COVID-19 Impacts to CUs, Members & Communities: Webcast Recap

As the credit union industry moves through the initial shock waves of the COVID-19 disruption, industry leaders are rapidly adjusting their operations. At the same time, “next practices” are beginning to take shape.

CU Times Editor-in-Chief, Michael Ogden recently hosted a wide-ranging conversation with Doug Marshall, EVP at BECU ($22.7 billion, Tukwila, Wash.) and Todd Pearson, southwest region president at Alaska USA Federal Credit Union ($8.5 billion, Anchorage) to share their organization’s rapid responses to these challenging times and their insights on what may be coming next.

A brief survey created by Purvis Management is available to extend the conversation and share your insights. Survey feedback is anonymous, may be used for additional editorial content and is intended to improve the health of financial cooperatives and the communities they serve.

Survey: Building a New – and Better – Normal

We are past the initial shock to the system, but your branches did not completely shut down. Why didn’t you shut down?   

“The why was simple – we had to stay open,” BECU’s Marshall replied. “Like so many out there, we are considered an essential service. And unlike many others, we do not have many drive-ups. So, one of our challenges in staying open is dealing with the face-to-face activity.”

BECU’s ability to remain open and serve members even in the early days of the COVID-19 response in the Seattle metropolitan area was made possible by an online appointment system that had been previously deployed.

“We could manage the traffic into the branches in a relatively safe and thoughtful way that allowed members to be safe but also allow them to have the access they wanted,” Marshall said.

Changing consumer needs quickly revealed a shortcoming with BECU’s online appointment system. “One of the flaws that we discovered was that we didn’t allow same-day appointments,” Marshall explained.  BECU staff was able to quickly revise the system to serve same-day needs.

Alaska FCU’s retail operation posed a different range of challenges. Pearson explained, “We operate in four different states, and each state during this pandemic has had different rules and policies.”

And Alaska FCU’s retail operation includes many in-store branches. “Social distancing was a challenge,” Pearson added. “We tried to do as much as possible through social media and our digital channels. But we quickly implemented new guidelines for our branch processes, too. We changed our hours to Monday, Wednesday and Friday with shortened hours.”

What safeguards do you have in place regarding employee health?

Alaska FCU’s Pearson explained that cleaning protocols were implemented virtually overnight. “We have training on how to sanitize the branch. We are cleaning the workstation after every interaction with a member. We’re doing it every hour on the teller lines and incorporating social distancing measures.”

He added, “We’ve incorporated plexiglass shields at all of the workstations. Our staff has done a phenomenal job. We’re learning on the fly every day how we can be better at this to make everyone feel safe knowing that we’re going to be there for them. “

BECU’s Marshall highlighted another challenge in the COVID era: “ATMs are one of the more challenging things to keep clean given the number of interactions.”

Beyond retail, BECU is looking closely at return-to-work challenges for its office staff. “If you have 500 to 600 people in an office and one person gets infected, that is not a good thing. So, we will treat the return to the office very, very carefully,” Marshall said. “And perhaps start with as few as 50 people and, over time, expand that.”

Back-office considerations include, according to Marshall, “all those common areas that we like to gather in and exchange ideas and check up on one another. Lunchrooms are fully social distanced – where you had 20 tables, you now have four.”

All of this is a work in progress at BECU. “We will start to move into that in early July,” Marshall said.

How are you handling members wearing masks?

Alaska FCU’s Pearson admitted, “That’s a tough one. We obviously need to identify the members we are doing business with. I do not think it is unreasonable to ask someone to pull the mask down so we can identify them. Once that is done, they can replace the mask over their face.”

At BECU, Marshall explained that the local and regional requirements to wear masks has meant another type of risk management challenge. “One of our challenges has been to ensure that members have masks on … so that we adhere to the protocols of the state and the county.”

Over time, BECU has worked through this challenge. “We now have a stash of masks for members who don’t have one with them,” he added.

Alaska FCU has taken masks to the next level. Pearson said, “Our marketing department put together branded PPE masks for our staff. Probably the toughest thing to do is to get enough of them made!”

What is the challenge of innovating in a remote space?

BECU’s Marshall explained, “One challenge working remotely is just getting work done. We think we have that covered. Then, how do you maintain the culture? And while you are working on that, how do you innovate?”

BECU is using a tool called Mural that allows team members to conduct exercises virtually in ways similar to those they practiced in a physical space together.

“The short answer is it has been a challenge, but we’ve found our way, in part, motivated by the need to meet our members needs,” he said.

The times and the tools seem to be working for BECU. “We developed a product in three days that might have taken us a year,” Marshall noted.

What are you seeing or hearing about members’ lending needs?

“We want to be understanding of what they need and what their particular household is dealing with, Alaska FCU’s Pearson said. “It is troubling to know what our collections staff are dealing with on a day-to-day basis, when you are a nine-billion-dollar organization and roughly 1.5 to two billion in members need help in one way, shape or form.”

Pearson added, “We’ve been fortunate too that loan growth has been fairly good. We’ve had a fair amount of auto applications and we’ve had record mortgage originations in each of the last two months.”

BECU’s experience has been similar.

“Some members and prospective members need new credit. The housing market remains very robust. So that part of our business in going very well for us and for our members,” Marshall stated. “Right when things hit, all that some members needed was a simple bridge loan of $1,000 or $2,500 for when their cash flow returns.”

Other members have needed loan forbearance, he noted. “Let me skip a payment … I know my job will be back next month. Or just simply don’t charge a late fee because I can make the payment but not on time.”

CUNA has put together a COVID-19 Recovery Task Force. What would you ask of a recovery task force?

Pearson of Alaska FCU said he is concerned about smaller credit unions. “Knowing the struggle of smaller credit unions, I’d suggest they put a lot of focus there. The fear from my perspective is that lots of smaller credit unions are not too far recovered from the recession of 2008 and 2009.  We need to focus on ways to keep small credit unions alive and healthy.”

BECU’s Marshall wondered about future differentiation and relevant credit union activities. “Help us all understand, as a movement, what it is that we can uniquely, distinctly do that other financial institutions cannot do.”

Marshall explained that BECU has been in the “react phase” and has moved decisively toward the “reenter phrase.”

The future is uncertain. “Entire business categories may not exist,” Marshall added. “We just don’t know.”

The COVID pandemic, economic changes and changes in consumer behavior suggested to Marshall that it is time for a “reimagine phase” in the credit union industry.

Matt Purvis is Principal of Purvis Management in Eugene, Ore.