Increase Deposits While Providing a Safety Net for Members
In recent years, a concerning trend has emerged within credit unions across the nation – members' decreasing savings account balances. For credit unions, lower savings balances mean reduced liquidity and a potentially more precarious financial position. For members, it often signifies a lack of financial stability and preparedness for life's uncertainties.
Fortunately, there's a win-win solution to this issue: providing education on emergency funds. These essential savings not only provide a safety net for members but also offer credit unions a pathway to strengthen their own financial positions. Credit unions can increase members' savings by promoting the importance of emergency funds and helping members create their holistic emergency plans.
Why Credit Unions Should Provide Emergency Fund Education
More member savings means increased liquidity for the credit union. This improved financial standing allows for more competitive loan rates and the introduction of additional services, enhancing the overall member experience. Moreover, members who have the security of an emergency fund are less likely to default on loans, which further stabilizes the credit union's financial health.
Beyond the balance sheet, emphasizing emergency savings improves member financial wellness, which helps to foster a deeper, more engaged relationship with members. This proactive approach to financial wellness builds trust, which is crucial for long-term member retention. This level of engagement also provides cross-selling opportunities. Members who are actively saving and engaging with their accounts are more likely to be receptive to other financial products and services offered by the credit union, thereby increasing member lifetime value (LTV).
Strategies Credit Unions Can Use to Promote Emergency Funds
While most Americans have heard of emergency funds, many are uncertain about how much to save and how to meet their savings goals. Let’s explore the strategies credit unions can use to boost savings account balances while enhancing the overall financial well-being of their members.
Education and Awareness
Hosting educational events like workshops and webinars can enlighten members about the importance of having an emergency fund. These sessions can help members set realistic savings goals, and they can also give members tips on how to budget to meet their goals.
Alongside live events, providing online educational resources like blog posts, eBooks, and video tutorials can offer additional avenues for members to learn at their own pace and convenience.
Specialized Savings Products
Introducing specialized high-yield savings accounts designed for emergency funds can offer an attractive incentive for members. These accounts could feature benefits like higher interest rates for maintaining a minimum balance or bonuses for reaching specific savings milestones.
Another way to encourage emergency saving is through bundling savings accounts with other financial products, like loans or checking accounts, providing an easy and efficient way for members to manage multiple financial needs in one place.
Technology Aids
Educating members about setting up automatic transfers to savings accounts can increase the chances of members meeting their savings goals. Mobile apps can also be a big help to creating and adding to emergency funds by offering timely reminders and notifications to contribute to emergency funds regularly. These reminders can serve as small nudges, encouraging consistent saving behavior.
Our own financial wellness app, Paperwork, offers a turnkey solution that complements these efforts. With our white-label app, credit unions can send targeted notifications to members, nudging them to save. Our interactive modules can also guide members through the nuances of establishing their emergency funds, from setting an appropriate goal to planning monthly contributions.
If you're interested in exploring how Paperwork can contribute to the financial wellness of your credit union's members and improve your member relationships, we invite you to schedule a free demo today.