FAIRFAX, Va. - In-school and student-run CU branches are usually seen as a quality educational tool for students and a convenient way for teachers to access a branch.
But in northern Virginia, Apple FCU is taking the concept beyond simple convenience and education and using the branches to build rapport with students and retain accounts when those students enter the working world.
The greatest challenge CUs have in generating new accounts with youth, says Apple FCU business development manager Dave Gorham, is the “inheritance cycle” where middle and high school aged kids simply stay with the financial institutions that their parents use.
“Typically people inherit their insurance and bank accounts from their parents,” he said. “There is a lot of reason to believe that is the biggest hurdle to face.”
There are now 34 Apple student-run CUs across five northern Virginia counties, and Gorham says that the retention rate is strong, pointing out that nearly a dozen of the students who signed up for an account at the first branch, opened in 1995, are still members. To keep these students in the system, Apple has taken a three-pronged approach.
It gives the youngsters an opportunity to get hands on experience in a financial institution by running the educational CU, and then follows up on that experience by giving students financial literacy talks and introducing them to credit cards.
“Hopefully the kids get an account from us through the student branch when they are 16 or 17 years old and opt to stay with us eight years down the line when they are done with schooling,” said Gorham.
During the fourth quarter of the educational year, every branch shows students videos on the “secret history of credit cards,” and then dives deeply into a discussion about credit for several days. After answering a battery of questions, students can “graduate” from the program, making them eligible for a $250-limit credit card on their 18th birthdays.
“When they turn 18, they would be able to go to an Apple branch, sit down with an Apple counselor and have a discussion on where they need to be with their credit, and on building credit,” Gorham said.
Not Out For The Money
Once students have become adult members, the CU does target a number of its other services, such as student and auto loans, but makes sure that the message it sends to parents, teachers and students alike is that it is trying to establish a relationship and not simply “out for the money.”
The youth market has been notoriously hard for CUs to crack, and Gorham notes that getting through to youngsters is not going to happen overnight.
“You’re not going to crack it and have a high school student branch generate 500 accounts a year. It is a slow, maturing process that doesn’t reach a true CU measurement of profitability for years,” he said, adding that CUs should look for a high open-to-closed ratio as the watermark for success. “Kids will take your giveaway any day of the week, but will they come back and make a deposit with you?”
Even though they do not have specific numbers, Gorham is confident that Apple has managed to keep its ratios very favorable.
“We’ve broken the inheritance cycle of financial products; we’ve made those products accessible through the (school) branches,” he said.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
