Modern Banking
Lessons from a
Credit Union

csybesma – Person

The following commentary was taken from an interview on October 2, 2018 with ORNL Federal Credit Union’s two most senior leaders: President and CEO Colin Anderson and Senior Vice President and Chief Operating Officer Dawn Brummett.

It’s a good time to be a member of ORNL FCU (Oak Ridge National Laboratory Employees Federal Credit Union). Its 164,000 members have shared in a windfall – a $3 million special dividend distributed among the membership. This is the first special dividend for ORNL FCU since 2005, and it’s a sign of things to come, says the senior leadership.

“We can thank an improved efficiency ratio for the dividend,” said ORNL FCU President and CEO Colin Anderson. “Streamlined operations allowed value to be returned to members,” he said, noting that he expects to continue the positive trajectory. “It played into how we budget,” Anderson said. “We focused on a strong balance sheet, good capital and sustainable earnings. This is very important in order for the dividend to be payable in future years.”

In an era when community banks, regional banks and credit unions are experiencing fierce competition from the giant banks – with their economies of scale and head start in digital banking – ORNL FCU stands apart. It is a growing, thriving credit union that manages to out-deliver the multi-national banks. Additionally, its deep ties to the community add purpose and mission to those who choose ORNL FCU.

“There will always be competition, but we still believe that credit unions offer significant value to members,” Anderson said. “We’re able to offer better rates, lower fees and a very good product set. Our loans compete extremely well. On top of that, we have a level of service and community support within our 16-county charter that make ORNL FCU the natural choice.”

Improving the efficiency ratio – how they did it

In 2013, we got feedback from members saying that they really needed more from their digital banking experience…In some cases, we needed to change direction and bring on new partners. This is what played out in digital banking.

Measurably increasing efficiency can be an elusive task for regional or mid-sized banks and credit unions. “One of the things we did was look at all of our delivery channels,” said ORNL FCU Senior Vice President and Chief Operating Officer Dawn Brummett. “Everything was on the table. We asked ourselves basic questions including where we needed more ATMs, where to locate branches, and how to improve our call center.”

ORNL FCU also invested in a digital banking platform that rivals those of the giant banks. “In 2013, we got feedback from members saying that they really needed more from their digital banking experience,” Brummett said. “We had to make some decisions about where our various partnerships were taking us and whether they could get us to the next level. In some cases, we needed to change direction and bring on new partners,” she said. “This is what played out in digital banking.”

“The Board of Directors was extremely supportive of the change in direction and encouraged us to enhance our digital channels. This not only pleased our members and employees, it paid off in terms of efficiency and significantly improved our bottom line. Digital was an important investment,” she said noting that ORNL FCU’s largest “home branch” isn’t a physical location at all. It’s digital banking. “We needed to evolve with our members and put together the right roadmap to do that,” she said.

“Our digital banking adoption rate has now tripled, and we are fully participating in today’s digital economy,” Brummett said. With $2 billion in assets, ORNL FCU is poised to continue attracting and retaining members.

Sharing the dividend with its extended membership – the community

As ORNL FCU turns 70 this year, the management team saw an opportunity to boost its commitment to local nonprofit community partners. They added $70,000 to their community investment budget and launched the Community Giveback & Investment program where members were invited to nominate their favorite local charity. Seven were selected to receive $10,000 each. On top of that, they poured an extra cup of goodwill into the community by sponsoring a free concert series.

“Exciting things happen when members have full access and full visibility to everything going on,” Anderson said. “We expect to continue returning value to members and, more broadly, to the communities in which we operate.”

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csybesma – Person