NCUA Membership Rules Have Opened the Door. Is Your Credit Union Ready?

A ruling from the NCUA is helping folks across the U.S. access safe and affordable financial services by changing how credit union areas are defined.

Credit unions: Get ready to welcome new members! At the end of July, the National Credit Union Administration Board (NCUA) unanimously approved a membership rule that opens the door to credit union (CU) growth. Specifically, CUs can now apply to “designate a combined statistical area, or an individual, contiguous portion thereof, as a well-defined local community if the chosen area has a population of 2.5 million or fewer.” These changes to NCUA’s chartering and field-of-membership regulations allow for credit union expansion and encourage increased access to important financial services.

“Today, with this rule, the Board is taking a critical step in the NCUA’s ongoing work to allow credit unions to alleviate some of the difficulties of low-income and underserved Americans in accessing financial services,” NCUA Chairman Rodney E. Hood said in a press release. “I often call financial inclusion the civil rights issue of our time, and this rule will help maintain and expand financial access to more Americans in rural and underserved communities.”

The announcement comes after years of litigation and wins many credit unions, particularly those in rural and non-metro areas, the right to expand—ultimately lowering barriers for folks across the U.S. to access safe and affordable financial resources. All told, community charter approvals, expansions, or conversions for credit unions are now easier—but credit unions themselves must be ready to respond.

Why Credit Unions and NCUA Membership Changes Matter

Access to financial services is essential. Financial health is not only about economic fitness but emotional wellbeing, too. When these two sides are balanced, a person can thrive. In fact, Morningstar Research points to this balance and its importance in helping people feel empowered. Financial empowerment can lead people to experience more feelings of joy, peace, and satisfaction, as well as increased pride.

However, despite the importance of accessing financial services, it is not a given everyone has equal access. Banking deserts, or areas with inadequate financial services, are usually in rural, less populated spaces. Additionally, such areas typically have a large percentage of elderly or underserved populations, making the need even greater. Large banking institutions can be hesitant to enter such an area, even with the need, because there are fewer opportunities for profit.

This is where credit unions can step up to play a role, and the NCUA ruling creates an opportunity for just that.

Credit union leaders and members already know the power of CUs. As non-profit, member-owned financial institutions, credit unions put people first. With the recent NCUA membership ruling, there’s now the opportunity for more people to connect with the power of credit unions. However, work must first be done to ensure your credit union is able to expand and effectively attract new members.

Research and Educate Before Expanding Your Credit Union

The new rules create opportunities for your credit union to expand—both in terms of geography and size. As you prepare your strategy for expansion, keep in mind that people want to work with organizations that care about them, and a credit union fills that role.

To attract new members, your credit union needs to convey its story as well as its services. Take the opportunity to educate younger generations and credit union newcomers on all that your credit union offers, and be sure to explain how it can help them improve their financial futures. The fact that you offer an alternative to traditional banking institutions can have considerable appeal.

As you look to expand in light of the NCUA membership ruling, it’s not about a sudden switch. You must start by doing your homework, as expansion may not be appropriate for every credit union. Next, since your credit union is all about people, consider who is there for you to serve. Is there a need? Is there an interest? What’s the pulse of the community? What are the causes, politics, and passions of the region? Read the local news, explore social media within a geographic search, and study public records and the census.

Remember, your credit union expansion isn’t about changing for the sake of change, but changing to respond to a community. If you find that there is an opening and feel the community would be receptive, congratulations! It’s time to do more work, this time for marketing.

Finding Your Credit Union’s Next Steps

There are things people know they need, and things people don’t know they need. Not everyone knows what a credit union is, or how it differs from a bank. If the NCUA membership changes have you considering an expansion, you’ll need to understand your audience. Residents (e.g. potential members) in your expansion region might not know if they’re interested in choosing a credit union. You need to convince them that they are. For that reason, you must plan for education after research. You will need to inform the community while marketing your credit union’s expansion. Through your marketing, you’ll have to effectively tell your story—and explain why you should become part of theirs.

Consider some questions first-time credit union members often have before joining: What is a credit union? Why should I join a credit union? How does a credit union work? Is there any fine print?

As you plan and market your expansion, it may be that your first step is simply answering what some of the benefits of a credit union are. As a credit union insider you already know that:

  • Members have the ability to open savings and checking accounts, as well as obtain loans and credit cards
  • Credit unions are able to offer higher savings rates and lower interest rates on loans
  • Members can turn to financial officers for education and guidance
  • CUs will invest communities through scholarships and volunteer work

Such credit union perks might be familiar to you but news to new members. Think of how the basics could be wrapped up in an informative campaign.

Differentiate Your Credit Union From Other Organizations

The NCUA membership changes have opened the door for your credit union. It’s your turn to open the door to new members. This is your opportunity to start a conversation. And, by starting a conversation in a community, your credit union shows a willingness and interest in engaging. Even though your credit union leaders are coming to the expansion with expertise and understanding, that doesn’t mean your new community is operating at the same level. That’s fine!

That first step in saying hello and explaining your role is a step in earning trust and showing your credit union cares. Differentiate yourself from other organizations that have misunderstood or ignored these communities in the past. Emphasize the power of a credit union through education and you could turn newcomers into dedicated members.

As you continue to learn from your members and actively listen to your community, your credit union will be in the best position to become a rooted part of its community and grow its membership.

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