When you think of bankers, you probably do not imagine the kind of people who volunteer to wake up early in the pre-dawn hours in order to be yelled at, forced to do pushups and run for several miles. However, that’s exactly what Robert Vickers, employee of USAA, did recently along with about 300 of his coworkers, according to The New York Times.
USAA is a financial services firm that caters to those with active military status and veterans. Each of the 300 or so employees who participated in the simulated “boot camp” exercise described above volunteered to do so in order to get a taste of military basic training, the Times explained. In addition, they spend months attending seminars and long workouts to become better educated about a day in the life of a member of our country’s armed forces.
“You serve the military best when you understand the military,” Josue Robles Jr., president and CEO of USAA and a retired Army major general, told the news source.
Battle for active military status customers
Part of the reason for this focus on the military is that active military status servicemembers and veterans make good banking customers, the news source explained. These customers have steady jobs and are often required to remain in good financial standing by their command. Those who are not can face loss of security clearance or other problems at work. They also tend to be more loyal to their financial institutions than some other customers.
“Military customers are pretty loyal and they pay their bills on time,” Michael Ott, president of U.S. Bank’s wealth-management division and a colonel in the Air Force Reserve, told The New York Times. “We see less churn than with customers who never served.”
USAA was initially set up in 1922 by Army officers who wanted to pool their money in order to insure their cars, according to the news source. Over time, it grew to become a broader financial institution that offers banking services, mortgages and financial investments. Today it has more than 10 million members and held $59.2 billion in deposits as of the first quarter of 2014. For most of its existence, USAA served only those with active military status, but in 2009 it decided to allow veterans with honorable discharges to open accounts, as well as their family members.
As a result of its military focus, USAA offers a number of financial services aimed at helping servicemembers specifically, but many mainstream banks have begun to offer similar services. Chase Bank, for example, has a Chase Military arm that works to provide servicemembers and veterans with banking services tailored to their needs. While there is a sense of duty, this is also simply good business. With many American families still doing poorly since the recession, those with a steady income and benefits, like those with active military status, are appealing customers.
These banks do need to remain aware of certain limitations that apply to lending to servicemembers. There are a number of restrictions in place to protect those with active military status, like the Servicemembers Civil Relief Act and the Military Lending Act. The latter law is being reviewed and altered right now per Obama Administration and Department of Defense proposals, and soon most loans to servicemembers will have interest rates capped at 36 percent, according to JDSupra Business Advisor. Already most debt that servicemembers incur before they go on active military status must be reduced for the duration of service to 6 percent.
In order to stay on the right side of these important laws, it is important for financial institutions and anyone else who deals with servicemembers in a professional capacity to regularly verify military status. The Servicemembers Civil Relief Act Centralized Verification Service can help to make that possible.