Persistent Lack of Awareness Continues
CUs will benefit tremendously if they mobilize quickly to education and attract young adults.
Ninety-seven million consumers belong to credit unions. But that still leaves about twice as many who don’t. That begs the question: Why do so many people not belong to credit unions?
Some nonmembers don’t realize they could join a credit union, while others don’t understand what credit unions are or how they differ from banks. Credit unions have been trying to bridge this awareness gap for decades.
The importance of turning nonmembers into members—especially nonmembers ages 18 to 24—can’t be overstated. This group, known as future borrowers, will soon enter their peak borrowing years (ages 25 to 44).
Credit unions will benefit tremendously if they can mobilize quickly to educate and attract young adults, says Jon Haller, CUNA’s director of corporate and market research.
“You want to be with these members when they start buying homes and cars, opening individual retirement accounts, taking out student loans, and purchasing other financial products and services,” he says.
Gen Y awareness
Currently, one-third of U.S. adults belong to credit unions—a figure that has held steady in recent years.
In nearly all age groups, between 30% and 40% of adults belong to credit unions. But the youngest age group is the exception—only 22% of those ages 18 to 24 belong.SIDEBAR
In addition to being the least likely age group to belong to credit unions, they’re also the age group that’s least familiar with credit unions. Seventyone percent of nonmembers ages 18 to 24 are “not at all familiar” or “not very familiar” with credit unions. That compares with 64% of all nonmembers who lack basic familiarity with credit unions.
The youngest cohort of nonmembers is the least informed group, so credit unions will have to work even harder to attract their business. Not only do credit unions have to convince this group that rates, fees, and services are better at credit unions than at banks, says Haller, they also have to explain credit unions’ unique, cooperative business model.
“Until these folks know what credit unions are, they won’t be able to make informed decisions about where to conduct their financial business,” he says.
When CUNA conducts informal research on what young people think credit unions are, the responses are “quite remarkable,” Haller says. Some say credit unions are credit bureaus, places to go to pay your taxes, or even labor unions.
“A lot of people—primarily younger nonmembers—have no idea what credit unions are and they certainly don’t know why credit unions are preferable to banks.”
NEXT: Hispanic outreach
Hispanics are the largest, youngest, fastest-growing, and most underserved ethnic group in the U.S.
But they’re also the least likely ethnic group to belong to credit unions. Only about 22% of Hispanics are credit union members, compared with 35% of blacks and 36% of whites.
Among all ethnic groups, Hispanics are the least knowledgeable of what credit unions are and how credit unions could serve or benefit them. Half of Hispanics surveyed have never heard of credit unions or know very little about them.
Among white and black consumers, it’s 23% and 28%, respectively.
And only 14% of Hispanics surveyed say a credit union is their primary financial institution, compared with 20% of white consumers and 24% of blacks.
Only 54% of Hispanics have accounts at financial institutions, which means many Hispanics are either unbanked or underbanked.
One reason for the high percentage of unbanked or underbanked Hispanics is the language barrier. Personal finances can be complicated even when all parties speak the same language.
Unfavorable banking experiences from some Hispanics’ countries of origin also make some of them distrustful of financial institutions in general.
The Hispanic population is not monolithic, says John Worthington, executive vice president and chief communications officer for $7.4 billion asset Security Service Federal Credit Union. The cultural norms and even language vary depending on one’s country of origin and current environment, he notes.
For instance, Security Service Federal’s headquarters is in San Antonio, where “there are a lot of people with Hispanic names, but many of them don’t even speak Spanish,” Worthington says.
But in El Paso, among the many places where Security Service Federal has expanded its reach in the past decade, “85% speak Spanish, and for many that’s their preferred way to do business,” Worthington says.
Security Service Federal turned to Coopera, a Hispanic credit union consulting firm and CUNA strategic partner, for assistance with a strategic plan to serve the large and diverse pool of Hispanics in the credit union’s field of membership.
The multifaceted plan involved:
Security Service Federal manages a small call center in El Paso and a main center in San Antonio with 185 seats. Both feature Spanish-speaking operators.
The credit union recently doubled staffing at the El Paso center to 24 employees to provide around-the clock service. Staff there handle about 5,000 calls per month—47% of all Spanish calls to the credit union.