During the Great Depression, as the story goes, seven non-military U.S. Navy employees came together and with $70 started an organization destined to eventually control $24 billion in assets. In 1933, Navy Federal Credit Union, Vienna, Virginia, was more of a self-help club than a financial institution. The original members pooled their money in order to have a safety fund available in case of an emergency. But the idea of a financial institution that catered specifically to Navy or Marine Corps personnel, regardless of where they were stationed, caught on quickly. [??] Today Navy Federal is chartered and regulated by the National Credit Union Administration (NCUA), Alexandria, Virginia. With 2.5 million members, it is the largest credit union in the country (see Figures 1 and 2).
From its modest beginnings, Navy Federal has grown to be one of the industry's largest employers, with more than 5,000 full-time employees working in its Northern Virginia headquarters and around the world (see Figure 3).
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In 2004, the firm's first mortgage loan sales into the secondary market accounted for 21.5 percent of the $20 billion worth of mortgages sold by all credit unions during that year. In the 73 years since its inception, the company has become a model other banks and credit unions have worked to emulate and a cutting-edge leader in financial services technology.
Evolution of an industry giant
A casual observer might envy the steady stream of potential members that Navy Federal enjoys. With some 2.6 million Americans either serving in or being employed by the U.S. military at any given time, it would only take a few years to build up an impressive membership--especially given the close relationship Navy Federal enjoys with the Department of the Navy (DON).
"It used to be that you entered the service and then you joined Navy Federal," says Lou Jennings, Navy Federal's executive vice president of operation. "When you left, if there was a local branch in your area, you would keep your account. But if you moved away from the base, you didn't."
For the first 50 years, the credit union didn't offer much beyond a savings account and an automobile loan. That was all that members needed at the time, but it wasn't enough to hold their accounts when they moved away from a local branch. There was constant membership attrition, with which the institution learned to live. The fact there were always new members to replenish the customer ranks removed any immediate need to do anything to improve customer retention.
And still the institution grew. A few years ago, when Navy Federal started to focus on member relationships after the members' term of service was complete, the credit union's membership grew rapidly.
"Over the past several years, we identified a member need to have Navy Federal as a lifetime financial institution," Jennings says. "We've been able to promote that idea through the advent of the Internet; our call centers; ATMs [automated teller machines]; and a more aggressive rollout of branch offices, many of which are in areas where there is no Navy or Marine Corps installation."
Today the company staffs 109 branches worldwide and employs more than 800 telephone customer-service representatives. It operates a network of 303 proprietary ATMs; a toll-free touch-tone teller system; and 24x7, 365-day access to account information through Navy Federal Online Account Access.
According to Jennings, the success of Navy Federal has come down to two things: being where its members needed it to be (even if that was in a remote area...