By Mary Auestad Arnold
About a year ago, headlines proclaimed that Americans' annual personal savings rate had dropped below zero--the worst showing since the Depression. In response, Robbie Wright penned a Skybox guest post, suggesting that with a few small changes CUs could make it much easier for members to regularly put money aside. Denise Wymore, who believes promoting thrift is an inherent--but often missing--component of the CU mission these days, responded to Robbie's post: "I asked 100 marketers at a conference recently how many had programs to promote thrift. One hand went up; she wanted to know what thrift meant."
Ouch! Is it really that bad? Looking back on the year, I say there have been several exciting break-throughs in CU efforts to promote thrift/savings with plenty of opportunity to build in 2008.
First there is prize-based savings, which $700 million Centra Credit Union in Columbus, Ind., pioneered this time last year (read more here). The CU bills it as Centra Super Savings, explaining that "The more money you save, the more chances you have to win!" Members can win everything from Wiis and other hot merchandise all the way up to a $5,000 annual prize.
Centra CU's program evolved from a Filene i3 project. Similarly, $1 billion FORUM Credit Union, Indianapolis, has launched its Weekly 5 Club.
On a disappointing note, Harvard Business School Professor Peter Tufano, through the Doorway to Dreams organization he chairs, was working this summer to get a prize-based savings program off the ground in Michigan where state regulations ease entry. He had hoped to find a Michigan CU to pilot the offering, but at CUES' CEO Network I heard from Filene's Mark Meyer that, instead, a bank has signed on.
Another savings program creating a lot of buzz is the Savings Challenge at $1.2 billion GECU in El Paso, Texas. Also stemming from an i3 project, Savings Challenge combines the concepts of saving, prizes and reality TV. And according to this post on the CUES Nexus blog, it's going national as The Savings Revolution.
Last but not least on the breakthrough list is the U.S. launch of Zopa with six credit unions piloting. Though slightly more emphasis seems to rest on the lending side--after all Zopa is considered a P2P lender--members can also sign up for insured CDs through the investing side of Zopa.
Today I visited each of the CUs' Web sites to see how they are marketing Zopa products to their members. I have to admit I was a bit confused about how to buy a CD during my first several visits. At FORUM CU, however, there are "borrow now" and "lend now" links that make it more obvious.
Read Net Banker Jim Bruene's take in "Zopa Credit Union Partners Give it Top Billing."
Did I miss some innovative savings programs? If so, let me know!
On the other hand, it doesn't always take a gimmick or something completely new. As Robbie suggested, just getting rid of or streamlining processes can make it easier for members who want to save to do so. Is there, for example, a simple way for members to change their direct deposit, so when they get a raise, they can direct at least some of the increase to savings?
You can also target members where their needs truly lie. That's what $12 million Personal Care America Federal Credit Union, Trumbull, Conn., is doing as it launches three accounts to help members save for 1) a home, 2) an education and 3) emergencies. They appear to be simple, straight forward accounts--with two special features. They pay 1% more than a one-year CD and the first 100 members who sign up with a $500 deposit will earn an extra $100 courtesy of the CU.
According to the CU's press release, "The new products were created with the specific desire to assist members to prepare for life altering events and help avoid financial hardship such as credit card debt while paying for them .... In addition, each member who enrolls will meet with a credit union representative to assess their current financial status and goals and then work together to create a customized plan for the future."
Now that's promoting thrift!
Mary Arnold is VP/publications for CUES and editor of Credit Union Management magazine.
