Why One CU Dedicated To Real Estate Has So Little Of Its Own Property
LAS VEGAS-A credit union pioneering a no bricks-and-mortar, online-only strategy believes other CUs will need to look to the same model.
Jesse Boyer, EVP/CIO with Rockland, Md.-based REALTORS FCU, explained the relatively new CU's model that is free of proprietary branches (it belongs to a shared branch network), uses a contact center (via PSCU Financial Services) and ATMs. "We are a model for credit union of the future," said Boyer.
But REALTORS FCU, which serves members of the National Association of REALTORS, which has 1.1-million members and an annual churn rate of 200,000 people, also got another boost, courtesy of its sponsor: a $15-million capital grant to get things rolling.
The NAR backed the credit union, with strong support from its president who spent several years leading the group as it explored a means of meeting the unique financial needs of its members. (There is also the unique nature of the NAR itself: it has a 1,000-member board, and a 100-person executive committee.)
"Most Realtors are self employed, stated income employees," said Boyer. "They have to demonstrate through tax returns their credit worthiness. It's difficult for many Realtors to get any credit, and cash flow is very cyclical."
It was quickly apparent, Boyer told the 1 Credit Union Conference, that a physical location was not feasible, and that cost savings could be generated by avoiding building branches.
"We felt there were a lot of very experienced third-party vendors. We approached and asked how would you like to be in something different," said Boyer. "Our model is we don't want to hire staff, don't want a branch; we want you to do it for us. This expanded the scope of what a vendor relationship can be."
The vendor due-diligence process was completed over a five-month period. NCUA's review took nine months. REALTORS FCU opened its virtual doors in June of 2009.
Patrick Hughes, director-client relations for Total Member Care from PSCU Financial Services, said credit unions mulling their channel management challenges should give more thought to the virtual model.
In REALTOR FCU's case, it has four contact centers available to it, although only two are being utilized. Both have provided special training to call center agents to understand the culture of Realtors.
"The way we have positioned the support model is a scaleable model," said Hughes. "As the activity grows within their marketing plans and backoffice plans, their expenses can scale, and that gives them the flexibility to adapt, exclusive of Regualtion E. Leveraging ATM networks is absolutely critical. REALTORS has a heavy, heavy dependence on shared networks. Members need to know the direction you're going, and that you''re available."
Hughes added one other piece of advice: "Communicating that you have shared branching access is just as important has having shared branching access."
PSCU-FS is now working to customizing communication with members as soon as they log in by mining data. "And that's even more critical where you don't have a branch and a teller to talk to the member when they come in," he reminded.