Purdue Federal: Shared Branching Helps Increase Member Retention by 25%
Through its shared branch network, Purdue Federal members used over 2,000 different branches from 745 credit unions across 20 states to make deposits and conduct other transactions.
In the not-so-distant-past, Purdue Federal Credit Union ($641 million; 59,448 members; West Lafayette, IN) experienced a couple of issues when it came to increasing its member retention. The persistent issues were Purdue’s students who leave the campus every summer and the graduating seniors who leave the campus for good to pursue their careers in other parts of the country. This rite of passage for these members made it challenging for Purdue Federal to retain them as they moved on in their financial life cycle from students to young professionals.
To increase its member retention, particularly with its graduating students, Purdue Federal looked to shared branching as a smart and cost-effective means of retaining its members no matter where they reside nationwide.
“While we strongly marketed our online and other remote access services to members who left our local area, we found there were times when they preferred over-the-counter services,” explains Gail Koehler, Executive Vice President for Purdue Federal Credit Union. “That’s why we looked into shared branching. It provides the ability for our members to affiliate themselves with a ‘Purdue Federal’ branch that is near them after they leave school.”
Purdue Federal discovered Credit Union Centers Shared Branching Network and incorporated the service in the mid-‘90s for its members to use for enhanced access to financial services. Today, the credit union benefits from the network’s more than 4,000 shared branches nationwide – more than 200 branches in Indiana, alone, which bode well for the credit union’s student members who remain in the state after graduating.
“As an Indiana credit union, this was the logical choice,” says Koehler. “We were actually involved in the early conversations among our state’s credit unions about forming a shared branch network for our state.”
Since incorporating Credit Union Centers’ shared branching, it has become a way for Purdue Federal to successfully retain members who find it easy and convenient to continue their accounts with the credit union by using shared branches – no matter where they live throughout the country. Based on the continually increasing numbers of transactions the credit union experiences through this service channel, it clearly provides a needed service for its members.
Among numerous student retention examples, Koehler cites an instance of how effective shared branching has been for the credit union’s graduating members. One particular Purdue University student opened an account at Purdue Federal during his freshman orientation in 1999 and has used the credit union exclusively since then. Since graduating from Purdue in 2004, he has not been in a Purdue Federal branch. However, he has been able to obtain a car loan and a mortgage from the credit union and still uses the same checking account that he opened in 1999. By using shared branching as well as most of the other electronic channels offered by Purdue Federal, he has been able to actively use his Purdue Federal account even while relocating twice to two different states with his employer.
“Without all the remote access that Purdue Federal provides him,” she says, “I am certain that as soon as this student left West Lafayette, Purdue Federal would have lost his account just when he was entering his prime borrowing years.
“Not only does shared branching make sense to increase our member retention among our students, but we also felt it would benefit the entire industry as a means of competing with large financial institutions through our nationwide branch services,” Koehler adds.
The shared branching network has helped Purdue Federal improve its member retention, as the credit union continues to market shared branching very heavily to all of its students preparing them for the future. One of the primary messages to this group is to remain with the financial institution because of the established relationship. “We discuss shared branching when student members come in to close their accounts due to the fact that they are relocating,” she says. “As a result, we have been relatively successful at retaining those accounts.”
According to Vicki Sims, Business Analyst for Purdue Federal Credit Union, who is involved with the credit union’s account retention efforts, her retention specialists conduct outbound calling programs to “at risk” members who Purdue Federal believe it may lose based on their decreased account activity. This outbound calling program identified “at risk” accounts, which allowed them to share the information related about shared branching. Through these efforts, Sims discovered that the credit union’s membership between the ages of 18 and 54 are the shared branch users – equating to 6.5 percent of Purdue Federal’s 57,000- membership using shared branching.
“We have dedicated resources focused on member retention dating back to 2007,” Sims explains. “Subsequently, we have been able to increase member retention by approximately 25 percent since then – and shared branching definitely has been a big part of that number.”
Other Purdue Federal shared branch, performance numbers include: Between August 2009 and July 2010, members of the credit union deposited more than $27 million into their accounts at Purdue Federal. This is a number that wouldn’t normally raise eyebrows, but over 2,000 different branches from 745 credit unions across 20 states were used to make these deposits along with other member transaction activity. Shared branching has definitely been leveraged.
“According to these numbers, it’s clear that our outbound calling efforts and shared branch services are working nicely in a complementary fashion to help retain our graduating members,” Sims adds.