Consumer sentiment has helped sway decision-making at large banks since the Bank Transfer Day backlash in 2011 forced Bank of America to back off plans for new debit card and other fees. Free checking is a staple at many credit unions — we look at two examples this week — but the promise of an imminent rising interest rate environment is forcing cooperative financial institutions to review the pricing models of all their products.
So this week, CreditUnions.com is exploring how today’s credit unions balance risk, perks, and member benefits to promote member engagement and institutional success.
When San Francisco Credit Union was in the final stages of designing a new checking product in 2014, leaders realized they weren’t happy with the fundamental approach of launching another product. So the Bay area cooperative went back to the basics.
“Rather than creating a product and having to change that product again, we decided why not change the relationship?” says Jude Gogan, senior vice president and chief operating officer of SFCU. Read how the credit union did this in Building Relationships One Checking Account At A Time.
As Digital Federal Credit Union can attest, sometimes the best pricing tactic is to charge nothing at all. DCU has a long-standing practice of crediting members’ accounts when it receives the deposit notice instead of when the money arrives. The move costs the credit union a day or two of lost interest and use of that money, but Tim Garner, DCU’s senior vice president for marketing and strategy, says it’s well worth it. Learn more in Early Pay Builds Loyalty At DCU.
Another California credit union, Star One, understands that borrowers want to be free of loan obligations before they leave the workforce without breaking the bank to do so. So in January of 2014, it introduced a promotional 10-year fixed-rate mortgage with no closing costs. It’s meant to entice members close to retirement to bring their loans — including the remainder of a 30-year-mortgage — to the credit union but has also drawn the attention of some first-time homebuyers.
“We thought lowering the term and eliminating closing costs would allow us to get those balances from other financial institutions,” says Victoria Tabler, real estate loan services manager at the credit union. Learn more in The 10-Year Fixed-Rate Mortgage Worth Bragging About.
Minneapolis-based TruStone Financial Credit Union capitalizes on its market’s enthusiasm for outdoor adventure by offering loans built for recreational activities. In the past two years, the credit union’s portfolio of motorcycle, boat, and RV loans has increased $2 million, to $7.5 million. There’s plenty of business for the nearly $1 billion credit union, but there’s also increased risk. Learn how TruStone approves, underwrites, and prices these loans as well as what the cooperative is planning for the future in A Tiered Approach To Underwriting.
Finally, if your credit union is questioning whether it’s adequately prepared for a new interest rate environment, then check out the CreditUnions’com Graphic Of The Week. One of the most important aspects of asset-liability management is the ability to reprice assets, and the three graphs featured in Ready For Rising Interest Rates? help show how well credit unions are positioned to respond to a bump in rates.