Express Credit Union, a state-chartered community financial institution designated to serve the Seattle area's low-income residents, is finding its partnership with the operator of one of the nation's largest surcharge-free ATM networks to be a key element in helping convince unbanked individuals to open checking and saving accounts.

Express has one office and four employees, and it does not keep cash on the premises. So members cannot use the office to cash or deposit checks, which makes the credit union's mission of serving the unbanked and the underbanked seem like mission impossible.

Its partnership with Co-op Financial Services Inc. is helping to overcome those difficulties. Co-op, which is based in Rancho Cucamonga, Calif., operates a surcharge-free ATM network of 28,000 machines, including 9,000 deposit-taking models, that serve credit unions nationwide. 

In Washington state, Co-op operates 1,000 surcharge-free ATMs, including 300 deposit-taking machines in 7-Eleven convenience stores. In King County, where Seattle is located, Co-op has nearly 250 surcharge-free ATMs, according to Bill Prichard, a Co-op spokesperson.

"Express Credit Union approached us," says Eric Porter, Co-op executive president of business development. "We felt that we could help cut down on the unbanked and underbanked going to check-cashing services with our ATM and shared bank-branching networks," Porter says.

Indeed, surcharge-free ATMs are important to achieving Express' goals, Brenda Kurz, the institution's CEO, tells ATM&Debit News. "With the unbanked or the underbanked, there is a high-reliance on a need for cash," she says.

Jennifer Tescher, director of the Center Financial Services Innovation, a nonprofit affiliate of Shorebank Corp. in Chicago whose goal is to bring financial services to the underserved, agrees. "Landlords of apartment buildings who rent to low-income tenants are more likely to want cash instead of a check for rent," she says.
Co-op Financial's agreement with Express Credit Union provides opportunities to sign up new members, Tescher says.

It would be a "very tough sell to attract new members without access to ATMs," says Tom Berquist, senior vice president of BECU (formerly Boeing Employees' Credit Union), which played a key role in helping Express Credit Union.
"There are check-cashing services on nearly every corner, and ATMs were absolutely needed," Berquest says.

Check cashers charge a national average of 2% of the check's value, but in some states the fees are higher, say industry experts. Although surcharge-free access means free access to the user, it costs money to operate the system, so BECU and Co-op Financial subsidize the outreach, ATM access and shared-banking services.
Backers originally founded Express Credit Union in 1934 to serve middle-income families in the Puget Sound region of Washington. The credit union continues to serve approximately 1,400 middle-income families, but it recently altered its business model to also serve low- and moderate-income families through partnerships with nonprofit agencies in King County, Wash.

The Medina Foundation provided seed funding for a needs assessment and market analysis, and BECU, Washington's largest credit union, upgraded the credit union's infrastructure so it systems could connect with those of Co-op Financial Services, Berquist says.

To sign up new members, Express Credit Union has four community-membership representatives who regularly visit 16 nonprofits to meet with unbanked and underbanked individuals, Kurz says.

Their goal is to convince them to join the credit union, where they can open checking and savings accounts. Team members use laptops linked to the credit union to open the accounts for individuals and families.

"We open accounts for them, and sometimes we give individuals a second chance to open a checking or savings account after another financial institution has closed their account for some reason," says Kurz.

Express also issues them either a Visa-branded debit card or a PIN-only ATM card, depending on their banking history, Kurz says.  "We place limits on the card usage concerning withdrawals and deposits to mitigate risk to the credit union," she says.
The credit union's relationship with Co-op has encouraged 300 underbanked or unbanked individuals to join the credit union since May 30, when the institution launched its outreach program, Kurz says.

Besides offering surcharge-free ATM access, Co-op Financial also offers shared banking to Express Credit Union members, who can visit any Co-op-member credit union that participates in the shared-branch network.

Co-op says its shared-branch network includes 18 locations in the Seattle area and 155 statewide.

Express Credit Union's partnership with Co-op also might point the way for other financial institutions to reach out to the unbanked and underbanked, contends Tescher.

Some 44.2 million unbanked or underbanked individuals and families live in the U.S, according to the Center For Financial Services Innovation.
It defines unbanked consumers as those who lack a transaction account linked to a mainstream financial institution, and underbanked individuals use a mixture of mainstream and alternative payments. ATM

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