CHICAGO-A new solution is being offered to make it easier for non-members to "switch" to a credit union.
Introduced by Deluxe during the BAI Retail Delivery Conference here, it follows in the wake of research that shows new members may not be long-term members.
According to Susan Eick, Deluxe's VP of program innovation, research and development, 37% of consumers leave their new FI within 90 days of switching, even though banks and CUs spend "anywhere from $140 into the thousands" to bring those consumers into the fold.
"We found that if we're able to help that member switch over their direct deposit and pre-authorize payments and capture that direct deposit relationship...that attrition rate drops to just over 3%."
Deluxe's SwitchAgent starts the process at the on-boarding phase, when with the members approval Deluxe begins contacting billers and depositors on the new member's behalf.
"We get the signed authorization, we verify the order and then we call the customer and schedule a time to go over all of their pre-authorized debits and credits coming out of the account," explained Eick. After that call, a SwitchAgent concierge contacts billers and creditors to switch all credits and debits from the old account to the new one, followed by a final notice to the original FI. "That's really what the credit union wants: to make sure they have 100% of that relationship," said Eick.
Because of the way pay dates and billing due dates fall, the process takes an average of four to six weeks. In the event that the full switch happens too soon and either account is overdrafted, Deluxe guarantees the overdraft back to the institution and the client.
Deluxe charges $60 per switch, but "What we recommend is that the credit union does not charge anything to the member for the service," said Eick. "It's really to their advantage to take advantage of the service and to use this as an enhancement to bring over new clients."
The CU Value Proposition
Eick stressed that SwitchAgent is what CUs are all about: "It's all about service, making sure the member is satisfied and taken care of," she said. "If [the member is] coming from a large institution where that didn't happen, this enhances the credit union's value proposition."
For TIC FCU Columbus, Ga., SwitchAgent has been a popular feature for new members. The CU beta-tested the product for Deluxe beginning in mid-August and 30 new members utilized it during September alone, with numbers steadily rising since then.
"I think it's a great product and I think it has a chance to really be successful" for credit unions, said Mark Littleton, VP of community development. "I can say that from our experience, we have looked and tried to figure out a more automated way to do the switch process...this makes it much easier for the member; it takes so much legwork away from them."
TIC is offering SwitchAgent for free, and Littleton said he expects to see both new and existing members take advantage of the product in the coming months as more and more consumers turn from banks to CUs.
