NEW YORK - Operating a credit union in New York City comes with a high price tag, both in terms of expenses but also in awareness of just how real the threat of terrorist attacks can be.
Few know that better than Municipal Credit Union, whose downtown headquarters are just blocks from the site of the former World Trade Center. Following the Sept. 11 tragedy, the $1.4-billion CU moved quickly to put in place a real-time data processing redundancy system that would have the credit union back online in two hours after a major incident.
“I still remember seeing the planes strike the buildings,” said Municipal president and CEO Kam Wong from his office 500 yards away from Ground Zero. That tragic incident made it clear to Wong and the CU that a stronger disaster recover plan was needed.
“If our building had to be evacuated or it collapsed, our backup site in New Jersey would have us online fairly quickly,” Wong said.
A state-of-the art disaster recovery system is just part of the price of doing business in a city in which it’s expensive to run a credit union, said Wong. Costs to rent or purchase a facility are extremely high–the CU pays $40 a square foot for rent in its Manhattan headquarters–and the marketing budget is higher than “many credit unions’” due to the extremely diverse nature of city residents, the cost of media, and the presence of the big banks, Wong said.
“Just look down Broadway and you’ll see the Citibanks, Wachovias, all the biggies, and we have to compete against them. They have a tremendous presence in New York City.”
To Stay In The Race
To stay in the race for members’ business, Municipal makes sure it’s in close contact with SEGs. Among its select groups, Municipal serves healthcare workers, government employees, police, fireman, and the New York Transit Authority.
“We’re constantly cultivating our SEGs,” Wong explained. “We have a department with 10 to 12 people who visit them regularly. We have leverage with these groups since we are well established. Some of our board members are retired civil servants, so they help us gain entry.”
Reaching members through employers is one way to keep up with the banks, but Ralph Pagan, Municipal’s VP of marketing and business development, says the credit union understands that you “have to be where your members want you” and has been expanding access for many years.
Touting Electronic Banking
“We just opened a couple locations on Long Island and have introduced express branches that allow us to be cost efficient,” said Pagan, noting that Municipal now has 15 facilities. “We have ATM centers and we constantly tout our electronic banking in our member communications.”
Those communications, outside the CU’s website, can get expensive in New York, said Pagan, who emphasized that promotions must be targeted as a result. “We deal with so many different nationalities and you have many different types of neighborhoods within the five boroughs, each with unique needs,” he said. “It’s like cities within a city.”
In addition to raising the ticket for what’s already a multi-million-dollar marketing budget, New York’s diversity affects product offerings. “It’s certainly not one size fits all,” Pagan said. “You have a universe of products and services you work with, but the ones you emphasize are, in part, a function of the neighborhood.”
In Manhattan, Municipal backs off car loans but pushes them in Queens and Brooklyn. Home equity loans are much more prevalent in Long Island than the other boroughs.
Municipal’s strategies within New York have raised the credit union’s assets from $1.2 billion in December of 2005 to more than $1.4 billion today. And while marketing, cultivating SEGs, and branch expansion play key roles in helping the credit union grow, pricing is critical to overall success.
“The one thing that gives us leverage is that we have very good asset liability policy,” Wong explained. “We make sure we maintain a good spread. In some case we may not be able to offer a very good rate, let’s say on a money market, so I am not going to compete for the sake of competition. If we cannot afford it, we cannot afford it. We don’t want to give the shop away. We always try to maintain at least a 1% spread.”(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
