By Ray Birch
MIDLAND, Mich.—One CEO says it’s not an oxymoron—digital banking can be combined with personal service—and his credit union has stood behind that philosophy all the way to $2.1 billion in assets even with just one branch.
Michael Goad, CEO of Dow Chemical Employees CU, told CUToday.info his organization has thrived ever since it was formed in 1937 with only one location, adding he believes the pandemic has played into his organization’s strength.
“We have combined digital banking and personal banking and done very well,” said Goad, who emphasized a highly digital CU, whose members conduct 98% of their transactions remotely, must not just be very efficient in its operations and service efforts, it must also resolve any member issues the first time the CU is contacted.
A strong patronage dividend—$15.6 million last year—helps, as well, he said.
As CUToday.info has extensively reported, consumer and member perceptions of credit unions service levels have slipped. Analysts have shared concerns the slide is due in part to more consumers turning to their phone, PCs and tablets to do their banking, leaving behind the face-to-face service advantage credit unions have held over banks.
CUToday.info has also reported credit unions, for the second year, in a row have fallen behind banks when it comes to consumer satisfaction, they also now sit at a “historic low” in one respected national survey.
Credit unions fell 2.5% to a score of 77 on a 100-point scale in the 2020 American Consumer Satisfaction Index (ACSI) conducted by the University of Michigan in conjunction with the American Society for Quality in Milwaukee and CFI Group in Ann Arbor, Mich. The nation’s banks achieved a score of 78.
A key driver in that falling score was perception of e-services at CUs.
‘Very Best Service’
Goad, who became CEO in early 2020, emphasized the attributes now viewed as personal service by members through remote channels include the credit union being quick to service them, being accurate in that service, and being able to resolve issues immediately without needing follow-up.
“You can always call the contact center and we will take care of you—our members know this,” said Goad. “While we are not face to face, we still build strong relationships with members and share a sense of community, I believe, through how we deliver the very best service remotely.”
Michael Goad
Goad said much of their efforts are focused on members maintaining faith in the organization.
“We really focus on our time to answer phone calls and being thorough with all of our member contact points—phone, chat, mobile…,” said Goad. “We have a huge target for first-contact resolution. If you have a problem with your account, or have a question, we want to take care of it the first time you call.”
A New Definition
As have a growing number of other analysts, Goad stressed the new consumer definition of service is speed and efficiency.
“If we always get things done for you the first time, you’re a happy member and you believe in the credit union,” said Goad, who believes executing on that strategy creates the same type of close personal relationship as face-to-face service traditionally has.
Not surprisingly, having just one branch allows DCECU to drive great efficiencies and in turn to pass those efficiencies along to members, said Goad. But that isn’t the only performance metric that is a peer leaders. DCECU also has a high account penetration among its 72,000 members (more than three accounts per person) and strong asset growth. The CU, with 9.51% capital, has grown to more than $2 billion in total assets from $1.6 billion in 2017.
“Our operating expenses are 1.42% of total assets, which puts us in the top 4% among CUs in our peer group across the country,” explained Goad, whose CU employs 153 people.
Can’t Have a ‘Dinosaur’
Goad said the pandemic played into the credit union’s strength, and he believes it will further emphasize the need for fewer branches within the industry in the future. However, he said the decision to put an emphasis on digital delivery should be approached carefully.
“Each credit union needs to decide for itself,” said Goad. “We have chosen to spend less on branches and then give more back to our members. It’s just an individual decision—how much money does the CU spend supporting the extra convenience of branches.”
Goad said if a credit union is considering making the shift away from branches, it must first make sure it has the IT infrastructure to support the kind of e-service delivery members will expect.
“That’s your backbone. And if you can’t deliver excellent service with your existing core system…you don’t want to go down this path with a dinosaur of an IT system,” said Goad, who also stressed the importance of a strong, skilled IT team.
The ‘Formula’
The multi-SEG credit union that started out just serving the employees of Dow Chemical worldwide likes being able to afford a high-profile annual member giveback that creates loyalty.
“In 2020 we paid out the highest patronage dividend, as a percent of total assets, of any credit union in the country,” said Goad. “We paid out $15.6 million.”
Dividend amounts members receive are based their loan and deposit relationship.
“There is strong focus here on service and operating with a low overhead structure, which gives us the ability to pay back such a huge dividend and create loyalty,” said Goad. “That is our formula.”