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BIGGER ISN’T BETTER

BIGGER ISN’T BETTER
Posted: May 2, 2018
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Act Small to Gain Trust

[Editor's Note: This article was previously published in Credit Union Times, and has been modified.]

There is no doubt that the credit union industry has been and still is going through quite a bit of change.  From mergers and acquisitions, to regulatory changes, to incorporating technology and attracting younger demographics. Overall, despite the shrinking number of credit unions; membership, loans and share numbers are up. According to Callahan’s Trendwatch Year-End 2017, The Annual Report for the Industry data, total credit union membership reached 112.9 million, up from 108.2 million at the end of 2016. While new auto loans (13.2%), used auto loans (10.3%), first mortgages (10.2%) and credit cards (9.2%) lead the way in annual growth among loans outstanding, and year-over-year growth in share drafts (10.0%), regular shares (7.1%) and share certificates (6.3%) outpace the rest of the portfolio. However, after being somewhat of the “anti-bank”, many argue that credit unions today are beginning to minimize the fact that they are credit unions and changing their profiles to look and feel more like retail banks in order to compete with their financial counterparts. Many have also been incorporating as many banking lingos in their messaging as they can. However, this may not be a good strategy.

 

Analysis from the recent Landor Pulse of trusted financial services brands showed that retail banks were ranked close to the bottom in trustworthiness. The analysis stated that “… retail banks are still struggling to regain that trust. Credit card brands, for the most part, scored higher than retail banks, with online payments brand PayPal the clear leader.” The article stated that “the financial services industry has been dealing with trust issues since the meltdown in 2008.” This was possibly made worse by the instances of fraud that have been plaquing the industry in recent times. It then gave further details on the analysis, which was based on data from the United States BrandAsset® Valuator on the first half of 2017 (https://landor.com/news/landor-pulse-paypal-leads-trusted-financial-services-brand).

 

In light of these trust issues that retail banks are grappling with, it raises the questions, are credit unions making the right move when they position themselves like retail banks? And, how can credit union marketers ensure that they are creating the right brand image?

 

In an interview with Landor’s executive director of financial and professional services, Louis Sciullo, he stated that “Trust is intrinsic to financial services.” He added that “The closer the institution is to the community that it’s in, the more likely it is to be trusted …” and that there are “… more opportunities when you are an institution that knows the customer and the community they are from rather than them feeling like just a number …”

Sciullo asserted that based on the data there is somewhat of a handicap with being associated with a bank. He acknowledged that with credit unions becoming larger through mergers and acquisitions comes bigger issues as it pertains to cybersecurity, technology, compliance and regulatory changes. However, he said that there are “Big opportunities for credit unions that lean into their connection with the community and their understanding of a community, as well as the demographics of it, what drives it and how they function and provide services to it to derive value propositions for themselves.” In fact, he added that, “Ones that are smaller have a more compelling story to tell because they can become more relevant and point to specifics and the geography that they are located in. However, as they become bigger they probably lose some of that cache that could be an interesting selling point.”

 

Echoing Co-Founder and Millennials and Gen Z Researcher, Jason Dorsey’s sentiments that “Generations are not a box that every one of us here will fit neatly in”, Sciullo remarked that “You don’t sell to a generation, you sell to people and people have different paths in their lives that create their individuality.” This is the reason why it is so important for marketers to begin by creating buyer personas. He also noted, like Dorsey at Trellance’s 2017 annual conference (http://www.thepaymentsreview.com/to-attract-younger-generations-to-credit-unions-start-by-explaining-what-one-is), that there is a lot of work that credit unions can do to change perceptions and gave the example that many consumers still believe that you have to be a part of a labor union to be a member of a credit union.

 

Sciullo added that credit unions should focus on “… demonstrating how they are and how they have been for a long time, which is really essential tools in the economy and grounded into a community approach …” This is a story that he says not many people are telling. He also added that it is valuable for institutions to think about their impact on communities. This is where Corporate Social Responsibility (CSR) or Environmental, Social and Governance (ESG) programs play an important role. “There is value in being able to demonstrate to people the value that a company plays in the economy and the community. This seems like a very good area for increasing trust,” stated Sciullo.

 

As with many things, it’s a balancing act. Credit unions need to grow to achieve economies of scale, and to offer state-of-the-art digital products to remain competitive. At the same time, members expect that level of personal service that comes from a credit union being close to its community. CU marketers need to formulate strategies to incorporate this story of community through face-to-face branch and outreach experiences, social media postings and interactions, call center conversations and direct mailing campaigns. Including a strong CSR or ESG campaign as seen here from Del-One FCU, Maine CU League and Summit CU, to showcase your credit union’s impact could only enhance this story.

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Shelly-Ann Wilson Henry

Shelly-Ann Wilson HenryShelly-Ann Wilson Henry

In her role as PR & Communications Manager, Shelly-Ann plays a critical role in the development, distribution and management of the content that supports Trellance’s thought leadership agenda.

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