Community Charters are Increasingly Popular, But CUs Say SEGs Still Good Fit

WEST PALM BEACH, Fla. – With the growth of community charters, is there still room for SEGs in credit union expansion plans? The answer is definitely yes, at least as far as USA Federal Credit Union in San Diego and State Employees Credit Union, Lansing, Mich., are concerned. However, both credit unions emphasize adding SEGs to the field of membership isn’t a slam dunk. It requires a lot of homework, patience, persistence and education. Neva Buckhanon is regional business development manager of USA FCU, where she says attracting new SEGs is an “ongoing process.” “In a time when a lot of companies are downsizing and merging, and in California moving out of the area, our biggest challenge isn’t necessarily finding SEGs but finding ones that have history or longevity,” she notes. Identifying likely candidates involves logging onto company Web sites, learning more about them, and phoning them periodically. It also requires participating in community activities. “We find the biggest thing is relationship building even before we bring them on as a new SEG. You have to do your homework and start early. We rely a lot on branch staff. They’re the ones who are actually dealing with members and potential members, folks who are coming in with paychecks and don’t have direct deposit,” Buckhanon says. “The branch staff then refers potential companies to us. The caveat to that, and what we firmly believe here at USA, is we’re looking for SEGs that fit. We don’t fit every group, and not every group fits USA.” What makes a good match? Buckhanon is looking for employers who don’t just tolerate the idea of a credit union, but see it as a partner. Most prospects have 100 employees or less, simply because that describes the majority of American firms. While USA FCU seeks employers who have at least 30 people on the payroll, size doesn’t really matter. A company may only have 25, but if 20 join the credit union, that’s significant. Ideally the company offers direct deposit, not only because the firm can send money directly into the credit union but because Buckhanon sees it as a sign the company is stable and investing back into its employees. Another indication of a good fit is a company willing to provide an ambassador, or better yet, perhaps two. These ambassadors serve as credit union cheerleaders who can be updated on new products and services. “I firmly believe in the trickle down theory,” Buckhanon emphasizes. “If your ambassador feels good about the credit union, they’re going to tell employees. We follow paycheck stuffers up with on-site visits. We like to set up links on the company intranet if that’s available. We want to get our new members and potential members educated as far as e-commerce is concerned. “We let them know right from the beginning what our goal is. We expect in a certain period of time to bring on 25 or 30% of their employees. I think they appreciate that. They know we have a vested interest in their company and their employees.” The latest survey of employee benefits by Mellon Financial Corporation’s Human Resources and Investor Solutions group, released January 15, shows credit unions are very popular with employees. The most frequently used programs included family sick days, paid family leave, on- or near-site child care centers, on-site vaccinations and credit unions. Buckhanon herself has seen, especially over the past couple years, employers beginning to realize the value of credit union membership. As they struggle with rising costs for other benefits such as health insurance and workers compensation, a credit union offers a no-cost benefit that will help employees make their money go as far as possible. “Five years ago, I think most employers were a little apprehensive. `Well, here’s another job I’d have to do.’ I don’t find that any more,” Buckhanon says. In Michigan, about a third of SECU members are active state employees. At the end of 2003 the credit union served 300 SEGs, and the average penetration rate was 21%. The job of keeping those numbers growing falls to Robin Stewart, the business development coordinator. “We had not really been developing our select employee groups for quite a while,” Stewart explains. “So two years ago we designed a business development area and decided we needed to try and concentrate more on our SEGs because of the potential there. “The biggest challenge is to find a way to help employers understand the value to employees of credit union membership. There is not a sense of ownership in the credit union with select employee groups as with an original sponsor group. So you have to find a way to make that business-to-business contact and have them really see the advantages of having their credit union – because that’s how you’d like them to perceive you.” With so many financial services providers vying for consumers today, some employers are concerned about sponsoring one financial institution, Stewart says. Depending on where a credit union is located, the presence of community chartered credit unions can make adding SEGs more challenging. “But at the same time, related to the type of credit union you are, if you can partner with companies that understand the advantage of having your own credit union, the possibilities are still there. We just have to go about it a little bit differently,” she says. “We have 10 branches. There are businesses we can certainly serve in the area that maybe a community chartered credit union can’t because of location.” Another challenge, Stewart continues, is finding the right person who believes credit union membership will provide a valuable employee benefit. You can hand out information, but if it isn’t passed on to employees, it doesn’t help. How do you find that person? “Call and call and call and call,” Stewart answers. “Really and truly what we’re finding, as we’ve been much more aggressive in the past two years, is that continual contact is so important. “There are two of us doing business development, and the most successful select employee groups we penetrate are those that allow us to come and visit their employees on a regular basis. They get to know who we are. The rest of it just follows. “We have some groups where the human resources person just loves the credit union. Those are very high penetration groups. When an employee comes to them with a financial issue or problem, they’ll say, `Well, contact the credit union.’ We try to contact the human resource person at least every month, depending on the size of the organization.” SECU also works to take part in golf outings or other company events the credit union can help sponsor. This year branch managers are becoming more involved in identifying potential SEGs in the community surrounding the branch and maintaining monthly contact with SEGs. You have to keep proving your value over and over again, Stewart says. -