Can One Word Make that Much Difference?
Ron Daly, DigitalMailer, Inc.
July 31, 2006

(This article was originally published in CUNA Marketing and Business Development Council.)

What if by changing one word your credit union could save $25,000, $50,000, or even more per year – without cutting member dividends or skimping on service? Too good to be true? The difference between “opt- in” and “opt-out” is one short, simple word. But it’s more than that. In the case of one credit union, the difference will amount to more than a $125,000 annual reduction in operating expense. By making electronic statements the default delivery method for your online banking members, inviting them to “opt out” instead of “opt in” for the service, credit unions are immediately realizing big savings in postage and paper.

Making E-statements the Default

The question at the center of the debate over “in” or “out” is: Do online banking members need to “opt in” or “opt out” of e-statements to stay with paper? When it comes to growing their e-statements program and saving money, smart credit unions are moving away from trying to change member behavior. Rather than asking members one at a time to switch to e-statements, these credit unions are changing their internal policies to make e-statements the default for all of their online banking members. By having members, both old and new, opt out rather than in, credit unions are knocking thousands of dollars off their print and mail monthly expense.

Credit unions are making this policy change in one of three different ways:

• Tying it to a change in vendor
• Implementing it at e-statement program launch
• Changing the policy for all online banking users through member disclosures.

Here are three credit unions that successfully switched their members to e-statements via the methods above:

Apple Federal Credit Union(vendor change). Located in Fairfax, Virginia, this credit union, which has been offering e-statements for five years, changed to an opt-out policy for e-statements this past June. The credit union’s estimated annual savings: $125,000. Member response? Thumbs up!

Apple FCU was an early adopter of electronic services, first offering online banking in 1995, so moving to e-statements was right on track with the credit union’s innovative bent. “Members have told us they like the fact that we are progressive,” says vice president of marketing Cynthia McAree. “They view Apple as innovative. And by adding e-statements to complement our other electronic services, they see that we’re committed to staying on the edge of current technology.”

McAree says one thing that made it easier to implement e-statements as the default delivery system was that Apple FCU tied the campaign to a data processing conversion. Even so, there were minimal opt-outs – fewer than 1.5%. The credit union projects that more than a quarter of its members will receive their statements electronically after the default policy is fully implemented, resulting in substantial cost savings.

“We are currently saving about 70 cents a member per month through e-statements,” she adds. “When you take that times 20,000 members, that’s a lot of money.”

Solidarity Community Federal Credit Union(program launch). This Kokomo, Indiana credit union began offering online banking four years ago, with 55% of its checking accountholders now using the program. This summer, Solidarity Community will introduce an e-statement program and give members an opt-out choice right from the start. Diana TenBrook, vice president of marketing, says it has been an easy decision for her credit union because members are driving the push. Smart members!

“They are asking for this,” says TenBrook, who projects that Solidarity Community will see an annual savings of at least $40,000. “It’s an ideal situation. Any time you can combine giving members what they want with saving money, you know you’ve got a winner!”

TenBrook says that in addition to statement stuffers, newsletters, and other “conventional” promotional tactics, the credit union will make use of its arsenal of e-mail addresses collected since introducing its online banking program. “Online banking users will receive ‘teaser’ alerts, reminding them that e-statements are coming,” she says. “From there, they’ll be able to click on a link to learn more about the program and then choose to opt out if they want.”

Seven Seventeen Credit Union(change in policy through disclosure to members). Located in Warren, Ohio, Seven Seventeen CU began offering e-statements nearly five years ago with opt-in enrollment. And while growth in the service was steady, usage climbed dramatically after the credit union switched to an opt-out policy for new online banking users a year and a half ago. Now, with a plan in process for moving all online-banking members to e-statements, the credit union expects additional savings of some $13,000 a year, according to Karen DeSalvo, vice president of marketing. DeSalvo anticipates that at least 13% of Seven Seventeen’s large membership will be using e-statements after the transition.

Seven Seventeen has learned that very few members decline the e-statements service when invited to opt out. “We’ve heard nothing but good things from our e-statement members – never received any complaints,” DeSalvo says. “They get their statements on the first of the month, compared with others who receive mailed statements on the tenth.”

DeSalvo says increasing the use of e-statements is one of Seven Seventeen’s strategic goals. “We often package our products, and it made sense to combine online banking and e-statements,” she states. “We consider it a ‘sticky’ service that improves member retention, provides cost savings and keeps us on the cutting edge.”

An Issue Worth Considering

If you’re concerned about being an early adopter of this approach, don’t be! Today, perhaps more than ever before, the timing is right to seriously consider e-statements as the default option for your online banking members. Credit unions that follow the trend of changing to an opt-out policy will save money. Sure, there are steps that need to be followed, and you have to make sure you can handle any requests to out. But credit unions are finding ways to take those steps and are receiving positive responses from their members, finding few members who “opted -out” of e-statements to stay in paper. Now these credit unions are looking forward to significant annual savings.

Ron Daily is president of DigitalMailer.com. To learn how e-statements can help your credit union increase member satisfaction and decrease postage and printing expenses of mailing statements each month, contact DigitalMailer at info@digitalmailer.com.