By Ray Birch
MADISON, Wis.—Credit unions have always had an inherent focus on the financial health of their members, but now it’s time to make these efforts a central part of the business model, says one expert, who is citing examples of CUs that have done just that.
Brenton Peck, director at Financial Health Network, said a significant number of Americans need financial counseling and that the focus on financial health is a sound business strategy for credit unions.
“Many households find it difficult to spend money, save money, borrow and plan in ways that set them up for success in the future,” said Peck. “All in, 166-million Americans are struggling financially. Serving these members is at the core of a credit union's mission and purpose. And let's not kid ourselves on the business. Opportunity is staring us right in the face.”
Peck shared his remarks during a recent Filene Research Institute webinar that covered five concepts Filene is examining in its new incubator project, “Remixing the Value Proposition.” Peck addressed Financial Health as a Strategy, the other four areas of the project cover:
• Rethinking Physical Presence in a Digital Age
• Subscription-Based Financial Services
• Credit Unions for Affordable Housing
• Expanding Partnership Banking
Standing Out from the Pack
Referring to Filene’s incubator initiative, Josh Sledge, senior director of incubation at the Filene Research Institute emphasized Filene’s goal is to identify business models that help credit unions stand out from the pack and drive exponential growth.
“I'll keep using the phrase ‘business models’,” Sledge told attendees. “We think it's really important here that this isn't just a single product. It's not just a single tool. It's not just a single marketing message. It's about how you package all those things together and really align your resources, your strategy and your engagement model with your members in ways that create that compelling value proposition.”
Old Idea, New Practice
Turning to Financial Health, Peck made clear that credit unions have already performed a great deal of good work here.
“Let's get one thing straight right out of the gate: You all have been in the business of financial health since inception,” he said. “You just haven't called it that. But with all this momentum around financial wellbeing for all, we believe that now is the time to amplify your efforts in building the member experience, improving branding and developing business strategies around this topic.”
Peck explained the Financial Health Network has conducted extensive research on the financial health of Americans.
“Approximately one-third of Americans are financially healthy, meaning they have that day-to-day financial system that allows them to be resilient when facing one of those inevitable and pesky financial shocks that we all deal with,” Peck said. “And they have an ability to pursue their long-term opportunities, dreams, goals and aspirations—however you want to define those. The other two-thirds of the country struggle.”
Peck said Financial Health Network research has found that members who believe their credit union supports their financial health are more satisfied, more loyal and more engaged with the CU. Or, as he summed up, “They buy more stuff from you.”
Examples Cited
Peck cited examples of credit unions that have made financial health core to their business strategy.
“Many credit unions have worked with us to design and execute financial health strategies. Mississippi Valley Credit Union has named a chief financial health officer,” he explained. “MVCU has made financial health the core of its enterprise strategy and introduced a compass guide to help members along their financial health journey. Virginia Credit Union has incorporated financial health assessment tools into its member experience. Using a platform from Attune allows the credit union to provide tailored and actionable recommendations and curated content to members while being able to see the results on a financial health dashboard to improve the aggregate figures of the institution.”
Just a Starting Point
Peck noted that these examples are just starting points for a credit union’s financial health strategy.
“These are examples of aspects of a financial health strategy, what it might look like in practice,” he said. “The opportunities for your credit union only grow from there.”