Looking for a New Financial Institution? Consider a Credit Union

By Jim Pytell, Assistant Editor On Jul 10, 2019

While most people have a rough idea of what a credit union is (a type of financial institution that differs from a bank) many don’t fully understand quite how wide the array of services is that a credit union can provide for them or their business. Another common misconception when it comes to credit unions is the idea that not everyone can join one.

While some credit unions have certain requirements to join, the reality is you don’t always need to be a part of an exclusive group or “know the right person” in order to open an account. As David C. Frankil, president and CEO of the New Jersey Credit Union League (NJCUL) says, there is pretty much a credit union for everyone.

There are currently 161 credit unions with headquarters in New Jersey providing financial services from more than 300 branch office locations to more than 1 million members, according to Credit Unions Online. These New Jersey credit unions also have more than $13.78 billion in assets.

One of the biggest focus areas that NJCUL is working on, as well as individual credit unions across the state, is increasing brand awareness about the industry. This entails: educating the general public about what exactly credit unions are, what services they offer, benefits compared to other financial institutions, staying on the cutting edge of technology when it comes to mobile banking services, and the fact that the barriers to entry are less restrictive than many perceive.

By Members For Members

“The personal touch you get at a credit union makes all the difference in the world,” Frankil says. “Typically you are going to see more favorable rates and lower fees at a credit union [compared to a bank] because our structure is a cooperative. We don’t have shareholders – our owners are our members. Our boards don’t get paid, and are volunteers who get elected by their fellow member owners.”

Arlene Bernard, CEO of XCEL Federal Credit Union, based in Bloomfield, says that while credit unions are competing with banks in some regards, it’s not necessarily a direct competition.

“We focus on the individual whereas many of the big banks want the commercial customers – the million- and billion-dollar customers. Here, we like to focus on the individual and stay with that member through their whole life,” Bernard adds.

While a credit union uses the money that its members deposit to make loans to other credit union members, much like a bank does, the difference is that since a credit union is a non-profit entity, it can use what would normally be considered “profit” and use it to help its members, providing lower rates on loan products, better rates on savings products as well as lower fees.

“I think there’s a value to banking as well. If we didn’t have the banking institutions, there wouldn’t be enough capital and ability to lend for all the needs that are out there, so you do need both, but I see us being a great alternative,” says Ty Muse, president and CEO of Visions Federal Credit Union, which has 11 locations in New Jersey.

Muse suggests that all potential customers should try to become a member of at least one credit union.

“They can still keep their bank accounts, but they can then leverage and compare so that they can always be making an informed decision and ensure that they are always getting the best price possible,” he says.

Impact of Storytelling

One of the most attractive appeals of a credit union is its direct connection to its community. Simple yet impactful storytelling is going a long way in educating the masses on what these entities offer, as well as providing insight into the history of the credit union movement.

“We are showing the credit union difference by virtue of our origin stories,” Frankil says. “This is a theme that you’ve seen in an array of consumer advertising and marketing across the country. It especially speaks to millennials who want to know where their products and services are coming from.”

NJCUL’s Legacy Series – available on the association website – showcases dozens of unique and compelling stories on how various credit unions were formed.

“For example, there are neighborhoods in New Jersey that are underserved – for various reasons – where the individuals living there got together and said, ‘We are taking our future into our own hands. Nobody else is providing banking services for us so we are going to do it ourselves.’ And that is how their credit unions got founded,” Frankil explains. “Every story is a little bit different, but all have that common thread where a bunch of individuals that worked together or lived near each other got together, pooled their money, and formed a credit union to provide banking services.”

It is also important for credit unions to continue to add younger members in order to sustain themselves for the future.

In February, NBC (NY) Employees Federal Credit Union merged with XCEL Federal Credit Union. While this merger has numerous benefits for XCEL, one such benefit is access to NBC’s younger, millennial members.

“We feel that this presents an opportunity, and will allow us to enhance and grow our credit union for the future,” Bernard says. “As XCEL’s membership is aging, NBC will give us a lift to continue on with a new crop of younger members.”

Business Services

Of course, credit union services aren’t limited to individuals. In fact, many credit unions across the state offer an array of businesses-centric services and can even help small business owners secure loans that they may otherwise have struggled to secure elsewhere.

“We are here for the local plumber and the local landscaper to make those [business] loans available to them,” Bernard says.

In fact, when Frankil became president of NJCUL, he says that nearly 80% of the association’s member credit unions were not offering business loans. This was for a variety of reasons including, but not limited to: being too small, not wanting to build up a new marketing and business development infrastructure, or having a different field of membership.

“By virtue of the collaborative nature of our industry, we were able to create the business lending collaborative njBIZloan.com. No matter where you are in your spectrum of being a credit union, we can help you,” Frankil says. “We have lead lenders across the state who are taking loans and funding them, and we can then participate them out to smaller credit unions that would be interested in buying pieces of business loans. It’s a win-win-win for everybody on our end, including a fourth ‘win’ for a small company that is looking for a loan that can’t get one from a bank for various reasons or doesn’t want to pay the extra fees.”

The njBIZloan Connection began in April 2018, and since then, nearly $75 million of deals have gone through the pipeline, according to Frankil.

New Jersey Credit Union League, Pennsylvania Credit Union Association Merger

In April, it was announced that NJCUL and the Pennsylvania Credit Union Association (PCUA) would merge to create a new, single trade association – a decision that was driven by the opportunity to provide added value to the organizations’ respective members, according to Frankil.

“From our very first meeting [with PCUA] we said, ‘if we were to do this [merger], it really has to change the landscape in terms of the value that we can provide to our members. The whole has to be greater than the sum of its parts,’” he says.

Frankil says he defines value as a solid return on investment.

“Anybody that is looking to join an association is looking for return on investment, and there are two types – soft [returns] and hard [returns],” he explains. “Soft returns are things like our advocacy efforts in Washington D.C., Trenton and Harrisburg P.A., or our brand awareness efforts to educate consumers on what a credit union is. Hard returns include the numerous programs that we’ve incubated that give our members an opportunity to recoup the cost of their investments and dues on multiple levels.”

Both Bernard and Muse agree that the combination of the two associations will be a net positive for the member credit unions.

“Both organizations have different strengths, so now being together it becomes a greater one-stop resource for all the credit unions to leverage,” Muse adds.

The transaction is expected to be effective January 1, 2020.

Conclusion

Clearly, credit unions can meet the various needs of individuals and businesses alike and serve as a solid alternative to consider when looking at financial services ranging from securing a loan to simply opening a new account.

Credit unions are also deeply committed to the communities in which they reside, and are focused on giving back to strengthen their surrounding areas and contribute to building a better future.

Financial literacy and education is just one example of the corporate stewardship efforts of credit unions. For instance, Vision Federal Credit Union currently has seven in-school branches in various high schools in both Pennsylvania and New York, with plans to get involved in New Jersey school systems in the future.

“We decided to double down in our presence in high schools over the last couple of years with the hopes of adding two in-school branches in New Jersey high schools where students work paid internships,” Muse says. “We train them and give them job skills and tools that help their resume when applying for college. We also have a scholarship program that students can apply for.

“People at credit unions truly believe that they make a difference,” Muse continues. “We feel like we are really helping people, which makes the job so much more rewarding.”

To access more business news, visit NJB News Now.

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