Competitive Products and Interactive Education are Directives at This Digital-First Credit Union

In a Nutshell: Where you put your money as a financial institution says a lot about your priorities. In Norfolk and Middlesex counties, the two most populous counties in Massachusetts, Direct Federal Credit Union delivers exceptional products and rates to more than 30,000 members, including many in need of a financial head start or a chance to rebuild. But the digital-first credit union doesn’t stop there. Instead of offering an overabundance of physical branches, it directs resources to financial education and charitable support, helping increase opportunities in a community of millions.

Direct Federal Credit Union takes a digital-first approach to serve more than 30,000 members who live, work, and study in the two most populous counties in Massachusetts, Norfolk and Middlesex.

A credit union of Direct Federal’s size — about $800 million in assets under management — typically maintains at least six to eight branches. Direct Federal has one.

Kristen Johnson, Senior Vice President, Employee and Brand Experience, said the lower overhead translates into better deposit rates and lower interest rates for Direct Federal’s more than 30,000 members.

“Our secret sauce is we don’t have the operational expenses or fancy branch networks of our competitors,” Johnson said. “We’ve invested in becoming a forward-thinking credit union that can truly serve our members however they want, wherever they want, and whenever they want.”

It also means more opportunities for the credit union to put its people-first philosophy into action in the more than 100 towns comprising Norfolk and Middlesex counties.

“We view it as our duty to ensure all our community members have the tools and resources they need to make sound financial decisions,” Johnson said. “There’s so many positive things a credit union can do when it partners with local schools and local organizations.”

We frequently reported about credit unions needing to pivot to serve members remotely during the COVID-19 pandemic. In Direct Federal’s case, the transition went ultra-smoothly because there wasn’t much need for one.

“We were already used to servicing our members digitally, and we didn’t have a big branch network we had to close down,” Johnson said.

Those interested in a traditional banking experience receive a warm welcome at Direct Federal’s full-service branch in Needham. About 90% of credit union members use digital banking.

For many members, the benefits of credit union membership start when transferring a credit card balance from another institution to Direct Federal. Direct Federal offers 0% on balance transfer amounts for six months.

However, because it understands that some may not repay their balance in full within that time frame, it offers an unusually low interest rate after the six-month introductory rate expires.

Other members arrive as new-to-credit customers — typically university students just starting adult life. Members who come to the credit union with thin credit files use the Smart Start program.

Direct Federal offers those members a top-tier rate typically reserved for those with a credit score of 800 and above. They also gain approval for auto loans and credit cards. The controlled environment gives these zero-credit-score members the opportunity to build a foundation of financial responsibility on which to base their future success.

Not all Direct Federal members are new to the financial scene, of course. For members with more seasoning, Direct Federal recently demonstrated its penchant for flexibility and responsiveness by launching a streamlined home equity line increase program for existing home equity lines.

“We created an easy five-minute process for members to apply for an increase, with the opportunity to get a lower rate if they did so,” Johnson said.

Johnson said Direct Federal’s quick adjustment to changing market conditions in its housing market typifies its ear-to-the-ground approach.

“When we see different trends in the industry and notice things are happening, we’re able to create products and make changes easily,” Johnson said.

However, when it comes to financial education, the more things change, the more they stay the same. There’s always a greater need for more effective ways of reaching students, workers, and other community members with news they can use.

Fortunately, banks and credit unions nationwide, including Direct Federal, are stepping up to fill the financial education gap. Top of mind as Direct Federal reaches out to students and community members is meeting people where they are on their financial journey with information they can use to get to the next level.

That commitment energizes many Direct Federal employees to take advantage of a credit union program that allows them to become certified financial counselors.

Armed with expertise, employees at all levels of the institution’s organizational structure can consult with members on a one-on-one basis to help them tackle financial hurdles, manage change, and save for a more secure future, whatever that might mean in each case.

Digital financial wellness is also part of the credit union’s commitment, and that’s not surprising considering its digital-first approach. A partnership with the financial wellness provider Banzai brings interactive lessons on money management topics, tools, and resources for real-world experience.

“They’ve helped us with resources to deliver in-person seminars and partner with area schools to get into the classroom,” Johnson said. “When we meet with the teachers and hear about what their needs are, that helps us get to the root of what they need from us as their local credit union.”

With Direct Federal employees as certified financial counselors, casual conversations with members, workers, students, and seniors can be opportunities to introduce products and services to achieve financial success.

“We’re listeners — we have conversations to truly understand members’ needs before we offer any suggestions on our part,” Johnson said. “It’s about understanding their individual situations rather than taking a cookie-cutter approach.”

We may think of Silicon Valley in California as America’s chief tech innovation hub, but there’s a reason the Polaroid Corporation started in Cambridge. Norfolk and Middlesex counties comprise the Greater Boston area. Harvard and MIT are the area’s most prominent among many colleges and universities. Tech startups abound.

But in and around those 100 towns in Norfolk and Middlesex counties that we referred to earlier, there are more than 2 million people. Direct Federal partners creatively with area nonprofits to help those in need through charitable giving and employee volunteerism.

Johnson stressed that Direct Federal isn’t a check writer but a partner in charity. It also brings organizations together to create a whole greater than the sum of its parts. One nonprofit, Storytime Craft, distributed children’s books in areas where public libraries were scarce.

However, the nonprofit’s resources were also scarce. In fact, one woman did most of the work out of the back of a Toyota Corolla. Direct Federal stepped in to purchase a delivery van for her.

The van enabled Storytime Craft to venture into additional area schools. Soon, one school reached out, wanting her to provide some financial literacy instruction, and Direct Federal partnered with her to produce a financial literacy event for hundreds of students.

She then became a member of Direct Federal because she thought of the credit union as a trusted, valued partner. Employees have volunteered with her organization, putting together book bags for kids.

“We just recently had books Storytime Craft donated featured in our branch, available for children and the community to take home,” Johnson said. “We really look to our community partners to attack things from all angles.”

That’s one example of the many small miracles that doubtlessly take place routinely due to Direct Federal’s direct approach. Johnson said another program, Vocal for Local, is an example of Direct Federal providing the same to local businesses.

“The more we can help small businesses, local organizations, and nonprofits get their names out there and be part of our credit union community, the better,” Johnson said.