The big rethink: Credit unions on changes driven by pandemic

March 22, 2021 5:00 AM

Just over a year has passed since the World Health Organization declared COVID-19 a global pandemic, and the last 12 months have forced the credit union industry to pivot in a variety of unexpected ways.

As branches limited access and social distancing became the norm, much of the industry quickly embraced remote work in ways many credit union leaders never expected. But that has led to new questions about not just how organizations operate after the pandemic ends, but how credit unions can convey institutional culture when fewer employees are together onsite.

To be sure, many of the industry’s worst fears never materialized – there was no liquidity crisis and no widespread failures or conservatorships – but lending and membership slowed, deposits surged, and there’s no clear consensus on how soon things might turn around.

As the nation passed the pandemic’s one-year anniversary, credit union leaders from across the country reflected on some of the biggest lessons they’ve learned in the past 12 months. Read on for some of their responses.

Disaster planning pays off

Todd Cover, CEO of USSCO Federal Credit Union

Todd Cover used to question whether the time and money spent updating his credit union’s business continuity plan and running various doomsday scenarios was logical.

Not anymore.

“When we would do this exercise in the past, I thought it was very expensive and wondered if the work and expense were worth it,” said Cover, CEO of USSCO Federal Credit Union in Johnstown, Pa. “It proved to be very helpful, and the pandemic plan that we had was the foundation for communication and provided the necessary action steps to continue to serve our members.”

The $147 million-asset credit union also found out the importance of having reliable drive-thru lanes, ATMs and technology, and Cover said those channels will continue to be of “utmost importance” to the company’s operation going forward.

“Members adapted and for the most part were very understanding and patient with our employees,” he said.

USSCO adopted a “Chick-fil-A" strategy during busy times, Cover said. When the weather permitted, the senior team would welcome members in the drive-thru, direct them to park, jot down their “order” and walk the transaction into the office. When it was completed, they’d head back out to the member. “It created a tremendous amount of goodwill,” he said.

The credit union also implemented a remote work strategy for non-member-facing employees, specifically the accounting and finance departments. Each person worked from home one day a week on a rotating basis, which Cover said made the credit union stronger.

“We proved to ourselves that we could run the entire operation remotely if we needed to,” he said. “It bolstered our confidence in our operation, and the affected personnel loved the flexibility in working from home."

Rethinking branch strategies

John Buckley, president and CEO of Gerber Federal Credit Union

The biggest lesson learned through the pandemic was that there is no reason to fear change and progress, said John Buckley, president and CEO of Gerber Federal Credit Union in Fremont, Mich. “We had talked about remote work for some time, but it was thrust upon us with little prep time. We made it work and can move forward confidently that we can figure things out as they occur,” he said.

The $195 million-asset Gerber FCU was in the middle of planning a renovation project at its corporate office to reduce its teller footprint and add fixed offices when the coronavirus hit. The company finished that project, and the shift in its business away from tellers to online is causing it to rethink its whole branching strategy, Buckley said.

Gerber had a grocery store-based, limited-service branch for 11 years, but outgrew that location over time. The credit union then built a free-standing 3,000 square-foot office in 2015, and that office has tripled its business in the last five years.

"Pre-COVID, this was our template for entering new markets – limited service in a high traffic, locally well-known store, build the base, then build free-standing," he said. "With COVID lowering the value of commercial real estate, I think we are more likely to put micro-branches in expanded markets and tie them via technology [such as interactive teller machines] to existing staff as teller transaction counts continue to fall."

Gerber FCU also now knows that it can deal with rapid change and that its membership is capable of moving along with it. “We can accelerate our deployment of remote work and maybe look at expanded hours with that capability,” Buckley said.

Business is booming for pot banking

Only a very small percentage of credit unions bank the legal marijuana industry, but many of those that do have seen a substantial uptick in that side of the business since the pandemic began. That was the case at Live Life Federal Credit Union in Fraser, Mich.

“Because of the cannabis business, we fared pretty well,” said CEO Karla Haglund. “On the consumer side, people are struggling to pay loans – the same things that everyone struggled with, we struggled with, but we had a line of business that kept us busy.”

The credit union moved into a larger facility in November, which has allowed staff to spread out more for social distancing. “When we built this building, everybody’s got a private space – in the old building, people were close together and when somebody sneezed, everybody panicked,” she recalled.

While Live Life was recently made news as one of the first institutions to be penalized for how it serves the legal marijuana industry, Haglund said the growth in that sector shaped much of the credit union’s last year, in spite of the pandemic.

“My year has been really busy, just not necessarily around cannabis but the organization as a whole,” she said. “We took some big leaps and it gave us great opportunities to have a new building [and] have people spaced out like they belong. It was just a different make-up for us; it was a very different culture than if we had just had our consumer [business].”

Hybrid work models are the future

John Holt, president and CEO of Nutmeg State Financial Credit Union

It’s critical to have a plan and be prepared for anything that could disrupt your business, said John Holt, president and CEO of Nutmeg State Financial Credit Union in Rocky Hill, Conn. Within 24 hours of the onset of the pandemic, he said, the $506 million-asset credit union mobilized everyone to work remotely, including employees at its contact center.

Holt said it is also important to keep employee collaboration and engagement at the forefront in a remote-work environment. “While that was challenging, we figured out ways to engage the staff, including town hall meetings, social hours for the staff and delivering food to employees’ homes when they had successes,” he said.

Holt believes a hybrid approach will be appropriate going forward because it offers the right amount of flexibility between remote and in-office work. That’s because some functions — including onboarding — can best be handled in the office, he said. “It’ll likely be a work in progress, but at least now we know remote work can be done. We also know that by working remotely, we can offer flexibility that should help us retain and recruit employees,” he said.

Most employees like working from home for reasons including reduced expenses, more time with family and the overall flexibility, but Holt admits there is a need for more solid data around productivity at home versus in the office. “Candidly, we really don’t know if people were more or less productive at home,” he said.

And Holt believes there is something special that happens when employees are together in the same office. “We are humans and we need face-to-face interaction. I’m not sure I can explain it, but it just feels better and appears to be more engaging,” he said.

Cool under pressure

Mike Lord, president and CEO of State Employees’ Credit Union

Mike Lord, president and CEO of State Employees’ Credit Union in Raleigh, N.C., the nation’s second-largest credit union, suggested the biggest lesson from the last year was how flexible staff can be under pressure.

“Our employees can pivot and adjust to the challenges that come before them,” said Lord. “Our management and our board are able to do the same, and the capacity for our staff and our board and management to make adjustments is very impressive. Our folks are to be commended for the great job they did adjusting to what is unprecedented in our times.”

Lord added that the credit union’s members deserve thanks for the flexibility they showed in working with the credit union as employees navigated uncharted waters.

“Our members were well served and they’ve been very patient through this whole trauma with the adjustments that have had to be made,” he said. “It’s the capacity of individuals to meet the challenges of whatever is thrown at them.”

Expect the unexpected and double down on relationships

Rachna Bhatia, director of community outreach & business development for $342 million-asset Infinity Federal Credit Union in Westbrook, Maine, said the biggest lesson learned in the past year was the importance of forging stronger relationships with the communities it serves.

"This disruption caused an upheaval in our small business communities," she said. "One thing we realized is how vulnerable our communities are in spite of the advances we have made in science and technology. The fear of lives and livelihood still lurks on the horizon."

So Infinity believes it needs to "hand hold" its members and also help itself out of the crisis by educating, empowering and empathizing.

She said even though physical distancing measures remain in place, it is critical to bring people together emotionally.

"Our relationship with our members is beyond banking. We have gone digital in so many areas but still have the human touch," she said.

Infinity has introduced "distance banking" and "curbside banking" since it had to shut down its lobbies. The credit union said those new initiatives will become permanent even after lobbies reopen.

"We are spending a lot of time educating our members about the convenience of digital banking at the drive-ups, through email, phone and also video calls," she said.

Infinity also learned to expect the impossible, she said. That could be anything from a cyberattack to a natural calamity or biological event.

"We must try to stay ahead of the curve by engagement with our management team, assimilating ideas and finding very creative ways to serve our members. This will be an ongoing process, challenging our old beliefs and adapting to the ever-changing environment. We will have to continue to evolve and keep finding unique ways to serve our members," she said.