By Kathryn Davis, CEO, BALANCE Corp.

Financial inclusion is a topic near and dear to my heart. It’s been the driving force in my career and actually what attracted me to working in the credit union industry in the first place. Every credit union has in its legacy financial inclusion – founding members could not get access to useful and affordable products to meet their needs. I’m often asked by credit unions if they should be concerned about forming financial inclusion strategies if they are serving a membership that isn’t unbanked or underserved. My response generally falls into two categories:

• Who are you not serving because they couldn’t open an account with you?
• Where do your members go when you turn them down for a loan?

Generally, they don’t have an immediate answer, because they never looked at their business this way. In fact, often times a credit union doesn’t think a focus on financial inclusion applies to them, but it applies to all of us working in the financial services industry. In the United States alone, 45 million Americans do not have access to credit because of no credit, thin credit, or poor credit. We can supply this population with all the financial education videos in the world, but without access to safe and affordable products to facilitate day-to-day living they will continue to be forced to use high cost financial products.

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So where do you even begin to address this gap at your credit union? Start with looking at your own membership – who are you serving 100% and who only has the ability to use 20% of your services? Look at where else your members are going – do you see title loans and payday lender transactions? Do you see other high-cost and risky transactions taking place outside your organization? Tackle them one at a time to serve the members you already know.

I’m so proud of the many BALANCE partners who offer payday loan alternative products to make sure their members don’t end up in the hands of predatory lenders. These credit unions have created a cost-effective and transparent product to fill an immediate need but have also created success mechanisms to ensure this product isn’t used as an ongoing solution. Many credit unions also have created Second Chance or Fresh Start checking products but didn’t stop with the creation of the product. They also added product requirements of education and budgeting, focused on long-term success that is sustainable for the member.

Several months ago, I had an opportunity to visit CAHP Credit Union in Sacramento, Calif. It is a SEG-based credit union, serving the California law enforcement community. I was in awe of their total passion and commitment to serve their members, and as I reflect on that visit, the credit union was focused on financial inclusion, but not in a way that requires a separate strategy to find underserved or unbanked members, it’s simply how they do business.

“As you look at financial inclusion for your membership I challenge you to think outside the box on how you could serve a member.”

Brad Houle, president/CEO of CAHP Credit Union invited me to listen in on a meeting in which managers were reviewing loans that had been denied. The loan they had before them was from a long-time member, who had very bad credit, a high debt-to-income ratio, and what appeared to be inconsistent employment. Yet despite seeing all of that bad news on the application, the history of the member showed he and his wife had never defaulted on a credit union loan, had several deposit products that had never gone negative, and past direct deposits were consistent and large.

Brad challenged the management group to phone the member to find out why his profile looked the way it did, why he was in need of a loan and how he intended to pay the loan. One of the managers phoned the member (with all of us quietly listening) and indicated she was reviewing his loan request and had a few questions. What we learned is that the member’s daughter had been in a near-fatal car crash 12 months earlier and his wife had quit her high-paying job to care for their daughter. He was asking for help to consolidate debt so they could make one lower payment and begin to crawl out of the debt that this medical crisis had caused them. He went on to share that he had grown children living in his home who helped with expenses, including the mortgage and he also worked a side security job that was being paid in cash. The manager thanked the member for his information and let him know she would get back to him with a decision.

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When the call disconnected Brad told his management team he deferred to them as to whether or not to make the loan, but he reminded them who their credit union serves and why their credit union exists. As you can imagine, the manager decided to do the loan and called the member back, so we all got to hear the good news delivered. The member (who I can only picture in my mind as the most serious highway patrol officer) sighed and what sounded like extreme emotion in his voice expressed his gratitude to the credit union and shared that they could never know how much this meant to him and his wife, and how it will help them get back on their feet. I’m not sure there was a dry eye in the room, but it was a very powerful reminder of how this one act would be changing the lives of this family.

I know not every interaction goes like that and in some cases maybe the loan would not have made sense, but as you look at financial inclusion for your membership I challenge you to think outside the box on how you could serve a member – maybe it’s not the full loan, but a portion, maybe it’s finding a partner who will provide them a safe loan in your place, or maybe it’s simply giving them the ability to use a transaction account that no one else would give them the chance to use. Financial inclusion is in every credit union’s DNA, and I think sometimes it’s easy to forget that or even over think it. I challenge every credit union to think about how they could serve anyone that was turned away – that’s what ‘people helping people’ is all about.