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Moving Over (Switch Kits)
Make the switch to your credit union nearly effortless for new members.

By Diane Franklin

Editor's note: This first appeared in the January 2004 issue of Credit Union Management.

As credit unions seek new members, the major obstacle to their success may be the perception among consumers that changing from one financial institution to another is just too much trouble. In many instances, consumers would rather stay put than go through what they perceive to be a maze of forms and procedures to move their funds from point A (the competing financial institution) to point B (the credit union). For many consumers, the mere thought of such a hassle becomes paralyzing. Inertia sets in.

The question for credit union executives is this: How do you become the irresistible force that motivates the immovable object? The answer: Make moving to your financial institution as convenient and effortless as possible. Your goal, when you bring in new members, is quite simply to induce the reaction, "If I'd known it was this easy, I would have switched to you much sooner!"

FACILITATING THE SWITCH

Switching is the name of the game. Thus, an increasing number of financial institutions are putting together what they call a "switch kit." Just as the name states, the objective of the switch kit is to simplify the new member's experience in moving from their former institution.

Greater TEXAS Federal Credit Union, based in Austin, Texas, has had its switch kit for about a year. Bridget L. Brandt, director of marketing for the $200 million credit union, reports that the switch kit was developed not so much as a means of growing raw membership figures but primarily as a means of growing the credit union's accounts-per-member ratio. "Before we developed the switch kit, our accounts-per-member ratio was low. Now it's growing," she says.

With 60,000 members, Greater TEXAS FCU has 14 locations throughout Texas. A large number of university students are eligible for membership. As Brandt explains, students in the pre-switch-kit days would open an account to get an auto loan or other consumer loan, but they wouldn't move their entire banking relationship to the credit union. "They felt it was too much of a hassle to switch," Brandt reports.

In the year since it was developed, the switch kit has had the desired result. Brandt reports that the ratio of accounts per member now stands at 1.85, whereas previously it was 1.2. "We're getting closer to '2,' which is where we want to be," she says. "It's working just the way we wanted it to. Now, students are opening more checking accounts, not just taking auto loans or student loans."

The switch kit includes two key forms: the financial institution transfer request and the automatic transfer of payment detail form. Greater TEXAS FCU's member service representatives are available to help prospective members fill out these forms over the phone or in person. "We promote it as being as easy as one-two-three," Brandt reports. "One: Contact Greater TEXAS FCU's member service department to open an account. Two: Fill out the financial institution transfer request, with or without our help. They can take this form to their old financial institution, or we'll do it for them. And three: Fill out the form to transfer automatic deposits or drafts to their new account."

Greater TEXAS FCU's switch kit is an envelope containing the forms and a brochure listing all the credit union's services. "From time to time, we put check coupons and other special offers in it but, for the most part, our members and employees use the online version," Brandt remarks.

The online version of the switch kit has been available at the credit union's Web site, www.gtfcu.org , since July 2003. "All you do is click on 'switch kit'" (after clicking on "Membership"), Brandt reports. "People love having it on line. It's even more convenient for them."

The cost of producing the switch kit has been very small compared to the benefits derived from it. While the switch kit has helped Greater TEXAS FCU increase its accounts-per-member ratio, Brandt says the primary benefit is the convenience it provides members. The switch kit, she notes, is also indicative of the types of service and responsiveness credit unions should be expected to offer.

"People are starting to pick up the ball when it comes to customer service," Brandt reports. "If we say our strength is customer service, then we must be sure to offer customer service. If we can make something easier for even one member, then we've done what we've set out to do. And it's cost us very little to implement it."

Also using a switch kit to assist new members is $1.1 billion Technology CU, based in San Jose, Calif. The switch kit comes in an envelope and features a variety of forms and marketing materials. "It details how the new member can switch over their drafts for their utility bill, their local water bill and so forth to their new account," explains Carlene Rousseu, AVP/sales. "They can fill the forms out themselves, or they can come to one of our branches, and we'll do it for them."

The 75,000-member credit union has implemented a number of other procedures, such as "Instant Issue" of Visa CheckCards and immediate funding of the new account through SpeedPay. SpeedPay enables Technology CU to efficiently and electronically transfer funds from the member's previous financial institution to the new account. "With SpeedPay, we're able to fund the new account more expeditiously," reports Rousseu, explaining that new members supply a routing number from their other financial institutions' accounts for a transfer of funds.

Throughout 2003, Technology CU conscientiously worked to improve its service to members—whether they joined at a branch, through a call center or on line. These efforts were prompted by survey results that came to light in the last quarter of 2002. "The satisfaction levels indicated by these surveys were not where we wanted them to be," Rousseu reports. "We began seeking ways to enhance the member experience from the very beginning."

While more recent surveys indicate a rising level of member satisfaction, Technology CU is continuing to put programs in place that will elevate members' opinions of the service level even higher.

For instance, Technology CU intends to implement a procedure that will allow the organization to extend loan offers to new members at the time they apply for membership. This program should be in place by the end of the first quarter in 2004. "We'll be able to extend the new member a 'soft offer' at the time they apply for membership," Rousseu explains. "We'll be able to run an inquiry on their credit and say, 'You qualify for this level of overdraft protection and you qualify for a $50,000 auto loan or a home equity line of credit.' Our goal is to enhance the member experience from the very beginning."

Rousseu contends this is a prime time to make such an offer. "We truly believe that, at the time they join, new members are more receptive to take your offer," she says. Because "it's tougher at another juncture to get them to commit, we try to be robust at the point of entry and make a strong statement that we want their business."

MAXIMIZING THE FIRST CONTACT

$112 million Charlotte Metro Credit Union, Charlotte, N.C., facilitates new member signups in a number of ways, including on-the-spot issuance of Visa CheckCards and printed checks. New members also get immediate access to their accounts on line. "We try to capture and do as much as we can during that first contact with the new member," reports CUES member Deb McLean, VP/marketing for this 30,000-member CU.

Instant check card issuance is an important service for new members and existing members alike, according to McLean. "There are two primary advantages to Instant Issue," she reports. "One is that it's a convenience to our members. Two is that it controls fraud."

Fraud is definitely reduced because without mailing the card and the subsequent PIN, there is no way for these to be intercepted in transit. "With Instant Issue, members are able to choose their own PIN," McLean adds.

In addition, Instant Issue will ultimately save the credit union money in terms of postage and outside issuance operational costs, according to McLean. And, of course, there is the fact that members can immediately go out and begin using the card. "The sooner they get their card, the better off they are and the better off we are as well," she says.

"It also helps with current members who lose cards or inadvertently demagnetize their cards. Without Instant Issue, it can take seven days for them to get a new card. With Instant Issue, they get their card immediately. They can block their old card using our auto attendant and even change their PIN."

Another positive is that new members can have immediate access to checks printed with their names and addresses, so there is no lapse in their ability to use checks in retail establishments. This service was made possible through the purchase of MICR-Quick from CUES FSF member Liberty Enterprises Inc., Mounds View, Minn., according to McLean. "We purchase pre-perfed check stock and MICR ink for the laser printer from Liberty," she says. "The checks print off from the system."

As a result, the account manager can hand the pre-printed checks to the new member. "They'll be able to use their checks in retail stores the same day they open their account," says McLean, adding that this is also a great service for existing members who have forgotten to re-order checks and need them as soon as possible.

The eventual goal is for Charlotte Metro CU to implement a switch kit to maximize convenience for incoming members. The CU already has in place some of the elements that would be included in its switch kit, including a form that notifies current institutions, as well as those that can be used to transfer direct deposits and drafts to the new account.

McLean also envisions having draft request forms for major utilities, payroll forms and a checklist for members to ensure that nothing is forgotten. However, she notes, developing a kit that is universally accepted does require some effort. "It's a challenge," she says, "because there are some payroll departments that have their own direct deposit form and are adamant that they will not use any other form."

'ROUND-THE-CLOCK ACCESS

Convenience is the key to gaining new member signups, and what could be more convenient than giving prospective members access to your credit union 24 hours a day, seven days a week? Such is the value proposition offered by the partnership of Digital Dialogue and uMonitor.

The partnership brings together the complementary strengths of two companies that collectively serve more than 60 U.S. credit unions. Digital Dialogue, based in Auburn Hills, Mich., is a specialist in 24/7 call center and online lending services. With two call centers in Michigan and a third in Utah, the company contracts with credit unions to handle their calls either on a full-time or overflow/after-hour basis. Germantown, Tenn.-based uMonitor is known for its account aggregation and funds transfer expertise. By teaming up, these companies provide CUs with the tools to allow consumers to apply for membership around-the-clock and fund the new account, either on line or on the phone.

Howard Hoemann, VP/sales and marketing for Digital Dialogue, sees 24/7 access as increasingly imperative in the competitive marketplace. "We have more credit unions that are community-based and are looking to attract new members," he observes. "They need the capacity to enroll new members, both through call centers and on line."

Hoemann reports that one way CUs can attract new members is through easy access to loan services. Digital Dialogue offers prospective members the convenience of filling out both membership and loan applications in one interaction—either on line or over the phone. "They can fill out a membership application and pre-populate the loan application with the same information or vice versa," Hoemann reports. "This makes it very convenient for the member who wants to join in conjunction with another service, primarily lending."

The Digital Dialogue and uMonitor partnership takes the prospective member through three steps: (1) filling out the application; (2) verifying the prospective member's identity through a major credit bureau in compliance with the USA Patriot Act; and (3) funding the account.

This final step is where uMonitor's expertise in account aggregation and funds transfers comes into play. "Allowing a prospective member to complete the transaction all at once improves the success rate," reports Dinesh Sheth, president/CEO of uMonitor. "Integrating the membership application and loan application process with account aggregation makes it all the more powerful."

Using the power of account aggregation may change the modest funding of a new account into a much more substantial transfer. As Sheth notes, account aggregation allows the member to see both accounts side by side, which facilitates the transfer. "They may open their account with $50, but when they see the information from both accounts on one screen, they may decide to put $5,000 from Institution A into Institution B," he says.

MAKING THE SWITCH

CUs can take steps to make switching easier for the prospective member, an important experience given the competitive nature of the market.

"Credit unions have to make the experience of switching easier and more efficient, or the individual is not going to be motivated to switch," Rousseu affirms. "That's why we're continuing to work to enhance the new member's experience. Our goal is to make a good presentation so they say, 'Wow, I'm glad I joined.'"

Diane Franklin is a free-lance writer based in Florissant, Mo.

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