MSU FCU: Keeping Members After They Graduate

EAST LANSING, Mich. – Patrick McPharlin’s office at Michigan State University FCU tells a story. First, the array of green and white Michigan State memorabilia confirms McPharlin, the president/CEO, is a staunch Spartan football fan. Second, the collection of family pictures suggests he’s a devoted family man. His three-year-old granddaughter occupies a place of honor in the photo gallery. “My perfect granddaughter,” he quickly insists, adding that a second grandchild is expected next spring. Then there’s the always-filled candy jar. One theory is the staff often needs a quick energy zap to keep up with their CEO. McPharlin’s loyalty to both MSU and the credit union date way back. He earned his B.S. from Michigan State and he also has an M.B.A. from Aquinas College. His first job out of college was at Great West Life Assurance Co. He then joined Lansing Automakers Credit Union, and after two years was hired by MSUFCU. He’s been there just over 30 years. He considers the late Frances Lesnieski, the long-time president, an important mentor. “The credit union wasn’t someplace Fran worked,” McPharlin recalls. “It was definitely her life. She created a passion in a whole bunch of us about the credit union and service to members.” McPharlin also cultivated his own ideas. Joyce Banish, vp/marketing, says he has always been generating plans to improve the credit union. “I swear for the 27 years Pat was here before he became president he was thinking of ways he could change the place, and what he would do when he became president,” she says. “From day one he has made significant changes. He’s really put us to the test. It’s fun, I have to say that,” Banish adds. McPharlin acknowledges he does like to improve things and pushes staff to try something new, then something else. “I think that’s a great part of my job, coordinating between the vice presidents so we’re all on the same page together,” he says. McPharlin joins many other CEOs who see service as the key to success. In fact, he’s annoyed at poor service, such as a vendor who doesn’t know his product. “We’re very much a high-touch institution,” he stresses. “We serve a university community and that’s desired and expected, I suppose.” But aren’t today’s students and faculty comfortable with online banking and other technology? After all, last month the credit union recorded 350,000 visits to the Web site and 45,000 calls to the contact center. “Our philosophy is really to deliver the highest quality service in all the delivery channels, whether that be the branch office or the contact (telephone) center or home banking. We have 85 ATMs, including about 30 on campus,” McPharlin answers. “So we try to deliver service whatever way the members want, and let the members choose how they want to communicate with us. One of our goals has been to deliver to each employee’s desktop all the information they would ever need to answer any member’s question about any service or the member’s accounts.” Yes, student members do pose challenges. McPharlin notes students generally haven’t received a lot of financial education, so they need a certain amount of support and understanding. Their financial resources are also typically limited. “Very few have $100,000 on deposit,” he quips. “It’s more like $80 dollars and they do 40 or 50 transactions a month.” On the other hand, there are some definite positives. MSUFCU, McPharlin suggests, is helping students. Before the credit union began actively seeking student members, students were going to local banks and getting hit with fees and poor treatment. “When we changed the fee structure, we ran a couple of banks out of town,” he notes. Then there’s the long-term view. Although students aren’t big moneymakers for the credit union, they become college graduates with good jobs who like to borrow. The credit union tends to retain many of them. In fact, of those who joined as students in 1995, more than 40% are still members. McPharlin cites the example of someone now living in Australia who has been a member for 35 years. Twenty percent of the membership lives outside the state of Michigan. McPharlin mentions still another benefit. The fact graduates move to cities throughout the country to pursue careers in a wide variety of jobs helps limit the credit union’s risk from any geographic or industry slumps. Like many states, Michigan is slogging its way through tough financial times. That translates into cutbacks in support for state colleges. But MSUFCU hasn’t felt a big impact even though there have been some layoffs at the college for the first time in 20 years, and faculty and staff are a little more cautious about borrowing. From the student perspective, classes may be larger as the faculty headcount shrinks. At the same time, undergraduates facing a bleak hiring picture often stay in school pursuing graduate degrees in hopes of being in a better position when the economy turns around. To make up for the falloff in state support as well as mark the university’s 150th birthday, MSU has launched a major capital campaign. For its part, MSUFCU has endowed $2.5 million for the Study Abroad Scholarship Program. When fully funded the program will offer at least 130 scholarships ranging from $500 to $2,000. “This contribution was sort of a win-win-win,” McPharlin says. “Having a scholarship which touches such a number of students every year is definitely a good thing. It builds our relationship with the administration, and to a certain extent it’s advertising for us because the scholarship program is given a lot of publicity by the university.” MSUFCU has also won recognition for its employee benefit program. The credit union was ranked by Principal Financial Group among the top ten companies in the nation in terms of employee financial security. Employees can chose from three medical insurance plans which cover employees and their families from the date of hire. Six months later they can enroll in one of two employer-paid dental plans. There’s also life and long-term disability insurance, plus tuition and books for up to two classes a semester for employees enrolled in school. Colleges come in and explain to employees how they can use those tuition benefits. “The long and short of it is the credit union only succeeds if employees succeed in providing good service,” McPharlin says. “We firmly believe you have to treat employees the way you want employees to treat the membership. You have to attract the best and brightest and keep them.” Employees do tend to remain, he continues, especially in the management and executive ranks. If you’ve only been there 10 or 15 years, you’re a newbie. The growth MSUFCU has enjoyed is putting a pinch on its present headquarters. So there’s talk of a new operations center, a branching strategy and enhanced e-commerce. That enhancement already includes extending contact center hours to 9 p.m. so a member struggling with on-line banking can phone and get help from a human. Off the job, you might find McPharlin on a boat he and wife have in a marina at Ludington on Lake Michigan. Closer to home, he plays on a softball team that’s been together for 20-some years, and three of his sons play on the team. Of course, it’s not surprising you’ll find McPharlin in Spartan Stadium for home football games. “I just ended a term as one of the national directors on the alumni association. I’m one of those people who realize I was very fortunate to attend MSU and have it open doors for me on a personal level and a career level. I try to give back.” -