ORLANDO, Fla.—The CEO of one of the most innovative small credit unions in the country told the leaders of other small CUs there are no reasons they can’t be equally innovative and successful. And that includes “Banking for Dog People.”
Linda Bodie, CEO of the $55-million Elements FCU in West Virginia, shared her CU’s history and innovations with the League of Southeastern Credit Unions’ annual conference. She touched on four key areas—income generation, balance sheet management, technology and financial education—but stressed that when it comes to growing, “It isn’t any one thing. You have to have all of these working together to be successful.”
First, Bodie shared her own story. She joined the credit union in 1998 when it had $2.3 million in assets and three employees and when she admits she knew little about CUs. In 2005, before the iPhone, it began offering e-deposit for members who could scan a check and send the image digitally to the CU.
A First in the World
In 2009, Elements FCU became the first institution in the world to develop a digital app for check deposits. “We didn’t know we were first, but credit unions, when you put your mind to it, you can do it.”
In 2009, Elements beat out a massive bank to become the bank for West Virginia’s medical cannabis industry, even though Bodie acknowledged she and the CU knew little about the business. In 2021, it began banking cannabis dispensaries in the state.
Today, it has three branches, a new one set to open, and 19 employees.
Keys to Income Success
Bodie recommended that credit unions:
- Make it easy for members and staff
- Don’t be afraid to try something new
- If you bring value, it’s OK to charge a fee. “If you need to pay for that technology or vendor partner, charge a fee”
- Look for the blue ocean. “Go where others are not, and it may not be a new ocean, it may be an abandoned ocean”
- Borrow someone else’s idea
- Use technology when you can. “It’s so much better for you, your staff and your members when you can automate things,” Bodie said.
Example Shared
As one example of trying something new, Bodie shared that in 2022 Elements FCU offered preapproved holiday loans to members. It sent out 3,725 offers for the $2,000 loans that had a 13.99% APR and 12 month-terms, 375 of which were accepted.
The credit union did $755,800 in total loans.
“No loan officer was involved, everything was instant and e-signed,” said Bodie.
She noted the standard loan volume on holiday loans without the preapproval offer was typically about $40,000.
“Think about that; how long would it take you to do 375 loans?” Bodie asked. “This took us about two hours (to process). We put it the members’ hands and made it easy. Our core system made it super-easy.”
Bodie said delinquencies on the loans are the same as its other loans, which required members to have a checking account with the credit union and other parameters. Credit score was not one of the factors in the preapprovals, she said.
Paper Statements
In a show of hands, attendees were split about 50/50 on whether they charge or don’t charge a fee for paper statements.
Bodie said Elements FCU implemented a paper fee about five years ago with “very little pushback” that now generates about $15,000 a year. She said the credit union incurs a cost for paper statements, and there is nothing wrong with passing along those costs. It has shifted many members to e-statements.
“We save money on paper statements that no one opens,” said Bodie.
The credit union charges a minimal fee for members who exceed a certain threshold on bill pay, with other fees in place for ACH early payday and a loan processing fee.
Bodie noted it requires staff time for small-dollar loans, and the revenue is needed to cover those costs.
“We are small credit unions. We have to find income. Our margins are squeezed,” Bodie told her fellow small CU leaders.
Blue Oceans
Meanwhile, Bodie said she has now accumulated so much knowledge around cannabis and the business model that she could likely run a cannabis business herself.
Elements FCU now acts as the state bank for West Virginia for its medical cannabis program (after the law that previously allowed only for banks to serve in that role was changed). The small credit union beat out a $2.3-trillion bank for the business, she said.
In 2019, Elements FCU began banking those accounts, and in 2021 it started banking cannabis business accounts and now services six companies with multiple West Virginia state licenses. Bodie said there is additional growth ahead in the category.
Bodie shared the Walt Disney quote below, saying curiosity drives her and should drive other small credit unions too as they look to “other blue oceans. You can find new ways to make your credit union successful.”
‘You Own the Joint’
Bodie added, by the way, that Elements FCU was using the theme “You Own the Joint” before it began its relationships with medical cannabis companies. But once that relationship was in place, it expanded it and used it on t-shirts and other items, a program that won a Diamond Award from the CUNA Marketing & Business Development Council.
“We stuck our neck out, not knowing the reaction from members,” said Bodie. “We took a chance and it worked.”
Balance Sheet Management
The key issues in balance sheet management are liquidity management, cost control, income diversification, members relationships and CUSO and partner relationships.
The challenges around liquidity were all well-known to her audience, Bodie acknowledged, including having too much money, too little money and all the scenarios in between. She encouraged other leaders of small CUs to work together to address many of those challenges.
Cost Control
As part of cost control, Bodie urged CUs to:
- Do an evaluation of “everything.” As an example, she said Elements FCU reviewed its armored car-related costs and was able to cut those by 60%.
- Never stop renegotiating services
- Ask, “Why do I need this? Is there a better alternative?”
- Review contract renewals and timing. “Make sure your vendor contract end-dates are at the same time; otherwise, you are going to spend a lot of money,” said Bodie
- Share resources/staffing. Bodie noted, for instance, her credit union shares the cost of a CFO. “CUSOs are wonderful for that,” Bodie said, adding that Elements FCU has also shared costs around marketing (using another CU to handle its marketing), bookkeeping, auditing and other back office expenses.
Income Diversification
Bodie covered issues related to loan interest income, servicing income, loan fee income, specialty banking fee income, insurance and investments income.
“Make sure you have options that can continue to bring revenue to your credit union,” Bodie recommended. “Keep looking for those opportunities to be adding to your income stream. You are going to have new things come up. Be ready and be curious. Research where is our world moving to? How can you monetize that and bring it to your membership?”
Member Relationships
Member relationships will always be key, reminded Bodie.
“Know your members. Who has large deposit balances and will continue to keep their deposits with you? Member loyalty is key to maintaining those relationships.”
Team Wellness
Bodie said many credit union team members and employees are not doing well in a number of ways, including physical and financial health. To that end, when it comes to the CU’s own staff, Bodie reached out to wellness app Noom, which began life as a weight loss app.
According to Noom, its data show companies that engage with Noom see:
- 25% average employee adoption
- 40% of participants lost more than 5% of their body weight
- 26% perceived improvement in burnout
- 33% perceived improvement in productivity loss
“Our numbers exceeded these numbers,” said Bodie. “We have three employees out of 18 who changed their lives. It’s not just about weight loss. It’s about food and nutrition. Same thing with financial wellness. Have you ever been educated on financial wellness?”
Bodie noted Noom is now also offering mental health assistance.
“We have seen a marked improvement in (employees’) wellness, their excitement, their energy levels,” said Bodie. “It’s not expensive and can be a great addition to your benefits package. Get your people healthy. It will be great for your credit union.”
What ChatGPT Can Do
With many in the audience saying they have at least tried the AI-based ChatGPT, Bodie said credit unions should consider looking to the technology to:
- Create policies and procedures
- Make existing content “better”
- Use for marketing ideas
- Create strategic action plans
- Compose emails that hit the mark
- Create a presentation
- Help a member create a budget/financial plan specifically for them
One audience-member said they used ChatGPT to create an implementation plan for an ITM, and it did so immediately.
“Some people are afraid to use it because it’s technology. But just ask it questions. I created an AI policy using AI, I do read what it generates and make sure it’s accurate and I do change it,” said Bodie.
More Technology
Bodie recommended small CUs:
- Digitize and eSign everything and every way, including text, email, online and in-person
- Ensure the CU can chat and text with members
- Recognize that phone systems are now multichannel communication centers (Zoom)
- Enable online account opening
- Offer Mobile check deposit
- Explore emerging technology, such as Apple Vision Pro
Financial Education
Bodie said Element FCU’s number-one goal is education. She urged CUs to examine the tools they can provide to members. In Element FCU’s case, it uses the Banzai! Financial literacy program, which allows it to engage with local schools and to have a CU presence.
It also uses savvymoney, which generates a credit score for members and offers personalized tips and flog content. For the credit union, it provides analytics and tracking, personalized loan officers, and member loyalty.
#BankingForDogPeople
Finally, returning to her theme that small CUs must be innovative and take chances, Bodie noted Elements FCU has been in a partnership some would call “edgy” in terms of its messaging, with the credit union in a charitable relationship with the Kanawha Charleston Humane Association.
Members enrolled in its “Banking for Dog People” program contribute to the charity by using Element products and services. There is no cost to members. The credit union created custom t-shirts and swag with the message “My bank is bitchin’” for the program, as it does for all its programs, Bodie said.
It has also created a similar program for cat people, as well as the local LBGTQ community.)
Other Issues Noted by Attendees
- One person said finding people to work to provide Saturday banking has been a huge challenge, so the CU eliminated Saturday hours and implemented an ITM after the pandemic and has had little member pushback. “Members love the new machine; adoption has been great,” the attendee saved.
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