OAKLAND, Calif. (7/18/12)--Self-Help FCU in East San Jose, Calif., is delivering "in-line" financial education to help lead low-income people to economic opportunity and security, according to the National Credit Union Foundation (NCUF).
Pictured is a flier for Self-Help FCU's "5 for me" saving account, which was developed to encourage unbanked check-cashing customers to open savings accounts and start the habit of saving regularly. It is a basic savings account with an automatic savings feature tied into check-cashing transactions. When members open this account, they agree to have $5 automatically transferred into it every time they come in to cash a check. (Photo provided by Self-Help CU)
The credit union received an NCUF Financial Education Grant this year to implement, analyze and refine its in-line education model, which delivers 'bite-size' financial management concepts at the teller line when consumers are focused on their financial decision-making. The new education model is being piloted in Self-Help FCU's Micro Branch, a check-casher credit union hybrid designed to meet the needs of unbanked families.
"By providing educational interventions during financial transactions and coupling them with access to asset-building products and services, Self-Help FCU creates opportunities to transition education into action and effectively change financial behavior," said Jeannine Esposito, Self-Help communications and development associate.
Established in January 2010, Self Help FCU's Micro Branch serves East San Jose, Calif., which consists mainly of Latino immigrant population. Based on the one-mile-radius census data around the branch's location, there are an estimated 20,000 unbanked and under-banked Latinos. In California more than 47%--or nine million--Latinos are unbanked, with nearly 200,000 in San Jose, said NCUF.
As a result, alternative providers--such as check cashers, pawn shops, consumer finance companies and payday lenders---have emerged to fills a void in financial services.
"The people in check-cashing lines are missing something valuable: a place to save money, the chance to develop or repair credit ratings, personal security from robbery, and access to responsible credit," said Lois Kitsch, NCUF national program director. "These basic financial services are the gateway to financial stability and capital access, which are critical steps toward upward economic mobility."
The Micro Branch attracts low-wealth customers where they live by:
- Providing relevant and accessible transaction, depository and credit products;
- Being located in their neighborhood, with the extended hours they need; and
- Being perceived as both familiar and supportive, through design and staffing.
As customers establish relationships with the Micro Branch, member service representatives nudge them toward products and services such as credit union membership and savings accounts that can assist them in building assets and achieving financial self-sufficiency. The Micro Branch serves 1,538 customers, and 20% of them have become members of the credit union. All customers received initial education when they registered with the branch to cash checks.
In the Micro Branch's first year of operation, Self Help had a significant impact in the area and proved its ability to attract customers. Now in its third year, Self Help FCU is focused on building the financial stability of its members.
Its in-line financial education consists of:
Teller line interventions--Delivering targeted scripts and /or marketing materials to customers at the point of transaction that nudge them toward an account, a savings product or a credit-building loan.
Community outreach interventions--Using the same marketing materials and scripts when participating in local community events, including neighborhood resource fairs, volunteer income tax assistance site days, non-profit partners' open houses, and so on.
In-branch marketing interventions--Creating posters, post cards and other marketing collateral designed to provide "bite size" education, delivered in an interesting and thought-provoking manner. For example: "Did you know the average Micro Branch consumer spends more than $300 in check-cashing a year and that the average Micro Branch member spends an average of $65 in account fees a year?"
Cross-selling savings accounts--Interacting with customers during their check-cashing transactions so they will open a "5 for Me" savings account. Self Help FCU incorporated the behavioral economic concepts of frictionless savings, the power of defaults, and future commitments with its on-the-ground experience in serving the unbanked to create the savings product.
Evaluation and analysis--Holding regular team meetings to review successful interventions and share best practices, which augments training materials for staff.
Staff training--Incorporating training into weekly team meetings to review the introduction of new marketing interventions, practice teller-line interventions and review community event interventions.
Also, during the second half of 2012, Self Help FCU's in-line financial education activities will consist of:
- Market research (quantitative)--A data-driven analysis of its customer base to determine which customers have progressed along the product suite. For example, the credit union looks at which check-cashing customers decided to open an account and how long it took.
- Market research (qualitative)--Phone and in-person interviews or focus groups conducted to understand how customers are using products and what interventions have worked on them.
- Customer profile flags--Flags in Self Help FCU's core processing system of potential clients who share characteristics from their success stories and are prime for cross-serving opportunities.
The long-term goal is to use the Micro Branch and in-line education model for any unbanked and underbanked population statewide and nationwide, potentially reaching millions of individuals, said NCUF.