More than one “primary financial institution”
Although we’d like to believe that online members are only using their credit
union for their financial service needs, the reality is that most of these members
may have two or more financial institutions that they consider to be “primary”.
Think about the product penetration rates for online members at your credit
union – do more than half of your online members have a mortgage loan, auto
loan, or credit card at your credit union? Considering the higher income levels
of the majority of online members, you can assume that they do have a need for
these products, but they are using another financial service provider.
As more and more financial institutions try to attract customers via online
access capabilities and incentives such as free bill pay, they’re also encouraging
these new customers to open or move their other accounts. And every time your
member visits another financial service provider’s site for their account information,
they’re receiving marketing for other products or services. But our research
indicates that credit unions still have an advantage in terms of credibility
and being a trusted advisor. While the potential for convincing online
members to switch services and assets to your credit union is great, successfully
accomplishing this is not guaranteed.
Understand The Reasons For Using Other Providers
Although there are a myriad of reasons why members chose to use multiple providers,
some members cite inertia and the fact that their credit union hasn’t effectively
made the case or even asked for more of their business. Relationship-based pricing
is one way to convince members to consolidate their financial services at the
credit union. But are there barriers you’re not aware of?
Callahan’s Survey Consortium
(shared cost research sponsored by a group of credit unions), is currently conducting
an online survey of credit union members to investigate the financial service
needs and usage of online members, including their reasons for using other providers.
Some of the member comments we’ve seen so far indicate that credit unions need
to consider whether they’re providing the right tools and information to convince
members to increase their relationship. A member comment we received just this
past week illustrates this:
“I got an home equity online from Wells Fargo. Now I wish I had done
this with my credit union. It's a hassle to transfer the loan to another institution
but I would do it if it were easier.”
Making It Easy for Members to Increase Their Relationship
How easy is it for your members to open or fund new accounts?
Credit unions should evaluate their website and procedures to consider how painless
they’ve made it for their members to open new accounts. There’s a number of
both online and offline ways that credit unions can streamline this process.
A recent trend is the use of “switch kits”, a tool to make it easier for members
to open and fund new accounts. Switch kits provide members with the information
and forms needed to complete the new account process. These kits are either
offered online through a fully automated process or members can obtain them
at the branch.
Another online tool is account to account transfers, whereby members can easily
transfer more funds from external accounts. But credit unions shouldn’t wait
to implement these more costly solutions. At a minimum, a relatively easy solution
for credit unions to implement is online access to PDF files containing the
necessary forms online so members can complete them before coming to the branch.
Credit union websites should also provide a thorough explanation of the steps
to open/fund accounts to demonstrate to members the ease of opening or switching
But do these tools go far enough in lowering the barriers?
What else do online members need to help them make a switch? As you’re planning
your online strategy for 2004, consider whether your credit union is effectively
leveraging the online channel to help members increase their account relationship.
Do you need more information on the financial service usage of your online
members? Do you want to be kept updated on the results of this survey? For more
information, please complete the form below: