HOBOKEN, N.J. — Credit unions are leading a savings revolution courtesy of Filene Research Institute's i3 team.
Across the country credit unions are offering savings challenges designed to help members improve their financial picture particularly during these tough economic times.
“We're so excited to see how this i3 innovation has grown,” said Filene Chief Innovation Officer Denise Gabel. “When you look at this effort and you contrast it with the branding issue where credit unions to date can't agree on everything from brand message to colors, interestingly, credit unions can agree they are the institution consumers can count on to help improve their financial lives. Regardless of size, product lines or field of membership, all credit unions have a savings instrument and the potential to demonstrate just what is at the heart of credit unions.”
Gabel said the concept uses a mix of reality television, online interaction and individual planning to encourage members to reduce debt, increase savings and get control of their financial lives. With a focus on making it easy for credit unions to customize to meet their needs, Gabel added that all the tools have been provided to get the program up and running quickly.
The challenge itself is a reality-based event in which select credit union members compete to achieve specific savings and debt reduction goals. Selected participants then meet with a financial planner who suggests a set of realistic yet ambitious financial goals. They are then followed over a 10-12 month period and their ongoing progress is made publicly available via a television show, Web-video stream, a series of newspaper stories or even updates in a newsletter. At the end of the competition, one participant will win a grand prize. The idea is to inspire consumers and other members to change their financial lives by setting their own savings and debt reduction goals and to stick to them with the aid of family, friends and community. According to Gabel the key is financial coaching.
“The savings challenge idea is born out of ethnographic research that found that consumers are looking for someone to lend them a hand and be a good money coach, not talk down to them or teach them financial literacy,” said Gabel. “That's the single most important component in making this a success and any incarnation should stay true to it. People believe their way of managing money is the best way so whatever their budget process, even if it's purchasing money orders, the challenge is not to say 'no you are wrong do it this way' but rather work with them. No one wants to hear they don't know best.”
GECU in El Paso, Texas was the first credit union to launch the i3 program in 2007, and it not only got two local news stations to follow the competition closely with regular interviews broadcast in the El Paso market and uploaded to the partner stations' Web sites, but it also helped GECU grow. Between Jan. 1, 2007 and July 31, 2007, GECU opened 5,341 No Excuse Savers Club CDs and 10,057 share accounts, a growth rate of 60% and 6%, respectively, over the same period in 2006. According to the credit union the accounts opened also tended to be higher value, with account balances for newly opened CDs and shares 30% and 17%, respectively, higher than the year before. This growth in accounts and balances occurred in the absence of any product-specific marketing. The credit union has continued the challenge, which is now in its third year.
Since then credit unions have taken the program and tried to make it their own. For example Lenexa, Kansas-based CommunityAmerica Credit Union transformed the challenge into a financial makeover and included a blogging component where the families selected talk about their experience throughout the competition.
According to the CommunityAmerica CU Director of Corporate Communications Barry Brakeville, the program was a natural fit for the credit union.
“Our goals and objectives as a financial institution are all about advancing the financial interests of our members, and this contest has, by and large, the same goal of helping members break the cycle of debt,” said Brakeville.
He added that the blogging helped extend the “winners” beyond just the four families selected to participate in the challenge to include every member and consumer by providing a place where they could learn valuable financial tips and share their common struggles with money management. He said the site had tens of thousands of hits and the credit union is gearing up for its 2009 makeover contestants and is in the process of selecting four new money coaches.
Inspired by the success of other credit unions AMOCO Federal Credit Union in Texas City, Texas has launched the “Earn or Burn” $20,000 Challenge to help its members think smart about money and learn how to make better financial decisions. Members can track the four families' progress over the next 10 months online at www.earnorburn2009.com. The site also offers viewers financial tips that can be implemented in their own lives.
“This just fit in great with our strategic goals for 2009,” said AMOCO Marketing Director Tina Linquist, regarding financial literacy. “So much of the financial education you see in the credit union world is so geared toward younger people that we're missing a big group of individuals who are older or are taking care of their parents and families who still don't have a good sense of money. The timing for something like this has never been better, and who better than credit unions to reach out and do what we can to help.”
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