Reaching Out

CUs take to ferries and float planes to serve indigenous communities.

September 23, 2011
Reaching Out

  FOCUS

  • CUs worldwide say there are more similarities than differences when it comes to serving indigenous versus nonindigenous people.
  • An Australian CU uses talking billboards to accommodate members who neither understand English nor read or write their native language.
  • Board focus: Financial education helps CUs minimize loan delinquencies and charge-offs.

 

Alaska’s Inside Passage is a 500-mile stretch of islands noted for its intriguing waterways, pristine forests, abundant wildlife, and captivating glaciers.

There’s also rain—12 to 14 feet per year on average. And during winter, sustained winds of 50 to 60 miles per hour aren’t uncommon, grounding the area’s primary modes of inter-island transportation—ferry boats and float planes.

“If the weather is bad, we don’t get off the island,” says Nathan Fawcett, executive treasurer of the Metlakatla Indian Community, Alaska’s sole Federal Indian Reserve. It’s located 16 seafaring miles from the nearest town of Ketchikan. “We’re pretty remote compared to the lower 48.”

Metlakatla’s 1,400 residents felt especially isolated in 2005 when Wells Fargo closed the community’s only financial institution branch. Consumers couldn’t cash their paychecks and businesses couldn’t make deposits without taking expensive, time-consuming ferry or plane trips to Ketchikan.

Enter Tongass Federal Credit Union, based in Ketchikan, which took over the vacant bank space. “No one else would consider a branch, so we did it,” says Susan Fisher, CEO of the $53 million asset credit union.

The decision turned out to be the best thing for both the community and Tongass Federal. Members have convenient access to financial services and the credit union has opened 900 member accounts in Metlakatla, including several held by Fawcett, who also serves on a Tongass Federal advisory board. The credit union is building a full-service branch on the island.

“I’m glad Tongass is here,” Fawcett says. “We have a vested interest in it—we’re shareholders. The better we do, the better Tongass does.”

Despite the challenges facing many indigenous communities—generally higher rates of poverty and unemployment—credit unions worldwide say there are more similarities than differences in serving indigenous versus nonindigenous populations. Although physical environments can be extreme, serving any new group requires fostering trust and following through with excellent, affordable, and convenient products and services.

Financial education

Because the average income of most Tongass Federal members is “staggeringly low,” the credit union embraces financial education, Fisher says. “People who are in monetary crisis sometimes don’t have choices or even know what options are out there—they’re bailing as fast as they can but the boat is filling rapidly.”

She recalls a former principal telling her not to bother setting up a school savings program on Annette Island because “these kids don’t have any money.” Fisher did so anyway and the students in Metlakatla now lead the credit union’s savings program, which encompasses 13 schools on three islands. The program overall has $43,500 in savings.

“These ‘kids’ do have money and are being rewarded for managing it well,” she relates.

A grant from the National Credit Union Foundation several years ago enabled Tongass Federal to hire a financial counselor for one year in Metlakatla to educate members about credit and money management. Fisher credits this effort for the credit union’s low delinquency and charge-off rates.

“Just look at our call report and admire our extremely low charge-off rate,” she says. “Our members pay their credit union first, even during the roughest economic times.”

Tongass Federal’s ratio of charge-offs to average loans is 0.2%, compared with its peer average of 0.83%. Its overall loan delinquency rate is 0.42%, versus 1.55% for peer credit unions.

Next: ‘Winter road season’



‘Winter road season’

As in Alaska, the biggest challenge some credit unions find in serving indigenous populations—known in Canada as First Nations people—has more to do with far-flung geography than lack of member wealth. Some areas are accessible only by plane.

“During winter, the government builds ‘winter roads,’ which enable residents to drive to Winnipeg” and get supplies, says Paula Nelson, general manager of $19.6 million asset (Canadian) Me-Dian Credit Union in Winnipeg, Manitoba. “Travel by winter road is more affordable than by plane. The winter road season depends on the weather—a cold winter extends access by road longer than a warm winter.”

Fortunately, harsh winters rarely impede the services Me-Dian provides. Except for a small branch offering teller services to members who live on the Grand Rapids reserve, most members receive services electronically. Members from other reserves who need more extensive services typically visit the credit union only once a year. More than half of the 3,251 First Nations members reside in metropolitan Winnipeg.

Me-Dian—one of 57 credit unions serving Canada’s Aboriginal population—also is  the oldest. It opened in 1978 as Métis Credit Union with a closed bond to serve the Manitoba Métis Federation—a group made up of racially mixed people of French-Scottish and Aboriginal descent.

“The Métis Credit Union changed its name to Me-Dian Credit Union around 1980,” Nelson explains. “Membership would then not only service the Métis, but also First Nations and Intuit people. Recently, the credit union changed its bond to include associate members who are of non-Aboriginal descent.”

Me-Dian offers standard credit union services, including loans. Some financial institutions won’t make loans to members who live on reserves because they have no authority to repossess collateral on sovereign land if the borrower defaults. “We’ve been lending on the reserves for years without major problems,” Nelson says.

One of the biggest problems the credit union faces is serving a population that traditionally doesn’t save, Nelson says. “Encouraging some members to save can be difficult.”

For some Aboriginal people, lack of savings isn’t a problem due to influxes of capital from land-claims settlements, according to a report from Credit Union Central of Canada. In addition, the Aboriginal population is projected to grow to 4.6% of Canada’s overall population by 2026—a 22% increase from the 2006 census and a 63% increase over the 1996 census. During that same period, Aboriginal communities are expected to account for 22% of employment growth.

“These trends represent tremendous opportunities for credit unions to demonstrate the cooperative difference by providing inclusive and much-needed financial services in ways that respect and acknowledge Aboriginal peoples’ aspirations,” Credit Union Central of Canada reports.

Next: Talking billboards



Talking billboards

In Australia, Traditional Credit Union (TCU)—the country’s only Aboriginal-owned financial cooperative—faced an unusual dilemma: how to market services to members who neither understand English nor read or write their native language.

The answer: Apply the people’s own communications method and use pictures and storytelling to get their messages across.

Darwin-based TCU was founded in 1994 to serve Australia’s Aboriginal population scattered across the country’s Northern Territory, known locally as the Top End. At one time, the Aboriginal population spoke as many as 200 languages. But in recent years, that number dropped to about 20 languages. Most of these languages are based on oral traditions without corresponding written versions.

To meet the needs of native speakers of Burrara, Djambarrpuyngu, Kriol, Mawng, and other tongues, TCU developed One Mob, One Talk—a series of “talking” posters to market its various financial products.

The billboards use an electronic solution developed by OneTalk Technology, an Australian firm specialized in communicating with Aboriginal populations in their native languages. Each One Mob, One Talk poster illustrates a certain service, with corresponding audio cartridges describing the service and how to use it in the members’ native language.

As the products change, new images can be posted and audio cartridges can be inserted to keep the display current. “For staff and members who speak English only as a second or third language, the posters help them grasp simple concepts about banking and money management,” says Anne Shew, TCU’s training and development manager.

Although the posters help educate members about financial services, branch staff still struggle with longstanding cultural issues about money that affect the population. “Part of the Aboriginal culture is to share wealth with family members in need,” says Robin Lacey, human resource manager for the 7,000-member credit union. “How much you can demand depends on where you are in the family hierarchy.”

By cultural standards, what you have to share also covers what you have access to, which includes loans through the credit union. A family member who can get a credit union loan is expected to do so, then share the proceedings with those who can’t get loans.

Failure to do so can result in a “shaming” of family members, says Morgan Hoyes, TCU’s business development manager. “There’s often pressure exerted by family members to do wrong, and that’s called ‘humbug,’ ” he says, describing an Aboriginal slang term for begging. “It’s as if they’re saying ‘I’ve done wrong with my money, and now I expect you to do wrong with yours.’ ”

TCU promotes financial education within the context of cultural issues, something Hoyes says government programs don’t do well. The credit union has even created a “deflection” program to protect members from having their transaction information shared with family members.

TCU believes it’s making progress in these and other areas of financial education, but the going has been slow, Lacey notes. “It’s not going to happen overnight.”

Next: 'Just like you' 



'Just like you'

Because half of First American Credit Union’s member households earn less than $15,000 per year, the members’ biggest need is for check cashing, checking accounts with debit cards, and small personal loans—sometimes for as little as $100, says Rico Bautista, president/CEO of the $75 million asset credit union.

The Casa Grande, Ariz., institution serves the Navajo Nation and other tribes. Their only financial services alternatives are payday lenders and title loan companies. “We still provide lines of credit or personal loans for $100 or $200 even though many financial institutions don’t,” Bautista says. “They’re not profitable, but we focus on what our members need and we’ll continue to offer such services.”

First American also offers “free checkless checking” for members who’ve had credit problems in the past. The account provides a debit card but doesn’t allow check writing.

The credit union recently launched a rebranding effort with the slogan, “We’re just like you!” It’s designed to tie First American to the communities it serves.

“We treat all our members the same, regardless of their occupation, income, or needs,” Bautista explains. “We treat our members just as we’d like to be treated.”

The biggest mistake mainstream financial institutions make when trying to serve this market is trying to mold consumers to their business model, he adds. “Instead, they should genuinely approach these markets based on their needs and wants.”

That approach has worked well at Tongass Federal. “Many financial institutions see native communities as high-risk,” Fawcett says. “But if they put faith in the community, the community will respond in kind and be very loyal.”

Serving indigenous people “makes us stronger, better, and cohesive as a financial cooperative,” Fisher adds. “There really is strength in numbers, and we need everyone.”


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