Interested in charging members fees? Not sure where to begin? Check out tips from First South Credit Union for kicking off this project!
Credit Unions are truly a class of their own. They’re not-for-profit, they care about their members and they support their communities.
However, in order for Credit Unions to remain sustainable and ensure they will continue to support their members in 5, 10, 20 years’ time, they need to look at other revenue sources.
Small loans aren’t enough anymore – products like Revolving Credit, Mortgages and Flexible Service Member Fees are all additional revenue streams for your Credit Union.
This blog will focus on Flexible Member Fees, and importantly, where to start!
Step 1 - Staff buy-in
It is vital to get staff buy-in from the beginning. Naturally questions will be raised such as “should we do this?” and “how will our members respond?”. Involve every single member of your staff; management, tellers, volunteers.
The Board of Directors are responsible for setting the Strategy of their Credit Unions. It is the responsibility of Management to ensure the Board are fully briefed and understand the rational behind the introduction of fees to enable the Board to make well informed decisions. Allow plenty of time to debate all proposals. Once the Board of Directors have agreed to the introduction of fees, the implementation phase of the process can start.
Without staff buy-in, this project will not be successful.
Step 2 - Engage with CBI/FCA
Pitch it to the Central Bank or FCA and explain your rationale for implementing this change to your business. When George Cantwell, CEO of First South first approached Central Bank with this idea, he pitched two concepts; fees & charges, or negative return on savings. Interestingly, CBI were more onboard with implementing member fees.
Once you’ve initially met with the CBI or FCA, continue to keep them in the loop at regular intervals throughout the project.
Step 3 - Engage with your IT Provider
Early engagement with your IT partner is essential. As there are so many different ways this can be configured, engagement and collaboration is key.
It’s crucial that you understand what you want to deliver, before engaging with your IT provider. No one knows your business and KPIs more than the Credit Union themselves, so you need to communicate this to your IT provider.
When Wellington IT engaged with First South Credit Union about this project, we established a project team with members of our team and members of First South, to keep in regular contact and provide updates frequently.
Step 4 - Think about exemptions
There will of course be exemptions to these fees, and First South decided that their exemptions would be:
- Anyone aged 18 or under (automatically exempt);
- Members under 26 years of age AND in full time education (could apply for exemption);
- Members that are unable to manage their own affairs (could apply for exemption)
Also, if any member could demonstrate that they cannot afford the fees and charges, then they wouldn’t be charged fees.
Only 36 of First South’s membership applied for an exemption.
Step 5 - Engage with your members
First South Credit Union communicated early and often to members about this change that they were implementing, and to get the message across on the rationale and value.
They kept members in the loop via post, digital, phone and of course when members were in-branch. Staff spoke to every single member on a one-to-one basis to inform them of the charges – a laborious and slow, but necessary, process.
Withdrawals of fees from members’ accounts are impermissible without their consent and you must capture this consent.
First South officially contacted their members at the end of October 2020, before commencing member fees on 1st February 2021. You must give your notice at least 2 months’ notice to any change in Terms & Conditions.
First South Credit Union's results
Within the first two months, First South Credit Union had over 3,000 members signed up to become full service members. 180 of these were students, and 36 were exempt members.
In addition to this, over 1000 opted for a Current Account as well.
The Flexible Service Member fees model generated €50,000 in revenue in 2.5 months.
Top tips for this project
George Cantwell cites “communicate early and communicate often”.
With your members, your staff and your IT partner.
The order in which First South carried out the project was:
- Procedures (including Governance)
- Systems & Controls
We hope you found this checklist helpful if you are thinking of embarking on the member fees journey. Don’t forget, you can catch up on First South’s journey with fees from their webinar in May.