Credit unions’ two greatest growth challenges – An aging member base and slowed member growth

How can a refreshed brand turn around performance for your credit union?

Credit unions are increasingly facing two critical obstacles for growth, a steadily aging member base (averaging 47 years old vs. the US national average age of 37.8), and difficulty attracting and retaining younger Millennial audiences that help drive lending, online banking and growing revenue opportunities. Those same challenges of attracting Millennials may also be hindering some organizations’ ability to attract and especially retain young talent without a purpose-driven brand, inspiring vision, and a well-focused culture.

While few financial leaders would argue the critical need to tackle these two growth challenges, the options to change a downward growth trajectory are not unlimited. Amidst fast rising fintech and traditional banking competition, the alternatives to accelerate growth are often costly initiatives ranging from multi-million dollar new branches, mobile and digital tech investments, new market expansion and increased marketing expense. While all those can be important tools, none bring the enterprise-wide engagement, passion, focus and shared purpose of a well-focused rebranding initiative.

That raises some critical growth questions for 2020 and beyond:

What can you learn from $120 million to $5 billion asset sized organizations who tackled growth challenges head-on—exploring, realigning and refreshing their brand; enhancing cultural focus and competitive positioning in their markets, and gaining scarce “mind share?”

How can you increase your relevance, marketplace image, member experiences and acquisition of new Millennial and GenZ prospects so you don’t age yourself out of existence? 

Are there ways to attribute the impact of your brand investment to helping increase market share, enhancing talent acquisition and increasing bottom line results? 

Should digital and mobile innovation be the lead driver of your future growth strategies?

Sometimes organizations pursue Millennial acquisition (and brand relevance) by trying to find a “silver bullet” among new mobile, digital and tech solutions alone. Yet if every financial institution is flocking to arrive at the same digital-savvy destination, isn’t that just the “ante” to be in the game. What will differentiate your financial institution brand and distinctive experience from any other if it’s not extraordinary?

While “digital transformation” is an essential evolutionary shift amidst dynamic competitive challenges, it is not a substitute for creating organizational shared interest around building a focused and distinctive brand position. It also sidesteps the critical importance of your people and aligning every internal stakeholder first toward a unified vision, clear target segments and living out a shared Brand Promise. Savvy leaders understand that a focus on people, cultural alignment and improving brand experiences must come first.

“We built the Starbucks brand first with our people, not with consumers. Because we believed the best way to meet and exceed the expectations of our customers was to hire and train great people; we invested in employees.“ – Howard Schultz, retired CEO, Starbucks

Placing tech initiatives ahead of organizational and cultural brand alignment often slows leaders from the real goal ahead: helping your organization prepare for the changes needed to lean deeper into helping and personalizing your key audiences’ financial lives and experiences. That requires deep understanding of your members’ needs, aspirations and hopes to get ahead. It can only come from solid market research and data analytics that help you listen, learn and tackle their critical pain points and focus on their unique life needs. 

Trailhead Credit Union: A Case Study in total Organizational Brand Focus and ROI

Faced with years of stagnant growth, declining loans and a rapidly aging membership, Portland, Oregon’s $120 million Northwest Resource Community Credit Union was running out of options to tackle sustainable growth in a highly competitive market. 

Following a failed “brand refresh” effort just three years earlier, they turned instead to an organization-wide journey to align their focus, target audiences, cultural shifts, brand promise and user experiences.

Jim McCarthy, Trailhead CEO shared, “like other financial industry CEO’s, I spent a lot of time thinking about how my credit union could succeed and how we could gain attention and build awareness. After seven years of negative member growth, I knew we needed to make a bold move in order to grow and thrive.”   

Armed with a bold new name and brand (Trailhead Credit Union), built around tightly defined lifestyle Personas that Strum titled “Urban Non-Conformists,” the results are industry-leading performance, ROI and record shattering growth of Millennials and GenZ new members that brought the aging credit union in line with a youthful and dynamic Portland marketplace. More than a facelift, it was a complete transformation from top to bottom.

With a brand platform built around “Banking for the Non-Conformist™, and a tagline “We’re Small Enough to Know Better,” Trailhead was poised to capture people’s attention and be relevant in a highly competitive Portland market. 

In the first full year of implementing an enterprise-wide transformational rebranding program, Trailhead’s loans increased 18%, net membership growth rose to double digits, website traffic increased 28% and overall capital increased 54 basis points.

In the six-year brand transformation journey between 2013 and 2019, net membership increased an incredible 61.9% total. More importantly, GenZ and younger millennials (18-24) grew 62%, and 25-34-year-old millennials grew 248%, lowering the overall age of membership by seven years, and dropping more each month. This contrasts the steady growth of Boomers (55-64) at 11% and GenX members (45-54) at 26%. This was a driving goal of the rebranding initiative and the rebranding initiative was overwhelmingly successful in attracting and inspiring millennials for the first time.

By bucking conformity, aligning all employees on a shared Organizational Journey, Trailhead’s brand stands fully apart in a highly competitive Portland metro market. Besides record-setting millennial growth and a lowered average member age rate, Trailhead’s brand continues to help the organization drive record-setting loan growth, net income and earnings. Trailhead engaged the entire culture, from tellers to the board, in a shared purpose-driven journey of transformation that has increased staff retention, passion and member loyalty exponentially.

Transforming From an Operational and Product Focus to a Personalized and Brand-led Focus 

Envisioning Transformation and the Journey To Get There. 

What does organizational focus look like when a credit union shifts from being traditionally operational-focused (or product and rate focused) to being a savvy, brand-driven organization where each employee knows and lives out the language, behaviors and relevant actions of the brand with members, your communities and each other? 

How does an organization pivot toward a “transformational journey” by building a fully aligned brand focused on driving rich and integrated member experiences and shared cultural focus that leads to record Millennial growth and bottom-line performance?

By focusing all stakeholders on a shared alignment of enhancing member value and experiences, brand foundation and purpose, it becomes much easier to realign people around managing change, and delivering on a shared set of brand experience initiatives to improve your value proposition.

We call this transformational focus to change, a shared “Organizational Road Map.” It doesn’t start with DP system upgrades, new branch investments and digital transformation first. It starts with gathering deep member insights; engaging stakeholders in the process; the development of a clear brand vision and strategy. It will ultimately weave those vital channel improvements to remove “friction” from an aging and often complex member experience because stakeholders are now led and focused around a unified set of shared member journey objectives, rich data analytics, corporate initiatives and integrated user experience design and execution. All tied to a fresh and unified new brand platform, shared promise and renewed commitments from individual staff. That is transformation at its best.

Redwood Credit Union: A Case Study in Renewed Brand Focus and Cultural Alignment

While steady growth and solid results were already occurring for the $4 billion Santa Rosa-based Redwood Credit Union, increasingly meaningful competition in the area left them searching for an answer to a critical question, “How do we stay on top?”

Redwood CU knew they had a strong brand, though a bit dated visually, and didn’t want to limit its growth by simply refreshing it for the sake of change. The problem was a lack of clarity in how to fully express the brand and talk about it in a consistent and differentiating way across the organization. They wanted to continue on their consistent path to success, but weren’t exactly sure how to shape their brand and maintain it. The credit union’s brand had so much potential; all it needed was a boost in the right direction.

“We weren’t looking to rebrand. We were looking for a way to articulate our brand that captured the real essence of who we were and what made us special,” said Brett Martinez, Redwood CU’s CEO.

The team at Strum began an internal review on the current status of Redwood CU’s culture with an extensive qualitative and quantitative market research process. Research focused on the journey that members took when they first became members with an auto loan, mortgage or checking account to gain insights. Research also found the name Redwood was well entrenched in the community. With strong awareness, a stellar brand image, a reputation for competitive pricing and a long-standing connection with its members, Redwood CU discovered early on that their name was a major asset. They chose to forgo the name change many credit unions take looking for a fresh start. Instead, the Strum team recommended articulating and expressing the essence of the brand strategy and enhancing their identity for more robust and relevant storytelling. The new brand tagline “For All That You Love™,” set the new tone of voice and a bright, fresh new identity helped bring their value proposition to life.

The result of the credit union’s brand journey of transformation is reflective in the results of its expanded reach around its newly developed brand, creative campaigns, branch messaging, and staff cultural training all led by Strum. 

In the first year following the brand transformation, total assets increased by 14%, loans increased 14%, ROA reached a record 2.2, and the member base grew 6%. The following two years saw even greater results in their year-over-year growth pace, with Redwood experiencing record-setting growth in 2018 of almost 10% net membership growth, 16.6% in increased loans, net income of $87 million, and an increase of 19% in equity. Redwood Credit Union grew organically $2.2 billion from 2016 to 2018 and is nearing $5 billion in late-2019. Redwood was recognized by a national study as one of the 5 healthiest credit unions in the US and are proud of their astonishing employee engagement score of 91. Redwood lives and breathes their brand every day in their interactions with each other, their members and their communities.

So how is your credit union planning to tackle the challenges of competitive growth and becoming relevant and more appealing to younger target audiences in 2020? 

How well-aligned are you to evolve your organizational journey toward a purpose-driven vision, a sustainable growth model and an optimistic future centered around a relevant, well differentiated brand strategy and an inspired culture? 

2020 might be the year to reconsider your highest priorities for cultural inspiration and sustainable growth.

For an initial discussion of your organization’s brand and growth strategy challenges, contact Strum.

Mark Weber

Mark Weber

Mark Weber is the CEO and Chairman of Strum, a 30-year nationwide leader in financial services, branding, business intelligence analytics and data-driven strategy. With offices in Seattle and Boston, Strum ... Web: Details