MADISON, Wis.-The simple fact is credit unions seeking to reverse stagnant or even declining growth must go back and "work the street," according to a new study.
In other words, it's time for credit unions, which as an industry grew just 1.4% from 2006-08, to get out into their communities and build relationships.
Jim Jerving, author of a new CUNA Marketing and Business Development Council white paper titled "Organic Membership Growth," told Credit Union Journal that this simple approach should produce the best growth returns. Jerving came to that conclusion after speaking with 14 credit unions across the country, a number of which are successfully growing.
"Credit unions need to get out and work the street," Jerving said. "Working the street is a symbol and metaphor for what is missing in the credit union business model. Credit unions can no longer sit and wait in their warm offices for the business to come to them, they have to go out into the community and get the business."
Much of the success in the mortgage business is built on relationships, Jerving pointed out. "It's very important to build relationships with real estate agents, builders, contractors, and others," explained Jerving, who said that working the street applies to all CU offerings.
While many of the successful credit unions Jerving spoke with rely on this guerilla tactic, Jerving shared other approaches that are boosting membership, such as mortgage lending, marketing to youth and their parents at the same time, leveraging trust capital, and SEG development.
"I think with community charters people thought SEG development was a thing of the past," Jerving said. "If you look at FORUM Credit Union in Indianapolis, in 1990 they had $174 million in assets and 30,000 members. And in 2009 they have more than $1 billion in assets and 103,000 members. A large part of that remarkable growth is due to their SEG development."
In Jerving's report he cites that while membership growth has experienced a slight uptick in 2009 due to banks' struggles, overall membership growth has declined for a number of reasons: The financial services industry was restructured and consumers had more choices. Point of sale financing became popular and automobiles were more likely to be financed at the dealership than at the financial institution. And members were still doing a lot of their business at banks; many members and consumers alike have an outdated image of credit unions as unsophisticated and unable to handle complex products, Jerving pointed out. "In the '70s credit unions had an average annual growth rate of 6.7%," Jerving reminded. "When the Membership Access Act was passed in 1998, that was supposed to open up the floodgates. But here we are 11 years later and we have only 90 million members."
The papers are available online in the white paper section of each council site (www.cunacouncils.org).
