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In today’s increasingly competitive financial market, it’s more important than ever for credit unions to remain relevant and differentiated. There’s no question that over the last several years, credit unions have been at a crossroads, looking to keep stable market share and future-proof their business model for a younger generation. And while there are many strategies to enhance a credit union’s competitive edge, one important (yet often overlooked) strategy is private deposit insurance.
Simply put, ALEC Credit Union would not exist without private deposit insurance. Our credit union started as an idea, one without a business plan or sufficient capital to make our vision a reality. All along we hoped we could find a better way to support the financial well-being of the employees of the ALEC family – but that wouldn’t have been possible without private deposit insurance, which is the route we chose in 1990 to help get our credit union off the ground.
Our main office opened in Gurnee, Ill., in 1992 – a year in which we also enabled the family members of our client’s employees to join ALEC. And over the years, our credit union family has grown – today we stand 31,000 members strong and with more than $1 billion in assets. Over my 20-plus years at ALEC, I’ve seen how private insurance can be a gamechanger for credit unions (and one they may not even know exists!).
Here’s how:
Flexible Programs to Best Serve Individual Missions
Credit unions are purpose-driven, and private insurance allows for that. Because a private insurer is not a regulator, they’re able to truly partner with a credit union and allow them to operate in the best interest of their members, while enhancing the safety and soundness of the organization.
More Coverage to Attract and Retain Members
Simply put, private insurance offers more coverage than the federal $250,000 individual limit. Under private insurance, each and every account is insured up to $250,000. This means members holding substantial deposits can be assured that all their assets can be comprehensively protected within one financial institution — an option not available to federally insured credit unions or banks. As the baby boomer generation retires (or begins to retire), this is a key benefit that younger generations will find particularly attractive.
Strengthened Financial Stability and Sustainability
Private insurers are business partners, vested in the success and financial health of their member credit unions. This level of commitment is especially important during times of economic fluctuation. Case in point: We didn’t lose a single member during the 2008 financial crisis over our choice of who was insuring our deposits.
Strength in Community
Sometimes the smallest things can make the biggest difference. And that’s the connectivity that privately insured credit unions have with one another. Over the years, our private insurance partner has opened so many doors for us, connecting us with other credit unions as we’ve built new departments, rolled out new products and formed new vendor relationships. We were able to learn from others and glean best practices to help us be more efficient and successful from the start.
To me, it all boils down to partnership. As the financial landscape continues to evolve, I encourage other credit unions to think outside the box when it comes to insurance protection. Not only can it help your credit union to be more nimble and agile, but it can also help members achieve (and hopefully surpass!) their financial goals today, tomorrow and into the future.
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