By Ray Birch
TUKWILA, Wash.—The old-school savings model of stuffing cash into paper envelopes to budget for monthly needs is now being digitized by BECU, which says members are reacting well to the e-program that also is a means to retain core deposits.
BECU is piloting new “BECU Envelopes,” which help members direct money toward specific savings goals through various digital envelopes within their BECU savings or Money Market accounts.
“About two years ago we convened a small group of cross-functional teams to look at new products and the envelopes are one of the concepts that we came up with,” said Doug Marshall, chief digital and product officer. “BECU is very focused on the financial well-being of our members, it is part of our mission, and these envelopes fit well with our goals.”
Through the CU’s online banking program members can easily move money from their savings or MMA accounts into envelopes that are set up for the goals members want to either achieve—such as saving money for their kids’ college—or for monthly expenses, such as the mortgage payment, groceries and more.
Members can establish up to 12 envelopes and can name the envelopes for whatever purpose for which they are setting aside money.
Old School, New School
Marshall said the envelopes are just a new, digital way to perform an old manual, but effective, savings process.
“I can remember when my wife and I were first married, we actually did this,” recalled Marshall. “This is a classic example of taking a physical thing and then making it digital. In the physical version, which people may recall, you get a paycheck, cash it, and if you're trying to budget for something you would put dollars into paper envelopes—for laundry, food, insurance, a new car…”
Marshall said the cross-functional teams learned that members still want to do that, but they want the task to be more convenient than working with paper envelopes.
“They want a digital tool to save for different purposes,” he said.
Pushing the Envelope (Concept)
Each envelope has a target savings dollar amount that when reached members will take the money out and use it for the purpose for which it was intended, explained Marshall.
“But, they can keep the money growing, if they want,” he said.
The digital envelopes are in beta-testing now, being piloted with a small group of members, before the program will be rolled out to the entire 1.4-billion membership.
“We rolled this out to our first group of members in April of 2021, and since then we have done five additional beta releases,” explained Marshall.
The reasons for all the testing is to learn what members like and don’t like about the online tool and refine it, said Marshall.
Engagement Rate
BECU has achieved an 11% engagement with the product and that number has been moving higher.
“We initially thought we’d have about 2,000 members in the test groups using the envelopes, but that number quickly grew to 5,000 using this on a regular basis, which we are very pleased with and indicates members want this service,” Marshall said.
BECU expects soon to expand the offering to a much larger group of members, according to Marshall, who added BECU understands not all members will be interested in the envelopes.
“I think this is more relevant to those segments that need to save effectively,” said Marshall. “Our aspiration is get to a material number of members, say 50,000 by the end of this year, using the service.”
Hopes for Robust Use
Marshall said BECU hopes members use the service “robustly,” creating more than one envelope. Currently members using the tool are averaging about two envelopes each.
While the digital envelopes were created to improve members’ financial well-being, Marshall said a side benefit for the credit union is retention of inexpensive core deposits.
“Everyone has seen a surge in deposits due to the stimulus funds,” said Marshall, noting the rising rate environment should prompt some of those deposits to flow back out of the CU. “And, BECU has seen a very high surge in deposits over the last two years, as well, because we are trusted by our members. At some point these deposits will soften, and we are seeing a bit of that now. But we believe these envelopes will help us keep some of these core deposits that might otherwise leave.”
The envelopes are currently only available via the home banking tool, but will eventually also be available on BECU’s mobile app, Marshall said.