Originally appeared in CUES Credit Union Management
Does the credit union difference really matter to consumers, or are they just looking for convenience and great technology?
Consumers are looking for a solid place to put their money, convenience that offers accessibility, great service and great technology. Meanwhile, credit unions may be too hung up on trying to communicate the credit union difference, cooperative principles and not-for-profit status. Do these things even matter to the average Joe or Jill?
I’ll warn you in advance that this article is a little contrarian, especially from me, a card-carrying credit union advocate who believes in the credit union difference. Heck, not only does my company work exclusively with credit unions, I’m now the chair of $45 million/2,000-member Mount Lehman Credit Union, Abbotsford, British Columbia. So I’m definitely all in.
Here are four topics to consider as you put together your CU’s business and marketing strategies.
Can’t Hide Lousy or Missing Tech
We can talk all day long about how awesome our credit union is, how it’s democracy in action and community involvement personified, how our not-for-profit status allows us to offer better loan rates and better returns. But if your online banking is lame or your mobile app stinks or, worse yet, you don’t have an app or personal financial management system, or online account opening or remote deposit capture or the next must-have technology, you are a second-rate choice in many current and potential members’ eyes. It’s a sad reality, but the deeper we get into the technology revolution, the harder and more expensive it is to keep up.
Your credit union doesn’t need absolutely everything, but you do need a suite of compelling technology products and services to get on the consideration list and to keep your members satisfied. Make technology a strategic imperative, prioritize what technology is necessary in your situation and make sure you are aligning your credit union with progressive technology vendors that get the importance of user experience and simplicity.
This is obviously easier for larger credit unions with deeper pockets, but small credit unions can’t throw their hands up in the air.
Take $27 million/4,700-member Element Federal Credit Union, Charleston, W.V., for example. Under the leadership of CEO/Innovator Linda Bodie, Element FCU transformed the organization from a traditional banking environment to one that is innovative, personal and interactive. Since Bodie joined Element FCU in 1998, the CU has digitized 99 percent of its paper, streamlined business processes with technology and implemented electronic check deposit services. Element FCU also co-developed and deployed the world’s first remote deposit capture iPhone app.
Without an innovative spirit and the products and services your members and potential members need, no amount of feel-good story and principles will win them over (I know this one is pretty status quo; the contrarian stuff is coming).
What’s in a Name?
It sure bugs me when I hear people say, “I’m going to the bank today,” when I know full well they are actually going to their credit union. But to them it’s their bank. We grow up with piggy banks not piggy credit unions, movies and TV shows have bank robbers, not credit union robbers and the game Monopoly requires a banker, not a credit union employee. From early on, we are programmed and educated to understand what a bank is, so why not embrace it? Why are we so hung up on “Credit Union?”
I wrote an article on my blog, “Credit Union Name Dropping,” where I bemoaned that nine of the 20 largest credit unions in Canada have dropped “Credit Union” from their logo and how they answer the phone. I argued that this shocking trend undermines a united CU movement and should be stopped and reversed immediately (I made a good case; you should read it).
The trend is not as pervasive in the United States, but it’s starting. $1.5 billion/202,000-member GTE Financial, Tampa, Fla., took a lot of industry heat when it dropped “Federal Credit Union” from its name in favor of “Financial.” President/CEO and CUES member Joe Brancucci told Credit Union Times, “No question it was the right decision to make. To me, it was interesting to hear all the academic discussions and in some respects, the histrionic discussions. But I can tell you the pundits were absolutely incorrect. We’re talking about having engaged members.” Among the reasons for the rebrand were reaching out to a younger demographic outside of the GTE legacy, getting up to speed on the latest technology, a big push back into consumer lending and a greater commitment to transparency.
Hey, from my new-found contrarian point of view, you can’t argue with success. These big Canadian credit unions are performing very well, continue to grow and have all built very sound and reputable brands. And GTE Financial has reported great initial results. The name change combined with an aggressive push back into the local auto lending market resulted in new and used vehicle loans skyrocketing from negative 11.29 percent growth in 2011 to 70 percent growth in 2012, with a portfolio that increased substantially from $204 million to nearly $348 million during the same time period. Membership numbers have also rebounded. In 2011, GTE Financial’s net member growth was negative 8,000. Last year member growth swelled to 16,070.
Just because they have a different last name doesn’t mean they’re not credit unions. They’re still governed by the same rules and laws and they’re still part of the family. If you are looking to rebrand, you may want to take a deeper look into this strategy to see if it can work for your situation rather than discounting the option just out of principle. (I can’t believe I just said that!)
Me, Myself and I
Citizens in European and Asian countries tend to value collectivism over individualism, while those in North American countries tend to be all about “me.” This is stereotyping of course, but worth understanding. Collectivist orientations stress the importance of cohesion within social groups and, in some cases, the priority of group goals over individual goals. Collectivists often focus on community, society, nation or country.
Collectivism is the backbone of the cooperative CU movement. If we go way back to 1900, Alphonse Dejardins and his wife Dorimène Roy Desjardins, founded the first caisse populaire in Lévis, Quebec, based on concepts and principles that Alphonse had learned and imported from Germany. It was the first credit union-like institution in North America.
South of the border, businessman and social entrepreneur Edward Filene championed workers’ rights and pioneered the credit union movement in the U.S. He was instrumental in establishing industry-enabling legislation in Massachusetts in 1908 and he also donated a million dollars of his own money to CUNA’s predecessor organization, the Credit Union National Extension Bureau. These are both collectivist examples that birthed the CU movement in North America and certainly played to North America’s European roots.
However, North American society has moved more and more toward individualism over the last century. Individualists promote the pursuit of their goals and desires and so value independence and self-reliance. They advocate that interests of the individual should take precedence over the state or a social group. They oppose external interference upon their own interests by society or institutions such as the government.
Add super-charged consumerism and relentless marketing to this undertone of individualism and it’s no wonder so many are driven to have the latest gadgets or fashions and aspire to live luxurious lives beyond their means. Over-the-top celebrities are today’s role models, and baby boomer parents have enabled their Gen Y children to expect everything!
Of course, this is extremely black and white and, instead, we live in a continent that is made up of people with diverse motivations and beliefs.
However, from a CU perspective, what we should glean from this is that the CU difference may matter deeply to us inside the industry, but it doesn’t mean anything to Joe Citizen unless he’s getting everything he needs first: the best service, the best technology, the best advice, the best rates, the best accessibility and on and on. It’s OK to fawn over your members and make them feel like the center of their own universe. Over time, they’ll grow to love the CU difference and potentially get more involved. (Did I lose you with this trip down history lane? Stay with me!).
Somewhere in the Middle
Now that I’ve painted everyone as a self-centered individualist who demands all of the latest widgets, what’s a CU to do? OK, maybe I exaggerated a bit to make a point. Most people care deeply for their country and their community, but they do put themselves and their family first. If you can satisfy their banking needs at a level that is as good as or better than your bank competition, plus publicly demonstrate the impact your CU is having in the local economy, then you have a winning recipe.
Canada’s largest credit union, $17 billion/500,000-member Vancity, Vancouver, British Columbia, is doing that in spades. Well known as an extremely ethical, professional and caring financial institution, Vancity has recently wrapped that up into a brand called “Make Good Money.”
The platform and brand positioning boil down to making your money work harder while doing good things in the community. It’s smart, simple and beautifully demonstrated in everything Vancity does. Check out this webpage to get a real sense of it. This a huge CU (which, by the way, dropped “Credit Union” from its branding), with a big budget, but it offers plenty of lessons for CUs of every size.
Vancity has demonstrated that it is a good place to bank and that by dealing with a CU, you can get everything you need from a bank and more. The CU difference and the underlying cooperative principles are there, but they are not in your face. In fact, it’s all about the members and the impact they can have with their own money, both individually and collectively (see what I did there?). (Read more about Vancity’s “Make Good Money” brand in this free whitepaper.)
Consumer First, Credit Union Second
We can’t expect every member to be a CU zealot, but by giving them a solid place to put their money, convenience that offers accessibility, great service and great technology, your CU can remain relevant and competitive while maintaining what makes it uniquely a credit union. Good luck!
Tim McAlpine lives in Chilliwack, British Columbia, Canada. He is the President and Creative Director of Currency Marketing, an integrated marketing agency specializing in helping credit unions attract the next generation of members. Tim is best known as the creator of Young & Free and CUES Next Top Credit Union Exec, and co-creator of the CU Water Cooler.