Ironworkers USA Federal Credit Union Spurred Growth Through Your Credit Union Partner’s Services
April 22, 2019
Northwest credit unions are leading the way in the execution of the credit union standard of “People Helping People” – especially when it comes to serving the underserved market.
According to Strategic Link partner, Your Credit Union Partner, or YCUP, most Northwest credit unions can and have approached this as an opportunity — the opportunity to be the underserved market’s hero.
As a consulting firm that provides affordable expertise to credit unions, YCUP helps credit unions implement best practices for loan and membership growth. They’re also low-income-designated and CDFI experts, and help credit unions design their own successful model for serving the underserved.
“We began working with YCUP in 2011 to help us focus on members who needed us, but weren’t using us,” said Ironworkers USA Federal Credit Union CEO, Teri Robinson. “We began to rethink how to serve our market and developed procedures and policies to this end. With this change in philosophy, we redefined our credit union and have had yearly record growth in loans, shares, and most of all, income.”
YCUP shared seven ways serving the underserved benefits credit unions.
The credit challenged
With half of consumers living paycheck-to-paycheck, their credit score could be the result of any number of things, and it’s in times like these that your members need you most. If half the population has less-than-prime credit and your lending strategy is 90 percent focused on prime only, you’ve effectively excluded half of your membership for loans.
Service to non-citizens
The USA Patriot Act does not prohibit credit unions from transacting business or lending to non-citizens. In fact, these members are in dire need of a credit union. Credit unions who serve this market have experienced loyalty, high referral rates, better loan yields, and less-than-expected loan losses.
Credit unions’ role
To say it’s not the credit union’s role to serve lower-income or underserved consumers is to reject a hundred-year history of credit unions. It’s the most important differentiator for credit unions, and the reason credit unions were started.
Examiners don’t expect that a credit union will not take any risk. They understand credit unions are in the risk-taking business. As long as you have a well-defined plan that outlines how your credit union will execute strategy, mitigate risk, and demonstrate that the strategy is congruent with the credit union’s strategic priorities, you’re in compliance.
Low-income designated credit unions
Smart credit union leaders embrace their low-income designation. They understand the regulatory benefits that come with the designation. They use it for NCUA grants, secondary capital to leverage future growth, or to expand business lending. They also use it to better understand the members they serve and the opportunities for growth within the underserved community. Approximately half of all credit unions have been designated “low-income.”
It’s a valuable service, not charity
Prudent credit union lenders would never make a loan to anyone they didn’t believe had the intent or capacity to pay the credit union back. It’s not charity. But that loan or checking account is a valuable service. As a result of serving underserved communities, a credit union is able to net higher margins and loan growth that result in a strong bottom line to ensure long-term sustainability.
Why it matters
Serving lower-income and underserved consumers is a privilege. It’s an important reminder of why credit unions were originally chartered, and a differentiator that makes our space the most relevant. Lower-income and underserved consumers will always be lining up to be helped by credit unions. And, isn’t that what we are here for?