As the new year begins, it’s a good time to ensure your credit union is taking full advantage of the National Credit Union Administration’s recent changes to field of membership rules. Let’s take a look at five major areas with the greatest potential for impacting positive growth.

1. Core area service requirements

Various changes were made to core area service requirements – most notably, allowing credit unions to focus service to a portion of a statistical core without the perhaps overwhelming obligation to serve a much greater core area, thereby creating opportunities for more organic growth consistent with each credit union’s charter. According to the NCUA, the rule also allows for segmenting population of a core area without regard to the 2.5 million cap. Credit unions can now serve combined statistical areas so long as they stay under the 2.5 million-population cap, and may also apply to serve adjacent areas, provided narrative submission requirements are met.

2. ‘Rural district’ definition expansion

The definition of a “rural district” has been expanded from 250,000 people to 1 million, a move which potentially gives credit unions a larger base for marketing products and services to potential members. Also, multi-state expansion limits have been clarified. Credit unions may serve population areas across state lines, but only if they border a state where the credit union’s headquarters is located. This change further expands the potential field of membership.

3. Redefined underserved areas

Concentration ratios were redefined in such a manner that gives credit unions greater flexibility for defining an area as underserved. This opens up new opportunities for marketing to potential members that were previously considered off limits due to the classical definition.

4. Multiple common bond rules relaxed

This membership requirement has been relaxed to allow for further member expansion. Credit unions may now pursue as members employees of businesses who are under contract with sponsor groups, rather than just those members of the sponsor group itself. This could open up hundreds or thousands of potential new members for your credit union to serve.

5. Trade/Industry/Profession common bond rules expanded

This is exciting news. Did you know you may now market to employees of entities that have a strong dependent relationship with other entities within the credit union’s Trade, Industry or Profession Charter? This opens up a new world of marketing possibilities.

Essentially, with the rule change, there are many new ways to expand your field of membership. There is one question you should always be asking. That question is “Who can we serve?”

Expansion Strategies

So, let's talk expansion strategies. Are there things you can do today that could affect your growth in 2018? The answer is “Yes!” The key to expanding your field of membership lies in the strategy you develop. If your credit union is located in a rural area, perhaps you can take advantage of the rural rule change by developing a marketing plan targeting those 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. Here are three great 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. You might find the same marketing tactics can work for the same demographic in a new subset. You may need to retool your marketing efforts for a different demographic, yet still be able to use the infrastructure of your current marketing campaign. You won't know until you take a hard look at your marketing campaign data.

2. Explore potential targets – Are there any new areas open for you to pursue? Do they line up with new core area service requirements? Explore the answers to those questions now. Every moment you wait is a missed opportunity to potentially expand your FOM.

3. Develop a marketing strategy – If new targets include new demographics, you will need to adjust your marketing strategy. Younger demographics are not attracted to the same messages used for baby boomers. Blue collar individuals will need a different marketing strategy than ones used to attract C-level clients for your lending and saving products. Look over your lending products, new member campaigns and credit card apps and craft new campaigns accordingly as you reach out to new areas of membership.

The membership rule change is the single biggest opportunity you can take advantage of to expand your field of membership in 2018. New members will provide new opportunities for lending in areas such as auto loans, credit cards, home mortgages and more. Plus, with the Fed projected to raise interest rates multiple times in 2018, expanding your field of membership will allow you to take full advantage of the potential to maximize your credit union's reach. The rule change is the perfect way to facilitate growth and further your mission of serving the financial needs of the members in your community.

Keep in mind that new members have even greater lending potential when you factor in the latest member business lending rule change. Credit union regulators are working hard to make sure the playing field is not only viable, but also competitive. 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 one 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, including online, digital and printed forms. Expanding your field of membership can be costly if your forms are not compliant with state and federal regulations.

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 answered “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. Otherwise, fines, penalties or other consequences could occur from having one bad inspection.

However, great forms and an excellent member-expansion strategy will help you capitalize on the opportunities coming in the year ahead. The rule change is an chance to expand your credit union with new members and new markets for future generations.

Richard Gallagher

Richard Gallagher

Richard Gallagher is CEO of Oak Tree Business Systems, Inc.