And The World Keeps Spinning

BECU knows what goes around comes around. That’s why it’s emphasizing good planning over good fortune, strategy over scale, and the needs of the many over the demands of a few.

 
 

The Space Needle is a signature totem of the Seattle skyline that also serves as a de-facto symbol for another iconic institution in the Pacific Northwest, the $13.1 billion BECU.

Eighteen Boeing Company employees founded the organization — then called Fellowship Credit Union — in 1935 with a contribution of 50 cents each. Eight decades and one name change later, BECU is one of the largest financial institutions by market share in the state of Washington and ranks as the fourth-largest credit union by asset size in the country.

“The restaurant at the Space Needle spins 360 degrees every hour,” says CEO Benson Porter. “If you were to sit there and have dinner, approximately one in five people you’d see would be members of BECU.”

CU QUICK FACTS

BECU Credit Union
data as of 12.31.14
  • HQ: Seattle, WA
  • ASSETS: $13.1B
  • MEMBERS: 886,677
  • BRANCHES: 43
  • 12-MO SHARE GROWTH: 7.99%
  • 12-MO LOAN GROWTH: 12.86%
  • ROA: 1.45%

By Fortitude And Fortune

Porter previously led Addison Avenue Federal Credit Union and its post-merger descendant First Tech Federal Credit Union before replacing BECU’s longtime leader Gary Oakland in 2012. According to Porter, the Washington cooperative’s current market positioning is largely Oakland’s legacy.

During Oakland’s 25-year tenure, the credit union took advantage of new state rules that granted boards of credit unions with a CAMEL 1 or 2 rating the authority to expand their field of membership without submitting a regulatory application, allowing BECU to open its doors to statewide membership in 2002. 

Oakland was also the architect of the credit union’s alternative service delivery strategy. The strategy encourages members to use ultra-efficient, preferably remote, channels for most activities and allows BECU to deploy remaining resources in high-value ways. 

The restaurant at the Space Needle spins 360 degrees every hour. If you were to sit there and have dinner, approximately one in five people you’d see would be members of BECU. 

For example, only two of the credit union’s 43 branches have tellers. Instead, BECU members conduct their business primarily through image-enabled ATMs. Online and mobile tools follow closely behind.

“Our ATMs average more than 10,000 transactions a month compared to an industry average of about 2,500,” says Doug Marshall, senior vice president of member channels and service delivery. “Our ATMs receive about an 80% Net Promoter Score, and our other remote channels range from 60% to 80%.”

In addition to strong leadership, several other factors contributed to the success of this organization in the late-2000s. 

For one, the presence of businesses such as outdoor goods retailer REI, care provider Group Health, and PCC Natural Markets gave the Seattle region a natural inclination toward cooperatives, says Tom Berquist, senior vice president of marketing and cooperative affairs.

The failure of major competitor Washington Mutual and its eventual acquisition by Chase, the announcement by market share leader Bank of America that it would charge a fee for debit cards in 2011, and Bank Transfer Day also contributed to BECU’s success.

“In our peak month, we added approximately 16,600 members,” says Scott Strand, senior vice president of member lending, business, and wealth. “Bank of America chased away who it wanted to chase away, but it miscalculated the people who left out of principle. The quality of the membership coming to us during that time was far better than average.” 


A Timeline of BECU’s History

 

Changing Gears Without Losing Momentum

Even without these external supports, BECU’s brand is well engrained in its market. 

In 2014 alone, the credit union added approximately 87,000 members, “more than five times the population of my hometown of Aberdeen, WA,” Porter likes to say.

Multi-channel coordination combined with outreach and affinity relationships with prominent local employers and universities means most of these new members fall into the 20- to 30-year-old range. As such, the credit union’s average age of membership is holding steady at 41.

“BECU had omni-channel delivery and member service before it was the vogue,” Porter says. 


That might be the case, but the cooperative has also undertaken plenty of fine-tuning in response to market changes. For example, the credit union partnered with the grocery chain Safeway to build more than 30 in-store branches in the early 2000s. As of early 2015, however, BECU has relocated all but two of those locations to leased stand-alones or storefronts. According to BECU, the move maintained its desired operational flexibility while preserving its brand prominence.

“With nearly 900,000 members, we just outgrew those in-store locations,” Porter says. 

The credit union now faces the dual challenge of making a good first impression with its physical locations and priming the members to deepen their relationship via virtual channels. According to BECU, approximately 75% of members join through the branch but never step foot inside one again.

The credit union has a solution, though.

“Our new lobby management system links all of our delivery channels together,” Porter says. “You can get on your mobile device, see what branch locations are available and what’s most convenient for you, and then get placed in a queue. That also helps us with staffing because we can see when and why people are coming in and build a better, more efficient experience for them.”

Breaking Big, Not Bad

BECU employs more than 1,100 full-time staff members and approximately 85 part-timers. On paper, the organization looks like an army, but in action, it prefers to operate like a scout: It cautiously tests, knowing that size is not a substitute for strategy. 

virtuous-growth-cycle

BECU’s formula for a virtuous growth cycle.


“Success can sometimes bring unwanted hubris,” Porter says. “Trying to over-serve outliers can make the organization very complicated. At the same time, we don’t want to stop growing. We are going to invest in anticipation of serving more members and continuing to grow.”

This plan for a virtuous growth cycle, as BECU calls it, is represented on the boardroom wall as a flywheel with four distinct quadrants: Engaged Employees, The Member Experience, Engaged Members, and Markets & Growth. It’s an effective visual reminder of how these goals feed one another as well as the fact that the more this flywheel spins — boosted by factors such as differentiation and brand engagement — the more BECU will be able to make an impact in the community.

“The best days I have are when I get to call members,” Porter says. “One member was at Home Depot buying paint for a condo she had just closed on. She was so excited and happy; it reinforced everything we do.” 



Who? What? When? Where? Why?

Seattle is famous for tech companies, coffee, and rain, but there's a lot more to this Northwest metropolis. Here are some little-known facts that make Seattle great.

Who?

Howard Schultz was not around when Starbucks opened its first location in Seattle’s Pike Place Market in 1971 — he joined the company as an employee in 1982 and then bought it outright in 1987. But it was his idea to replicate an Italian coffee house experience for a domestic market which has helped turn this local treasure into an internationally known brand with approximately 20,500 stores worldwide.

What?

The Great Seattle Fire of 1889 started in a cabinet shop at Front Street and Madison Avenue. Within a day’s time, it destroyed 29 square blocks of buildings — mostly basic wooden structures — as well as many of Seattle’s wharfs and railroads. Rather than abandon the site, though, residents rebuilt. Using stone, brick, and steel, they laid the foundation for the modern city on top of the remnants of the old one.

Where?

Olympic National Park is located 92 miles west of Seattle. Its 922,651 acres include coastland, temperate rainforest, and more than 60 glaciers. It is home to hundreds of varieties of birds, reptiles, fish, and mammals, 22 of which are on the threatened or endangered species list.

When?

In 1916, a well-off engineer named William Boeing constructed and test flew his newly designed twin-float B & W seaplane. That year he also founded what would eventually become the Boeing Company. Today, Boeing is known for manufacturing iconic aircraft such as the WWII-era B-17 and B-52 bombers, passenger carriers like the 747 and 777, and even space station and shuttle parts for NASA.

Why?

fremont_troll
Photo courtesy of Matt Ambrey
and The Huffington Post

“De Libertas Quirkas” or “The Freedom to Be Quirky” is the unofficial motto of Seattle’s Fremont neighborhood. It has hosted a number of odd events over the years, including the annual Naked Pumpkin Run during which participants wear a jack-o-lantern on their heads but all other clothing is optional. Neighborhood visitors that miss the run can snap a picture with the Fremont troll, a car-crushing sculpture meant to deter illegal dumping at a local overpass.

 

Sources: Starbucks.com, HistoryLink.org, NPS.gov, Boeing.com, ViewAmerica.net, HuffingtonPost.com

 

 

 

 

April 20, 2015


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