout with their credit union account. At Michigan State University Federal Credit Union ($8.2B, East Lansing, MI), CashBack+ users are projected to earn between $91 and $190 annually, with rewards averaging 8-10% per purchase — far exceeding typical credit card cashback rates.

What differentiates this innovation from competitors?

Unlike most cashback platforms, CashBack+ is fully integrated within credit unions’ digital banking environments, eliminating friction and keeping members engaged. It supports both debit and credit transactions, ensuring broader accessibility. Additionally, CashBack+ provides a revenue stream for credit unions, outpacing debit interchange fees. The platform has already been adopted by leading credit unions, including Golden 1 Credit Union ($19.6B, Sacramento, CA), Suncoast Credit Union ($18.4B, Tampa, FL), and MSUFCU, with proven results in increasing digital engagement, transaction volume, and member satisfaction. By combining ease of use, high-value rewards, and seamless integration, CashBack+ stands out as the most effective cashback solution tailored specifically for credit unions.

Pulsate

Describe your innovation.

Pulsate’s Opportunities Engine transforms digital banking into an active engagement channel, helping financial institutions build lasting, profitable relationships in a mobile-first world. By leveraging real-time behavioral data, the platform delivers personalized, contextual offers directly within an FI’s banking app — where members are already managing their finances.

Key capabilities include:

• Next-best engagement: AI-driven campaign recommendations with pre-built creative and audience targeting.
• Engagement summary: Actionable insights into user trends and campaign impact.
• Opportunities file: Lists of high-intent users for outreach via digital campaigns or outbound calls.
• Seamless data integrations: Connects with core banking systems, CRMs, and fintech solutions.

With Pulsate, FIs can cut through digital noise to deliver timely, relevant offers — from debit card incentives to loan preapprovals — strengthening relationships and increasing engagement, deposits, and lending.

What opportunity or challenge does it address?

With 90% of consumers preferring to bank from their phones, community FIs are at risk of losing 90% of growth opportunities to big banks that dominate digital mindshare. Without in-branch interactions, members miss out on tailored product recommendations, and traditional outreach methods like email often go ignored.

Pulsate bridges this gap by enabling FIs to proactively engage members inside the banking app — where trust is highest — with hyper-personalized, data-driven micro-engagements that keep them top of mind and therefore top of wallet.

How does it increase member value?

Pulsate enhances the digital banking experience by delivering:

• Timely, relevant engagement: Members receive the right offers at the right time, creating a more intuitive and seamless experience.
• Stronger financial well-being: Personalized recommendations help members make smarter financial decisions.
• Convenience and trust: Unlike email or SMS, in-app messaging ensures secure, non-intrusive engagement within a channel members already use.
• Better financial outcomes: By responding to members’ real-time behaviors, FIs increase adoption of high-value products like loans, deposits, and credit cards.

What differentiates this innovation from competitors?

Pulsate delivers engagement where it matters most — inside the digital banking app. Unlike generic email campaigns or generic notifications, Pulsate’s real-time, behavior-based messaging ensures higher visibility, more relevance, and greater response rates.

By leveraging an FI’s own data, Pulsate anticipates member needs, making interactions feel intuitive, not intrusive. No other platform offers the same depth of personalization, multi-channel reach, and seamless banking integration, positioning Pulsate as the premier engagement solution for community FIs.

Spiral

Describe your innovation.

Members have a lot of options. On average, every household has five accounts across various financial institutions. Members constantly evaluate who provides the greatest value, trust, and personal service in today’s competitive market.

Spiral is the award-winning platform that enables credit unions to grow deposits, increase engagement, and build deep member relationships — making them the primary institution for savings, loans, cards, and more. By turning member engagement into an emotional connection, credit unions can become the go-to choice for your members’ financial needs.

What opportunity or challenge does it address?

With 73% of community financial institutions concerned about losing deposits to bigger banks and fintechs, standing out has never been more critical. As interest rates decline and 80% of recent homebuyers consider refinancing, growing deposits and deepening member engagement is key to meeting loan demand.

Spiral empowers credit unions to win and retain members, grow deposits and loans, and empower millions of people to build better lives and support their communities.

How Spiral helps credit unions:

• Boost member engagement to deepen relationships.
• Increase card transactions and fee income.
• Grow deposits from members.
• Become the primary financial institution (primacy).
• Expand savings account penetration and wallet share.
• Drive charitable donations and strengthen nonprofit partnerships to attract deposits.

How does it increase member value?

With Spiral, members can:

• Swipe. Save. Impact: Save money and achieve community impact easily with everyday purchases.
• Easily save for life’s dreams: Get personalized insights, build easy savings habits, and save automatically without thinking about it.
• Be community heroes: Help other people and achieve community impact easily with each transaction. Donate to favorite charities and manage all charitable giving from their digital banking.

What differentiates this innovation from competitors?

Spiral stands out by combining seamless user experience, financial wellness, and community impact into turnkey, fully personalized experiences within digital banking that drive proven business impact for credit unions.

Key Differentiators:

• All-in-one engagement platform that engages members through their entire banking journey (savings, loans, giving).
• Savings combined with community impact: The only solution that seamlessly integrates savings with giving, empowering members to support causes they care about.
• Superior user experience and easy enrollment with gamified member experiences: Interactive digital widgets and pop-ups that keep members actively engaged while growing deposits and card usage.
• Customizable and turnkey: Credit unions can personalize impact and savings areas, ensuring alignment with their mission—all seamlessly embedded within their existing online banking.

Proven results:

• Spiral’s clients achieved 500,000+ savings transactions in seven months.
• Spiral’s clients achieved on average 15% higher monthly deposits, 30% more monthly card transactions, and 15% higher digital engagement.
• Hundreds of thousands of dollars saved and donated via Spiral’s digital banking experiences.

The post Meet The Finalists For The 2025 Innovation Series: Member Engagement appeared first on CreditUnions.com.

Check out more must-know ratios in 15 Ratios For Board Members and 21 Ratios For All Credit Unions.

Benchmarking performance relative to other credit unions and community banks helps educate personnel about their credit union’s business model and helps managers advance projects. Comparing credit unions with similar business models, membership demographics, or geographic range lends credence to new marketing programs and helps measure success. Credit unions can track the metrics featured in this article using 5300 Call Report data.

Of course, well-rounded marketing plans also consider ratios outside of the metrics featured here and link marketing plans to the institution’s strategic objectives.

CLICK ON THE TABS BELOW TO LEARN ABOUT THE 12 RATIOS

1. Member Growth

The population of the United States is approximately 319 million in 2014. Credit unions’ potential membership base is more than 1.5 billion, which means each consumer is eligible to join nearly five credit unions. Members per potential members measures the credit union’s penetration relative to the total potential membership base. The credit union’s field of membership (FOM) is the predominant driver of this ratio and acts as a proxy for market share.

2. Member Per Potential Members

The population of the United States is approximately 319 million in 2014. Credit unions’ potential membership base is more than 1.5 billion, which means each consumer is eligible to join nearly five credit unions. Members per potential members measures the credit union’s penetration relative to the total potential membership base. The credit union’s field of membership (FOM) is the predominant driver of this ratio and acts as a proxy for market share.

3. Net New Members Per Branch

This ratio matters more for credit unions that have a significant brick-and-mortar investment. Credit union branches, through placement and service, are billboards for the institution. Combined with marketing campaigns and word-of-mouth, credit unions should be measuring how many members, on average, each branch location brings in. Elevated levels can result from word-of-mouth referrals, high traffic, promotions, events, or an influential business development program. Negative values indicate a net loss of members for the previous 12 months at the credit union.

4. Annualized Loan Originations Per Member

The amount of loans granted year-to-date demonstrates the credit union’s success at executing its lending strategy. The dollar amount of loans granted is a function of the demographic make-up of the field of membership, the breadth of the credit union’s lending operations, and the effectiveness of the credit union’s marketing and sales culture. Average member age, a FOM’s socioeconomic makeup, a FOM’s cultural makeup, and home ownership percentages all impact the balances of granted loans.

The types of products a credit union offers is a key determinant of the number of loans it will grant. Additionally, real estate and new auto loans generally have higher balances than used car and signature loans, which will drive this ratio higher. Measuring the change in loans originated in a given quarter over the previous year helps demonstrate marketing successes; however, take note of economic climate, consumer attitudes toward credit, and the management of the credit union’s balance sheet as these will influence increases or decreases.

As cooperatives, credit unions are not able to measure their market performance via daily changes in stock price. Without this type of market benchmark, credit union performance can be more difficult to gauge; therefore, identifying appropriate measurement standards is a significant aspect of credit union management.

Member loyalty is a significant benchmark for credit unions, and quantifying the member relationship is a great way to gauge loyalty. Metrics about member relationship help marketing departments track how well they are succeeding at communicating the value of credit union membership and participation.

5. Average Member Relationship

The average member relationship reflects how much the retail member is using the credit union’s share and loan products. This calculation should remove outstanding business loans to focus on the consumer relationship. The credit union’s pricing strategy, underwriting policies, product mix, service levels, and sales culture contribute to this performance measure, as does the makeup of the field of membership (FOM) and the economic environment. Offering products at competitive rates, having a more affluent membership, and offering a variety of loan and deposit products all contribute to higher share and loan balances. The credit union’s ability to market and sell loan and deposit products also has a measurable impact on the average member relationship.

How to calculate: (total shares + total loans outstanding member business loans) / number of members=average member relationship.

6. Year-Over-Year Change In Average Member Relationship

Several factors that affect share and loan growth such as the credit union’s pricing strategies, new product offerings, the level of risk the credit union is willing to manage, the membership’s demographic and socioeconomic composition, and the state of the economy can also change average member relationship. Credit unions with memberships composed of growing industries or communities typically post higher rates of growth than their peers. Demographic factors that influence loan growth include: the average age of members, the wealth distribution of the membership, and cultural attitudes toward debt and borrowing. A credit union’s marketing, product development, delivery channels, technology, and sales culture also influences its ability to grow loans and deposits. If a credit union cleans its membership rosters or purges single-service accounts, this ratio might spike.

How to calculate: (average member relationship new year) – (average member relationship original year)/ (average member relationship original year)=year-over-year change in average member relationship.

7. Number Of Accounts Per Member

The number of accounts per member loans and deposits is driven primarily by the credit union’s business plan but also by its FOM. A credit union that offers a full array of financial services as well as the resources required to deliver those services should have a higher account-to-member ratio.

Credit unions can use a four-step business plan to increase the number of accounts per member.

• First, a credit union must develop products and services such as checking accounts, investment-type deposit products, credit cards, and real estate loans that meet member needs.
• Second, a credit union must develop the delivery channels that fit the FOM. A credit union must have the appropriate number of branches, but it also might consider a call center that processes loans and an online system that provides both transaction and deposit and loan account processing.
• Third, the credit union must offer competitive pricing.
• Fourth, the credit union’s sales culture must be able to promote both deposit and loan products.

Credit unions that want to provide niche or limited services need to continually monitor the membership to validate such a strategy and be aware of competitive forces that could copy the strategy. Credit unions that do not have a strategy to routinely purge dormant or single-service, inactive accounts will likely also have a low account to member ratio.

How to calculate: (number of loan accounts + number of share accounts) / total members=number of accounts per member.

Although technically a single metric, penetration is a valuable way to evaluate ROI on marketing expenses, and there are several subsets to consider on a product-by-product basis.

Credit unions can analyze penetration metrics in two different ways:

• The percentage of membership that has an outstanding account.
  For example, 16% of credit union members nationwide have an auto account (some members might have two or three, some none, but on average it works out to 16%). This is an easy way to evaluate the depth of a certain product within the membership. In this example, 84% of credit union members do not have an outstanding auto loan with their credit union.
• The number of accounts each member has.
  This is another way to think about penetration. Continuing the above example, each member has on average 0.16 auto loans. This viewpoint is helpful in constructing the average member. When used in conjunction with other loan products it reflects the composition, by number of accounts, of the credit union’s loan portfolio.

Both of these metrics is calculated: number of product-specific accounts / number of members=product-specific penetration rate.

Few credit unions excel in each and every one of the five subsets below. Depending on the credit union’s membership demographics, overall strategy, and individual product strengths, a credit union might grow some of these metrics while keeping others in a maintenance mode with steady penetration rates.

8. Checking/Share Draft Penetration

8a. Checking/Share Draft Penetration

A credit union’s share draft penetration is an excellent measure of the membership’s participation in the credit union. The checking account is generally the central account for most households. It indicates the financial institution is the one the member contacts first when looking for additional financial services. The credit union’s ability to penetrate its share draft account market is based on how well the product or products meet the needs of the members and on how well the credit union is able to communicate the product’s benefits to members. Debit card activation and usage along with associated direct deposit relationships are critical to building a sticky relationship through the checking account product.

8b. Auto Penetration

Auto loans are the primary source of income for most credit unions as they are both profitable and broadly appealing. When done right, they can also be a productive use of operational resources. However, they do carry risk, particularly if the credit union does not have adequate risk control procedures. Auto loans are also not great relationship builders and the marketplace is highly competitive.

Successful auto lending credit unions generally have the following characteristics some sort of relationship with auto dealerships either through buying programs or indirect lending programs, solid risk management policies, multiple delivery channels for loans, and effective marketing and sales programs. Credit unions in urban areas will post noticeably lower auto loan penetration rates than those credit unions located in suburb or rural areas.

8c. Mortgage Penetration

Real estate loan penetration is a measure by which credit unions can determine the percentage of members that are using the credit union’s first or second mortgages or home equity lines of credit. Several factors contribute to the value of this ratio. For example, if the credit union is mainly a consumer lender or has a young mortgage program, this ratio might be lower. This ratio also might be lower if the credit union primarily sells mortgages to the secondary market rather than keeping them on their balance sheet (the ongoing record-low rate environment makes this increasingly the case).

Use care when comparing the real estate loan penetration rates using 5300 Call Report data. Advanced analysis using a combination of additional metrics such as amount of loans sold or serviced, average mortgage balances, and market share provides a more accurate comparison for credit unions that are strong mortgage lenders.

8d. Credit Card Penetration

As a financial service, the credit card is as ubiquitous as a checking account. At year-end 2009, according to the Nilson Report, there were 2.7 credit cards per person in the United States in circulation. Having a credit card is nearly essential to function in today’s increasingly cashless society. A credit card account can therefore be a relationship-building account along with the checking account and a real estate loan.

Operationally, credit cards generally require more resources and a higher level of expertise. And if not managed correctly, credit cards also have risk management characteristics that can lead to significant losses relative to the portfolio. Credit unions that have sold their credit card portfolios will report few, if any, outstanding accounts on their call reports.

8e. Online Banking Penetration

Member usage of the credit union’s online banking portal indicates a strong relationship. Most consumers expect the availability of online account access, bill pay, and eStatements. Additional online services such as personal financial management, remote deposit capture, online loan applications and pre-approvals, and mobile banking are gaining prominence in serving members regardless of their physical location. Credit unions that do serve a disparate group of members or have a large number of Gen X and Y members are more likely to have or be investigating these delivery channels.

We’ve already examined metrics relating to membership base and new business, reviewed the member relationship based on balance sheet totals and the number of accounts, and tackled product penetration rates. Now, we consider the income and expense items related to marketing.

9. Fee Income Per Member

The level of fee income per member is driven by the credit union’s fee strategy, which is a function of the credit union’s field of membership (FOM) and financial structure. A credit union’s fee strategy is generally designed to fill in the shortfall between net income and the credit union’s ROA goal. Other issues include the FOM’s tolerance for fees, competitive pressures in the credit union’s trade area, and the board’s attitude toward fees. Beyond this, fee income per member can also indicate member usage. As they would at any financial institution, credit union members generally pay some type of fee to use products and services. Marketers must not only be cognizant of competitors’ fees but also be able to support the credit union’s fee strategy by communicating how the credit union’s products, services, pricing, and fees fit into the market landscape.

How to calculate: (annualized fee income)/number of members=fee income per member

10. Education & Promotional Expenses Per Member

The amount of money a credit union spends per member on education or marketing expenses is driven by the credit union’s business plan, market commitment, and sales culture. Education and promotional expenses are an investment in the success of the credit union’s products and services. To ensure the investment is producing results, credit unions should evaluate the expense in terms of other measures that indicate market penetration. These measures include accounts per member, average share balance, share draft penetration, and average loans per member.

How to calculate: (annualized educational & promotional expenses)/number of members=educational and promotional expense per member

11. Education & Promotional Expense Per Loan Origination + Net New Deposit Account Balance

This metric, while somewhat similar to the one above, tries to reconcile education and promotional expenses in a given year with the new business generated that year. Although measuring average balances and accounts per member is important, those two aspects are cumulative over time. It is equally important to measure the new business generated in a single year. Measuring the promotional expenses relative to the loans originated year-to-date and the net new share balances helps measure the more immediate return of the marketing spend. As there is a seasonal trend to savings and lending, credit unions should evaluate this metric in full year (i.e., 12-month) increments only. A year-to-date review significantly skews the data.

The credit union’s demographics and members’ financial behavior will greatly affect this metric. For example, older members are less likely to take out new loans and might be spending-down retirement savings. A credit union with these members might have to increase marketing spending to entice members to open a new loan versus a credit union serving a younger membership in their prime credit years.

How to calculate: (annualized educational & promotional expenses)/{(annualized loan originations) + (annualized YTD change in deposit balances*)}=educational and promotional expense per new dollars in loan originations and deposit account balances

*Current deposit balances less deposit balances as of the prior year-end.

12. Net Income Per Member

Ultimately the credit union exists to serve members; however, each credit union manager must work with the board of directors to determine profitability goals. Marketers are key employees in helping to meet those goals. Credit unions can measure success at the institutional level such as through ROA or ROE or at the member level. Net income per member is one way of thinking about how each member contributes to the credit union’s success. Profitability levels vary depending on member product usage, engagement, and organization contact, and the credit union’s chosen delivery networks such as branches, call centers, and online services as well as FOM help drive these variables.

How to calculate: (annualized net income)/number of members=net income per member.

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Know Your Ratios In A Snap

Manually tracking performance metrics can be time-consuming, but with Callahan Analytics, it only takes a few minutes to see how you compare against peers. Stay ahead of the trends. Contact us to see Callahan Analytics in action.

This article appeared originally on CreditUnions.com in December 2012.

The post 12 Ratios Every Marketing Manager Should Know appeared first on CreditUnions.com.

To help drive those results, the Memphis credit union often uses a local vendor’s turnkey service for high-value product campaigns such as home equity loans and credit cards.

The credit union chooses a focus and then leverages its own resources using tools from its marketing partner. Those tools can include anything from simply a list for emails or direct mails to the whole campaign from start to finish.

First South uses emails like this to encourage members to adopt electronic services. Click here to view larger size.

We vary it by campaign, says Delynn Byars, the credit union’s senior vice president of marketing. Sometimes we create the email or direct mail piece. We’ve also done campaigns, like our non-member checking campaign, where [the vendor] handles it from start to finish and we tweak the message and the imagery.

First South also uses the firm to enhance member data and help Byars focus marketing dollars on products or people. In a loan campaign, for example, the credit union might use the firm to target existing members who have the greatest capacity and propensity to take out a certain kind of loan, Byars says. Or, the firm might suggest a campaign or target segment and First South will develop its own list and creative or give the lead list to the branches.

First South spends notably more on marketing per member than most credit unions its size: $20 per member in second quarter 2016, compared with $15 for its $500 million to $1 billion peer group

MARKETING EXPENSE PER MEMBER

FOR U.S. CREDIT UNIONS $500M-$1B IN ASSETS | DATA AS OF 06.30.16

Source: Peer-to-Peer Analytics by Callahan & Associates.

But that’s because it gets results, Byars says. First South has reaped more than 2,000 responses to the offers it has made to more than 15,000 new members since spring 2011 and has improved retention, electronic services engagement, and accounts per household.

And in a recent credit card campaign, First South targeted 4,436 member households, resulting in 62 new credit card accounts and $229,146 in new outstanding balances during the tracking period. It was the most successful cross-sell campaign to date.

How Do You Compare?

Check out First South Financial’s performance profile on Search & Analyze. Then build custom peer groups and access reports for more meaningful comparisons.

Search & Analyze

Campaigns like this have helped First South out-perform both its peer group and industry in credit card growth the past several years. In second quarter 2016, it posted year-over-year growth of 23.65%, according to data from Callahan & Associates. That’s in the top 10% for credit unions with $500 million to $1 billion in assets and in the top 5% for all credit unions nationwide.

CREDIT CARD GROWTH

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.16

Source: Peer-to-Peer Analytics by Callahan & Associates.

CU QUICK FACTS

First South Financial Credit Union
Data as of 09.30.16

HQ: Bartlett, TN
ASSETS: $523.8M
MEMBERS: 57,057
BRANCHES:14
12-MO SHARE GROWTH: 4.7%
12-MO LOAN GROWTH: 16.0%
ROA: 1.89%

First South’s payment options include monthly fees, flat fees, and pay-for-performance. For example, it pays $100 for a new HELOC that closes. Nothing if it doesn’t. The credit union’s pay-for-performance new member acquisition campaigns have attracted 655 new members to First South since 2011. These members in turn have opened 1,179 new accounts.

According to Byars, each of the credit union’s acquisition campaigns now nets approximately 100 new members, and she says if each of those members is worth $400 a year, then the credit union yields an ROI of 390%.

First South Financial Credit Union uses Infusion Marketing Group for its data-driven marketing campaigns. Find your next solution in the Callahan & Associates online Buyer’s Guide.

Onboarding newly acquired members is another priority for the marketing team. Members receive six messages, one per month for six months, based on factors such as credit scores and the products and services they use.

Byars says First South Financial uses a 180-day cycle because the typical 90- to 120-day onboarding process is not long enough to make an impression amid the messaging consumers are exposed to on a daily basis.

Six months is not unreasonable for onboarding campaigns today, Byars says. It takes more repetition to resonate with our target market.

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The influx of cash via member deposits coupled with fresh advertising budgets sets the stage for credit unions to deepen member relationships and increase their wallet share by extending credit. But for a credit union to retain members and help them improvetheir financial well-being, it’s imperative for front-line staff to focus on those in front of them.

However, it is difficult for tellers to uncover financial needs while expeditiouslycompleting transactions. Especially during high-traffic hours, it’s easy to miss an opportunity to have value-added conversations with members.

Given the delicate balance of supply and demand for teller time, what IS the optimal member per full-time equivalent employee ratio (members/FTE) for a credit union? What is that ideal number that enables productive conversations that result in growing member relationships rather than missed opportunities?

Callahan & Associates is currently reporting first quarter performance data on 5,725 credit unions representing 99.1% of the industry’s assets.

In the first quarter, the average members/FTE ratio for all credit unions in the nation was 386. Despite the outliers, the scatterplot below shows how credit unions near that ratio tend to have a higher average member relationship than credit unions withhigher members per FTE ratios.

*For 5,725 credit unions.

Thoughtful conversations allow staff members to address how a credit union’s products and services can meet the financial needs of a member. Credit unions with a members/FTE ratio between 250-550 members generally originate more loans and capturemore deposits than those with a larger ratio. Similar to average member relationship, loan originations and average share balances decrease as there are more members per FTE to serve.

*For 5,725 credit unions.

*For 5,725 credit unions.

As members increasingly leverage technology to conduct day-to-day financial transactions, the need to step into a brick-and-mortar branch is declining. However, there are still occasions wherein members need exceptional service face-to-face or over thephone. An optimized members/FTE ratio will help ensure credit unions can provide just that.

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According to research conducted with nine credit unions (representing nearly 8,000 borrowers) that offer the Student Choice lending program, average checking account penetration for their Student Choice borrowers was nearly 65%, while more than 21% had a credit card. More than 10% had an auto loan with the credit union. These numbers indicate young adult borrowers are likely to continue to seek out their credit union for their ongoing financial needs.

Building Lasting Relationships

Credit unions often have the reputation of being antiquated or better suited for older generations. This couldn’t be further from the truth, but establishing themselves as a hub for millennials’ financial matters takes calculated strategy for success. Wright-Patt Credit Union in Beavercreek, Ohio, has a focused young adult initiative that is showing results.

In addition to offering the Student Choice loan solution, WPCU has convenient products to serve all of its student members’ needs. Young members can take advantage of online home banking and mobile banking platforms to access their accounts on the go. WPCU also has a major presence in the local college community; one of the credit union’s Member Centers is located inside the student union of a local college. During the first few weeks of classes each year, the WPCU team works to help students open checking and savings accounts, and continues to serve as a resource for students throughout their college careers.

Young adults are a key demographic for growing our business, said Tracy Fors, WPCU’s vice president of marketing and business development. By offering millennials relevant products such as student loans, free checking, and mobile banking, we’re able to develop lasting relationships that are mutually beneficial for years to come.

Of members who have a student loan with WPCU:

• 80% have a checking account
• 25% have a credit card
• 14% have an auto loan

These additional borrower relationships mean more of WPCU’s members will continue to use its services even after they graduate from college or pay off their private student loans.

Affinity Plus Federal Credit Union in St. Paul, MN, has also seen the rewards of private student loans among young adult members. In a recent evaluation of its borrowers, 64% also have a checking account with the credit union. As we examine the relationships our student loan borrowers have with Affinity Plus, these individuals are outpacing average members by one full product or service and deepening their relationships by adding a checking or savings account, or even a mortgage, said Levi Wilson, consumer lending software administrator. And that number grows by an additional product or service for co-borrowers.

Stories From Real Borrowers

To further emphasize the value of young adult relationships, Student Choice collected stories from borrowers as part of its 2015 Lend Your Voice marketing campaign. One respondent told Student Choice, The lending process with my credit union was smooth and very stress free. I also have an auto loan through them and the lending process for that has been equally as good. The credit union lending process in general has helped me to plan to budget and manage my finances in a more responsible and efficient manner.

The numbers and narratives show that private student lending is about more than loan dollars it’s about building connections with students and their families that can last far beyond college and repayment. By attracting a younger member base, credit unions can drive down their average member age and connect with millennials in lasting and meaningful ways.

– This article originally appeared on CreditUnions.com on April 18, 2016.

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• Building long-term, productive relationships with Gen Y
• Growing and diversifying the loan portfolio
• Helping existing members and the broader FOM during a time of critical need

While these goals are certainly admirable, for Digital Federal Credit Union (DCU) the initial decision to enter the business of private student lending came down to something much simpler. At DCU , our vision is to help all members achieve financialwell-being, said Diane Richard, DCU ‘s Vice President of Consumer Loans. It’s well known that the average wage for a person with even a little bit of college education is much higher. We had to ask ourselves how we could helpmake that happen.

Historically, DCU provided equity loans to assist with educational financing and also referred people to Sallie Mae for federal student loans. While this was helpful to members we realized the financial gap between federal support and the costof college was becoming a serious challenge for families, said Richard. Our members had a need for private student loans and were being forced into other options that oftentimes failed to deliver true value or placed the full financialburden on the parent. We needed to be there with a true student loan solution.

For well over a year, DCU researched ways to provide their own private student loan service, eventually deciding to collaborate with several other credit unions to establish the new Credit Union Student Choice CUSO. Employing a networked business model,Student Choice gives DCU a turn-key solution that manages the key challenges and risks commonly associated with student lending while also leveraging best-of-breed partners to handle call center operations, automated credit decisioning, loan servicing,insurance, and fully co-branded websites for each participating credit union.

From a numbers standpoint, when we looked at income potential, risk management, and other costs, our research showed that owning the loan asset and outsourcing the servicing was the best solution for us. This is somewhat the opposite of the fixed-ratemortgage market where our preference is to retain the servicing and sell the asset, said Richard. The Student Choice solution gives us this ability. First and foremost we want to be the members’ first choice for almost every typeof loan, and by actually offering our own private student loans we’re plugging a big hole in our product line and delivering superior economic value. This is a great example of why financial cooperatives exist.

According to Richard, another key component of the program was the ability to recognize the full value stream that can only come from a long-term loan relationship, not a one-time referral fee. As a balance-sheet lender we certainly want to generateincome with the loan, but more importantly we want to develop deeper long-term relationships with young members, expand relationships with the families of students, and build meaningful relationships with colleges in our service area. As a creditunion, you are not likely to deliver meaningful value to the member if you are referring them to other for-profit entities. This is especially true if you have no say in setting the rates and fees that your members will receive from the referral.

Early results seem to indicate that DCU may be moving to the head of the class for providing private student loans. In just four weeks, 67 DCU members have been approved for nearly $1.25 million in loans.

The bottom line is that we believe offering a private student loan product where we actually control the pricing and can build upon the relationship is not just good for the member, it’s good business for the credit union, added Richard.

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Tracking Referral Activity
Credit unions most active in tracking referral activities to and from the credit union and investment program are dual employee programs, where the representative(s) are an employee of the credit union and are dually managed and supervised by both the credit union and the broker-dealer that the credit union has contracted with. Of these, two-thirds have dedicated tracking systems that document not only the actual number of referralin both directions but also the dollar value of the referrals themselves.

Utilizing Internal Resources
Patelco Credit Union ($4.1B in San Francisco, CA) tracks referrals from tellers and member service representatives (MSRs) using an internally developed program. By utilizing Patelco’s Intranetsystem, MSRs use simple drop-down boxes menus to send referrals to investment advisors/financial consultants. The system is fully integrated with Patelco’s customer relationship management tool and provides the advisor with a brief description the referring representative receives a congratulatory email and $25 as an incentive.

Measuring Success
In 2007, 2,096 referrals were generated by Patelco’s staff, of which 42% were qualified, resulting in $8.2 million in investment and insurance sales. Richard Adams, Director of Investment and Insurance Services at Patelco, noted that the average ticket generated per new customer was $35,000, yet the average ticket generated per new customer through a referral was $41,800, resulting in a gross dealer concession (GDC) or revenue of just under $2,100. The member takes interest in this process, since they were referred to someone that the MSR knows, he said, and this results in a higher wallet share.

Adams also manually tracks FC referrals back to the credit union. In 2007, those referrals generated $16.4 million in new deposits and 60 mortgage applications for the credit union. Referrals from the program to the credit union are not incentivized, with the understanding that FCs must comprehend their client’s full financial status. CU and program executives view the dual referrals as a key to maintaining solidarity and cuccess for both the credit union and the investment services program.

Importance of Referrals
Referrals are an important method for increasing product awareness of all of the credit union’s products and services. A recent Internet Strategy Consortium study of online credit union members found that almost half of the members were unaware of their credit union’s financial planning and investment resources. For the members who were using their credit union’s financial planning services, the top reason members cited for how they heard about the credit union’s program was through credit union staff referrals.

Tracking the referrals from your investment program can help reinforce the importance and value of referrals. Many credit union investment programs are providing incentives for referrals from the credit union to the investment program. Beyond sophisticated tracking systems, credit unions should consider some basic comparisons of the product usage patterns of the retail investment clients compared to other member segments in order to fully understand the value and potential of this important service.

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In the December 2006 issue of the Callahan Report, Rick Heldebrant, CEO of Star One Credit Union ($4.6B, Sunnyvale, CA), coined the term virtuous cycle to describe the credit union’s model for successful growth: Higher balancesleads tolower expense ratio to higher rates to higher balances, and so on.

While this cycle may make sense intuitively, how does the virtuous cycle play out in practical terms? Further, what is the relative strength of these relationships during a recession? How does a credit union start the virtuouscycle?

Higher balancesto Lower Expense Ratio

The graph below displays the relationship between the average share balance per member and the operating expenses-to-assets ratio for a sample of 500 credit unions: as average balances increase, the expense ratio tends to decrease.

Source: Callahan’s Peer-to-Peer Software

The logic behind this is not altogether surprising; servicing expenses for a $20,000 share account is roughly equivalent to a $10,000, but the difference in balances causes the expense ratio to decrease.

For Star One, the core of this virtuous cycle is their primary savings product, the Money Market Savings Account, supplemented by a simplified line of other products. By offering a streamlined selection free of gimmicks, the credit union avoidshigher costs associated with marketing and educating members about a more complicated selection of products; they also save in staff training. Further, they drive deposits into fewer, higher balance accounts rather than having members spread theirbalance among many accounts. These additional savings and higher balances combine to further fuel the virtuous cycle.Lower Expense Ratioto Higher Rates

The second relationship in the virtuous cycle is the trade-off of operating expenses and savings rates (holding interest and non-interest income constant). Star One works under the belief that comparatively lowering their operating expenses yields a higherportion of funds to distribute to members through higher dividends.

Source: Callahan’s Peer-to-Peer Software

There are two discernable clusters in this graph. The relationship between operating expenses and dividends breaks down for the lower cluster, but it is important to note this group only accounts for 20% of the credit unions included in theanalysis. These credit unions are clumped around a near 0% dividend rate and 3.3% expense ratio, the average for the group. This suggests that these credit unions may be focusing on minimizing expenses across the board. The remaining 80% of creditunions appear to be at the frontier where this trade-off occurs. Star One’s operating efficiency allows them to offer higher rates; Heldebrant explains that We price for relationships andwe have set up our systems and brand todeliver great rates.

Higher Ratesto Higher balances

Many factors contribute to the average share balance at a credit union: field of membership, local market conditions, number of savings products offered (see above), depth of relationship, and other influencers. However, there nevertheless appears tobe a direct relationship between rates and balances, especially in the range of more competitive savings rates.

Source: Callahan’s Peer-to-Peer Software

A key component behind the rates/balances relationship is making sure that higher rates are properly visible in the credit union’s marketplace. A local paper in Santa Clara would routinely publish the rates of money market funds for financial institutionsin the area. Star One had an N/A next to their name because they did not specifically offer a money market account, despite having regular share rates higher than any competing money market rates. Responding to this opportunity to havetheir rates published in a widely read newspaper, the credit union rebranded their primary savings account into the Money Market Savings Account and have since regularly sat at the top of the list.

Entering the Virtuous Cycle

One element typically attributed to growth is absent from the virtuous cycle: new members. It is possible for credit unions to maintain solid growth relying primarily on existing membership.

Star One confirms this as they identify the origins of the virtuous cycle at their credit union: We believe that member retention is the key to the health of our credit union We have seen from analysis of our MIF (member information files)that generally the longer a member has been with the credit union, the higher the savings balances. The process of minimizing member turnover allows the credit union to forge stronger, deeper relationships with members, which in turn generatesthe beginning of the virtuous cycle.

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Double-Digit Growth
Share certificates jumped 67% to $1.7 billion while money market shares jumped 56% to $1.4 billion. These numbers reflect the realization of an initiative we started in ’04 that focused on returningmore value to our members. Steps we took two years back freed up resources that allowed us to enhance the spread over the competition, said Brad Canfield, CFO of BECU.

By focusing on cost cutting and eliminating inefficiencies, BECU was able to offer deposit rates up to 80 bps above Washington state averages and therefore attracted significant deposits.

Loan growth also continued to fortify the balance sheet. Total loans grew 22% to $5.6 billion, with real estate loans growing 16% to $3.0 billion and auto loans growing 33% to $1.8 billion.

According to Canfield, indirect auto lending generating around $100 million a month in originations, coupled with unwavering focus on the home equity market, drove BECU’s loan portfolio growth. Enhancing efficiencies has been a focus in lendingas well, as the credit union has simplified in-house processes to drive down costs and offer competitive prices. For example, BECU shortened the approval time for HELOCs by removing multiple redundant forms and significantly reducing paperwork.

BECU’s total assets grew 17% to $6.8 billion while membership jumped 10% from a year ago.

Net Income Grows Despite Higher Costs of Funds
The solid balance sheet growth is matched by equally good growth on the income statement. Total income for the nine months ending September 2006 grew 26% to $323 million versus thesame period last year, thanks mainly to 30% growth in loan income.

While expenses grew a modest 4%, dividends jumped 74%, pushing the average cost of funds from 2.2% to 3.1%. Net income grew 6% over the previous September.

source: Peer-to-Peer

To gain insight into the most recent data, subscriber to Peer-to-Peer, Callahan’s financial analysis software.

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