Download December 2013 Report
In 1940, 11 employees of the Massachusetts Institute of Technology (MIT) gathered in the basement of MIT’s Infinite Corridor and placed $5.00 in a strong box to create MIT Federal Credit Union. Since that time, the credit union has grown and diversified with the university, providing services to its affiliates, including Draper Laboratories, Lincoln Laboratories, and Broad Institute. Approximately 15 years ago, the credit union added graduate and undergraduate students to its field of membership and has been named the exclusive provider of financial services to the MIT Alumni Association. Most recently it has positioned itself as a value-added benefit to organizations that are affiliated with MIT’s Innovative Ecosystem, a group of like-minded independent life science corporations and business startups that have aligned themselves with MIT by means of research and educational collaboration. All of MITFCU’s SEGs have some relation, even if historical, with MIT.
Currently MITFCU has nearly $390 million in assets and serves 30,000 members from approximately 35 SEGs. It has three brick-and-mortar branches, a 24/7 call center, and a network of shared branching and multiple ATM networks that provide members access to more than 40,000 surcharge-free ATMs. President/CEO Brian Ducharme joined MITFCU 12 years ago.
CU QUICK FACTS
Data as of 9.30.13
HQ: Cambridge, MA
12-MO SHARE GROWTH: 9.62%
12-MO LOAN GROWTH: 23.02%
Data as of 9.30.13
We take pride in realizing our purpose of “fulfilling the dream and enriching the lives of others” and look to be the provider of financial services to our primary SEG, which is MIT, and to groups relating to it. We continuously strive to position ourselves from inside the community to help the Institute and other affiliated groups in ways that only we can.
An example is when the credit markets dried up during the crisis of 2008-’09. Citibank quickly and without notice pulled out of many private student lending programs across the nation, leaving a vacuum and significant need for many colleges and universities, including MIT. With the cooperation and collaboration of CU Student Choice, MITFCU was able to take on a great deal of the credit needs of MIT students, especially the foreign-born students. Doing so not only helped MIT but also strengthened our relationship with the Institute, and we have made the most of the student loan relationship ever since.
Another example of our work with SEGS relates to the Novartis Institutes for Biomedical Research (NIBR), a recently formed entity linking 6,000 people around the world. NIBR has specifically established a significant presence in Cambridge and is planning to grow its employee base from 2,500 to more than 5,000 in the next few years. At the request of Novartis, we are now providing our services to NIBR employees in Cambridge. The value of this arrangement is multiple: MIT is able to deepen its already strong ties with NIBR by offering the services of MITFCU; NIBR wins because it is able to offer employees the valuable, no-cost benefit of MITFCU membership; NIBR employees in Cambridge win because they have a close yet globally accessible credit union in MITFCU; and MITFCU wins because it is able to add new members with demographics similar to those of its current membership.
In addition, building on the strength of its connection with MIT, MITFCU bid for and won a relationship as the financial institution of choice for the MIT Alumni Association. Again, we believe this is a natural fit because of all the other MIT-related entities we serve. The fact that we are now the financial institution of the MIT Alumni Association we believe strengthens the bonds of MITFCU to and among the MIT-related community.
We at MITFCU are proponents of “getting things done in the middle,” focusing our outreach with our senior managers and having them create touch points with our three dozen SEGs. Our goal is to cultivate relationships with key people in the SEGs, understand one or two unique needs or benefits we can leverage, and then act on those opportunities to deepen the relationship with MITFCU. We know our name gets us to the table, but once we get there we have the agility to create unique programs that respond to a SEG’s distinctive needs, something the competition really struggles with, never mind delivers.
One aspect of our business that sets us apart from the national and global megabanks, which evidently place their attention elsewhere, is our focus on our immediate proximity. We often discuss with a SEG’s human resources department what we could do especially for people relocating to Cambridge in order to work at the SEG. Our SEGs are always looking to attract and retain the best talent, and we know competition for talent in the technology fields is intense. If there is a competitive advantage, we can provide new hires at SEGs with loans, mortgages, or otherwise. By working with SEGs in this way, we help them become more attractive companies to potential hires.
Relationship With Our Principal SEG
MIT is at the center of our relationship efforts. We continuously reach out and grow our relationship with the Institute by sponsoring community-related events, helping at benefits fairs on campus and at spin-off labs and other SEGs, making ourselves visible on campus, and the like. Our goal is to be the undisputed choice for financial service across the Institute and for all of our SEGs.
For example, MIT offers relocation services and low or no interest rate loans to its junior and senior faculty. We try to truly understand the relationship between MIT and its professors so we can complement the benefits MIT offers, in this case to faculty. When we can leverage MIT’s value-added benefits by positioning our products to help employees take advantage of and maximize them, we provide additional value to ourselves.
More SEG-Specific Work
Some of our SEG-related work is pretty specific. For example, a recent MIT spin-off is a company that in conjunction with its work on online banking conducts quick surveys on behalf of local merchants offering discount coupons. The company might offer an electronic survey to our members — who, of course, can opt out — on a particular subject. For taking the survey, the member could receive a discount coupon for a local service. The company offers a monetary incentive to the credit union for allowing the survey. The SEG benefits in its business model; the credit union gains some extra income; and the members receive free coupons for discounts at various establishments — yet another benefit of being a member of the credit union.
Because many of our SEGs are in technology fields and their employees are highly educated, when we think about our business model and how to provide service and access, we think less along the lines of a traditional sort of commercial account relationship and more along those of the Silicon Valley Bank (SVB). One of the things SVB does extremely well is evaluate and identify high potential startups. Continuously emerging from within the MIT community are highly promising and successful startups that have significant commercial potential. Helping them leverage federal research and other types of grants as well as managing and taking advantage of tax credits is something we feel MITFCU could be uniquely positioned to facilitate.
MIT also offers or is affiliated with a number of innovation and entrepreneurship programs offering advisory services and finding sources for entrepreneurs and startups. These go by the names of MIT Venture Mentoring Services, MIT Technology Licensing Office, MIT Enterprise Forum (a non-profit organization), and the Lemelson, Deshpande, Trust and Legatum Centers. We recently started to talk to and learn more about these services and groups, finding out what their needs are, whom they are helping, and how we might be able to create a link between a concept and its emergence as a commercially viable organization.
Our SEG focus is specialized, well-defined, and directly or indirectly related to MIT. I don’t believe we are doing anything unique — we do the basics extremely well, better than any other organization in our market. We look to understand, leverage our knowledge, and execute and deliver quickly, consistently, and as efficiently as possible.
This strategy makes it easier to understand what the SEGs are, how they think, what their connections are, what sort of people their employees are, and so on, which allows us to better come up with the kinds of products and services these SEGs will appreciate. In return they understand us pretty well and know how to ask for added value. We believe we are on the right path.