How to Make the 'Credit Union Hug' 10 Times Better

Meet Shoal, a new digital platform that will give savers in the U.K. the power to help fund the fight against climate change.

Launching in 2022, Shoal will invest exclusively in green and sustainable projects, giving savers the power to select the types of projects they can support with their money. The platform will empower communities to channel their savings directly into their most important causes.

Shoal also marks a massive moment in the U.K. banking world, as it is the first collaboration between the British multinational Standard Chartered bank, which was founded in 1969 and operates more than 1,200 branches in more than 70 countries, and challenger bank Starling. Starling, founded in 2014, offers best-in-class digital capabilities and Banking as a Service (BaaS) to over 2.5 million customers, according to the challenger bank.

A challenger bank is typically a smaller bank that aims to compete with traditional banks by leveraging technology. Most challenger banks are digital or app-based and do not have a physical branch system. This structure provides a considerable benefit to the challenger bank because it can avoid the high costs of running in-person branches and use the money saved to deliver better digital service and product innovation, resulting in lower costs to consumers. The apparent targets of challengers are those who embrace technology, primarily millennials and Gen Z.

Because of their smooth digital and app experience, many challengers saw a rather nice uptick in users due to the pandemic. Challenger banks were able to process and deposit stimulus payments faster than traditional banks. This efficiency was appreciated by those who might have been living paycheck to paycheck or who lost a paycheck during the pandemic. (To learn how credit unions can challenge challengers, please read my July 16 article.)

While the collaboration between a traditional bank and challenger bank is exciting, what’s even more exciting is the purpose and potential impact of Shoal. Shoal taps into millennials’ and Gen Z’s desire to make a difference in their world, and gives them a way to invest in efforts they support. Unlocking this much-needed retail capital gives savers the power to make good money while making money to do good.

What actions can credit unions take to fill the desires of millennials and Gen Z?

During the pandemic, credit unions stepped in and stepped up their local outreach efforts, delivering the “credit union hug,” a representation of credit unions’ passion for their members. A prime example is the ”Give Love Challenge” efforts made by WV Central Federal Credit Union in Parkersburg, W.V. During the height of the pandemic, this triple-hit fundraiser quickly and easily infused $75,000 into the communities the credit union serves in one day. This was accomplished through a buy local, matching and food bank donation.

In addition the Minnesota Credit Union Network hosts CU FORWARD. This is a one-day event when credit unions of all sizes statewide commit to giving back to their communities in a cooperative effort by promoting volunteering opportunities, fundraising events and participating in community service projects. This year’s efforts impacted more than 540,000 people.

While these accomplishments are incredible, the opportunity that is currently being presented to credit unions is to formalize these efforts for maximized results.

Here are five actions a credit union can take to increase the impact of their hugs by 10:

1. Assess current giving efforts. Evaluate current efforts and determine what is most impactful for the least amount of effort.

2. Formalize the efforts. Take a moment to ensure these efforts have formal process documentation. Next, review the process for ways to reduce friction and improve efficiency. What can be automated? How can you leverage current technology, such mobile apps? Who can you partner with (other credit unions/state associations/others)?

3. Quantify the impact. Make sure the bigger picture is being measured, for example, how many lives are being impacted by these efforts. What goals should you set? What other community benchmarks should you be attempting to achieve?

4. Formalize the process as an offering. This includes the following steps:

• Set goals
• Promote it as a product (devote the same level of promotional effort that you would for a typical credit union product)
• Share stories
• Leverage social media

5. Rinse and repeat.

Credit unions have been connecting their members to the communities they serve for much longer than Starling and the Standard Chartered bank have. Now is the time to leverage the credit union hug!

Anne Legg is the Founder of THRIVE Strategic Services, a San Diego, Calif.-based company that assists credit unions with data transformation, and author of “Big Data/Big Climb,” a credit union playbook for data transformation.