Enrichment FCU transitioning from being a physical credit union with a digital presence to a digital credit union with a physical presence.
For phase one, nine branch managers are deciding how that should look and how to redeploy staff.
CU QUICK FACTS
HQ: Oak Ridge, TN
Data as of 06.30.20
12-MO SHARE GROWTH: 20.0%
12-MO LOAN GROWTH: 10.0%
COVID-19 has hastened the transformation of Enrichment Federal Credit Union ($604.6M, Oak Ridge, TN) into an online-first credit union, and its CEO has turned to the front-line leaders of brick-and-mortar to lead the initial charge to change.
The credit union’s nine branch managers are now working on the first phase of crafting a strategy to redeploy Enrichment’s 120-member workforce to accommodate that transformation.
“The pandemic has pushed us from being a physical credit union with a digital presence to being a primarily digital credit union with a physical presence,” says Craig Peters, CEO of the 45,000-member cooperative in suburban Knoxville.
Peters became CEO at Enrichment on April 1, 2016. On May 1, the shop converted core processors after 34 years on the same platform, setting off a complete upgrade of its technology infrastructure.
Now, it’s time to reorganize its human assets. Here, Peters explains what’s up at the institution that’s open to anyone who lives, works, worships, or attends school in an eight-county FOM in East Tennessee.
Can you elaborate on how the pandemic pushed Enrichment to become a digital credit union with a physical presence?
Craig Peters: Prior to COVID-19, everyone thought of their financial institution as a brick-and-mortar place to do business. During COVID-19, everyone closed their lobbies and implemented new technologies — such as digital signatures, text messaging, e-notary services, and more — that they had planned for a few years out. We made about 250 Paycheck Protection Program loans totaling about $10 million without meeting in person with any of the borrowers. We had never done anything like that before.
We had to do those things because the government forced us to shut down. Without government intervention, our members wouldn’t have been as patient as they were. Now, we think about everything we do digitally or virtually. In a few months we made technological advances that would have taken us two to five years to implement under our previous strategic plans.
What’s happening with your workforce? How have you changed your thinking around that?
CP: Our main strategic focus for 2020 was going to be on training and motivating our people for an in-person sales and service culture.
Then, COVID-19 happened. We closed our lobbies on March 21 and allowed employees to work 32 hours but paid them for their normal 40 hours — which, by the way, supports the notion that in a workforce of about 120 people, we’re overstaffed by 10 to 20.
Craig Peters, CEO, Enrichment FCU
We have 40 to 50 people still working at home — in accounting, in lending, in collections, in internal audit, almost all e-services. No C-suite people have worked remotely.
We reopened our lobbies on May 18 with no Saturday hours. That’s probably permanent. Since then, we’ve averaged about 40 members per branch per day. That’s 360 a day at our nine branches. That means we have roughly $14 million invested in a branch infrastructure that’s now serving less than 1% of our 45,000 members. There’s an idea to create “personal bankers” to specifically tend to these 360 members plus certain elderly members and perhaps certain others.
Do you anticipate layoffs? Are you hiring new people? What comes next?
CP: We made a commitment to our employees on May 15 that there would not be layoffs. We do have a hiring freeze in place except for some specialized skills positions. For example, we need a full-time technology trainer, and we could use an insurance agent for the online insurance CUSO we created in 2019.
So, we’re turning our attention to creating a new culture and skill set for a digital credit union with a physical presence.
How will you create that skill set? New people? Re-training staff? How will you identify those skills and aptitudes?
CP: That’s the challenge. We don’t have all the answers. We’ve committed to not have layoffs, but we’re also looking for a commitment from our employees to learn new skills, maybe change the way they work — for example, remote or on-site — and be more flexible.
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How do you think this transformation will affect your branches and branch strategies in terms of growth and maintaining what’s there?
CP: We don’t know. But our branch traffic has declined to where it doesn’t justify our $14 million investment in brick-and-mortar. Addressing this question is a major part of our redeployment project.
Where are you in that redeployment project?
CP: Our nine branch managers are currently working on this. Their report is due to me by Sept. 15, 2020.
From there, key mid-level managers and the C-suite will review it. The C-suite will take their suggestions and formulate a strategy to present to our board of directors in late 2020. We think this will require one to three years to fully implement.
I should add that, deliberately, no one except the nine branch managers is involved initially. We want their honest, frank, and authentic ideas. There might be nine different answers to each question and that’s OK.
CEO Craig Peters asked his nine branch managers to consider an array of questions as they prepare a report on how to redeploy the workforce for digital transformation. Find out what those questions are here.
You said having people working 32 hours instead of 40 implies the credit union is overstaffed by 10 to 20 positions. How did you arrive at that?
Constituencies, City, Culture
Enrichment CEO Craig Peters offers three imperatives that help inform his approach to credit union transformation.
Your constituencies, in order of importance, are members, employees, community. If it doesn’t benefit your members directly or indirectly, and you can’t articulate how it benefits your members, then you probably shouldn’t be doing it, whatever it is.
City of 45,000 people. Imagine your credit union as a city of 45,000 citizen-members. What financial products and services would these citizens need? If you don’t offer them, your competitors will, and they will also solicit members to their version of the products and services you do offer.
Culture. If people are not willing to learn, change, and adapt to new technology to supplement their required people skills, then the 21st century financial industry is not a good place for them.
CP: If your total business volume increased — and ours has — but you allowed some employees to work 32 hours yet paid them for 40 hours, then you decreased their hours 20% [8 hours/40 hours = 20%] but your productivity is up. Therefore, it seems you might not need 20% of your existing workforce to do your current volume of business.
I intend that observation as a generalization about the changes that COVID-19 has made on the workplace — more technology, more volume, and less working hours means increased productivity.
It also means you can, and probably should, redeploy your workforce.
Talk a bit more about the personal bankers who would help those 360 members a day at your nine branches?
CP: I’ve joked that I could buy cars or Uber rides for those members or go to their homes to do their transactions. That’s what I meant by “personal bankers.”
These would actually be call center people whose goal would be to become trusted advisors to these members. The personal bankers would call these 360 people weekly to ask how they can assist them … to save them time, travel, and let them know that we care about them. It’s not a profit-making idea. It’s a personal service delivery channel for low-technology and perhaps elderly members.
Five years from now, in what ways will Enrichment FCU be different?
CP: Did anyone see COVID-19 a year ago? Has our entire economy ever been completely shut down before? If I could see out five years ahead of everyone else, we wouldn’t be having this conversation. We would have already done all of these things and be way out in front.
This interview has been edited and condensed.
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