TUKWILA, Wash. - To grow your credit union, don’t focus on growth–focus on making members happy.
That’s BECU’s strategy, and it must work. The credit union has recorded membership growth of 12% to 15% for each of the last three years. Moreover, it’s also seen loans and deposits increase by 15% to 20% over that same period. The key, according to BECU CEO Gary Oakland, is making members happy.
“We don’t focus on growth, but we focus on where we think our members are most interested,” he explained. “They reward us back by opening accounts and talking with their friends and family. If we reward them, they will reward us.”
Oakland will discuss this and other secrets of his success at Credit Union Journal’s Grow Show April 27-29 at Orlando’s Omni ChampionsGate Resort.
Some of the tactics BECU uses “might be a little less than ordinary,” Oakland acknowledged. “Some of our strategies, especially around growth, are not the typical. Growth is not a prominent factor we strive for. We want to make sure we are relevant to our members, and then growth is a by-product. If we are relevant, then members will expand their relationship and will tell friends and family, and we’ll grow.”
BECU’s infrastructure is different compared to most CUs, and for the past five years or so, BECU has aggressively pursued a branch system with a twist. Prior to that, it operated out of just two locations.
“We have developed a non-traditional model in that we do not have teller lines in our neighborhood financial centers, or NFCs. We have teller lines in our two traditional branches. Many of our NFCs started as grocery store branches. We don’t cash checks–cash is available at ATMs. The primary purpose is to open accounts and to teach members how to do their banking however they want, including ATMs, online banking and kiosks. And, very importantly, broadening their relationship by opening other accounts.”
It was a Bank Administration Institute survey that prompted BECU to pursue its new branching strategy, Oakland recalled. He said the separation caused by a counter and, sometimes, bullet-proof glass between staff and members is a barrier–in an unintended manner.
“We want to conduct conversations, rather than transactions,” he said. “This way, we find out what the members really want. We want to generate the trust that really differentiates credit unions in the first place.”
In just a few years, BECU has established a network of approximately 40 NFCs. Oakland praised the no-teller-line system for having created new ways of interacting with members.
As for the next step: Oakland said BECU is working to anticipate where payment systems will be in three years or five years.
“Online banking obviously is there, but how does that extend? A big element is access to member deposits. Financial institutions have always been very good at providing ways to get money out of accounts, such as ATMs, debit cards and transfers. What we are not good at is getting money into accounts instantly so members can start earning. We are looking into remote deposit capture.”
Another one of BECU’s counterintuitive strategies is offering high rates to smaller depositors. “We are turning the savings paradigm upside down. Instead of the more money the member has the higher the interest rate, we pay a higher rate on the first $500. This teaches members it is productive to save, and they begin transferring money into CDs. We want our members to feel they are not left out of those high-return deposits.”
Oakland added that the current opportunity caused by the tumult in the housing market gives BECU a chance to establish a firmer toehold in the origination and mortgage market. “In the past, credit unions have not been top of mind in consumers who are out buying homes,” he assessed. “We are going to be a better choice for these people because others are not able to fund their loans.
“We have focused on mortgages for several years and have grown our market quite a bit,” he continued. “We are pretty aggressive in our products and pricing. Also, we are doing HLPR loans to get people into their first homes. If we get people into their first homes, that relationship is off to a good start.”
