Expanding Your Field of Membership

Is your credit union taking full advantage of the NCUA Field of Membership rule change? As the year draws to a close, now is a good time to revisit the rule and make sure your credit union is getting the most out of it. As a refresher of sorts, let’s review the five major areas that have the most potential for impacting positive growth.

Community Common Bond

Various changes were made to “Core Service Area” requirements, most notably allowing credit unions to serve a portion of a statistical core without being obligated to serve the entire core area. The rule also allows for segmenting population of a core area without regard to the 2.5 million person cap. Credit unions can now serve combined statistical areas so long as they stay under the 2.5 million cap and may also apply to serve adjacent areas so long as narrative submission requirements are met.

Rural District Definition

The old 250,000 people, or 3% of a state’s total population definition, has been updated. Now, credit unions may serve rural areas with up to 1 million people. Multi-state expansion limits have been clarified. Credit unions may serve areas across state lines, but only if they border a state where their headquarters are located.

Underserved Areas

The rule retools the “concentration of facilities ratio” by excluding non-depository institutions and non-community credit unions from that number, allowing greater flexibility for defining an area as underserved.

Multiple Common Bond

Credit unions may now include employees who work for entities under contract with sponsor employee groups as long as it can be proven that the sponsor and contractor have a dependent relationship.

Trade/Industry/Profession as a Common Bond

Employees of entities that have a strong dependent relationship with other entities in the credit union’s Trade, Industry or Profession Charter may now be considered for membership.

These changes to the rule mean on thing. There are many new ways to expand your field of membership. One question should be at the forefront of your mind. Who can we serve? Answering that question well opesn up expansion opportunities. Let’s take a closer look.

Expansion Strategies

The rule change opens up many opportunities for credit unions previously nonexistent. The key to expanding your field of membership lies in strategy. For example,if your credit union is located in a rural area, perhaps you can take advantage of the rural change by developing a marketing plan targeted towards new areas. If you are in a metropolitan area, expansion could be possible by focusing efforts on a particular community subset previously off limits due to the old rule. It all has to do with strategy. Consider these tips.

  1. Review current membership. Look for trends, demographics and other relevant factors. It is also a good idea to review current marketing practices used to attract these members. Take an honest look at what is working and what is not working.
  1. Explore potential targets. Are there any new areas open for you to pursue? Do they line up with new “Core Service Area” requirements?
  1. Develop a marketing strategy. If new targets include new demographics you will need to adjust your marketing strategy. Millenials are not attracted to the same messages used for Boomers. Working class individuals will need a different strategy than one used to attract high earning clients.

The membership rule change presents the single biggest opportunity you can take advantage of to expand your field of membership in the coming year. New members provide new opportunities for lending in areas such as auto loans, credit cards, secured lending and home mortgages. They have real potential to impact net revenue. te rule change is an open door to provide the invitation.

Furthermore, new members have the potential to double stack in a against the latest member business lending rule change. This is a result of credit union regulators working hard to make sure the playing field is not only viable, but competitive too. Expanded fields of membership allow credit unions to compete at the highest level with large financial institutions. Now is the time to review your current membership strategy and develop a new plan that will facilitate further expansion.

The Impact on Forms

While doing this, keep your forms in mind. Certain disclosures and addendums will be necessary. All aspects and mediums will need to be addressed. This involves, online, printed and print on demand forms. They must comply with state and federal regulations to ensure compliance. Expanding your field of membership can be costly if your forms are not compliant.

Make sure your forms provider is up to date with compliance issues surrounding the FOM change. Questions to ask would be:

Are my forms up to date?

What is necessary to make them compliant?

How easily do my form packages integrate with my current data processor?

Am I using them to their full potential to make the member experience pleasant?

Do they support our mission and facilitate the new member process?

If you answer “No” to any of the above, those areas need to be addressed immediately. Forms and form packages go hand in hand with membership. While you are developing a strategy to take on new members, it is a good time to make sure your forms are compliant. One inspection can ruin any benefit from an expanded field of membership. Fines, penalties or worse could occur.

However, good forms and a good member expansion strategy, will help you capitalize on the new year. It is never been easier to expand. New markets and members are the foundation of credit unions. The rule change is an opportunity to expand it for future generations, ensuring the financial needs of your community will be met for years to come.