Preparing Credit Union Members for Natural Disasters

Does it seem like the number of natural disasters per year is growing? What about forest fires? If you said yes to both, you would be correct. According to the UN’s disaster monitoring system, natural disasters have more than quadrupled to over 400 per year since 1970.

At Filene Research Institute, we have a program called Filene i3. We bring top credit union professionals together to brainstorm, test and create products, processes and business models to better serve credit union member needs. The work is done through a process called the Filene Method of Innovation.

The Problem

In 2017, we had a number of i3ers who were affected by major disasters in their communities:

• One worked for a credit union in the Houston, Texas area that was devastated by Hurricane Harvey, which is currently tied with Hurricane Katrina as the costliest hurricane on record, causing over $125 billion dollars in damage, dumping over two feet of water in one 24-hour span and making landfall three times over six days.
• Another worked for a credit union in northern California, where more than 9,000 fires burned 1.3 million acres of land. Throughout the year, fires destroyed or damaged almost 10,000 structures in the entire state. Total property damage set a new record that year.

Given this personal experience, as well as data showing the increase in major occurrences, one i3 team took on the challenge of researching how this increasing trend of natural disasters impacts credit unions and their members – putting Filene’s innovation methodology to the test on an ever more important problem.

The Process

They started by talking to people: Members and credit union employees. In one interview, they heard a powerful testimony on credit unions playing a crucial role in times of need:

“A credit union employee said he was turned on to credit unions after going through a hurricane while living and working in Florida. He shared that the local credit union was simply handing out money, making notes on a piece of paper, and trusting the member would repay. This happened to him back in the 1990s and still sticks with him today. These members may have just lost their car, house, pets, possibly family – virtually everything but the clothes on their backs. They are undoubtedly in shock and simply needed cash for a hotel room.”

Given the digital capabilities that exist for credit unions today plus the credit union philosophy of putting members first, the team focused on how this could benefit members. If something happened today, would credit union employees be prepared to help? How might credit unions play a role in natural disaster outcomes beyond 24-hour ATMs and digital banking?

The team surveyed more than 170 employees across five geographically dispersed credit unions to establish a baseline of awareness and preparedness. They found several interesting insights:

1. More than 70% of those surveyed had never experienced a natural disaster.
2. Not surprisingly, because of this, almost 65% do not have a natural disaster preparedness plan.
3. Seventy-one percent indicated they would be willing to download a third-party resource provided by their credit union.

The Solution

Rather than inventing something new, they scanned the market to see what was available today that would prepare credit union members and employees for natural disasters. What they found was an app developed by FEMA designed to do just that.

The FEMA app does three things, and does them very well:

1. Allows users to receive real-time alerts from the National Weather Service for up to five locations nationwide.
2. Teaches emergency safety tips for over 20 types of disasters, including earthquakes, fires, hurricanes, tornadoes and more.
3. Shares the location of open emergency shelters in the users’ area and connects users with disaster recovery centers.

Armed with a solution to their problem, they went back to a subset of the same group and designed a simple user test to determine if this was actually something people would use, and:

1. Almost a quarter of them downloaded the app.
2. Sixty percent stated they planned to.
3. Thirty-five percent said they had already told someone about it.

The Multiplication Factor

Credit unions today have more reach than ever before. Together, we serve over 100 million members and employ approximately 300,000 individuals in the United States alone.

Meanwhile, the world is getting “smaller.” It was suggested in 1929 that only six degrees of separation exist between any two individuals on the planet. Today, that number has been reduced by nearly half. A 2016 Facebook study found that “each person in the world is connected to every other person by an average of three and a half other people.”

If we could get 85% of all credit union employees to use this app, we would have more than 255,000 employees taking the important steps of being prepared for themselves and their families, and also being available to support important credit union functions during a serious time of need.

If 35% of those employees got others to take action, that would be an additional 105,000 members of our community that would be prepared and have additional resources at their disposal. This connectedness, coupled with credit unions’ very nature as community-centric cooperative institutions, uniquely positions them to catalyze disaster preparedness.

Sometimes making a real difference in the lives of employees, members and the community doesn’t take much effort. Sometimes the biggest problems can have the simplest solutions. And sometimes, the steps taken by putting your members first can be monumental in its simplicity, but epic in its impact.

Note: Current and past i3ers Nicole Bowen, J-J de Roover, Justin Kautz, Holly Martindale and Melissa Vigil contributed to this article.

Ryan Foss is Managing Director, Innovation for Filene Research Institute. He can be reached at 952-201-2130 or ryanf@filene.org.