PANAMA CITY, Fla.—Seeking to lower its costs per transaction and nudge a stubborn group of brick-and-mortar-using members to digital services, Tyndall FCU took a new approach to its year-end giveback.
Moving away from the typical annual reward based on deposit and share relationships, the $2-billion CU handed out $11 million in late 2021 based on the following structure:
- Silver Level 1: $50 to members who logged into online banking a minimum of four times
- Gold Level 2: $250 to members who made a single direct or mobile deposit greater than $250 and swiped their debit or credit card a total of 15 times (+ the Level 1 requirement)
- Platinum Level 3: $400 to members who made an internal or external transfer and/opened a loan (+ the Level 1 and 2 requirements)
CEO Jim Warren said the change was made for several reasons, including not only reducing the CU’s cost per transaction and shifting more transactions to digital, but also to make the year-end giveback sustainable.
More Sustainable
“We’re not so much concerned about the dollars we save, but these new giveback rules make this program more sustainable,” said Warren. “This will encourage more members to use e-services in the future—that saves us money and generates revenue for the membership. The whole idea is to make this sustainable. Our job is to create sustained value and make credit union membership more meaningful.”
A significant majority of Tyndall FCU’s 115,000 members has been using digital services, explained Warren, who added there has also been small percentage of account holders who have been resisting making the shift away from branches.
“For years our biggest branch has been the smartphone,” said Warren. “But we wanted to nudge more of our members in the right direction. ”
Warren said the pandemic “woke up” the credit union in Florida’s panhandle to the fact members were moving away from using branches for simple transactions. So, the organization looked at its transaction data more closely.
“That really let us know members don't care about our branches anymore—not the bulk of them,” said Warren. “We just had to encourage change in our older members who are the most resistant, who are the loudest and who call in every day asking if their check has cleared and ‘What's my balance?’…They were doing that over and over again. This program woke them up to the fact they don’t have to use our branches for these simple transactions.”
Bottom Line Effect
For the credit union the change in member behavior is having a measurable bottom line effect. Warren said its cost per transaction, when members are even more fully using digital services, will drop to 25 cents per transaction from about $1.50.
Not only will that give members more cash back at the end of the year, it will allow the credit union to cut and reduce more fees. At the start of 2022, Tyndall eliminated all account maintenance fees.
Tyndall FCU’s operating expenses to average assets dropped in 2021 to 2.12% from 2.47% in 2020. Capital held steady at 9.19%. Net income declined to $7.9 million last year, from $9 million in 2021.
The new giveback program was introduced with a few months remaining in 2021 and was heavily promoted to encourage members to use more digital services in order to increase their year-end reward.
“As a result, we were able to drive real change,” said Warren.
The CU established benchmarks at the start of the campaign. By the end the effort it increased the number of members qualifying for Level 1 by 2%, increased Level 2 by 6.33%, and increased Level 3 by 13.6%.
‘Means a Lot to Them’
Nearly 50,000 Tyndall members received a give-back last year—which was paid out right before the holidays.
“For many, it was substantial amounts,” said Warren. “Over half our members are low income—we're a low-income designated credit Union—so, 70,000 to 80,000 people that we serve don't have much of a savings. This bonus means a lot to them.”