Growth Ideas Fresh From Filene

For those with kids in high school and college, you know the drill.

Thanksgiving was that treasured time for family – and the discussion on money in and money out. (With three kids, it seems like it’s always more the latter than the former.)

For credit unions, this season means that strategic plans have been drafted, budgets are in place and board members and staff are aligned. And yet, the discussion continues: How can we drive more growth?

Let’s set aside the holiday leftovers for a moment and instead focus on a fresh helping of Filene insights to help you identify new opportunities for growth in the year ahead.

Research-Backed Innovation to Drive Growth

With this fast-changing environment and economic changes looming, what factors can bring you reliable, sustainable growth? At Filene, research is our middle name, so that’s where we always begin. We leveraged NCUA data from over the past three-and-a-half decades plus insights from our academic fellows across our research centers to offer up three big asset growth drivers for credit unions of all sizes:

1. Pay competitive rates on your deposit products. More consumers will become members – and more members will bring more of their savings and their business – if a credit union pays higher interest rates on deposits. Data shows that an increase of 1% to your deposit rates can boost growth by 1.12%. Economic cycles can be a factor since impacts from higher deposit rates climb during times of changing interest rates. Plus, the normally positive impacts of noninterest expenses do go negative during recessionary times.

Recommendations:

• Monitor your interest rates on key deposit and loan products against other financial providers.
• Make deposit benefits, loan benefits and total member benefits part of your key metrics that managers target and track.

2. Invest in your marketing. Marketers across the country will be sending me wine baskets but here’s where a small change can yield big results. Just an increase of 0.1% of assets to your marketing budget can increase credit union growth by 0.79%. In today’s competitive marketplace, your members – and your prospects – are saturated with options and messaging. Marketing means selling the credit union itself and making sure you’re promoting the right product to the right member through the right channel.

Recommendations:

• Optimize your brand: Position your brand on emotional versus functional factors. Everyone today highlights service and quality. The most compelling brands reflect emotional issues (think Nike) that showcase your credit union’s differentiation and make it difficult for others to compete.
• Build brand advocates: Create evangelists for your credit union with your employees and members. Build a culture of employee ownership and engage those brand builders through incentives tied to simple, key performance metrics that are important to your credit union. Encourage members to spread the word through social media.
• Segment your marketing:Just like holiday gifts, one size does not fit all. Consider the problems, challenges and opportunities facing each segment of your membership, and find ways to offer solutions that only your credit union can deliver. For millennials, offering products like small balance, low transaction cost savings accounts, preloaded debit cards and credit-builder loans is a good way to start. For the LGBTQ community, very few financial institutions provide support beyond the occasional marketing message. Identify your credit union’s ability to serve the needs of this community in a differentiated manner. Start by reviewing your consumer loan and mortgage application materials. For minority households, many traditional financial institutions struggle to support these consumers’ financial wellness. Our research with Visa and the Ford Foundation uncovered that 45.5% of Hispanic and 49.3% of African American households were unbanked or underbanked. How are you meeting the needs of the minority households in your membership and your community?

3. Increase your product portfolio. Broadening your loan and deposit offerings can drive faster growth. In fact, increasing your product portfolio by just two products could increase growth by 1.04%. Our fast-changing world is opening the door to new product opportunities that could be your credit union’s game-changer.

Recommendations:

• Family accounts: Multigenerational homes are one of today’s biggest trends in home building. As more families take responsibility for aging relatives, consider adding family accounts to your portfolio. Such products would allow a range of options for children and caregivers to view, approve or even control joint accounts.
• Retirement financing: Your credit union could become the resource for health care and elder care to meet your members’ personal needs. They’ll be particularly interested in products and services designed in three areas: Maintaining adequate levels of income for day-to-day expenses, covering increased long-term care costs, and managing their health and longevity risks.
• Student loans for all ages: The opportunity goes beyond stand-alone student loans. Consider the trend of life-long learning and helping your members (of all ages) manage the costs of full tuition and open access (free or reduced online tuition) college coursework.

For more ideas on managing your kids’ personal finances, talk to your parents. I’m tapped. For more innovation on generating new growth for your credit union, check out the following Filene Research Institute resources at filene.org:

• “Factors Contributing to Credit Union Asset Growth, 1979-2016”
• “The Credit Union Brand: What Is It Good For?”
• “Reaching Minority Households Incubator”
• “Trending: Credit Unions in 2025”
• “Understanding the LGBT Opportunity in Financial Services”
• “The Power of Engagement Through Open Book Management”
• “Member Megaphone”

Mark Meyer is CEO of the Filene Research Institute. He can be reached at 608-661-3740 or markm@filene.org.