GLASGOW, Scotland—A small credit union that was once struggling before closing its branches, going completely digital and turning itself around, shared its story with credit unions from around the world here.
Carma Parish, CEO of the $48-million, Lebanon, Ind.-based NorthPark Community Credit Union here, told credit unions attending the World Credit Union Conference here that the drastic move has led to robust results with little member pushback.
In all, NorthPark Community closed three branches, which are now community centers that other organizations can use. The credit union was featured earlier in CUToday.info here.
Prior to sharing details, Parish asked for a show of hands around the asset size of audience members’ credit unions, discovering that most hailed from $1-billion-plus operations.
“Even if you are a large credit union you know you have a lot of tellers standing around and not doing anything,” she said. “Maybe you don’t want to go all in like we did, but maybe you could reallocate some of those individuals.”
Little Choice
Parish made clear the credit union had little choice but to make the move it did. When she became CEO “overnight,” she found on her first day on the job there was a lack of funds for bills and payroll, and the regulators were already on the phone. Working through the challenge, Parish said the CU took a hard look at everything, including its strong mission of serving the underserved. Seventy-five percent of its loan portfolio was in loans to low-income individuals.
Parish said NCCU reviewed five areas: operations, an advisory board it formed, its own board, its employees ad members.
“We looked to our team to make sure we could get it done. We went to our board and said this is all going to work, are you OK with this, and here is how we are going to measure success or failure before we completely close the branches,” Parish explained.
She urged every credit union to conduct their own analysis of how their branches are utilized. The slide below shows what NorthPark Community discovered.
‘You’d Be Shocked’
“What we did was look at each transaction and ask how it could be done virtually,” said Parish, crediting Heather Jones at her credit union for really getting the plan implemented. “The end we had in mind was to be completely virtual. We identified on our website every way to access a transaction. You’d be shocked at all of the creative ways a team can come up with to do these transactions virtually.”
Parish said she was “shocked” at the response from the Advisory Board of members.
“Quite honestly, we thought this is where the idea was going to go to die,” admitted Parish. “I was quite pleased to hear just the opposite. For low-income individuals, your branches are typically open at the same time they are at work. There are issues of inconvenient hours, branch transportation, afraid of being told no in person, and other accessibility issues.
“When it came to members we asked the same question every time with every member who came in: ‘Did you know you could do this transaction virtually?’ And one by one we encouraged our members to do this a different way,” she continued. “We had very few complaints from members.”
There have also been very few closed accounts, Parish added.
Staff ‘All In’
Parish said the credit union’s staff was also “all in,” especially after being informed they would not be losing their jobs and everyone would be getting a promotion.
“Credit unions typically have a flat hierarchy, especially in a small organization. I believe as a leader we are not just responsible for changing the lives of our members, but our staff, too,” said Parish.
Those staff members were transitioned from teller roles to making outbound calls, serving in marketing, risk management and one became a loan officer.
“Since doing this in 2018 we have almost tripled our staff because of our growth and we are able to recruit team members from around the country,” Parish explained. “We just hired one person from Puerto Rico.”
She noted most employees save up to an hour of commuting every day, which equates to 11 days per year.
Cutting Costs
“Just in our little shop we cut expenses by $200,000 in the first two years and generated more income and grew loans 80% the first year, and 30% in the second year,” she said. “We are now doubling our loan growth every year. We are able to do more outreach.”
Parish said the credit union is taking its savings and now investing in fintechs.
For more information: www.virtualbaranching.com.