Turn Potential Members Into Real Members At PALS
Two years ago this week, I launched the initiative called PALS-Partnering and Leadership Successes.
PALS began as my contribution to NCUA's Access Across America initiative, which was launched four years ago by Chairman Dennis Dollar to encourage credit unions to adopt underserved areas. In these past four years, credit unions have expanded their fields of membership to include 91-million more potential members.
However, while larger fields of membership present tremendous opportunities, they don't guarantee that new members will actually join credit unions. PALS is focused on helping credit unions turn those potential members into real members.
In introducing PALS, I noted that many credit unions were spending a great deal of their hard-earned resources to attract new members from diverse fields of membership. Yet despite all of their admirable efforts, some credit union officials had told me that they were getting very little return on their investment and they weren't sure how to proceed.
Well, what a difference these past two years have made! Nearly 2,000 credit union officials have come from all over the country to free PALS workshops to learn about innovations that have proven successful in reaching new members who need credit unions the most. And on the PALS Best Practices website, credit unions have posted more than 500 initiatives that have inspired other credit unions to offer products and services they may not have considered before.
PALS participants have shown that to attract new members today, credit unions must take different approaches than they had in the past. And their greatest opportunities are in new markets.
Across America there are 25,000 markets underserved by insured financial institutions. These areas are home to nearly 100-million people who do not have a relationship with a credit union or a bank. Many of these residents have nowhere else to turn but to predatory lenders who charge triple-digit interest rates and outrageous fees. As a result, predatory lenders are draining $200 billion out of these markets. That's $200 billion that could be flowing into credit unions!
So for credit unions, marketing to these potential members is a win-win opportunity to gain new members and build needed loan volume-and at the same time help people who need affordable financial services.
Potential members in new markets are as diverse as America itself. In particular, more and more immigrants are moving in from Latin America and Asia.
In little more than a decade, America's non-white population has exploded by 60%. One out of every three Americans now identify themselves with a race other than Caucasian. Latinos and Asians together are growing four times faster than the rest of the population.
Yet both Latinos and Asians are under-represented in most credit union memberships. This has significant implications for CUs because America is projected to grow even more diverse. By the year 2020 Latinos and Asians are each projected to grow more than 75%, African-Americans are projected to grow nearly 30%, while, the Caucasian population is projected to grow less than 10%.
So the best strategy to grow membership in the future is to reach out to people of all income levels-and all ethnic backgrounds-today. Some credit unions are already employing this visionary strategy with tremendous success. While each market is different, PALS participants have shared several common approaches:
* Offer a wide range of services to meet the needs of members of all income levels. Provide small loans to cover short-term emergencies and risk-based loans that allow everyone to access credit at a price based on their own credit history. Help new members put down roots in their communities by providing small business loans and affordable mortgages.
* Recruit bilingual staff from different countries who can relate to immigrants' experiences.
* Develop relationships with organizations that residents already trust-such as community-based organizations, charities, and churches. Once residents see credit union staff and volunteers contributing time and money and working with community leaders they trust, they will feel more comfortable doing business with a credit union.
* Provide clear financial education in potential members' native languages as well as English.
* Remove any unnecessary barriers to opening new accounts. Accept legal foreign government identification, such as the Mexican government's Matricula Consular cards, as valid ID for new members. Establish non-interest-bearing accounts for new members who do not yet have Social Security numbers. And allow anyone in your field of membership to cash checks and make international wire transfers.
* Present a welcoming environment in your lobby so members can bring their families to your branches. Provide extra seating, activities for children, and art work that reflects diverse cultures.
Reaching new markets is hard work. But credit union leaders have found it is very rewarding.
At the next PALS workshop on April 28 in St. Louis, credit union panelists will share success stories in reaching new markets, new members and new business. This free workshop will help credit unions of all sizes capitalize on opportunities to build their loan portfolios and strengthen their bottom lines.
In addition, reaching new markets helps preserve credit unions' tax exemption. When serving people from all income levels and all ethnic groups in our society, credit unions demonstrate their "societal good." This is important to lawmakers who are questioning whether credit unions deserve to keep their tax exemption.
So reaching new markets is not only the right thing to do. It's good business. And it can ensure that credit unions remain safe, sound and secure in the future.
Debbie Matz is a member of the board of the National Credit Union Administration, Alexandria, Va.