DALLAS — Like most credit unions, DGE Federal Credit Union in Washington was struggling to attract youth, until a partnership with the local summer youth employment program (SYEP) boosted young membership to the point where 12% of DGE's members now are under age 24.
DGE began life as the credit union for District of Columbia government employees, but the institution has a history of supporting city programs and policies. Speaking on a panel during the jointly held National Federation of Community Development CUs' annual conference and the CUNA Community CU conference, DGE CEO Carla Decker explained that each year the city hires 13,000 young people between the ages of 14 and 24 to work for six weeks as part of the SYEP, with other employment opportunities available beyond the summer. That program, Decker said, was an avenue for her CU to boost membership and assist the unbanked.
"We saw our work as a means to better engage with our primary sponsor and also to ensure that we support not just the programs, but the people who work in the municipalities, because many of their children, their neighbors and family members are participants in the Summer Youth Employment Program," explained Decker, adding the program was also an opportunity to diversify DGE's member base.
Through its involvement in the program, DGE discovered the city's employees were being paid via a prepaid payroll card from Citibank.
"Funds were coming into the card and the only thing they could do was spend — they couldn't save with it," noted Decker.
Working with the city, DGE helped set up an onboarding process for summer employees so that once youth have been hired, they utilize an online portal to determine how they want to be paid. Those that already have banking relationships simply enter their account information. For those who are unbanked, an online tutorial provides financial education and information about financial products. After that, participants learn about savings and establish savings goals, pledging to save whatever amount they choose from their summer earnings. When that is completed, the user selects a financial institution, and DGE FCU is one of the options.
Two different kinds of accounts are available — custodial and non-custodial, depending on the user's age — and DGE offers these employees a checkless checking account with no maintenance fees or dormancy fees, and access to 150 surcharge-free ATMs across Washington. The credit union also set up online enrollment so that these members — many of whom either may not be old enough to drive or might not have access to reliable transportation — don't have to come in to a branch.
During the summer, participants get additional financial education through peer-to-peer learning, and those who have attained their savings goals by the end of the season are entered into a contest to win an additional $1,000.
For the summer of 2016, DGE opened 1,014 youth accounts, 817 of which were non-custodial accounts. Nearly 890 users received ACH payroll, a 90% usage rate, and the average account-holder's age was 16, said Decker. The total portfolio balance by the end of the summer employment program was $65,000, with 35% of the money in savings and the remainder in transactional accounts. The average savings balance was $30 and the average transactional balance was $50.
Decker said that while these stats are impressive, they are just the tip of the iceberg.
"If we banked 1,000 kids in 2016 and there are 10,000 kids that take part in this each summer, there are huge options for scalability," she said. And while other FIs — credit unions or otherwise — may snap up a portion of the remaining SYEP participants, Decker said she doesn't view those institutions as competitors for this market. With 1,000 new accounts per year, she said, "we are really, really satisfied."
And there is some evidence that these members are beginning to broaden their usage of credit union products and services. Decker conceded that the credit union hasn't done a good job of measuring data, but a portion of the youth who participate do end up working in DC government and have remained members.
"We saw our first car loan from [SYEP] take place in 2015 and we expect that as these youths continue to age, that impact will continue to increase," she said.
