By Ray Birch
VERNON HILLS, Ill.—It’s trust in the credit union that drives member loyalty, and that loyalty in turn generates growth, and one CU believes it has uncovered the secret to building that member trust.
Baxter Credit Union here has a steering committee called “Member First” that meets regularly to review member feedback and make quick decisions to address any issues.
“The committee is constantly looking over a list of reasons why members are contacting us,” said John Sahagian, VP of marketing and member intelligence, who will be among the presenters at the CUTomorrow Conference. “They also go over our ongoing Voice of the Member surveys and constantly come back—no matter how small the issue—with suggestions for how things can be improved, how the member experience could be made better.”
The leadership of Baxter takes the input, calls a meeting with cross-functional teams, and makes changes.
“This is not a set of ongoing projects as much as it is a mindset of the credit union, which is why I think it works so well,” said Sahagian.
The $3-billion Baxter has done well with the attention to member service, increasing assets from $1.8 billion in 2013 and averaging more than $28 million annually in net income over the last five years. Capital stands at 9.87% and ROA just above 1%, according to call report data.
Recognized For Value to Members
Baxter was recognized by CUNA with a Benefits of Membership honor for 2017. The award recognizes CUs that return great value to their account holders. This past year, according to CUNA, Baxter gave back an average of $417 per household.
Sahagian acknowledged that building trust with members must be embedded in everything.
“Trust comes from all that we do,” said Sahagian. “It’s an aggregation of all the decisions we make—from pricing to product structure, from the things we choose to do and things we chose not to do. And it comes from members being at the forefront of all of our priorities and decision making.”
Sahagian said trust is built through good communication, as well.
“We are always open and transparent with our members,” he said. “For example, if there has been a data breach at a merchant in which members’ cards could be impacted, we are often the first to tell our members there is an issue. We don’t wait. We’ve often heard members say they hear from us first about a data breach before they hear from their bank.”
A High Ratio
Member loyalty is the reason, Sahagian said, for members having an average of 3.8 products with BCU in addition to their share account. He recognized that top-of-market pricing is critical, and that Baxter, with members spread across the country, competes nationally with other FIs.
Baxter is a multi-SEG credit union, serving companies such as Baxter International, the CU’s original sponsor, Target Corporation, United Health Group and others.
“The majority of our members reside outside of Illinois,” said Sahagian, noting that Baxter has 58 locations in the U.S. “We have to have our finger on the pulse of national pricing to make sure we always deliver great value to our members. We subscribe to pricing services and constantly look where we stand in each of our markets. We monitor closely how our products are doing and their velocity of growth, and outflows as well. If we start to see outflows, especially on the share side, we look into the issue and ask if we are being aggressive enough in our pricing and make adjustments if needed.”
Pricing is Attractive
Baxter is currently paying 2% APY on an 11-month CD, 2% on checking balances up to $25,000, and charging as low as 2.49% APR on new car loans.
“That 2% checking account drives a lot of the value we return back to the member,” said Sahagian. “There are few qualifications—e statement, direct deposit and 15 or more debit swipes per month.”
Sahagian said the CUNA award means a lot to the credit union and reinforces the decisions the CU makes every day are the right ones.
“We are really proud of this award, and we work very hard to be a purpose-driven organization to create real value for our members,” he said. “We are proud to be recognized in an industry in which there are so many credit unions doing great things for their members. The award not only invigorates us but reminds us that we are heading down the right path.”