MOLINE, ILLINOIS — Last fall, Vibrant Credit Union decided it was time to start offering members something they couldn’t find at any other local financial institution: interest on their savings and checking balances that adds up to more than a handful of pennies a year.
Interest rates on consumer borrowing, especially car and home loans, have risen significantly over the last 2+ years as the Federal Reserve has raised the federal funds rate to combat inflation. At the same time, interest rates on consumer deposits—the funds that financial institutions use to make many of those loans—have remained stubbornly low. Most big banks still offer a measly 0.01 percent annual percentage yield on consumer savings—meaning that if you deposit $10,000 in a savings account, by the end of the year, you’ll earn a single dollar in interest.
Put that same $10,000 in Vibrant’s new Preferred Savings account, though, and you’ll earn $450. Further, the account has no monthly service fees, no minimum balance requirements, and no hidden conditions about setting up direct deposit or making a certain number of debit card transactions each month to qualify.
It’s a strategy that’s proving wildly successful for the credit union. In February alone, current and new members moved an additional $26 million in deposits to Vibrant. So why aren’t other financial institutions following suit?
Matt McCombs, Vibrant’s president and CEO since 2015, thinks it’s because Vibrant’s new model goes against the conventional wisdom of what a credit union is supposed to look like.
“Over the last few years, we’ve taken a long hard look at where we’re spending our members’ money and how well that aligns with what they actually want us to spend money on,” says McCombs. “For instance, a decade ago, more than half our members did at least some of their banking in person at one of our branches. Last year, that number was down to about 16 percent, and it’s continuing to drop.
“So we asked, what if we invested more in the technologies and services our members are actually using—like our online banking platform and our call center? What if we repurposed some of those spaces that were being underutilized as branches and turned them into revenue-generating coffee shops that also offer video banking? What if we close some of those branches outright and use the savings to pay our members more interest on their deposits?”
That’s the new Vibrant: relentlessly focused on the products it knows it does better than its competitors and devoting its energy and investments into building up the service channels its members prefer to use, especially its digital banking platforms and its Moline-based call center. “It’s a matter of understanding our strengths and doubling down on them,” says McCombs.
For now, it means that Vibrant doesn’t look like anyone else in the area. But McCombs is confident Vibrant’s model is the way of the future. “The days of getting all your financial needs met by a single institution are over. When someone wants to buy a house, they can get on Rocket Mortgage. When they want to buy a car, they go straight to the dealership. We don’t mind if our members get the best deal on their loans from someone else, because that means we’re able to give them the best deal on their deposits.”
Even given the rise of so many internet-only financial institutions, McCombs also sees an important place for credit unions like Vibrant. “In general, people prefer to do business with local people,” McCombs says. “When they have questions, they want to be able to talk with someone they know. They want to support local jobs. They’re just not going to do it at the expense of passing up a much better deal online. Our savings and checking options give people an excellent reason to keep their money here in our communities.”
Learn more about Vibrant’s deposit products at vibrantcreditunion.org.
About Vibrant
Vibrant was founded in 1935 as a federally insured credit union with its roots in agricultural manufacturing. Now an industry-leading deposit rate competitor, customers across the country can bank with the best utilizing easy access apps and money movement-friendly accounts with top earning rates. In the community, Vibrant strives to bring specialized products to nonprofits and small businesses to foster all to “be the good.” With a belief in the spirit of human connections and partnership, Vibrant brings banking together with coffee to operate Vibrant Coffeehouse + Kitchens throughout the Midwest, which provide house-roasted coffee and offer a space for work, community, and fun. Not far from their roots, Vibrant also provides relationship- and education-focused equipment financing programs to outdoor equipment manufacturers nationwide.