YES LIVE: Matching your brand to your target market

Pierre Cardenas believes in the power of brand. Brand is the basis of the connection between his credit union and its target demographic, which he defines, not by age, but by a preference for doing business online.

Wednesday morning at the YES Summit, Cardenas, vice president of retail for the $485 million Amplify Federal Credit Union of Austin, Texas, began by pointing out that overall credit union growth was 1.7%. But without the members who joined via indirect channels, such as through car dealership and retail lending activities, that national growth rate would have been negative.

“Financial institutions will continue to consolidate. Earnings are down, margins compressed,” Cardenas said. But the response from banks and credit unions has been curious. The expansion of physical branches continues, even though branch business growth is expected to be 0.5% over the next three years. In the same period, online business will increase by an estimated 30%.

That statistic has driven strategic planning at Amplify FCU, which has reinvented itself in recent years to reflect the new realities of consumer choice.

Once a Wells Fargo employee challenged one of Cardenas’ coworker to compare the number of branches each institution had. (Wells Fargo many mulitples of Amplify five physical branches.) The coworker pulled out his cell phone, and said, “Every one of these is a branch of ours.”

Amplify's reinvention was based in part on recognition of the way the public views credit unions. Research has shown that the most common characteristics applied to credit unions are “unsophisticated,” “blue collar,” “have to belong to some organization,” “lack expertise,” “not the same services as banks,” and “have car loans at a pretty good rate.” Given the mainly negative associations, Amplify decided to recast itself futuristically as an online institution.

“A brand is something that people think they are,” says Cardenas. “People become what they believe.” The credit union’s new slogan—“Amplify: Bank less, live more—reflects its determination to give its members the convenience of time. The decision not to include the words “credit union” in the slogan was a conscious determination to avoid any unflattering connotations.

Before the summit, Cardenas explained that credit unions need to be concerned with being relevant and convenient. It’s important, however, to be sure to understand how the target audience defines those terms. “18-to-30s have too many distractions and choices,” he said “They can access whatever they need, whenever they need it. The only market penetration that we can expect to have at this point is with those whose parents have told them to be part of their credit union.

“How long they stay, how much they decide to use a credit union will depend on the ease of use and ability to meet the need at the time. How accessible are we as credit unions? In the past we defined convenience as a branch location with close proximity to work or home. That definition is changing and will start first with Gen Yers. Accessibility is the new convenience.”

Cardenas elaborated on this during his summit presentation, showing attendees scenes of the redesigned Amplify offices. “To build a brand; build an experience,” he explains. The new interiors comprise a multi-purpose center, whose every component mobile, allowing the credit union to host social events of all kinds. Members benefit from the use of wireless connections to provide real-time video conferencing with investment and mortgage advisers in remote central location.

Amplify has also developed a proprietary personal financial management tool called MoneyTracker. The idea came from an employee, who received a green light for development without a formal business plan or ROI assessment. The tool, available free to any member with an Internet connection, provides instant account information and home deposits.

IMHO: Amplify FCU’s willingness to experiment required the whole-hearted support of leadership that is willing to accept risk. This is not to say that there was no risk calculation. It was secondary to an open-minded assessment of human behavior, based not only on statistics but also on trust in widespread anecdotal evidence.