MADISON, Wis. (11/15/11)--Bank Transfer Day and the weeks leading up it brought credit unions about 700,000 new members. Now credit unions face the challenge of converting dissatisfied bank customers to long-term, productive members.
At many credit unions the relationship building begins during the account opening process. For example, $1 billion asset Elevations CU, Boulder, Colo., uses what Assistant Vice President Dennis Paul calls the "human switch kit," whereby the credit union member representative drives the migration of direct deposits and electronic fund transfers between financial institutions.
"We've found that the perception from new members is that it's a very complicated process," Paul told News Now. "We take the burden off the consumer and put it on the credit union. I can tell you that new members are amazed, and much more willing to bring us their business."
During the account opening process Elevations also conducts a free "Reality Check," a thorough review of the new member's credit history.
"We've found that free credit reports and monitoring services really aren't what they claim to be," Paul said. "For example, they might show consumers their credit report but not their credit scores, or they might charge an additional fee for more information. Reality Check is a top-to-bottom look at the members' credit history. We also look at every loan they have and compare them with our products side by side. Our goal is not to put products in the member's hands unless it is going to benefit them."
Elevations did not run any special promotions leading up to Bank Transfer Day, mainly because it is not in a primary Bank of America market, Paul said. Still, the credit union added 732 new members in October, a 75% increase over a typical month.
BECU, in Tukwila, Wash., reported that 659 people opened accounts on Bank Transfer Day in one branch alone.
The $9 billion asset BECU faces an additional challenge in engaging new members: Because the credit union operates primarily out of tellerless branches, much of its account-opening process is geared toward member education.
The credit union has 45 branches, of which only two have tellers. The remaining are what are what the credit unions terms "Neighborhood Financial Centers," equipped with ATMs. BECU also has two contact centers, one in the Seattle area and another in Spokane, Wash.
"It's not just about educating new members that we don't have tellers; it's educating them about why we don't have them," said Toby Travis, BECU senior marketing strategist. "It's about operating more efficiently, creating a better return for the members in offering better rates."
Next, new members must learn about BECU's remote delivery options. Travis calls the BECU's online banking platform the "Rosetta Stone" of its retail delivery strategy. The credit union also employs remote deposit capture.
"For us, it's not about product wrapping until new members are comfortable with who we are and how they can gain access to their accounts," Travis told News Now.
"We know we are not the right financial institution for every consumer," added Todd Pietzsch, BECU public relations manager.
But BECU's operating model does allow it to provide very competitive products, Pietzsch added. During the account opening process, new members are apprised of the Member Advantage account, which offers better rates on savings and loans if members receive e-statements and use specific electronic services.
"We also have strong confidence in our staff that they can save members money by transferring a credit card balance or a loan from another financial institution," Pietzsch told News Now. "We know our rates are competitive, and that helps in leveraging that first point of contact."
Texas Trust CU, with $695 million assets, Mansfield, Texas, which added 1,248 new members during the month leading up to Bank Transfer Day, employs a process known as onboarding to more fully engage new members.
Onboarding is a systematic process of reaching out to new members using a combination of phone calls, e-mails and direct mail during the initial months they join the credit union.
"During the first 90 days you either lose a member or gain their trust," said Amber Danforth, Texas Trust FCU vice president of marketing and public relations. That's why we want to make sure we capitalize on it."
Texas Trust begins its onboarding process, called "Embrace the Connection," by sending new members a hand-written thank you note and an owner's guide to the products and services the credit union offers.
During the next 12 weeks, the credit union's member customer information file system generates e-mails and direct mail offerings about product and services that fit the member's financial needs, including loan offers based on the member's credit score.
"The cool thing is that every communication is from the member representative that opened the account," Danforth said. "So, members do feel like they have a direct connection with someone at the credit union."
While credit unions vow to earn their new members' trust for the long haul, more than one credit union representative sensed that Bank Transfer Day was about much more than consumers making a one-time statement against big banks.
"The people that are moving from big banks are very excited, not just to open an account at a credit union, but to bring their relationships with them," said Anne Benjamin, executive vice president/chief operating officer at Redwood CU, with $1.9 billion assets, Santa Rosa, Calif. "I've worked in credit unions for 30 years and have never seen anything this unique. People are so engaged."
Redwood CU opened more than 600 new accounts on Nov. 4 and 5, more than six times the number it normally would. During October, the credit union also experienced an 83% increase in new accounts from October 2010.
"We're not seeing people joining the credit union to just to say, 'I did it,'" said BECU's Pietzsch. "They are joining because it's best for them and they're going to use it. We see them bringing their relationships with them."