WASHINGTON - One of the largest student-run credit unions in the country has worked to turn itself around after getting a lesson in Competition 101 from a local bank.
The $10.2-million Georgetown University Alumni and Student FCU grew by more than $2 million in assets during 2007, as it shored up its operations and product offerings in response to a competitive threat presented by a relationship between the university and the $15.1-billion Chevy Chase Bank. Chevy Chase, a federally chartered thrift, now operates one full-service branch on campus, two ATMs and a third ATM on the medical campus. Among the products the bank targets at students is a Flexible Rewards Platinum Visa card with a 0% APR for up to six months.
“We experienced a 15% decline in assets between 2004 and 2006 due to competition from Chevy Chase Bank which arrived on campus in 2004,” explained GUASFCU CFO Dan White, a junior at the university.
But the incursion by Chevy Chase Bank ultimately led the credit union’s young staff and board to implement new strategies that played an instrumental role in curbing market erosion, according to CEO Cyril Virgis, who is in his senior year.
“In 2006, GUASFCU joined the Allpoint ATM Network, offering our members access to 32,000 ATMs nationwide surcharge-free,” Virgis told Credit Union Journal. “Additionally, we waived our monthly online banking fees and added an online bill pay services. By making our banking package more attractive to not only incoming students but also graduating seniors, we have been able to attract a larger pool as well as increase retention.”
How Does 70% Penetration Sound?
According to White, approximately 70% of Georgetown University’s students have a relationship with the credit union, a figure that has remained steady for the past five years. Its asset mix is divided almost evenly between student and alumni accounts. But it has been the latter group to which the credit union has paid increased marketing attention as it explores ways to offer services and products that will keep graduates active in their credit union rather than just moving to another institution after leaving campus.
“There are a number of students who leave Georgetown but still keep their accounts with GUASFCU,” said Treasurer Bob Scully. “Graduating seniors who keep their account usually list one of these reasons: convenient services such as AllPoint ATMs; free online banking and high saving account rates; affinity for Georgetown University and the CU (Jack the Bulldog debit card); enjoyment in interacting with students, or they may have worked at GUASFCU and believe in its mission and purpose.”
These factors, among others, he said encourage alumni to keep their accounts. “An examination of the membership base reveals that we have become more successful retaining alumni over the past two years and we hope to continue this trend into the future,” Scully said.
Specifically, Scully said marketing has targeted students who have graduated at least two years ago. “This strategic goal will not only allow GUASFCU to grow its asset base, but also greatly benefit our loan marketing efforts as the typical loan applicant is an alumnus in his or her later twenties.” he said.
“Due to the addition of our many newer services during the past graduation period, we had a higher-than-average retention rate of graduating seniors,” said Vergis. Part of that strategy, Vergis said is expanding its online banking platform to ensure it meets the needs of members who move away from the Georgetown community, implementing the new Check 21 initiative and promoting the new partnership with CU Mortgage Group, a third party mortgage originator to credit unions that is based in Vienna, VA.
An In With MBNA
Although the CU does not directly offer credit cards, it sponsors a Georgetown University Alumni American Express card in conjunction with a partnership between the university and the card issuer. In 1991 GUASFCU was approached by the alumni association to create a joint partnership to market the MBNA credit Card. The alumni association itself entered into a partnership with MBNA back in 1983, when it was approached by MBNA founder Charles Cawley, a Georgetown graduate, said GUASFCU chief lending officer Greg Blair.
Blair attributes much of the CU’s member loyalty to the fact that many alumni remain in the Washington, D.C. area after graduation to work, and often keep secondary accounts open at the credit union long after they graduate. “Other contributing factors are the partnership with the university that allows the credit union to market products to prospective freshman before they arrive on campus and the competitive product offerings,” the Georgetown senior said.
However, even then the CU must compete with several local banks. During orientation tours for incoming freshman they are given the option of visiting with four financial institutions: Chase Bank, PNC Bank, Bank of America, and the credit union.
In addition to offering free checking accounts with no minimum balance and no monthly fees, another popular product the CU said helps lure students–oftentimes through their parents–to the credit union is the QuickPay product, which gives parents the option of electronically linking a checking or savings account at another bank with the student’s CU account. The service operates much like online bill pay services that other financial institutions offer in that funds can be transferred as needed or on a recurring monthly basis.
Blair added that the university also has a strong tradition of supporting student-run organizations and since the university does not have fraternities or sororities on campus, many students see the CU as another student organization to join.
“The credit union is well known as an attractive way for business students to get real-world work experience, so popular in fact, that the CU received 130 applications for 20 non-paid internship positions,” Blair said.
For More Information
* www.guasfcu.com
* www.ncua.gov
* www.cumortgagegroup.com
