Credit unions have a significant opportunity in this troubled economic climate to promote the credit union difference and differentiate their products from the competition. In a recent Internet Strategy Consortium survey regarding member loyalty, members cited this difference as a primary reason for recommending the credit union.
"The most important reason why I moved our accounts to the CU is it is not a big conglomerate bank who only thinks about profits that benefit themselves, at the CU the profits benefit everyone who banks there."
This is a great opportunity for credit unions to leverage their strengths, their non-profit status, trusted advisor positioning, and their lack of involvement in the subprime loan crisis.
"I believe the benefits of a credit union are far better than those of a "normal" bank. The service is much better and the rewards are better. You feel like someone really cares about your finances besides you."
Both members and employees are feeling the effects of a difficult economy. Credit unions are challenged by the difficulty of maintaining service levels while reducing their own expenses. Tighter financial situations faced by members are resulting in a greater focus on reducing personal expenses. They may be less forgiving of fees and deposit rate differences. While members value their credit union relationship, some member segments may be more focused on short-term gains, as they rate shop to replace stock market gains.
"The CU is not full service. It needs to add a money market account. Right now the savings rates stink and offer no in between account or ability to maximize returns between a savings account and a 90 day certificate. In today's economy my 6 months of needed savings is in a money market account earning 3% versus a CU savings earning less than 1%."
Despite the Economy, Members Are Interested In Opening New Accounts
The Internet Strategy Consortium survey revealed that members are considering a range of new products and services in 2009, including both loans and deposit products. The top products of interest are CDs (16%), mortgage loans (15%), auto loans (13%). However, interest levels vary among different segments:
- 15% of members aged 18 to 29 are interested in credit cards.
- Members under age 40 have greater interest in mortgage loans and auto loans than members over age 50.
- Higher income members $86K + have the greatest interest in CDs.
Ensure Your Website Enhances Member Research and Account Opening
This is also a critical opportunity for credit unions to make the online channel more robust. Consumers are increasingly turning to the internet for information, account monitoring, and new account opening. Some credit unions are seeing increased online activity, as members login more often to track deposits and payments, and avoid fees. Members are also looking to their credit union for financial information and assistance with their money management and budgeting needs. Members are turning to their credit union as a resource to learn about financial topics and research alternatives.
Credit unions need to consider how to make it easier for members to open new products and services at the credit union, as well as the best way to market to different segments.
Younger members are most interested in opening credit cards. Given their interest in the online channel, it is critical to ensure that you have straightforward online information comparing different products as well as an easy to use online application. It is important that credit unions highlight their benefits over other card providers, particularly for terms and rates.
In the low-rate environment with high financial uncertainty for members, credit unions need to figure out ways to make their CD options more appealing to members. Some credit unions are offering more flexible options to reduce the risk of locking in their money, such as one penalty-free withdrawal for longer term CDs and "bump"-up" rate options. For a quick list of the different rate deals and promotions available, the Bank Deals Blog has daily updates on the types of specials offered at credit unions and banks across the country at - http://bankdeals.blogspot.com/.
Credit unions should also use the online channel to make CD administration more efficient, such as email or text reminders for maturing CDs, online capabilities for rolling over CDs into new ones, and online opening. Offering promotions to encourage members with saving accounts or automated saving programs to open a CD can help encourage saving and grow the CD business line.
Finally, credit unions should review their websites and consider how their website helps or hurts the member research process. If your member is interested in a particular product, are all of the relevant details available online? How does your website position your product offerings compared to the competition?
For further information regarding the Internet Strategy Consortium and improving your website, please contact Denise Senecal at 800-446-7453, or by email at firstname.lastname@example.org