Let me get some things out of the way first: I work for Callahan & Associates and support the credit union movement; I recognize the differences between credit unions and banks; and I understand the concept and details behind shared branching. But I have a confession to make…my primary financial institution isn’t a credit union. It’s PNC.
I grew up using my parents’ small community financial institution, First Federal Savings & Loan, a $100 million thrift located in coastal Maine. The institution was focused on service. I knew the three tellers and manager of my hometown branch (and they knew me) by the time I was depositing checks from my ninth birthday. When I went to college, I maintained my relationship with them – bearing $3 ATM fees as necessary, and mailing work-study checks back to Maine once a month.
The breaking point came when I moved down to Washington, DC. No longer could I justify the ATM fees and, to be fair, I wanted my new independence to extend to my finances. So, about a year ago I opened an account with PNC’s Virtual Wallet.
Primarily an online banking suite of linked applications, the Virtual Wallet is three accounts: low-interest checking, low-interest savings, and high-interest savings (dubbed Spend, Reserve, and Growth, respectively). But why didn’t I choose a credit union?
- Convenience – While myths abound about Gen Y, one fact exists: the majority of us still have to use a branch. Living in a city, the mile to the nearest credit union branch seemed too far to hike both ways on my lunch break (several branches were closer, but had restricted access). Now, I visit the PNC branch 100 feet from my office building, once per month to deposit reimbursement checks and some cash. I also checked distances for the nearest ATM, but PNC won that round as well.
- Online Banking Suite - Previously I was using my community bank for checking and an E-Trade account for high-interest savings. Yet I grew increasingly frustrated with the three day transfer period between accounts. The linked accounts in PNC Virtual Wallet provide a high-interest savings account with same-day transfers. I also regularly use their “Wish List” function within online banking to list savings goals or track money saved for future purchases. Through mobile banking, via an iPhone application and SMS messaging, I can also easily check balances without using the full online banking suite. Automatic alerts and transfers, in addition to standard bill pay, complete the picture.
- Rates – The rates were great a year ago (3.00% APR on the high-interest savings in June 2008). Right now they’re good (1.75% at the time of publication), and still better than the competition.
However, I have experienced some issues with PNC. I was supposed to receive a box of checks after opening an account – crucial to fully moving over automatic payments and direct deposit. It took six weeks, four phone calls, and two secured email messages before receiving the checks. Limits on the account include a $0.50 fee per check after three written checks per month, the high interest savings is limited to six withdrawals per month and only applies to account balances less than $25,000 (not that I have to worry about that).
What can credit unions learn from my tale? Few, if any credit unions, can offer the range of services that PNC, or other national banks can. I would switch to a credit union if they offer a high-interest savings account, cool online banking features and are reasonably convenient. The last two qualifications overlap. Offering remote deposit capture would eliminate 75% of my branch trips and I can easily use shared branching for the rest.
Developing a dynamic online banking suite is quite possible. Offering the high interest rates with today’s spreads may be more difficult, but credit unions across the country are finding ways to offer high-interest checking accounts. All of the features that I desire exist at credit unions today – yet I haven’t encountered an institution where they exist together.
With credit unions’ unique ability to collaborate, smaller organizations can leverage others’ expertise and resources. Examples of collaboration in technology and product development are beginning to emerge throughout the industry. What can your credit union create with the right partners?