CUNA's Member & Nonmember Survey Results

Focus on Members You Already Have

CUs must expand their 'wallet share' of existing members.

August 9, 2013

In the quest for growth and profitability, many credit unions have found a new focal point: existing members. They’re seeking more business—or wallet share— from the members they already have. And many credit unions are finding plenty of room for growth.

Consider that 85% of credit union members also have accounts with banks. And only 15% of credit union members don’t use banks. That means a lot of your members do a lot of business elsewhere, which represents a big challenge—and opportunity.


Convenience services

Members are just as likely to use credit unions as they are banks for checking and online banking (“Members’ use of banks and CUs for convenience services”).

Sixty percent of members use bank checking accounts and 59% use credit union checking accounts (the totals add to more than 100% because some members use banks and credit unions equally).

For online banking, 49% of members use banks and 50% use credit unions. And banks have an advantage over credit unions in mobile banking where 26% of members use banks and only 18% use credit unions.

The 59% of members using credit unions for their checking accounts is up from 51% in 2009.

“This represents important wallet share growth opportunities for credit unions,” says Jon Haller, CUNA’s director of corporate and market research, “because the checking account is an important product that determines primary financial institution [PFI] status. As your members’ PFI, there’s a strong likelihood they’ll give you the first shot at meeting their product needs.”

Indeed, it’s almost impossible for a credit union to be a member’s PFI without the checking account relationship, notes Haller. Credit unions should continue to work on increasing checking account penetration among members by promoting low-fee or free checking. 

“These options are becoming increasingly scarce as banks increase fees,” Haller says. “Credit unions enjoy a competitive advantage over banks with respect to checking and ATM fees. Members and nonmembers respond very well to that difference once they discover it.” 

In addition to increasing checking account penetration, credit unions also made gains with online banking penetration. CUNA’s research shows that 50% of members use their credit unions’ online banking services, up from 32% in 2009.

The problem is, just as many members (49%) use their banks’ online banking services. For both checking and online banking, members are just as likely to use banks as credit unions.

Mobile banking disadvantage 

Banks hold a distinct advantage over credit unions, however, in the battle for members’ mobile banking business. Twenty-six percent of credit union members use banks’ mobile banking services, while only 18% of members do the same at their credit unions.

This last figure isn’t surprising, says Haller, given the rapid introduction of mobile offerings and the fact that only 5% of credit unions offered mobile banking just four years ago. Now, however, nearly 75% of members belong to a credit union offering mobile banking.

“I suspect some members and nonmembers mistakenly assume credit unions don’t offer mobile banking,” says Haller. “The challenge before credit unions is to clear up that confusion.”

Credit unions can’t match the large, national banks’ budgets for developing and promoting mobile apps. While the functionality of banks’ and credit unions’ mobile apps might be similar, many credit unions lack the marketing budgets to keep up with large banks’ promotional strategies.

With smaller budgets, credit unions tend to prioritize the technology itself rather than the marketing of it. These mobile apps may be just as robust and user-friendly as banks’ apps, but members and nonmembers are less aware of them and hear fewer persuasive messages about credit union apps.

“Many larger and midsize credit unions are doing an excellent job of developing technology,” says Haller. “Their smaller size, relative to the national and regional banks, can work in their favor—enabling them to be more nimble and respond to shift s in the marketplace more quickly than megabanks. Credit unions’ most significant disadvantage, however, is in terms of their smaller marketing and technology budgets.”

NEXT: Lending erosion

Lending erosion

While members’ use of convenience services is—for the most part—evenly split between banks and credit unions, members seem to turn to banks more often for loans. Since 2009, credit unions have been slowly losing their share of members’ vehicle loans, first mortgages, and home equity loans or lines of credit (“CUs’ shrinking share of members’ loans”).

Four years ago, credit unions had 74% of their members’ vehicle loans. Now, they have 57% of those loans—a 17 percentage point drop since 2009. Haller suspects this sharp drop in credit unions’ wallet share is due to auto manufacturers’ low or 0% financing during and after the recession.

Credit unions—and most banks— couldn’t afford to match the 0% financing that auto manufacturers were offering through their finance companies. And 0% financing can make new cars just as attractive as slightly used cars. So, instead of purchasing used cars, many consumers opted for new cars and the dealers’ below-market financing.

Credit unions have also seen some erosion in their share of members’ first mortgage loans. Credit unions currently make 20% of their members’ first mortgages, which is down from 24% in 2009 (but up from a 16% share in 2011). While credit unions lost mortgage wallet share during the past four years, they’re rebounding from a low point two years ago.

Credit unions’ share of members’ home equity loans/lines of credit also is showing signs of erosion. Credit unions now have 34% of members’ home equity loans, down from 39% in 2009.

Post-recession mindset

It’s more than likely the recession contributed indirectly to the erosion of credit unions’ share of members’ loans. During the recession, some credit unions tightened up their marketing budgets, focused more on credit risk, and generally became more cautious lenders.

And even though the economy is slowly recovering, the growing burden of regulatory compliance is requiring many credit unions to hire compliance officers instead of loan officers, increasing overhead.

Despite these challenges, credit unions need to adopt a post-recession mindset and a proactive lending philosophy, according to Bill Vogeney, senior vice president/chief lending officer for $3.7 billion asset Ent Federal Credit Union, Colorado Springs, Colo. (“Regain your share of members’ loans,” p. 27).

“After several years of monitoring loan delinquencies and losses, it’s important for management to adjust lending criteria back to pre-recession levels and get out of a defensive operating mode,” Vogeney writes in the 2013-2014 CUNA Environmental Scan (E-Scan) Report, a strategic planning guide for credit union leaders.