Serving your members: Partnering for financial capability

Credit unions of all sizes do great work in their local communities around financial literacy and education. We get in front of our membership and local stakeholders regularly with programs like Mad City Money and Kirby Kangaroo, and develop our own educational workshops to engage our charters. These programs are important and relevant, but I recently wrote about how our industry can begin to go deeper in helping solve financial hardships for our membership. Income inequality has become a frequent conversation in our country. Recent cultural trends have included widening gaps between rich and poor, increases in suburban poverty, and a move toward the gig economy as people try to make ends meet.

Meeting real needs will be an increasingly larger part of the business model for thriving credit unions. Financial capability is a common term among non-profit practitioners that work to improve lives for people experiencing financial challenges. Prosperity Now, an organization known for its work in this area (and a great resource for research and data), defines financial capability as “the capacity, based on knowledge, skills, and access, to manage financial resources effectively.” Credit unions are uniquely positioned to provide both knowledge and access to their membership. Access comes in the form of safe, consumer friendly products and a staff that is educated in serving a diversity of needs and life experiences. Here are some ideas to get started.

Create an ongoing relationship with a community group: Sometimes we approach financial education as a one- time event. We may come in and do a presentation at a local school or non-profit and then not have contact with them again for a long period of time. Credit unions have various levels of experience and expertise in engaging with local community groups, but establishing deeper relationships always leads to deeper opportunities. Consider sponsoring a local school for a year – provide education and then learn about real needs in the school district. A similar strategy can be implemented with local religious groups and non-profits. Identify ways to have a continuing relationship to better understand what is happening locally.

Build a partnership with a non-profit that focuses on financial capability:  There are many great community groups that want to take advantage of the educational services you offer, but there are also many great non-profits that offer more extensive educational services than many credit unions offer. They also often combine this with case management work, or policy work, or both. Consider bringing in a more experienced local partner to help you develop a financial education strategy. One advantage is that many of these organizations are close to their communities and aware of the circumstances that are affecting their communities before it begins to affect your deposits or delinquencies. They can help you foresee what to think about in future planning.

Develop a unique product that encourages positive financial behaviors: It is easy to create products and promotions that we think will encourage people to use our services. At the end of the day, most promotions are fairly standard, and individuals that have the financial capacity to focus on rates and promotions have many options to choose from. In most cases, the most loyal members will be the ones that you are serving who don’t have every option to choose from. Think about product design in a way that meets the needs for those members; not every financial institution will do this and this will differentiate your credit union in the marketplace. The partnerships you build will be key in helping to define products that work.