In With The New, In With The Old

Credit unions still have an opportunity to capture dissenting consumers from large banks, even a year after Bank Transfer Day and the Occupy Movement.

 
 
Subscriber Package: On The Cusp
» In With The New, In With The Old
» A Warm Welcome Nourishes New Members
» Member Onboarding Perfected

*The data in this article has been updated to represent figures as of June 2014.

Millions of disgruntled consumers created a sea of multicolored posters around the country, protesting Bank of America’s $5 fee increase in 2011. Their activism —coupled with the Occupy Wall Street movement plus Kristen Christian’s Bank Transfer Day — highlighted the benefits of the cooperative model and prompted a growing number of people to join credit unions.

average-member-relationship
AVERAGE MEMBER RELATIONSHIP
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Although the number of consumers that switched financial institutions on Bank Transfer Day wasn’t as dramatic as first hypothesized, credit unions are still capturing individuals tired of their bank’s profit-maximizing antics. Now it’s time for credit unions to show new members why they switched and why they should fully embrace cooperative financial services.

Many consumers that switched didn’t completely leave their for-profit banking institutions. According to a Javelin Strategy and Research report, “Bank Switching in 2012: Giant Banks Remain Highly Vulnerable as Customers Weigh Fees and Convenience,” only 3% of consumers walked away from big banks altogether. Another 11% of consumers say they are likely or very likely to switch financial institutions within the next 12 months. And approximately 21% of Bank of America customers and 25% of Citibank customers are planning to switch financial institutions within the next year.

This means credit unions still have the opportunity to not only capture new members but also onboard them in a way that persuades new members to use the credit union as their primary financial institution. These consumers represent $675 billion in assets. Although credit unions are more focused on lending in today’s economic environment, these assets can be advantageous in the future.

Member growth at credit unions is accelerating. For eight consecutive quarters the cooperative financial services industry has posted membership gains, as credit unions have seen 5.5% growth over the two year period starting in June 2012. But cooperative financial institutions aren’t just adding new members; core depositsshares, and loan portfolios are also expanding. Nearly all areas of the loan portfolio increased in the second quarter of 2012. As of June, loans grew 10.3% and shares grew 3.8% year-over-year.

New members tend to slowly transfer their financials to another institution, which leads to a drop in average member relationships. But today the opposite is happening. During the second quarter of 2014, member relationships hit $16, 484, up 2.80% from $16,034 in June 2013. By maximizing the movement with successful onboarding programs, credit unions are welcoming new members and building complete relationships.

The consumers that credit unions can snatch from the banks share similar traits to those who have already moved their financial relationships. Notably for credit unions, most of these potential members are young. Consumers between the ages of 25 and 34 accounted for 33% of individuals that switched financial institutions during the nine months before and after Bank Transfer Day. Mobile banking is an important service for these consumers. Additionally, 11% are willing to pay for services such as money orders, cashier’s checks, safe-deposit box rentals, and mobile deposits, according to the Javelin report.

member-growth-leader-table
MEMBER GROWTH LEADER TABLE
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Credit unions need to make an outstanding first impression within the first 90 days. Research has shown a consumer’s lifetime profitability and value is determined within this timeframe. Engage members within weeks to make sure the credit union understands their needs and leverages opportunities to cross-sell products. Successful onboarding relies on a great consumer experience, which is a major way credit unions competing against banks can differentiate themselves. Hand-written thank you notes, personalized marketing, and warm calls are onboarding tools that credit unions use to impress members.

The work doesn’t stop after the member walks in the door. To make the switch seamless and positive, credit unions must properly onboard new members so they continue to see the advantages of banking with cooperatives. Credit unions can’t afford to lose members because of dissatisfaction with products, services, and customer service. Ramp up member onboarding programs and focus on the technology and convenience that prompts consumers into taking the next step toward financial stability with a partner that works for their best interests.

Want to learn more? Click on the articles in the Subscriber Package below for a deeper dive into On The Cusp.

Subscriber Package: On The Cusp
» In With The New, In With The Old
» A Warm Welcome Nourishes New Members
» Member Onboarding Perfected
 

 

 

Oct. 15, 2012


Comments

 
 
 
  • Great article. I believe that onboarding is critical to credit union growth and the key to a good onboarding program is striking a proper balance between service and sales.
    Paul
     
     
     
  • Good article, we all play a fine line in regards to fees, when I first started in the credit union industry 30 years ago, back then my CEO said, “ remember that when the member walks through the door he is your boss, not me, we all did to remember that. ****
    ****
     
     
     
  • Our credit union is conducting a complete overhaul of our member onboarding process, which traditionally was done, more or less, by one person in business development. Moving forward we will train, empower and incentivize all front line and support staff to suggest products and services that may save our members money -- a win-win situation for the members and the credit union.
    Todd Nelson
     
     
     
  • We began a member referral program in September, and already have generated a significant amount of loan growth as well as share deposits. Our current members love the fact we are thanking them and appreciating what they are doing for our credit union.
    Tina
     
     
     
  • I agree that Member onboarding is a great way to thank new Members and open the door for future communications. We began our program early in 2010, and its worth noting that our best response rates are during the spring to summer months. A welcome is sent within the first 30 days, and follow up offers are spaced about a month apart thereafter, keeping within the 90 day window of opportunity. Streamlining this process through Harland Financial Solutions "touche analyzer" and "messenger" has made the task quick and easy. Monitoring and tweaking of the offers are a must every quarter to analyze what is working and what needs improvement.
    Pati Maguy