I recently attended a workshop hosted by the New Jersey Credit Union League with guest speaker Denise Wymore. She spoke a lot about credit unions going back to their roots in order to prosper in the future. I related this right back to our current evolution at Aspire, where we continue to grow a sales environment in a culture of service and helping. By focusing on our “people helping people” philosophy, we can in turn help ourselves. We are, after all, financial cooperatives, so why wouldn’t we want to ask our members for their business and give them the best member service experience possible? Not only should we want to do this, it’s imperative to our future viability and success.
Wymore raised several interesting points, which relate directly to my project.
Use the 3 Cs
When the first credit union began operating in this country over 100 years ago, there was no such thing as a FICO score. How did credit unions qualify their members without a score associated with a letter grade? And who decided that was a good idea, by the way? A = you’re a good person and are financially responsible, D = you’re a deadbeat and a failure in your financial life. Anyway, the way credit unions used to do it back in the day was by using the 3 Cs, evaluating members’ ability to repay a loan based on their available collateral, capacity to take on debt, and personal character. Character is an especially interesting qualifier in my opinion since it’s so subjective. But remember, credit unions were originally started by people who shared a common bond, so it was extremely common for credit union employees to know members personally, which brings me to my next point.
The Common Bond
In 1998, President Bill Clinton signed the Credit Union Membership Access Act, HR1151, into law. This made it easier for people to join credit unions, which were truly exclusive prior to that. What great news for credit unions and potential members! We then had the opportunity to open our doors to entire communities and even whole states in some cases and the new members would just start strolling in to give us their complete financial relationships, right? Not exactly. Credit unions did gain new members as a result of HR 1151, but we lost the common bond. Living, working and worshiping in a certain community is not the same as working alongside your members for the same employer. So we lost the advantage we previously had of knowing our members personally. This makes it more difficult to approve loans, especially those for large amounts, and to judge a person’s ability to repay based on the 3 Cs rather than their credit score.
Build Brand Equity
As credit unions, it’s our job to lend money to people; not to credit scores. The sooner we get back to that, the better our brand will become in our members’ eyes. And like beauty, brand equity is in the eye of the beholder. The main point here is to treat members like human beings instead of numbers and focus on the experience they have when interacting with your brand. It makes sense to fix your brand experience before spending money on marketing to ensure that members will receive the level of service you promise them. While we’re on the topic of marketing, make sure that you have a target market and that you’ve found a common bond within that group. For example, “Gen Y” as a target market is much too broad and too vague. Rather, “younger, working moms” is a much more focused target.
Going back to our roots is going to help us achieve the future we aspire to. By delivering personalized member service, we gain our members’ loyalty and referrals. By selling the products and services that are in our members’ best interests, we stand to build our brand equity while simultaneously assuring our continued success. While we continue to review members’ credit scores and accept new members outside of our core sponsor group here at Aspire, we actively strive to go back to the basics in terms of sales, service and helping our members.