Prioritize Member-Friendly Revenue Streams

We have a tradition at CUNA Mutual Group of starting our meetings by hearing directly from a consumer. It’s inspiring and instructive to listen to the perspective and concerns of some of the nearly 20 million people who place their trust in us.

A few weeks ago, we had the opportunity to share Carlton Marshall’s story in a video we presented to our board of directors, and later to employees. It’s an amazing tale of perseverance.

A lieutenant with the Dallas Police Department, Carlton kissed his wife as he left his house for duty one day and told her he’d be home in a few hours. Instead, that return trip took more than eight months.

Carlton got shot in the neck that evening when he tried to enter a house during a SWAT unit raid. He woke up two weeks later in a hospital bed, unaware of his surroundings. Then, he contracted meningitis from a spinal cord injury, which cost him his hearing and caused a stroke on his left-hand side.

One day when he was paying bills, he realized he had never filed a claim on his TruStage accidental death and dismemberment policy, which he obtained through his credit union. Deaf without his cochlear implants, Carlton contacted our call center and found out that yes, his policy does cover hearing loss, and we would pay his claim.

As you might suspect, he was elated. And so are we, because these stories underscore the value of offering affordable coverage that helps our customers and their families face life’s toughest challenges.

Likewise, our products carry significant, twofold value for our nearly 4,000 credit union partners. Not only do our TruStage policies for AD&D, life insurance, home and auto provide members a valuable tool to achieve financial stability, the royalties we pay credit unions for each covered member provide a member-friendly stream of noninterest income.

A Tool to Fight Shrinking Margins

In an era of rising rates and added regulatory burden that continues to exert pressure on credit unions’ margins, the importance of noninterest income can’t be understated.

Analysis of national credit union reporting statistics by our chief economist, Steven Rick, indicates that credit unions boast a collective return on assets of 76 basis points. But if you remove fees and other income from the equation, credit unions would have a return on assets of -63 basis points. The last year credit unions showed up on the positive side of that ledger without fees was 2002.

Adding to this crunch is the rising rate environment, which will prompt credit unions to solicit deposits by increasing rates, further restricting the revenue they generate from the lower-priced loans already on their books.

If you were a big bank, you might compensate by instituting or accelerating punitive fees. Last year, consumers spent an average $329 on bank fees, according to the Bank Fee Finder Report from online banking provider Chime. But that’s not how credit unions deliver value to their members.

Industry-wide, the scales have tilted toward other sources of operating income, which have surpassed fee income and now represent the majority of noninterest income. Many credit unions have abandoned or significantly reduced many fees, turning instead to options that provide member value.

Minimal Investment, Impressive Returns

The TruStage portfolio falls squarely into that category.

In 2017, the noninterest income credit unions generated by carrying TruStage products rose 8.5% year-over-year, more than doubling the industry’s 4.1% organic member growth. Growth exceeded 11% at credit unions with more than $1 billion in assets. Among policy types, accidental death and dismemberment – which Carlton carries – leads the way with 7% growth across the board.

TruStage represents a high and quick return on investment, with few associated costs. A single point of contact manages an implementation process that we replicate 300 times per year at credit unions around the country, launching the program in less than 90 days. Our project management professionals handle the heavy lifting so credit unions can focus on their strategic initiatives and maximize the bottom line.

Delivering a Differentiated Experience

For the past several years we’ve been dramatically reshaping the way we do business, with a focus on providing a compelling and differentiated consumer experience. To stay at the forefront in this increasingly competitive marketplace, we will continue to target investment and integration across three key pillars of our business:

• Media: Tailoring marketing to reach consumers where they are. We’ll increase our presence in digital media and television ads, enabling us to both cast a wider net and drill down to our most promising leads with personalized offers.
• Channels: Making it easy for consumers to learn, buy and service with us. After fully digitizing our product platform in 2016, we now issue about 33% of all digital life insurance policies nationally. We have surpassed $1 billion in digital sales, and our simplified-issue life insurance products with automated underwriting have exceeded $6 billion in total coverage through all channels. We recently introduced online chat, and we’re developing text and voice communication functionality with Alexa.
• Products: We have built a product set that serves a much wider variety of a family’s needs, with the ability to protect people from early life stages through final expense coverage.

To support these changes, we’ve made major investments in talent, recruiting staff from technology and industry leaders such as Google, USAA and REI. And we’ve gone all-in on data through our AdvantEdge Analytics arm, which delivers enhanced capabilities for our credit union clients.

A Commitment to Credit Unions

These improvements underscore our commitment to providing credit unions and their members exceptional products and experiences that you’ll be proud to endorse and carry.

TruStage lives up to the CUNA Mutual Group mission to help people like Carlton achieve financial security, and these advances ensure we will deliver a much-needed source of member-friendly revenue for credit unions for years to come.

Susan Sachatello is SVP of Consumer Experience for CUNA Mutual Group. She can be reached at susan.sachatello@cunamutual.com.