The concept of understanding who’s earning or not earning dividends should be at the forefront of what we are doing as cooperative financial institutions to ensure that our members are getting value out of their credit union. It is great that we, as cooperative financial institutions, market that our fees and loan interest rates are lower than traditional banks, but nothing says thank you to a member more than providing them with cash.
We must hang our hat on the fact that we are returning profits to members and deepening our dependency on the core reason why credit unions exist, and that is to provide value to our members and participants. We must identify how we can coach members that are not earning so that they can, and coach members who are earning on how to continue. That is the essence of credit unions as financial cooperatives.
Dividends serve your members and the credit union
Promoting a sense of savings within a credit union’s membership will lead to the ability for members to make larger purchases and perhaps those members will be more likely to apply for a loan with a credit union once they have a savings balance that is enough for a down payment.
Below are the top 8 reasons why credit unions should be interested in knowing who is earning dividends:
1. Coaching members for higher participation
By identifying members who are not earning dividends, we can coach members to participate at a higher level to ensure that they are seeing a return on their relationship with the credit union. This should be part of the train schedule for credit unions on a semi-frequent basis to ensure that members are aware of their opportunities to earn.
2. Helping members earn more
Identify members who could be earning more in dividends by suggesting an alternative product. For example, a member may be earning 1% on a savings balance when they could be earning 2% on a certificate balance.
We can coach members on how to navigate their savings balance to achieve the greatest amount of return. In so doing, you promote a sense that you always have the member’s best interest at heart, and you want them to earn more.
3. Educating members on how dividends are determined
Credit unions can coach their members on how dividends are earned. I often speak with consumers (whether they be credit union members or not) and they do not understand the concept of dividends and how they are calculated.
By advertising and promoting dividends and how members can earn, we can easily raise the level of advertising that we do collectively as cooperative financial institutions to prove that we are a different type of financial institution.
4. Identifying opportunities for bonus or patronage dividends
Credit unions can identify opportunities for paying bonus or patronage dividends to members. By studying which members are earning dividends and which members are not earning dividends, it allows a credit union to study which options exist for paying those dividends and presents the opportunity to reward members who may not otherwise be rewarded.
5. Better informed rate change decision-making
Credit unions can closely monitor how much in dividends are being paid out to members over time. This will be helpful data for credit union management teams and board members to declare rates and perform analytics on which members would earn dividends based on a rate change.
6. Reminding members of the value they get by being a member
Credit unions can identify members who are earning dividends and remind members of what they are earning by saving money with their credit union. I do not know of any credit union that is promoting dividends any more than that the transactions are posted to members at the end of the month.
How do we change the game so that credit unions can provide members with a greater focus on the data? We create a dashboard that easily identifies who is earning and who is not earning to bring it to the forefront of everyone’s minds.
If I were a credit union manager, I would be advertising how much I am paying to members. This data is already available on a financial statement, but as a credit union, we can get details by product, etc. that we can promote to our existing and potential members in our marketplaces. We should be telling the world what we are paying to members.
7. Deep-diving the demographics of dividends
Credit unions can analyze what types of members are earning dividends (age, gender, zip code, etc.). This allows credit unions to isolate who is earning dividends and why. This feeds the education machine and identifies areas of the community where there may be greater opportunities for outreach and increased participation.
8. Shaping product offerings
Credit unions can identify which products they can potentially increase rates on to shift member behavior and/or retire products that do not pay dividends in favor of products that do pay dividends.
Show your appreciation
There are numerous benefits to diving into your data to learn which of your members are receiving dividends and which are not. Knowing allows you to market new products and features to members, educate members, and show your appreciation to members who are not currently earning dividends and get them more involved in the credit union. It also means your credit union takes pride in giving back to the people it was made for and is truly invested in the cooperative principles.