With the positive momentum of Bank Transfer Day starting to abate in some areas, credit unions should continue to look for new and inventive ways to differentiate themselves from banks both financially and culturally. Perhaps one of the strongest branding tools credit unions can deploy is taking an interest in members’ hobbies and passions and tailoring financial products tailored to them.
Identifying Your Niche
Credit unions looking to add diversity and value to their products and services can consider where members spend discretionary funds, outside of the basic necessities like housing, education, and transportation.
Many institutions now offer bicycle and bike equipment loans, and a few like Unitus Community Credit Union ($915.6M, Portland, OR) even provide borrowers with more holistic relationships like additional checking, eStatements, or bill payment services for a lower loan rate. And Actors Federal Credit Union ($161.5M, New York, NY) offers its members musical instrument loans for up to $250,000, potentially drawing in not just enthusiastic amateurs but also business-minded entrepreneurs looking to create real, viable income streams.
Putting just a small fraction of available resources into offering loan products that aren’t available anywhere else will encourage passionate niche consumers to think like its Bank Transfer Day all year long.
Thinking Outside The Box
Superior Credit Union ($47M, Collegeville, PA) exemplifies how community institutions can be more in-tune with community and individual concerns than national, for-profit competitors if they’re willing to think outside the norm.
“We’re fortunate that our board of directors supports change and knows we have to move forward to succeed,” says Joseph Gimble, vice president of operations for the credit union. “They’re never going to say, ‘We’re only going to do car loans and that’s it.’ They’re willing to try new things.”
The credit union’s success in the overall loan portfolio ─ including 45% annual growth in new auto loans and 28.8% growth in used auto loans, in addition to the $17 million in real estate loans the credit unions currently has in its portfolio ─ has provided some room to try offering products that members and employees can use to pursue their passions.
Fortunately for the credit union, these investments are also driving new community connections and deeper financial ties that increase profitability.
A Paws On Approach
Roughly three years ago, Superior introduced a pet-oriented product suite that included a pet checking account, pet loans – either to buy an animal or pay for their vet bills – and pet insurance plans through a partnership with VPI, a subsidiary of Nationwide Insurance.
“We did it because there was no one else who was offering these types of products,” Gimble says. “We wanted to give people something different they couldn’t get walking into a PNC Bank or a Wells Fargo.”
Source: Callahan & Associates' Peer-to-Peer software
Many of the credit union’s employees and members were already pet owners and they often it brought their pets into the credit union. Shared stories about the joys and financial trials of animal ownership were common enough to confirm that there was a definite market for these solutions at the cooperative.
“A lot of us who don’t have kids consider our pets to be our kids, so if you can have a kid’s savings account why can’t you have a pet savings account,” Gimble says.
Today, pet savings accounts can be made out in the animal’s name and pay 3% APY on the first $500 dollars. Members also have the option of setting up direct deposit through their payroll. Similar to a Health Savings Account (HSA) for people, a bill, invoice, or other evidence of pet- related expense is required to actually withdrawal the funds.
“When you yourself go the doctor’s office, you have a $20 copay,” Gimble says. “But you go to the vet and its $250-plus every time, so we needed something to help members offset that.”
The pet loan option can also provide up to $3,000 in funds for medical care or to acquire more expensive breeds of animals that might normally be out of reach for the member. Gimble, who breeds of Yorkshire terriers, says the dogs can cost from $1,500 to $2,500.
“A lot of people don’t have those funds available to just take out of their pocket and pay,” he says.
An Investment In Member Interests
Around 50 members currently have pet checking accounts, and the credit union has also issued a several pet loans and pet insurance products, despite having no active marketing initiatives outside word-of-mouth and a microsite called bankwithbella.com.
But the initiative seems to be paying off by encouraging deeper member relationships.Those members who sign up for pet products typically open at least one other credit union account or product per pet-related one.
Source: Callahan & Associates' Peer-to-Peer software
“These pet products themselves won’t make us a whole lot of money back, but they help shape the way people perceive us and how caring we are,” Gimble says. “That can encourage them to open up a checking account, or get a loan for a car or a mortgage, so the products do pay us back in other ways.”
Next year, Superior plans to hire more staff to actively push these pet-related products. It will also donate land next to its facility to the local township to create a dog park. The land had been in limbo for a number of years as the credit union balanced the costs of insurance and liability concerns against the potential benefits of retention.
“For us to have insurance on that piece of property is much more expensive than if our township just added it to the hundreds of other parks under their insurance policy,” Gimble says. In return for the donation, the credit union will receive a tax break and retain exclusive naming rights to the facility.