Charter in Reach for Student-Run Credit Union

Imagine if the credit union industry had an army of enthusiastic college students who thought credit unions were super cool. It might be led by 20-year-old Sahil Pankhaniya, a George Washington University student who is crazy about the credit union model and believes there can be many more like him after students learn about the movement.

His goal, of course, is to graduate in 2021 with a double major in finance and statistics. But unlike most college students, he has another ambitious goal that may be even more challenging and daunting: To open a new student-run credit union by May 1.

“Credit unions are super cool, and they have a great mission. I’m bought into them 100%,” Pankhaniya (pronounced pan-khan-nee-ya) said. “I do want to do something fulfilling with my career, so definitely [a credit union career] is on the table.”

What’s more, he believes a lot more college students would come to the realization that credit unions are super cool after learning about what makes them different and their mission. To accomplish that exposure on college campuses, Pankhaniya’s idea is for industry leaders to organize and launch a national initiative with the goal of establishing at least one student-run credit union at a university in every state.

Undoubtedly, if Pankhaniya’s sheer excitement, energy and enthusiasm for the credit union industry could be harnessed, it would light up GWU’s campus for at least a year, accomplish the most arduous Capitol Hill advocacy project, and beat back, once and for all, any more banker attacks on the credit union tax exemption.

“Having these students here and seeing them start a credit union and thinking about the impact that this credit union could possibly make on hundreds and thousands of people in the years to come, and seeing the energy of these kids, is really something that I think our whole executive team was very moved by,” Brett Noll, president/CEO of the $393 million SecurityPlus Federal Credit Union in Baltimore, said. “We just felt like, ‘Wow, this is what we’re here for.’ It just reminded us of why credit unions exist, and it gave us energy.”

Noll, SecurityPlus CFO William Kennedy and other executives are mentors for about 10 student credit union organizers, providing them with real-world advice, guidance, insights and ideas on how to build a credit union’s operations from the ground up.

During coaching sessions, Kennedy made it clear to student organizers that executives were not going to do the work for them.

“They needed to do all of the work because that was the only way to learn how to lay the foundation for the new credit union,” Kennedy said. “It was just a wonderful thing for us. As leaders, we want to give back, we want to make a difference, and we just look at these students and go, ‘Wow, these kids are pretty smart.’ Of course, you can’t get into GW if you’re not smart.”

Noll and Kennedy said they’re intrigued by Pankhaniya’s idea of opening a student-run credit union at a university in every state, noting it would be a good way to attract young members and future industry leaders.

Most of the executives Kennedy knows fell into a credit union career by happenstance or accident.

“It cannot be by accident anymore,” Kennedy noted. “It has to be by design that we bring these young folks in.”

Interestingly enough, Pankhaniya’s introduction to the credit union industry occurred by chance when he was visiting the campus of Georgetown University during the summer of 2017. Something caught his attention as he walked by a branch of the $15.6 million Georgetown University Alumni and Student Federal Credit Union in Washington, D.C. After hearing it was a student-run credit union, he met with one of GUAS FCU’s former student executives to learn more about it.

“I saw that they were doing really well. They offered these incredible learning experiences for students, and they offered these incredible products for students, too, that were really tailored to the campus community,” Pankhaniya recalled. “I thought about it and realized that we [at GWU] have all these problems with learning about financial literacy and being prepared for financial independence after college. I thought this combination of a great learning experience and great services, could help solve that problem by really getting students involved in their finances early on.”

When he got back to GWU, Pankhaniya went door-to-door in his dorm and talked to students about the idea of opening a student-run credit union. He managed to round up interest from about 20 students, and the group entered a new venture competition sponsored by GWU in January 2018.

“We made it to the finals and raised about $5,000 in startup capital and about $15,000 in additional support,” he said. “That got us going,”

The student group that established the George Washington University Credit Union Initiative (gwucui.com) began the hard work of developing operational plans, conducting research and student surveys, developing a marketing plan and compiling all of the other information, data and documents required for the NCUA’s federal charter application.

“We’ve submitted multiple rounds of documents for feedback based on how we built out our plan,” Pankhaniya said. “We submitted our first round of documents over a year ago. Our most final submission was about a month, month and a half ago [in February], and that’s the documentation that looks the most final. It looks like it’s going to help us push past the finish line.”

When CU Times interviewed Pankhaniya in early March, before the coronavirus threat became a bona fide national pandemic and college campuses, including GWU’s, were shut down, he was hoping to secure the federal charter by May 1. Despite the health and economic crisis, Pankhaniya’s boundless optimism still allows him to believe getting the federal charter approved by that date is still possible. However, the official credit union launch on GWU’s campus would have to be delayed until August, if the coronavirus crisis subsides and stay-at-home orders are lifted by then.

“They [the NCUA] have not said it is not feasible [to secure the charter by May 1], and they haven’t said it is feasible,” Pankhaniya said on March 27. “They said they are going to work with us on it. We have not gotten anything firm yet.”

But Pankhaniya has another obstacle that may temporarily place his plans on hold.

The project’s organizers have raised about $21,000 in capital cash, but they need to raise an additional $39,000 in cash to reach the capital minimum of $60,000, which is required by the NCUA to start operations, he said.

“I  think we will [raise the rest] because we have generated so much momentum recently, with the school’s recent contribution of a total of $11,000 in cash and from the chairman of the NCUA [Rodney Hood], who gave us a shout out at the GAC,” Pankhaniya said. “He actually went off-script when he mentioned us and said he’s looking forward to coming and helping us cut the ribbon at our opening ceremony. I think that that momentum is going to be really helpful, and I think we can attract a lot of supporters.”

While the organizers plan to operate a small office on campus, the credit union will be all-digital, and open to GWU’s 12,500 undergraduate students and 15,000 graduate students.

Organizers said they believe they can attract as many as 100 student members annually.

“Now, we think we could exceed that. Again, we’re trying to be as conservative as possible with our assumptions,” Pankhaniya said. “In reality, growth could be faster, it could be slower. It’s all based on market conditions and our marketing, which we think will be relatively effective.”

The marketing plan would include leveraging data analytics to determine the peak times students are on various social media sites, and using every communications channel available including, surprisingly, email and in-person marketing.

“Email tends to be relatively frequently used because students have student emails, and they use them to subscribe to a lot of student organizations and campus outreach lists, et cetera,” he explained. “That’s an option, but we’re going to see what the most frequently used platforms are. On certain days of the week, some social media platforms have increased activity while others don’t. On campus, in-person advertising tends to be super effective, by just setting up a table … and just talking to students about what we’re doing.”

In addition to the traditional share draft accounts and savings accounts, Pankhaniya said the credit union will offer internship loans to pay for expenses that students incur before they get their first paycheck, textbook loans and micro loans for student organizations to fund their expenses before they receive funding from the university.

“The marquee product right now is actually our credit builder program,” he said. “That’s going to be a program that lets students safely build credit. They assume little to no risk from taking out the loan. We assume little to no pre-payment risk or default risk based on the way we will structure this product. We think it can be great for the student community.”

Pankhaniya said these loan products were developed based on several surveys and one-on-one conversations with GWU students.

In addition to Pankhaniya, who is expected to become the credit union’s first CEO, other student organizers and officers include Christian Trummer. chief technology officer; Scott Rothschild, chief operating officer; Ander Tebutt, technology team chair; Kelly Chen, operations team chair; Vincent Premysler, development associate, and numerous new staff who were welcomed on board this year.