Do Consumers Know There is a Credit Union Difference?

February 23, 2015 at 10:05 am Leave a comment

 

Do credit unions have it all wrong when it comes to attracting new members? Are there things that can be done in both a marketing and regulatory framework to make consumers more likely to use credit unions?

The answer to both these questions is, at least on the industry level, a resounding  yes.  In today’s blog I comment on the importance of getting out the message and in tomorrow’s I will comment on some proposals for unleashing more consumer choice in the selection of financial institutions.

Today it’s  time to call out the marketers.

It’s hard to get people to join a credit union if they don’t know what a credit union is.  That is exactly the dilemma the industry faces.    According to a survey reviewed by the Financial Brand   the top three reasons why consumers switch financial institutions have nothing at all to do with great service great, great products, or even a desire to “stick it to the man” in the aftermath of the Mortgage Meltdown.  Instead   The three main reasons  consumers site for switching are: They moved (41%) their marital status changed (14%) or their job status changed (6%).

Now here is the real bad news.  If consumers were going to switch they would most likely switch to a “Regional Bank”(29.6%), a “local” bank, or a “Super-regional bank”  before they would  switch to either a credit union(15.6% )or a national bank (16.5%).  In other words,   even though  we comfort ourselves  with the knowledge that  consumers  love credit unions and hate banks    when it comes to deciding where to place their money they still  equate credit unions with   the very institutions with which they  most contrast.

The survey results are consistent with hurdles confronting credit unions. Most importantly, even as credit union membership grows the industry continues to struggle attracting members who consider credit unions their primary institution.   Members will gladly take out a cheaper car loan but they aren’t so concerned  with great  service that they will go through the hassle of changing accounts. Furthermore people may like credit unions but they really don’t understand that they are different from banks

Credit unions have positioned themselves as the best consumer choice for more than 100 years and the consumer still doesn’t get it. We have a failure to communicate.

The first component of a multi-faceted solution is to engage in a national marketing campaign. All credit union associations should chip in for a professional national and yes expensive campaign dedicated to making sure that people know that credit unions (1) Are the true community banks (2)They are the alternative  to, not synonymous, with national banks,  and (3)they represent an exclusive club that almost anyone can join.

I know that national campaigns have been tried before but they have been watered down consensus driven underfunded public relations  campaigns designed to make members feel good at conventions as opposed to explaining to a nation of cash strapped consumers why credit unions are good for them.

I’ve said it before and I will say it again the industry should do for individual credit unions what the beef industry has done for ranchers and the dairy industry has done for farmers

Would this make a difference to the individual credit union?  You bet.  No credit union that belongs to NAFCU, CUNA or a state level association should have to explain to a potential member what a credit union is. Potential members   should already know this  as  they are surfing the web.

Your credit union can spend its time advertising its products.

Here is a link to the blog.

http://thefinancialbrand.com/49658/why-people-switch-banks/

Chex Please!

Speaking of checking accounts on Friday Attorney General Eric T. Schneiderman announced that Santander Bank, N.A. has agreed to adopt new policies governing its use of Chex Systems, a consumer-reporting agency that screens people seeking to open checking or savings accounts. CapitalOne and Citibank have previously agreed to overhaul their use of the account screening system which critics contend rightly or wrongly-allow financial institutions to arbitrarily  deny access to people who would otherwise qualify for accounts.   Here is a previous blog I did on the topic and a friendly reminder that the system has already drawn the attention of the NCUA(Below is a link to a 1993 Opinion letter).  Use these systems with care and in conjunction with a well drafted procedure detailing reasonable account criteria.

Here is a copy of an NCUA Opinion Of Counsel on Chex Systems,  a recent blog on the topic and the AG’s press release

http://www.ncua.gov/Legal/OpinionLetters/OL1993-0720.pdf

https://newyorksstateofmind.wordpress.com/2015/01/29/pressure-mounts-on-chexsystems-users/

http://www.ag.ny.gov/press-release/ag-schneiderman-announces-commitment-santander-bank-eliminate-barriers-unfairly

Entry filed under: General. Tags: , .

Now What? More Transparency=More Credit Union Accounts

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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