By Ray Birch
NEW YORK—It takes a “habit-building process” for members to turn their financial lives around, but to help those members a CU needs to change its own habits first, according to one credit union.
In the case of change New York University FCU, the change it made to help members become good financial stewards was to begin by educating its frontline staff.
CEO Mira Ness told CUToday.info that years ago the credit union decided to require every employee who has contact with members to become a certified financial counselor. Ness said that move has allowed NYUFCU to regularly evaluate a member’s financial condition and make simple and subtle recommendations that eventually have a lasting, positive impact on accountholders’ lives.
‘It Takes Time’
“Teaching people to become better money managers is far from a one-step process,” Ness explained. “It takes time--many, many touches, that eventually build positive habits among our members. I believe that is the only way to make lasting changes.”
Those changes NYUFCU has been making among its lower income membership have led to the organization saving the average member household $569 a year as the result of making better financial choices.
Delivering that kind of value has landed the $73-million CU a Benefits of Membership Award from CUNA for the “exceptional” savings provided by a CU below $300 million in assets.
‘Constantly Educating’
As it serves an academic institution, its strategy shouldn’t come as a surprise.
“We do a tremendous amount of financial education. We do seminars on how to establish good financial habits. We’re constantly educating people,” said Ness. “But the education that’s delivered is more than just inside classrooms. Each employee is a certified financial counselor. So, every time, when members come in we deliver a little bit of education. We might say, ‘I see you have a car loan at X bank you are paying on. I don’t know what the interest rate is you are paying, but we might be able to lower it for you and give you more cash flow each month’.”
For example, Ness recalled helping a member who had a 17% car loan outside the credit union.
“I said, ‘Why don't you refinance with us?’ I set him up for automated payments and we saved him a lot of money,” she said. “It's all about regularly educating members and solving their problems.”
To get members to change, they first have to listen to what they’re being told, according to Ness—and for that to happen they must have faith in their credit union.
“All of this centers on trust,” she said. “You can try to explain to people that they will be benefiting from this, we can say whatever we want, but the only way you can really get them on board and commit to saving is to establish trust.”
Value in Word of Mouth
NYUFCU said among the most effective strategies is having members deliver some of the education and advice.
“We give them examples of success that we have already achieved with other members—hear from other members who achieved success,” said Ness. “We have members speak at our annual meeting about the success they’ve had with our credit union, turning their financial lives around one step at a time. We do this all the time, asking members to tell their story success stories.”
The CU also includes those stories in its e-newsletter and on its website.
Mira Ness
“I think when you approach it this way, with daily education, success stories and more, members understand you are not making a sales pitch. They understand you are trying to help them,” she said.
Moving Away from the Mission?
Ness believes as credit unions have become larger, they have moved away from working daily to help members.
“Some have become too much like banks,” she said. “Our frontline is the key. Again, everyone on the front line must be a certified financial counselor. We place a tremendous amount of energy and resources toward training our frontline.”
In addition to the earnest work being done by both members and employees, Ness said the value to members is also the result of market-leading pricing on both deposits and loans.
As of this reporting, the credit union was offering a 3% APY on its checking account and a 5% APY on its six-month CD. Loan rates are always priced to be some of the lowest in the local market, Ness said.
The credit union’s efforts to improve members’ lives have been rewarded, as NYUFCU has posted outstanding growth numbers in recent years, as CUToday.info has reported.
NYUFCU’s ROAA is above 3%, and membership growth has been above 30% in some years. NYUFCU has more than 9,300 members.
Creating Cash Flow
“What we are really doing is creating cash flow for members,” concluded Ness. “Psychologically, it really helps you to save. You think about buying a beautiful handbag or beautiful dress, or something like that, and you say, ‘Are you kidding, I'm saving for my down payment. I'm not going to take money out for a dress.’ Our philosophy is to help our members reestablish positive financial habits. We start small, which we feeI is the best way to create habits.”