Simply the Best: The Keys to Credit Union Success

What keys to success set credit unions apart from their competitors?

DENVER; FEB. 9, 2021 - To be considered for Forbes’ list of America’s Best Credit Unions, financial institutions must be scored by the people they serve. Credit union customers are asked to score their institution in 5 critical areas:  trust, terms and conditions, branch services, digital services, and financial advice.

Few if any credit unions have the resources to excel in all five of the functional areas that Forbes asked consumers to consider in rating their institutions. Where they choose to put their focus becomes their own secret sauce and differentiates them from all other institutions. Only 3.5% of all credit unions in the country make the list. Among this year’s best are GESA Credit Union (originally servicing General Electric employees), Richland, Washington; BECU (originally formed in 1935 to support The Boeing Company), Seattle, Washington; and BCU (chartered originally as Baxter Credit Union in 1995), Vernon Hills, Illinois.

Understanding those it serves

There are significant differences between Credit Unions and the other financial institutions they compete with for customers. But you won’t find a credit union executive referring to those it serves as customers. In their world they serve members, and each credit union member has a stake in the institution. It’s a very important distinction.

Understanding this is the first step in excelling at the first of the metrics that Forbes asked consumers to consider when rating their institution, trust.

“You have to know your members,” said Lorraine Stewart, Senior Vice-President at BECU. “The only person who really knows what the member wants is the member. So, you need to ask them. It seems simple but many people miss this, despite spending a great deal of time on process improvement.”

Staying close to members is part of the work that executives in top-rated credit unions take very seriously.

“Credit unions have to work every day to earn the trust of their members and the communities they serve,” said Randy Wacker, Vice-President of Mortgage Lending at GESA. “Building trust never comes down to just one thing. It’s all of it.”

Of the metrics Forbes tracks, trust ranked high in importance for all of the credit union executives I interviewed. But as important as it is, it’s still just the starting point for the nation’s best performers.

“In 2019, trust and branch servicers were weighted higher than digital and financial advice, but the pandemic changed that,” said Herbert O. Behrens, Vice-President of Mortgage Lending at BCU. “I believe digital and information will continue to be very important in the future, although we don’t think of the latter as financial education as much as helping our members maintain a state of financial wellness.”

Giving members the information they need

Behrens said his institution (BCU) had rebranded with a new purpose statement: “To empower people to discover financial freedom.” He said it’s more about leading members on a journey of financial discovery than helping them achieve anything.

“Life will bring financial confidence,” he said. “Our role is to help our members discover what financial freedom feels like, so they have a clear understanding when things aren’t going well.”

At BCU, that comes down to good product design, one-to-one interactions with members and a robust digital experience.

“We find ways to put nudges or interactions with focus on financial confidence,” Behrens said. “The best rate might be the best short term but might not be the best long term solution.”

I heard something similar from Lorraine Stewart at BECU. “For years we have focused on financial education. We have various formats in which we offer financial advice and services. Financial counseling is very important. It’s how we make it easy for our members to do what they want to do, especially when it comes to buying a new home. We customize our services to their needs.”

One way Stewart says BECU does this is with its Reprice Program. As a member’s credit score improves, the interest rate for other specified products automatically improves. After polling its members, management learned that programs like these encourage responsibility and build trust.

Benson Porter is President & CEO at BECU. He said, “We focus most on improving the financial wellbeing of our membership. We want to improve their financial position and we do that with individual counseling.”

This becomes even more important as the credit union makes its journey deeper into the digital realm.

“You can’t bring the technology up without resources available to guide your membership through the technology,” said GESA’s Randy Wacker. “Be available to your members through technology, including text banking and your call center. You must have something for every type of member so you can deliver service when, where, and how they want it.”

The importance of being digital

When asked what the future holds, executives from all three credit unions said they were working toward a blend of digital and personal services for their members and communities. A digital strategy helps the credit union realize enhanced backend productivity, which can then be passed back to the member through responsiveness.

“Digital will continue to play a larger role in financial wellness,” said BCU’s Herbert O. Behrens. “Few people will intentionally seek financial education. Our generation was probably one of the last that received any financial education in high school. The consumer education classes that taught us how to balance a checkbook don’t exist anymore.”

According to Behrens, transactional intelligence that comes to the credit union when members use digital online banking services will let the institution categorize expenses on the back end and then provide that intelligence back to its members.

“We can use behavioral economics to help members become conscious of their choices through notifications,” he said.

GESA is also aware of the opportunities that digital offers. “Our members are doing business every day,” Wacker said. “The digital platform offers exceptional benefits to our members through its robust self-service capabilities. That’s what everyone should be doing.”

On the mortgage side, Wacker reports fewer compliance issues with the digital channel. “We are finding that compliance requirements are addressed by the technology. Obviously, we still monitor everything, but the platform helps because it allows our mortgage loan applicants to give us more complete and detailed data than our own employees.”

Finally, BECU’s Benson points out that the combination of digital applications and digital access equates to higher trust on the part of the credit union’s members.

“We didn’t strive to be on the [Forbes] list,” Benson pointed out, “but our focus put us there. This happens when you focus first on your employees and then give back to your communities.”

Jill Sammons, Vice President of Marketing and Brand Strategy at BCU told me something similar when she said, “If making the list means we are doing something right, I would say it is having the best, best equipped, most member focused employees and taking care of them. If you take care of your employees your employees will take care of our members and the rest will take care of itself.

Watch this space as I’ll be sharing more insight from these industry-leading credit union executives in future posts.

By Cate Dalton, EVP Customer Advocacy at Mortgage Cadence

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