“What’s a credit union?” The most common response to this question is “I have no idea.” It’s the response that students enrolled in CUNA Management School often get when they conduct their “people on the street” interviews.
Other responses include, “a place where you pay your taxes,” “a company that helps protect your credit score,” and “something like a labor union—where you pay dues.”
The same disturbing trend is seen in research that’s a little more “statistically valid,” such as CUNA’s 2009-2010 Survey of Potential Members Report. The percentage of consumers “not at all familiar” with credit unions spiked in 2009 to a disconcerting 39%, up from about 25% over the past decade.
Why don’t people know what credit unions are? Why don’t they understand the benefits of credit union membership? Why has annual membership growth been only about 1.5% during banks’ worst public-relations crisis in a generation?
There are many answers, according to CUNA research and other sources:
In any given market, there are a lot of consumers who have no idea they can join a credit union, says Mignhon Tourné, president/CEO of $300 million asset ASI Federal Credit Union, Harahan, La., near New Orleans. And they’re not aware of the broad range of affordable products and services available at most credit unions.
Because no two credit unions are alike, Tourné says it’s not surprising consumers are confused. “Unlike banks, credit unions have no consistent brand recognition,” she explains. “They aren’t easily identifiable to the general public. While banks typically offer similar services and keep consistent hours, credit unions cover a much broader spectrum. Some offer only consumer loans but not mortgage or business loans. Some small credit unions are open only a few days a week.” This is difficult for the public to wrap their heads around, she says.
Building consumer awareness has been an uphill battle since the first U.S. credit union opened its doors, she says, because of field-of-membership restrictions and product variety. Someone who joins a small faith-based credit union will have a vastly different experience than someone who joins Navy Federal Credit Union, she says.
Consumer confusion—even apathy—actually presents an opportunity to seize the moment and improve consumer awareness, she adds. “With the financial meltdown, and the backlash against Wall Street and irresponsible multinational banks, it’s high time we capitalize on this sentiment and show credit unions for what they are—responsible, ethical lenders with a mission of serving the underserved.”
Tourné suggests thinking about your credit union’s unique characteristics. What’s your credit union doing better than its competitors? Is there a niche or a void in your community that your credit union can fill to help its members? Answering these questions and taking the appropriate actions will help your credit union shine and put it in a league of its own.
“We know we’re outspent by at least 10 to one by most of our competitors,” says Tourné. “Rather than trying to mirror them, we look at what they’re doing and then try to do it differently.”
ASI Federal, for example, has fostered its identity as an ethical product developer in the arena of non-credit-based, low-cost alternatives to payday lending. “We’ve positioned our credit union as an ethical leader,” says Tourné. “We let social investors know that by supporting ASI Federal, they’re allowing
us to expand economic development in some of
New Orleans’ poorest communities.”
The credit union also differentiates itself by giving “legs to its mission.” It formed a 501(c)(3) affiliate that allows it to offer free foreclosure prevention counseling to any client, regardless of membership status. “The nonprofit also offers credit counseling and homebuyer education,” says Tourné, “and we work with local schools in low-income communities to promote college savings.”
If you want to be recognized for what you do, you have to earn that awareness by being more than the name of a financial institution, she says. If your credit union doesn’t have a huge marketing budget, Tourné suggests three ways to increase awareness:
1. Offer innovative products and services;
2. Reach out to underserved markets; and
3. Engage in advocacy around economic empowerment, fair lending, and issues affecting the unbanked or underserved.
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