Credit Unions Follow Members as Life Happens

Sometimes life taps you on the shoulder. You earn that diploma. You honk the horn as you pull in the driveway with your first car. She says yes. A child is born.

And then sometimes a hurricane says hello, with a pine tree branch punching through your roof at 2 a.m. and its winds knocking out the lights for miles around.

One of those sometimes was called Hurricane Irma, which hit the Florida Keys Sept. 10, 2017 and moved up the peninsula over the next two days, downing power lines, pelting cars and whacking houses.

Suncoast Credit Union President/CEO Kevin D. Johnson took a number of steps to help members through this experience. The credit union allowed members to skip loan payments, and waived ATM fees, not only for members, but for everyone. In some areas, power was out for about a week.

As Irma was dissipating over Missouri on Sept. 13, Johnson stepped out of his Tampa office and hopped aboard a mobile bank branch driven by Gary Vien, Suncoast’s chief administrative officer.

The mobile branch connects with the outside world via a satellite dish on top. It has a walk-up ATM on its side, and has enough room inside to hold three or four employees working with members.

Vien threaded the truck through downed trees, driving 160 miles south before setting up shop in rural Immokalee, Fla. The town had been without power for three days.

“Many people couldn’t take credit cards, and they were looking for cash,” he said.

Suncoast and many other credit unions look at members’ life events as the gauge for designing their response. Some are rare, like hurricanes. Others are more common and predictable.

In the course of this year, if a credit union had 20,000 members who matched the overall U.S. demographic spread, it might expect:

• About 320 births and 220 deaths;
• About 570 members would attend a two-year college and about 1,100 would attend a four-year college;
• About 300 would graduate from high school, 80 would receive associate’s degrees, 150 would receive bachelor’s degrees and 80 would receive post-graduate degrees;
• About 320 would drop out of a two- or four-year college program;
• About 1,400 would buy a new car or truck, and 3,200 would buy a used car;
• About 180 members would marry and 50 would get divorced;
• About 500 would buy a home; and
• About 540 would be unemployed.

Many economists, especially behavioral economists, have discarded the notion that consumers act rationally. One reason is that consumers are usually acting with a vast imbalance of knowledge against those trying to sell them cars, homes, loans or most other products.

George Hofheimer, chief knowledge officer for the Filene Research Institute, said a life event approach helps credit unions translate credit union products into consumer needs.

Research by the non-profit credit union think tank in Madison, Wis., has shown first-time experiences of car buying and home buying is highly important “in the eyes of the consumer even though the financial return may not be initially enormous for credit unions,” he said.

Many people can tell stories of how a life crisis was averted or alleviated because they were steered into the doors of a credit union. The transactional value of the loan to the member might be small and short-lived, but the trust earned can last a lifetime.

“We want to be a trusted advisor, whether it’s a product or service we offer, or something else in the community,” said Victoria Selfridge, vice president of corporate communication for Ent Credit Union in Colorado Springs, Colo. ($5.1 billion in assets, 304,172 members).

“We want to be that connection point to help guide members to make great financial decisions for themselves and their families,” Selfridge said.

Suncoast tracks loan stages and obvious demographic patterns to know when members’ needs arise. “People are fairly predictable based on their age,” Vien said.

The data can show when a member might need a new car, be starting a business, or planning for retirement. “We try to capture each of those moments, and have products and services available for them.”

Trying to buy your first home? Suncoast has an adjustable rate mortgage for first-time home buyers that resets once after 10 years.

Facing bankruptcy? Suncoast can steer you to BalancePro.org, a San Francisco-based non-profit that has been providing financial advice to the poor and financially stressed since 1969.

“We want to partner with our members for life,” Vien said. “Wherever life takes them, we want to be there to help with different products, advice and personal attention.”

Ent and Dupaco Credit Union in Dubuque, Iowa ($1.6 billion in assets, 104,188 members) have website pages devoted to “life events.”

Most of the links offer guidance and steer visitors to non-profits and others with more detailed information. Only a few of the links take them to sites for information on credit union loans or services.

“We want to be their lifetime financial home,” Dupaco Chief Marketing Officer David Klavitter said. “We rarely lead with products and services.”

Dupaco’s website was once titled “life stages,” but the notion of linear progression was at odds with the chaotic reality of most people’s lives.

One effort at Dupaco is to increase private loans to students and graduates. That program is tiny right now, just $3.8 million of Dupaco’s $977.9 million in total loans at the end of 2017. It fits a special need after students have pursued government loans.

Klavitter said Dupaco’s main goal is ensuring that young people, many of whom it hopes will be future members, and their parents make financially sound decisions. That led Dupaco to buy broadcast rights to “Broke, Busted, and Disgusted,” a 2016 documentary film written by Adam Carroll, a financial literacy advocate from Iowa. Dupaco hosted film screenings and a panel discussion.

“It’s all about the explosive growth of student loans and this crushing debt that many students and parents are undertaking without the full knowledge of the ramifications of it for their future, and will the major they are pursuing be able to pay off that debt,” Klavitter said.

Ent is focused on Colorado Springs’ middle income market, Chief Experience Officer Rich Scholes said. “Banks have learned to make money off of people who pay a lot of fees, and off of very affluent individuals. You see a bias toward those two extremes,” Scholes said.

Ent coaches employees to not make assumptions about members and to listen carefully, Scholes said.

“We have this culture of everyone shows up with their own bag of rocks, their own assets and attributes,” he said. “Whether or not there is a product today, there is a relationship, there’s guidance.”

One of Ent’s goals is to increase its financial education over the next 15 years, in part by providing more online tools accessible to anyone.

“The scariest thing to me is that there are so many families who don’t know there are a whole bunch of good people with greater resources and connections that are there for them,” Scholes said. “We’re a not-for-profit financial cooperative. It’s a different mentality. We’re thinking: Who can we help?”