BECU: Leading With Data To Advance Financial Health

Founded in 1935 in Washington state as a financial cooperative, BECU has long embodied the “People Helping People” ethos central to credit unions. While this principle has endured for nearly a century, the company has continued to evolve into one of the largest credit unions in the country, with total assets of nearly $29 billion. The credit union experienced a watershed moment in 2015, spurred by an eye-opening article in The Atlantic that revealed a startling statistic: 40% of Americans couldn’t cover a $400 emergency expense.² This revelation ignited a paradigm shift for the credit union, challenging the organization to think about the role it could play in improving the financial lives of its members, who number nearly 1.5 million today. 

Early in its journey, BECU recognized that improving financial health outcomes would require more than simply offering financial education resources that, in isolation, had yet to produce meaningful financial health outcomes for people.³ Recognizing the importance of delivering financial education at pivotal moments, paired with well-designed products that encourage sound financial behavior, BECU underwent a significant shift in its approach to supporting members’ financial health. 

Through innovative initiatives and rigorous financial health measurement practices, BECU has laid a solid foundation to continue integrating financial health into its core business strategy. This case study explores BECU’s financial health journey, offering insights and lessons for any financial institution looking to pair customer financial well-being with business performance.

Aiming to address the $400 emergency savings crisis that initially sparked the credit union’s financial health journey, BECU launched an emergency savings pilot program in 2016 in partnership with ideas42, a behavioral science lab.⁴ This pilot not only addressed the immediate challenge of emergency savings, but also propelled BECU to explore and advance a financial health strategy.

The program focused on closing the intention-action gap, or people’s tendency not to follow through on a task they intended to complete, by applying principles of behavioral economics to services offered by the credit union.⁵ BECU hypothesized that making it easier for members to take action instantly on intentions would change financial behaviors, increasing the number of members who, for example, set up automated savings goals or created a budget, which could, in turn, improve financial health.⁶

The program paired members with trained “consultants” for a one-time 30- to 60-minute phone call to set monthly financial goals, budget, and set up automatic savings and debt repayment features. Importantly, consultants focused on emphasizing empathy, eliminating financial stigma, and enhancing money management skills during each financial health check. 

BECU members who participated in the initial program significantly improved their savings activity. Of those who participated, 21% took action to automate transfers toward their savings goals, helping to close the intention-action gap. Compared with the control group, participants who acted experienced a 34% increase in net savings (deposits minus withdrawals) and an 11.5% increase in dollars deposited at the credit union. 

Recognizing the program’s success both in terms of financial health outcomes and increased savings deposits, BECU continued to invest in and improve upon the initiative. Since that initial pilot, the number of people who take action to automate savings has increased to approximately 60%. The credit union has also worked to scale the program through digitization, with the goal of broadening the credit union’s impact on member financial health, while lowering operational costs and increasing savings deposits with the credit union. Increasing emergency savings remains a top priority for the digital version, in addition to developing additional interventions that will support other aspects of financial health, including debt management and spending. 

Encouraged by the results, in the two years following the emergency savings pilot, BECU began exploring how to align financial health with BECU’s broader business strategy. The credit union was compelled by the magnitude of potential impact it could have on improving member financial health outcomes. As an initial step to inform its approach, the credit union conducted a survey to measure the financial well-being of its membership using the Financial Health Network’s framework. To the surprise of BECU leadership, the survey found that more than half of the credit union’s membership struggled financially. These findings not only further fueled BECU’s commitment to improving the financial health of its members, but also provided BECU with valuable insights on its members that informed key business decisions. BECU leveraged survey data to identify gaps in its product and service offerings, especially related to serving Financially Vulnerable and Coping members, which informed how the credit union prioritized initiatives that would produce high-impact financial health solutions.⁷ Next, BECU convened a group of stakeholders across the organization with a mandate to improve the financial health of its membership in alignment with broader business goals. 

Creating a Financial Health Council

Building on the previous three years of financial health work, BECU established a Financial Health Council in 2018. The Council championed a cross-functional, organization-wide strategy that aligned the various departments around a shared goal to drive improved financial health outcomes while achieving business goals. Doug Marshall, a member of BECU’s executive team, informally referred to this group as the “coalition of the willing” to emphasize the group’s focus on turning ideas into action. The Council convened leaders across a wide variety of business functions, including collections, consumer lending, product, digital, marketing, and credit risk, to name a few. Council members met monthly to develop a strategy and implementation roadmap that identified and prioritized financial services solutions aimed at improving how members spend, save, borrow, and plan with their money.

Defining a New Purpose 

While the Financial Health Council began working to build and execute on a plan to integrate a financial health strategy across the credit union, the executive team weighed the role that financial health should play in the broader purpose of the institution. To shape the new purpose, leadership listened to the perspectives of stakeholders across the organization, from member-facing staff to board members, who were united around a strong culture of “people helping people.” The credit union realized that focusing on financial health outcomes did not have to inherently take away from how they served historically higher revenue-generating members. Rather, financial health could serve as a way to ensure the credit union fully optimized its products and services to better serve all of its members. Settled on a commitment to support the financial health of all members, BECU, with support from the board of directors, committed to a new purpose in 2019: “improve the financial well-being of our members and the communities we serve.”

With a formalized council of stakeholders enlisted in operationalizing a strategy and a finalized purpose, BECU set out to build a process that would enable the credit union to measure the financial health of its membership regularly and track the performance of new solutions against those financial health metrics.

An early priority of the Financial Health Council involved building an internal model that would use transactional data to measure the financial health of the credit union’s membership and deepen BECU’s understanding of members’ financial pain points.⁸ The transactional model’s dashboard would complement financial health insights the credit union gained annually through its financial health survey, allowing BECU to observe financial health in real time and track trends over time.

The transactional data insights enabled the credit union to make informed decisions at two levels as it looked to improve member financial health. At the strategic level, the Financial Health Council used financial health data to advocate for investments required to advance initiatives focused on solving the financial health-related challenges faced by members. At the product and marketing levels, deep financial health insights allowed BECU to design and communicate about products and services most relevant and useful to supporting the financial journeys of individual members. 

Building a Transactional Data Dashboard

As an important first step in building the transactional model, BECU identified a sample of members that used the credit union as their primary financial institution (PFI). BECU used a variety of criteria related to the types of accounts held at the credit union, volume and type of transactions, and amount of liquid funds deposited to qualify a member as PFI. Including PFI members in the model ensured the analysis would garner the most accurate understanding of how members spend, save, borrow, and plan with the credit union. 

Next, BECU looked to determine which types of transactions would most closely predict the financial health of the member, using the Financial Health Network’s eight indicators of financial health as a guidepost.

Eight Indicators of Financial Health

For each of the eight indicators, the credit union employed a statistical regression model to understand which transactional parameters best predicted whether to classify a PFI member as Financially Healthy or not. In determining the strength of relationships between various transactional metrics and indicators of financial health, BECU leveraged financial health survey data to calibrate and test the validity of the model. BECU ranked transactions by correlation strength and identified specific transactions that proved most predictive in determining BECU member financial health.⁹ For example, BECU found that total balance growth in deposit accounts proved predictive as an indicator of member financial health. BECU also found that observing balances in checking, savings, and money market accounts over time proved predictive, especially among Financially Coping members.

To understand how members plan with their money as an indication of overall financial health, BECU explored a variety of potential proxy data, such as insurance payment transactions and whether a member had set up automatic bill pay. While the data were somewhat predictive, BECU ultimately decided to exclude plan indicators from the model due to limited data availability. Despite this limitation, the credit union still succeeded in building a highly predictive model. The transaction model not only enhanced BECU’s understanding of its members’ financial health, but also allowed the credit union to design and market financial products that better served a wider set of BECU members, particularly those struggling financially.

With the financial health dashboard established, BECU could then leverage financial health insights with a level of granularity required to inform strategic business decisions related to product development and marketing.

Example: Quick Save

BECU’s Quick Save mobile app feature, which launched in 2020 in partnership with MX, serves as a prime example of how the credit union leveraged its financial health data when developing a solution that benefited both financial health outcomes and business performance.¹⁰ Quick Save is a digital feature on the credit union’s mobile banking app that prompts members to spontaneously transfer small amounts of money into a savings account.^{11, 12} BECU partnered with the Financial Health Network to measure the impact of the digital feature on savings outcomes for members. Importantly, transactional data enabled BECU to understand how the savings behaviors of members varied depending on a member’s starting savings balance. For example, the study found that members who started with a savings balance between $5.01 and $500 when Quick Save launched saw their savings balance increase by 17% on average. Meanwhile, the same study found that members with a starting balance of more than $2,000 had reduced savings deposit sizes and balances. By observing the differences in how various member segments interacted with this savings tool, BECU learned that one solution may benefit some members while causing unintended outcomes for different member segments. For the credit union, this solidified the importance of leveraging transactional data to understand how potential solutions can influence financial health outcomes for different member segments. 

Quick Save increased the number of BECU members who save at the credit union, improving business performance while simultaneously improving the financial health of some members. Members invited to join Quick Save were more likely than those not invited to make at least one savings deposit during the five-month study. Additionally, among members with $5 or less in a BECU savings account when the digital tool launched, Quick Save increased the number of members who made at least one savings deposit by 10%. Understanding the differences in how members interact with a product or service, like Quick Save, can provide financial institutions insights to make informed business decisions about how best to target customers with the most beneficial solutions.  

Organizing for Data-Informed Action 

In 2019, as BECU looked to leverage the transactional model to understand and design solutions targeted specifically at addressing the needs of Financially Coping members, the credit union formed a “financial health pod.” The pod included staff spanning a diverse set of skills, including product, digital, marketing, research, and analytics. 

BECU empowered the pod to work cross-functionally to execute on short sprints that would test and iterate on financial health solutions. The small, agile, and autonomous nature of the pod allowed the team to serve as a catalyst for ongoing innovation throughout the organization. In only a few years, the team successfully piloted several products that have created a tangible impact on member financial health, especially for the Financially Coping. This includes a digital version of BECU’s Financial Health Check as well as its digital envelope system.^{13, 14} These initiatives have shown a marked impact on improving member financial health, validating the pod’s nimble approach to developing financial health solutions.

Connecting Financial Health and Member Engagement 

Research shows that enhanced personalization of products and services can lead to higher levels of engagement.¹⁵ Designing solutions that are informed by customer financial health data can facilitate more tailored services that better align with customers’ financial needs. As such, BECU has begun to explore how to align financial health insights and member engagement – one of BECU’s key business performance indicators. Having seen improved member financial health outcomes from data-driven product design, BECU hopes to explore the influence of these products on other key business metrics, such as member engagement. 

When measuring member engagement, the credit union now looks beyond more traditional metrics to include additional financial-health related metrics. For example, BECU considers whether the member has completed a Financial Health Check or used the credit union’s financial health tools, and also analyzes transactional data tied to financial health, like liquid savings balance or reduced non-sufficient funds (NSF) transactions, as part of its criteria for determining and tracking member engagement. As the credit union looks to continue building the case that investing in financial health solutions can yield long-term business gains, BECU’s work on tying changes in overall financial health to deepened member engagement lays the groundwork for integration across additional indicators of broader business performance.