VIENNA, Austria–During a session at WOCCU’s World CU Conference titled “Growth Strategies in an Ever-Evolving Environment: An International Perspective,” here’s what Tom Webster of First West Credit Union said his CU is doing.
Webster, who is CFO, said First West has driven growth by absorbing other credit unions but allowing them to continue to operate as sub-brands beneath its umbrella. Along the way, it has also learned some lessons, which its CFO, Tom Webster, shared with the WOCCU World Credit Union Conference here.
Operating under the First West umbrella are Envision Financial, ValleyFirst, Enderby & District Financial, and IslandSavings.
First West recognizes the challenges it faces in Canada, said Webster. The credit union operates with an efficiency ratio around 80% (it costs it 80 cents to generate a dollar of income). By comparison, banks in its market have efficiency ratios in the 50% range.
“So that’s a huge advantage for them,” he said.
First West, which has approximately $10 billion in assets (it was at $3 billion eight years ago), has a target of 13% capital (to meet regulatory requirements).
Three Lessons Learned
What has the credit union learned? According to Webster, First West has learned three primary lessons over the years as it created its operating model:
- In the past, it allowed its brands to continued with existing processes. Today, it has sought to harmonize, rationalize and standardize backoffice processes to achieve greater operating efficiencies
- In the past, it retained legacy systems. Today, following integration, it has moved to quickly adopt common systems in order to reduce costs and speed the delivery of new products. (It has five CRM systems at one point, for instance)
- In the past, 50% of its regional offices were doing their own things vs. First West. Today, approximately 20% of the regions are doing their own things vs. First West, which has meant it is able to move faster, and more quickly enhance performance while providing clear value, he said
Membership growth has been an issue Webster said his credit union has spent a “lot of time” on. Its growth had been in the 3% range annually. In 2010, it added 2,525, members. In 2015, it added 9,471 and in 2016 it added 7,093 members.
“We want to grow membership, but we also want a younger member,” said Webster. “Our average member is 51, but over last few years the average age of our new members is 41. Our target member is members age 29-45. We also want it to be an engaged membership, so we measure the services those members take.”
Webster said the average age of its members who prefer branches is 58, while its 41 for those who prefer digital channels. Seeking an engaged membership, First West also measures the services those members take.
“One of the implications of that is you have to offer more online services, which is an additional investment, and you have to maintain your branches for those members, too,” he said.
Future Strategies
In terms of First West’s future strategies, Webster said First West’s include:
- Improve technology delivery and applications for targeted younger membership. It is seeking to create an omni-channel experience
- Adapting to boundaries and regulations that don’t fit digital solutions. “As you put more services online, a lot doesn’t fit in the regulations that are in place,” said Webster
- Use technologies to achieve efficient workflow automation. “Technology is also an opportunity. We have been able to reduce and even eliminate some of the lower-level jobs,” Webster said. “When we started we had 30,000 GLs, and now 61% of the reconciliations are done automatically. That allows staff to focus on value creation”
- Workflow of the future. “The workforce has no interest in antiquated tools. Software has to be at the standard they expect,” he said