Credit unions: Still here to help!

It’s an inspiring time to be part of the international credit union movement. Credit unions from around the world are demonstrating the value of the credit union cooperative brand by investing in communities, drawing a line in the sand around deep social issues, and going the extra mile for their members and community.

At a time when traditional for-profit lenders are backing away from higher perceived risk due to economic uncertainty, higher unemployment, rising delinquencies, and falling credit scores – credit unions are clearly the ‘financial first responders’. Today, credit unions are ‘still here to help’ with empathic staff who are ready to listen, provide financial guidance, create flexible products, and build on existing community partnerships.

Legendary brand and intentional preparedness

The credit union brand is more than 100 years old. It’s not new, credit unions have always been there as a lifeline for underserved/overlooked consumers and communities. They have stretched even further during periods of extraordinary challenges; COVID-19, famine, war, recession, and other world-wide disasters. One only has to review the international credit union operating principles to get a sense of the scope of our movement. If you’re reading this and not familiar with the principles that guide credit union leaders, please take a moment to read and share with your team!

Credit union leaders respond best to these disasters when they are prepared to act. While most credit unions have been able to help their members during the current pandemic, the greatest outreach and impact I’ve observed has come from credit unions that were prepared. Preparation is key for credit unions that want to maximize their impact in serving the underserved, and help people experiencing unplanned crises.

Here are a few areas of preparation to consider as credit unions prepare for the next round of financial hardship their members or communities might face:

  • Mission/Vision/Purpose – A commitment to serving the underserved – being a ‘financial first responder’ in times of crisis should align with the credit union’s purpose, mission and vision.  My experience is that “financial first response” is limited when it’s not squarely aligned with purpose.
  • Capital – Credit unions that entered the current pandemic/economic crisis low or moderately capitalized are limited in what they can provide. Many credit unions wish they could do more, but are limited due to capital concerns.
  • Flexible Culture – A culture with people and policies that are flexible to meet very unique member and community challenges.  Extraordinary times call for extraordinary measures.  It’s difficult to expect inflexible cultures to be flexible enough during times of uncertainty.
  • Expertise – Financial education, community development and lending staff are “boots on the ground” ready to provide quality financial advice in real-time, ready to collaborate with existing community partnerships and have the skill set for flexible lending.

The current global pandemic and economic recession provide abundant examples of just how important this preparation is in maximizing your impact during unprecedented times.

Case in point – Bradford District Credit Union 

Bradford District Credit Union (BDCU) is a small and fast-growing credit union in Northern England that quickly became a ‘financial first responder’ in the midst of the COVID-19 pandemic. BDCU has demonstrated how building community partnerships is an effective business strategy. Presenting with Scott Butterfield at the March 2020 ABCUL Conference just prior to lockdown, Financial Inclusion Officer Ian Brewer explained how establishing the ‘Anti-Poverty Events Group’ increased brand recognition and trust in the community by pooling ideas and resources.

  • Mission/Vision/Purpose– BDCU began in 1993 as an industrial payroll program by Bradford Council, in response to a deep recession, to give staff access to loans and savings. Over time they have grown their payroll partners to thirty-three firms and have also opened to the area’s underserved community. BDCU has rapidly grown their membership over the last five years. They credit their success, to being an early adopter of digital banking along with employing a Financial Inclusion Officer. BDCU recognizes the value of partnerships and positioned itself as a ‘go to’ hub for financial education, innovative projects and affordable borrowing.
  • Capital– Strong fiscal management is at the heart of BDCU, where maintaining growth in payroll saving members helps to support vulnerable families with a ratio of 50% payroll, 30% financially excluded and 20% community investors. This has helped BDCU stay strong in capital assets to be able to offer members help in a time of crisis.
  • Flexible Culture – BDCU has high engagement from members. In its last survey, members gave a 98% score for overall service and value. Teamwork is central to the BDCU ethos where board members and management have transitioned from a purely industrial model, to reaching the financially underserved, who are often excluded from the financial services mainstream. Strong leadership, a focus on digital banking, and being embedded in the community made BDCU uniquely prepared for the pandemic. BDCU operates in a multicultural district and has increased its member diversity.
  • Expertise– Drawing from over twenty-five years of personal experience in community development, Financial Inclusion Officer Ian Brewer has helped BDCU build bridges within the community. In 2019 BDCU founded the ‘Anti-Poverty Events Group’ with key organizations to pool ideas and resources for a win-win outcome.

Together they have trained 470 community practitioners and reached over 1500 people through roadshows and events that achieved national media coverage. Under the slogan of #StillHereToHelp, BDCU has joined health and community organizations to ensure residents are not financially stranded during the health crisis.

In the ‘buy now, pay later’ western culture, BDCU is focused on building community financial resilience, bringing hope and optimism to people by helping them to develop a healthy savings habit, that few can achieve on their own, as well as educating them on how to borrow safely when they need to – and this message is cutting through.

Measurements of success

We’ve learned from the BDCU case study that fiscal preparation and community collaboration lead to high (and increasing) perceived brand value, high (and increasing) community partnership engagement, and high (and increasing) referrals that lead to member, loan, and revenue growth.

Why it matters

A clearly differentiated credit union brand is critical in today’s financial landscape. The consumer and community advocate model have consistently shown to be the best niche for credit unions, regardless of country. My goal isn’t to minimize the importance of technology or product diversity; these are very important.  But when it comes to being identified as clearly different and better from all the other financial resources in the market – consumer advocacy and service remains the single best opportunity for credit unions.