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    Growth By Meeting New Needs

    Opportunity creates opportunity. I have seen this so clearly as my career has developed. A manager took a chance on me when I said I was interested in politics. Before I knew it, I was lobbying in the Montana State Legislature and got my next chance in Washington D.C. Through my role there, I met so many people throughout the credit union movement and when it was time for me to move back west and get my first job with an actual credit union, I knew people willing to give me that opportunity.

    Every day I see opportunity building opportunity at credit unions across the country. Credit unions give adoption loans so families can bring children into lives where they become thriving community members. Credit unions offer members that first loan that turns an entrepreneurial college graduate into the prominent local business owner. When chances are taken and opportunities are given, there is room for opportunity to be realized.

    Unfortunately, in a time when so many more of us- credit unions and consumers- are watching every financial move with greater care than ever before, it is difficult to justify taking on additional risk and extending resources for new programs and services for non-established potential members. Instead, we happily offer credit to our well-established members and pay dividends that reward those who already have substantial balances while struggling to justify (to our regulators, our members, and ourselves) serving those most in need of traditional financial services.

    When credit unions determine the cost is too great to reach out to the underserved, we leave these potential members to seek assistance from organizations that pull them further from prosperity. They do not receive opportunities to grow and free themselves of debt, begin building assets, and break a cycle of poverty that costs many in our communities much more than just dollars.

    Growth, Opportunity, and Influence

    Like these underserved members, credit unions are also in need of opportunities to grow. For years, we have had a stable market share of about 6% nationally. For years, we have worked hard to spread the word about credit unions and have still maintained only a steady 6% market share. But, in the past 18 months, we have heard from members, politicians, the media, and each other that now is the time for us to change that figure. We are living in a time that provides the opportunity we need to grow.

    That opportunity is not in A+ borrowers with established assets, though. Rather, as it was back in 1934, it comes from those also in need of an opportunity. Instead of vying for the same piece of pie that every other financial institution is eyeing and trying to convince consumers to make the switch, credit unions can thrive through finding their own, entirely different pie: populations who (through real or perceived barriers) do not have access to traditional financial institutions.

    Here in Marion and Polk Counties, Oregon (home of MaPS Credit Union), some of our most underserved neighbors are immigrants. Recognizing the fast-growing Hispanic population (and knowing they weren’t banking at MaPS), we knew we needed to learn more about how to increase our efforts to meet the needs of these potential credit union members- and what it would mean if we didn’t.

    Early in 2009 we began conversations with Warren Morrow of Coopera Consulting. Coopera is a subsidiary of the Iowa Credit Union League that helps credit unions more effectively serve underserved populations, especially Hispanics. Some key elements we wanted to understand included the growth rate of the Hispanic population in Marion County, the origin of the individuals who make up the population, and the current financial behaviors of the demographic.

    As a whole, the population makes up 1 out of 5 of our community members. They earn slightly less than the average income in Marion County and are significantly younger. Research shows this population is typically first- or second-generation Mexican immigrants who have come to the Willamette Valley for opportunity in our agriculture industry. This is an important point to note because the financial services industry in Mexico has been plagued with corruption and instability caused by flawed regulatory oversight and economic disruptions. Because of this, many immigrants do not trust traditional financial institutions. In fact, a Center for Financial Services Innovation report states that while approximately 35% of all Latinos in the U.S. are likely to be unbanked, among Mexican immigrants that number is much higher at 53%. With Hispanics being the largest, fastest-growing, youngest, and most underserved population, credit unions have an opportunity to tell the story of what we are, to serve this population in a way that earns their trust, and to increase our market share well beyond 6 percent.

    Our conversations with Coopera have shown us that the Hispanic population is a huge part of our community and their presence and influence will continue to grow in the coming years. They are not using transaction accounts or borrowing in a way that is consistent with their income level; more likely they are using check cashing services, keeping large amounts of cash on hand, and borrowing money from friends and family. They are not coming to MaPS for international remittances, small business loans, or accounts of any kind; though we know they are wiring money internationally, starting new businesses at a rate twice that than the overall rate of new business growth, and earning income on a regular basis. We also know that those Hispanics who have opened accounts at MaPS are significantly younger than our general membership and they tend to perform very similarly to those non-Hispanic members of similar ages.

    Building the Future Now

    We have also considered what experts are saying about the future of their financial habits. An FDIC Outlook paper reported that “many industry analysts believe that more than half of all U.S. retail banking growth in financial services during the next two decades will originate from the growing Hispanic market.”

    Similarly, “the New York-based Research & Advisory Group project(ed) that between 2002 and 2007 the number of Hispanic households with checking accounts (would) increase by 57 percent, those with savings accounts (would) grow by 76 percent, and those using investment products (would) grow by 94 percent.”

    Looking at these numbers, considering these findings, and understanding the clear need that exists, it is easy to see the business case for serving the most underserved in our community: We can serve more members who are younger than our existing membership, securing our future. We can help these members achieve individual financial success that is essentially out of reach without a traditional financial institution. Breaking this poverty cycle will increase the whole community’s economic capacity.

    Opportunity creates opportunity and ignoring it results in a snowball of missed opportunity. By serving the underserved, credit unions become stronger businesses and individuals become more financially successful.

    Jill Nowacki became vice presidentc-development at MaPS Credit Union in January 2009; around the same time the $350-million credit union gained a community charter and expanded its scope to serve all individuals living in Oregon’s Willamette Valley Basin.

    Jill is a native Oregonian who has worked with credit unions since 2001, holding various positions at the Montana Credit Union Network and serving as Executive Director of Credit Union House in Washington, D.C. She is a graduate of Carroll College (Helena, MT) and holds a Masters in Public Administration from the University of Montana.

    In August 2009, Jill attended Credit Union Development Educator training and earned the CUDE designation.

DiscussionLeave a Comment

  1. Thanks for giving such a great example of the benefits credit unions can give and receive by meeting new needs. Plus credit unions were started to help the little guy, and who’s the littlest guy of all? The un- or under-banked individual. I agree that by doing the research and presenting a solid business case, what at first seems like a large risk can become a clear opportunity for credit union growth and to put the credit union philosophy of people helping people into action. NOW is the time for credit unions to step up!

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