TUKWILA, Wash. - After revamping its pricing structure and keeping its focus OFF of growth, Boeing Employees CU is enjoying results that not only put it at the top of national peer rankings but also is allowing the CU to do the one thing it isn't focusing on-grow.
The key, is the credit union's new watchword-"manageable"-as in manageable growth, according to Tom Berquist, the $8.3-billion credit union's senior vice president of member strategies. That strategy appears to be working: BECU ranked at the top of Callahan & Associates Total Return of the Member category for credit unions with more than $1 billion in assets.
"Over the last two years, we've seen strong but manageable growth in loans, deposits and on the member account process," Berquist said. "I stress ‘manageable' because we don't want growth to be too strong."
That strategy appears to be working. BECU ranked at the top of Callahan & Associates Total Return of the Member category for credit unions with more than $1 billion in assets.
Placing first in this overall category means BECU is strong in three important performance components Callahan tracks: lending, deposits and member service usage.
When making decisions and planning, BECU's management attempts to be "very conscious" of the impact growth is going to have on its pricing and service levels, he continued.
Growth Is Not The Beat-All, End-All
"People know they get good service at BECU, and we want to make sure we don't have too much growth that it hurts service," Berquist explained. "Growth is not something that is truly targeted. It is not the beat-all, end-all for us. We feel if we are providing great service to our members, growth is a by-product. If we do our job right, we will see growth, and we want it to be at a level we can support."
In 2004, BECU made some "drastic changes" to get its costs back in line, Berquist recalled. He said management decided its pricing had deteriorated and it was not offering great value. "We made changes, and we plowed those savings back to members in terms of better rates and fees," he declared. "We've seen strong membership growth since then, which also is a reflection of our branding efforts."
We Can Give Back To Our Members
BECU's expense-to-average-assets ratio was in the 3.5% range, and management wanted to reduce that to the 2% range, Berquist continued.
Today, it is near 2%, which he characterized as "appropriate" for the level of service the credit union wants to provide. "With that increased efficiency, we can give back to our members," he assessed. "Over the last couple years, we have been trying to make sure our expenses are under control, and we are offering good member service. It has been a widely communicated message throughout the operation."
Traditionally, consumers feel they have to give up price for service or service for price, Berquist asserted. He pointed out Costco built its name on offering a low price; while Nordstrom in known for stellar service.
"The cooperative model gives all credit unions the opportunity to provide both," he said. "The member experience is important to us. We leverage the cooperative model and put a focus on our expenses. There are a whole host of things we are doing to be more efficient without compromising member service."
Asked for examples, Berquist said the credit union is "on a mission" to reduce the number of forms in the organization. Not only does this yield greater efficiency, it uses less paper and therefore is environmentally friendly-important in the green-conscious Pacific Northwest.
Also, BECU recently implemented interaction tracking, meaning members who phone the call center do not have to reprise their story from a previous call.
Neighborhood Financial Centers
Perhaps most important, BECU has opened a series of "neighborhood financial centers," which provide a lower-cost alternative to the traditional branch.
According to Todd Pietzsch, the credit union's public relations manager, neighborhood financial centers are relatively small, have no cash except through an ATM, and the staff at the centers teach members how to use online and other channels. "Some people define convenience as ‘how close is the nearest teller line.' So we know we are saying ‘no' to some of the market, because those people want a full-service branch," Pietzsch said.
BECU recently opened neighborhood financial centers in both downtown Seattle and downtown Bellevue, an eastern suburb.
Said Berquist: "The one in downtown Seattle is high profile. It is near Pike Place market. It is the first physical location we've had in downtown. We have been searching for the last two to three years to find the ‘right' location. Most of our 47 locations are in suburban locations."(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
