Filene Hoping Wisconsin Agreement Will Become Model
The Filene Research Institute is hoping a new partnership with this state's league to boost services to underserved markets will become a model for partnerships with other leagues.
In fact, Filene is currently courting three other leagues and hopes to have them signed onto the project by the end of the year, according to Lois Kitsch, program director at Filene.
The idea is to take Filene's copious research on serving the underserved-such as check cashing, payday lending and serving recent immigrants-and put that research to work by partnering with leagues to help show credit unions how to implement some of the ideas resulting from that research. In this initial partnership with the Wisconsin league, WCUL will help identify which credit unions are in a position to reach out to the underserved and encourage them to work with Filene, which will offer tools for implementing programs for the underserved.
"We are in the process of implementing a program called Real Solutions where we will work with selected leagues to help credit unions offer transactional services and other products and services to reach out to the underserved," Kitsch explained. "Wisconsin is the first league we are partnering with. Our expectation is to bring on a new league about every three months, with each partnership lasting about a year. Then Filene will leave the league to continue to replicate the project with other credit unions on their own."
"We realize that reaching some markets is more difficult, such as new Americans, due to language barriers and cultural issues that affect people's perception and trust in financial institutions, but that's a hurdle that our service delivery model is designed to help overcome," said WCUL CEO Brett Thompson. "More than 80 credit unions already offer non-member check cashing services. Credit unions have recognized the need for some time but will benefit from the support and resources the League and Filene can provide."
But Kitsch pointed out that one of the reasons Filene has a good handle on how to implement some of these programs is because some credit unions are already doing some very innovative things to reach out to the underserved.
Brewery Credit Union, here, which served as the site of the signing of the agreement between WCUL and Filene, is one such example.
Located just a few blocks from the Hillside housing project, the $23-million, community credit union is dedicated to providing products and services that will keep its members from falling prey to payday lenders, title lenders, check cashers and other expensive, non-traditional financial services providers, according to CEO Jim Schrimpf.
"We want to offer the services that this community is looking for. We know some of our members go to payday lenders, and when we ask them why, they say, 'Well, it's where I buy stamps, and the money orders are cheaper there,' " he related. "So we're dropping the price of our money orders, and we're selling things like stamps, envelopes and bus passes."
But the credit union wasn't always so enamoured of its inner-city roots. "About eight years ago, the credit union built a branch in Menominee Falls, an upscale suburban area about 25 miles from here," Schrimpf recalled. "The credit union went from making money to losing money-about $100,000 a year, which for a $17-million CU is a lot of money to be losing. That went on for about three years, and the regulators were getting antsy. That's when the board brought me in, and it was time for a tough decision.
"We had to decide which market we were going to serve-the inner city market or the suburban market. We decided that this (the inner city) is the community that needs us most," he continued. "It was a very difficult, heartfelt decision. The dream had been that the credit union was going to move its headquarters to that branch in the suburbs. It's what everyone does: move to the suburbs. But we sold that branch, and we went from losing $100,000 a year to making $300,000 a year."
Five years and $6-million in asset growth later, the credit union is about as close to being a community development financial institution as it can get without actually taking the name.
"If you pull our zip codes, we're hovering right around 50% [underserved areas]. We do a lot of the same stuff as a CDCU," Schrimpf offered, noting that while Brewery CU isn't actively pursuing CDCU status at this time, it may well do so in the future. "It would give us access to funds that would make it a whole lot easier to help people with down payments and other things."