Credit unions are booking loans and accepting deposits at a pace never seen before. Membership has hit new highs. Things couldn’t be better, perhaps, but they could certainly get worse.
Bank and non-financial institution competitors are lining up to take credit union wallet share even as it reaches new peaks in auto lending, mortgages and more. Consumers, meanwhile, are seeking the most friction-less ways of conducting their personal business (seamlessly integrated mobile banking, anyone?) while at the same time many are placing new value on how they’re treated and how through their own actions, they treat the world.
Credit unions of all sizes are benefiting from this opportunity for growth in volume and value, as technology allows in-demand services to scale down-market, empowering cooperatives to offer the same services as big banks without acting like one.
This all comes together to create either the perfect storm or the perfect opportunity for credit unions. To make it the latter, the movement needs to seize the day and frame the way it does business in its messaging. We’re off to a good start. By original design, we already have a head start in capitalizing on the “Experience Economy.”
The “Experience Economy” concept has been kicking around since a 1998 article in the Harvard Business Review. The general idea is that economic growth — including yours — depends on the value of the experiences you provide. Goods and services are no longer enough. They’re commodities and over-reliance on them alone can and will lead to “disintermediation.”
That’s a big, trendy word for losing members and business. Repeating “lower loan rates, higher deposit rates” like a mantra or a metronome is no longer cutting it. That’s letting the banks frame the debate. Credit unions need to become much better at communicating their value. And their values.
The industry needs to talk about its ownership structure, about how credit unions by their very design act in the best interest of its member-owners. We need to look for opportunities to share our values, our history, and we need to walk the talk, to deliver on that difference we promote even as credit unions continue morphing from the SEG-based savings drawer to substantial financial institutions with considerable geographic and financial reach.
We’re already competing successfully. Nationally, credit unions increased their loan portfolio 10.6% as of June 30, 2015, compared to 5.4% for banks. By loan type, credit unions posted 8.2% growth in real estate, 15.4% growth in auto, and 6.8% growth in credit cards in the same quarter, year-over-year. Banks posted 4.4%, 7.2%, and 2.2% growth, respectively.
We know the data. But what about the members and strategies behind those numbers? It comes down to story telling. Not just about how your credit union offers such-and-such a rate and how you can save everyone a few bucks here and there. It’s about more than that.
Telling the story of your brand is not telling the market a story about you. It’s about your members and the value they get when engaging with your product or service. And about the values you share. The most powerful brand stories are the ones that prioritize members as the stars. Think of your credit union as a supporting character. Frame your story as their story.
Here are examples of clear, direct statements of fact that can be sliced, diced and marketed in multiple ways across all your channels, social and traditional.
We helped (your number here) new families enjoy the benefits of home ownership.
We’ve saved our members (your dollar figure here) through refinancing existing loans at lower rates.
We helped (your number here) members break the payday lending cycle.
We helped send (your number) students to college, and (your percentage here) were first-generation.
There’s a lot of need out there. By some measures, three-fourths of Americans are living paycheck to paycheck. Half can’t cover a $400 emergency without selling something or borrowing money, and more than a third have more credit card debt than savings. Credit unions already are inclined to address those issues, and in ways that also outdo the competition in serving the more economically secure.
This new age of competition is more about than simply defending our turf against banks. We all remember Bank Transfer Day. A lot of credit unions made hay on dissatisfaction with the big banks, promoting themselves as “non-banks” and “un-banks” and other such iterations. The resulting member surge was ballyhooed, but that was such a short-term event that it almost smacks of gimmickry. And it won’t work long-term. Consumers are either too savvy or too bombarded or both for that “we’re not them” message to keep sticking.
Ultimately, it’s all in the experience. Credit unions deliver a unique combination of value and values, something consumers respond to when they know about it. We need to make sure they do. That reality has never been more critical than now, when so much same-game service has been available from so many competitors who don’t share the credit union philosophy.
This column originally appeared in the Oct. 21 edition of Credit Union Times.