Self-Help Federal Credit Union is delivering “in-line” financial education to help lead low-income people on the path to economic opportunity and security.
The credit union received a National Credit Union Foundation (NCUF) Financial Education Grant this year to implement, analyze and refine their in-line education model, which is innovative delivery of "bite-size" financial management concepts at the teller line when consumers are focused on their financial decision-making. This new education model is being piloted in Self-Help FCU’s Micro Branch, a unique check casher credit union hybrid designed specifically to meet the needs of unbanked families.
A flier for Self Help FCU's "5 for Me" savings account, which was developed to encourage unbanked check cashing customers to open savings accounts and start the habit of saving regularly. It is a basic savings account with an automatic savings feature tied into check cashing transactions. When a member opens this account, he agrees to have $5 automatically transferred into it every time he comes in to cash a check.
“By providing educational interventions during financial transactions and coupling them with access to asset-building products and services, Self-Help FCU creates opportunities to transition education into action and effectively change financial behavior,” noted Jeannine Esposito, Communications & Development Associate at Self Help FCU.
Self Help FCU’s Micro Branch – Serving the Unbanked
Established in January 2010, Self Help FCU’s Micro Branch serves East San Jose, which is made up of a primarily Latino immigrant population. Based on the 1-mile radius census data around the branch's location, there are an estimated 20,000 un-banked and under-banked Latinos. In California over 47% (or 9 million) Latinos are unbanked and almost 200,000 in San Jose alone. This population represents the service gap that exists in between mainstream financial institutions and less regulated, alternative financial services providers. As a result, alternative providers - such as check cashers, pawn shops, consumer finance companies and payday lenders - have emerged to fill the void.
“The people in check cashing lines are missing something valuable: a place to save money, the chance to develop or repair credit ratings, personal security from robbery, and access to responsible credit,” said Lois Kitsch, NCUF National Program Director. “These basic financial services are the gateway to financial stability and capital access, which are critical steps toward upward economic mobility.”
The Micro Branch attracts low-wealth customers where they are by:
- providing relevant and accessible transaction, depository and credit products;
- being located in their neighborhood, with the extended hours they need; and
- feeling both familiar and supportive, through design and staffing.
As customers establish trusting relationships with the Micro Branch, member service representatives nudge them toward products and services - such as credit union membership and savings accounts - that can assist them in building assets and achieving financial self-sufficiency. The Micro Branch currently serves 1,538 customers and 20% of them have become members of the credit union. All customers received initial education when they registered with the branch to cash checks.
In the Micro Branch’s first year of operation, Self Help FCU had a significant impact in East San Jose, Calif. and successfully proved its ability to attract customers. Now in its third year, Self Help FCU is focused on building the financial stability of its customers and members. Enter In-line financial education.
In-line Financial Education – Helping Unbanked on the Path to Financial Self-sufficiency
Self Help FCU is serving unbanked families and assisting them with in-line financial education which consists of the following:
- Teller line interventions - delivering targeted scripts and / or marketing materials to customers at the point of transaction that "nudges" them towards an account, a savings product or a credit-building loan.
- Community outreach interventions - using the same marketingmaterials and scripts when participating in local community events, including neighborhood resource fairs, VITA site days, non-profit partners' open houses, and so on.
- In-branch marketing interventions - creating posters, post cards and other marketing collateral designed to provide "bite size" education, delivered in an interesting and thought-provoking manner, e.g. "did you know the average Micro Branch consumer spends more than $300 in check-cashing a year and that the average Micro Branch member spends an average of $65 in account fees a year?"
- Cross-selling savings accounts – Interact with customers during their check cashing transactions so they will open a “5 for Me” savings account. Self Help FCU incorporated the behavioral economic concepts of frictionless savings, the power of defaults, and future commitments with their on the ground experience in serving the unbanked to create this new savings product.
- Evaluation & analysis - holding regular team meetings to review successful interventions and share best practices, which informs training materials for staff.
- Staff training- incorporating training into weekly team meetings to review the introduction of new marketing interventions, practice teller line interventions and review community event interventions.
In addition to the activities mentioned above, during the second half of 2012, Self Help FCU’s in-line financial education activities will consist of:
- Market research (quantitative) – a data driven analysis of their customer base to determine which customers have progressed along the product suite. For example, the credit union looks at which check cashing customers decided to open an account and how long did it take, etc.
- Market research (qualitative) - conducting phone and in-person interviews or focus groups to understand how customers are using products and what interventions have worked on them.
- Customer profile flags - flags in Self Help FCU’s core processing system of potential clients who share characteristics from their success stories and prime for cross-serving opportunities.
The long term goal is for the Micro Branch and in-line education model to be used for any unbanked and underbanked population throughout California as well as across the nation, potentially reaching millions of individuals.
A Foundation Grant at Work
NCUF grants are made possible by supporters of the Foundation and the Community Investment Fund (CIF), an award-winning system of investments that help credit unions earn dividends while donating to national and state community development programs.
This “Grant at Work” is part of a series highlighting NCUF grantees making a positive impact in their community and empowering consumers to achieve financial freedom through credit unions.
About the National Credit Union Foundation (ncuf.coop):
The National Credit Union Foundation is the US credit union movement’s primary national philanthropic program provider, fundraiser and grant-maker. Through NCUF grants and programs, credit unions provide widespread financial education, create greater access to affordable financial services, and empower more consumers to save, build assets, and own homes.
NCUF is funded primarily by investments in the award-winning Community Investment Fund (CIF) and by generous Supporters led by the Credit Union National Association and CUNA Mutual Group. All NCUF donors provide support that empowers NCUF and state credit union foundations to make financial freedom achievable through credit unions.
The National Credit Union Foundation is a 501(c)(3) tax-exempt charitable organization. NCUF continues to earn the Better Business Bureau seal of approval as an “Accredited Charity” for meeting all 20 BBB Wise Giving Alliance Standards for national charities.