It's Time For Credit Unions To "Chime" In About Doing The Right Thing

The mobile-only bank’s marketing gambit provides lessons in how to make lemonade out of lemons.

 
 

Credit unions were created to do right by their members. That’s baked into their DNA and in their charters. They succeed by sticking to their mission: providing affordable, fairly priced financial services and service that puts members, and their communities, first.

So, why is it so hard for so many credit unions to deliver that message? It’s one thing to do all the right things, but it’s another to get people to sit up and take notice, to give credit unions the credit — and the business — where it’s due.

Instead, the movement’s competitors — old and new — are publicly pounding their chests about doing the right thing like it’s something new. That’s true even when the “right thing” unravels in the fine print.

Take the case of Chime, a mobile-only bank backed by Bancorp Bank that’s making a big impression in the marketplace by advertising itself as “the bank that has your back” and promising “an early payday” by depositing pay into accounts “up to two days early.” It also offers no hidden fees and 38,000 fee-free ATMs.

For too long, credit unions have let the big banks with their big marketing budgets play the hero by promoting as new and different and special the very things credit unions quietly do every day.

Alix Patterson, Chief Experience Officer, Callahan & Associates

None of this is new. No hidden fees and thousands of fee-free ATMs have been credit union standards for years, if the credit union belongs to the big networks or offers shared branching.

But let’s unwrap this a bit more. It’s standard operating procedure for many credit unions to credit paychecks as soon as the ACH notification comes in. Heck, the movement started as a workplace benefit, and many credit unions just keep doing this. It’s second nature, not an advertising hook.

Plus, how good is this offer, really? Besides the caveat of “up to” two days early, check out this Chime footnote disclaimer on its website: “Faster access to funds is based on a comparison of traditional banking policies and deposit of paper checks from employers and government agencies versus deposits made electronically. Direct Deposit and earlier availability of funds are subject to payer’s support of the feature and timing of payer’s funding.”

So, it’s faster than walking into a branch with a paper check and waiting for a hold to come off? Chime is comparing that to direct deposit, like direct deposit is a new thing? And even then, it might have a hold on the settlement?

Compare that to, say, Digital Federal Credit Union ($9B, Marlborough, MA), which has a longstanding practice of crediting members’ accounts when it receives the deposit notice instead of when the money arrives. The move costs the credit union a day or two of lost interest and use of that money but says it’s well worth it.

Chime’s second value proposition claims no hidden fees, ever. It starts with “no overdraft.” Notice it doesn’t say “no overdraft fee” because Chime doesn’t allow overdraft at all — it just declines the charge.

That’s not necessarily a bad practice. In fact, it’s how my family sets up our teenagers’ debit cards. But for many, overdrafts are a fact of life. It’s how they manage money. Done right — which means not processing transactions in an order that yields the most fees — overdraft can save people from using payday lenders.

I’m not picking on Chime because it’s particularly nefarious or anything like that. But, Chime’s successful launch is the result of smart marketing, not the result of doing anything different or new for consumers. Chime is selling big ideas and hoping no one reads the fine print. Most people don’t. Even if they do, unless they know credit unions, they might not realize all this isn’t such a big deal.

So, what can Chime teach credit unions? Namely that they must get better at tooting their own horn, at publicizing their good work and doing the right thing. It’s not just friendly service. It’s a business model built around making choices in the best interest of members.

Credit unions, in fact, actually do amazing things. Callahan writes about that all the time at CreditUnions.com, and it’s not hard to find great success stories to share. But the movement must work harder to get that message out beyond an industry audience.

For too long, credit unions have let the big banks with their big marketing budgets play the hero by promoting as new and different and special the very things credit unions quietly do every day.

They even do that when they’ve been bad. Remember the Wells Fargo cross-selling debacle, and how the big bank promoted itself as a reformed citizen? Along with expensive, extensive advertising, the mega bank is now telling the market the following values guide every action it takes:

  • What’s right for customers. We place customers at the center of everything we do. We want to exceed customer expectations and build relationships that last a lifetime.
  • People as a competitive advantage. We strive to attract, develop, motivate, and retain the best team members — and collaborate across businesses and functions to serve customers.
  • Ethics. We’re committed to the highest standards of integrity, transparency, and principled performance. We do the right thing, in the right way, and hold ourselves accountable.
  • Diversity and inclusion. We value and promote diversity and inclusion in all aspects of business and at all levels. Success comes from inviting and incorporating diverse perspectives.
  • Leadership. We’re all called to be leaders. We want everyone to lead themselves, lead the team, and lead the business — in service to customers, communities, team members, and shareholders.

That sure sounds in some regards like the cooperative principles that have guided the credit union movement since its inception. And every successful credit union can point to its products and success stories as proof.

There’s no silver bullet here, but perhaps the best tack is to stress your impact and the value of your products and services compared to the competition through every effective channel at your disposal. All the while keeping up the good work and doing the right thing.

This article appeared originally in Credit Union Strategy & Performance. Read More Today.

 
 

Sept. 18, 2019


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