Earlier this year, I spoke at CUNA’s CEO Roundtable in San Francisco. It was interesting to hear the thoughts and opinions of some of the most influential CEOs from America’s credit unions.
To put things into context: I do not bank with a credit union, I’m a Gen X consumer, and I own and operate the personal-finance property MyBankTracker.com.
Based on this perspective, my research, and observations at the Roundtable, I’ve come to two conclusions:
1. Credit unions aren’t capitalizing on a fundamental shift in the nature of customer service. Gen Y consumers are as likely to consider a credit union or a community bank as they are a large bank, according to an Aite Group and Bancvue study. For Gen Y, customer service no longer is king—it’s third to technology and convenience.
If you ask anyone what separates a credit union from a bank, they’ll likely say “customer service” and “trust.” But credit unions might be losing these advantages. Technology has changed what customer service means. It’s no longer enough to have friendly tellers at convenient locations.
In 2012, great technology is great customer service. And large banks actually are in a much better position to deliver on technology.
So how do credit unions win here? By evolving their definition of service to focus more on helping members manage their financial lives—whatever the tool or format.
Credit unions always have positioned themselves as trustworthy. But the prepaid debit market is changing what “trust” means.
Banks and credit card issuers are stepping into the prepaid space. For the first time, large banks are seen as leaders in bringing transparency to a sneaky-fee market. Banks and credit card giants are the good guys in the prepaid space. And by playing that role, they’re building trust with an entire generation.
2. The credit union movement doesn’t do enough “team campaigning” across the industry. During the Roundtable, I heard more debates on whether a national branding campaign for credit unions was needed than on any other topic.
I concluded from those discussions that any such campaign is far from reality. While a national campaign might be a lost cause, regional branding is feasible. National events like Bank Transfer Day are one of a kind, and can’t be relied on to happen often, if ever again. (Banks are getting smarter and learning from their mistakes.)
Instead, credit unions should use their strongest attribute—an older, wiser generation of consumers who think highly of their credit unions. Credit unions will have more success if they act on the classic theory that it’s easier to grow relationships with existing members.
To do this, credit unions can work to increase their referral performance scores (RPS)—the percentage of primary financial institution (PFI) members who refer friends and family to the credit union multiplied by the percentage of referrers who grow their own relationships (by increasing account balances and/or adding new accounts).
While 47% of credit union PFI members refer friends and family, compared with 32% for large banks, large banks’ RPS is 381, compared with credit unions’ 353, according to the Aite/Bancvue study.
The credit union movement is in a vulnerable position—quite different from what most thought at the peak of the Occupy Wall Street movement. Credit unions have failed to adopt the technologies young consumers require, while banks are, at long last, answering those technology demands.
More important, credit unions have failed to find a way to get their unified message to the majority of U.S. consumers.
ALEX MATJANEC is the co-founder/media and communications manager for MyBankTracker.com.
Over the past weekend, the chairman of CUNA’s System Structure and Governance Task Force, Tom Dorety of Suncoast CU, Tampa, Fla., discussed with the CUNA board some initial models the Task Force is considering. The group has been meeting since last fall and commissioned several focus groups and a nationwide survey of credit unions to gather credit union feedback to inform its deliberations.
WASHINGTON (5/4/15, UPDATED 1:45 p.m. ET)--Building on the success credit union advocates are having in getting data breach legislation introduced in the U.S. Congress, today CUNA launches a new call to action to garner support for the recently introduced House Data Security Act of 2015 (H.R. 2205).