Among the many problems the COVID-19 pandemic has caused for credit unions is the heightened challenge of bringing in new members with limited opportunities to interact face-to-face.
Although overall credit union membership has continued to rise, the growth rate has fallen steadily in the last quarter — to 3.5% in August, after sitting at 3.9% in June — according to
For instance, the $39 million-asset Family Focus Federal Credit Union in Omaha, Nebraska, saw its membership fall by 3%, to 2,870, at the end of the second quarter compared to a year earlier.
Even that decrease of fewer than 100 members is harmful to the credit union, said President and CEO Amy Brodersen.
Even though the institution was able to interact either virtually or in person though its drive-thru, there is no doubt the pandemic took a toll on its ability to personally connect with its members, she said.
So Family Focus earlier in October rolled out a $100 sign-up bonus for new members. It may not seem like much, but “it by far is the most aggressive promotion we have ever run to encourage and grow membership,” Brodersen said.
Family Focus FCU’s membership is made up almost exclusively of employees of Metropolitan Utilities District, a public utility. Because that limits its size, the institution was forced to close down its branch and main office lobby and cancel all in-person events such as Metropolitan Utilities District’s new employee orientations, annual benefit fair and member day — all events that encourage participation in the credit union — throughout the entirety of 2020.
But once the vaccine rollout began and restrictions within the community started to ease, Family Focus was able to reconnect with its membership starting in August, when it held an in-person member day event. It has also opened a new branch and kicked off a membership drive that will run through the end of the year.
Later this month the credit union is scheduled to participate in its select employee group’s employee benefit fair
"As a small credit union, our niche is intimately knowing our members,” Brodersen said. “And to do that, you have to be able to engage them in a manner that they get to know you as a person they can trust. Virtually is one thing, but there is nothing like someone using all their senses to help feel and make a personal and emotional attachment.”
Preston Afrank, executive vice president at Haberfeld Associates, a consultancy based in Lincoln, Nebraska, said its credit union clients have been proactive in looking for more small businesses clients.
Many small businesses came to the conclusion during the most challenging months of the pandemic that the big banks didn’t have their best interests at heart, Afrank said. And as a result, significantly more business opportunities exist for credit unions today.
The $718 million-asset Erie Federal Credit Union in Erie, Pennsylvania, is taking advantage of this interest from small businesses.
Erie FCU had just under 68,000 members at the end of September, roughly a 5% increase compared to the end of the third quarter of 2020. It has attracted these new members through a renewed focus on small-business checking, according to Tom Brennan, the credit union's chief marketing officer.
“That was a strategic planning item from 2020 that has come to fruition in the third quarter of 2021,” he said. “Our numbers have started to spike, and inquiries have increased, but at this point it is a work in progress.”
The biggest impact and challenge of COVID has been in the servicing of current and prospective members, Brennan said. In particular, Erie FCU needed to make sure existing members were fully aware of service changes the institution was forced to make.
"I know this is an overused word, but we had to make a major pivot in terms of transitioning to remote work and serving members with reduced branch capacity, which continues today,” he said. “Purely from a marketing angle, we have demonstratively upped the ante in regard to our digital marketing expenditures, most notably search ads and remarketing campaigns. Those focused efforts were somewhat out of the box for us. We focused more on traditional mass marketing tactics pre-COVID.”
Erie FCU sees the 25-35 year-old segment as its fastest growing member group, which was also the case pre-COVID. That’s due to the delivery of its brand message on a consistent basis and its deliberate deployment of “cause marketing” activities, Brennan said.
Erie also marketed digital and contactless solutions quite a bit during the pandemic, and Brennan said that has enhanced its retention efforts as well.
“The pandemic has helped us understand what remote services were required to maintain and grow our membership base,” he said.
Some credit unions have turned to offering perks such as travel rewards as a way to draw in new members.
A post-pandemic wave of consolidation among larger credit unions, coupled with a diminishing workforce, could leave small and midsized institutions competing harder for new members, said Alan Josephs, chief product officer of Arrivia, a company that works with member-based groups and financial services companies.
Credit unions can invest in initiatives that keep members engaged with their digital platforms, Josephs said. Travel benefits and rewards can achieve this while also providing a means for incentivizing new member sign-ups, he said
Arrivia is working with a handful of credit unions that are dealing with the lingering effects of the pandemic. Using Arrivia’s platform, credit unions can offer travel benefits as a sign-up or first deposit bonus, as well as provide ongoing travel benefits as a perk of membership.
Ongoing large-scale workforce shifts can weigh on credit unions’ ability to attract new members, especially if they have relatively narrow fields of membership.
“But the biggest legacy the pandemic left that applies to credit unions is the acceleration of digital interactions among their members. Both existing and potential members encountered the convenience of digital banking during the pandemic and demand a more robust digital experience from their credit unions,” Josephs said.
Haberfeld's Afrank said its data shows that credit unions saw their member attrition rates drop from approximately 10% in 2019 to less than 8% in 2020, so there is hope that members will stick around.
“Most agree that changing financial institutions is hard and most people will only do so when it’s absolutely necessary,” Afrank said. “The credit unions that have historically practiced what they preach about doing right by their members have been rewarded during the pandemic with very strong retention numbers.”
