Credit unions had a great opportunity to attract new members during the recession and at the height of consumers’ frustration with banks. But with the credit union member growth rate stuck at 1%, has it been a missed opportunity?
As the economy recovers, consumers who have short memories are regaining faith in banks. But with quick action and focused effort, credit unions can still make gains, says Jon Haller, CUNA’s director of corporate and market research.
In your strategic plans, make it a goal to target:
• Young adults. Only 23% of adults age 18 to 24 belong to credit unions, and nearly 70% of nonmembers are “not at all familiar” with credit unions. They represent the next generation of “peak borrowers” and your credit union’s future loan growth.
Delivery Channel Trends
CUNA’s 2011-2012 Survey of Potential Members shows nonmembers:
• Increased their use of debit cards, decreased their use of credit cards, and, as a result, decreased overall credit card debt during the past year;
• Used branches less frequently;
• Continued their high ATM use; and
• Exhibited a high level of mobile banking use.
The survey suggests, however, that the use of these channels will change. ATMs will function more as self-service convenience devices.
The number of tellers will grow and their duties will expand. And branches in the future will become hubs for financial education and community gatherings.
In addition, there are 21.4 million nonmembers under age 18 living in members’ households. Make sure your credit union is rewarding adult members who sign up their children for membership.
• Baby boomers. Boomers own more than 70% of all U.S. consumer assets and use more balance-carrying services than young adults. Plus, they often influence the financial decisions of their parents and children.
• Hispanics. Hispanics comprise 16% of the U.S population, according to the 2010 U.S. Census. They’re projected to make up 30% of the U.S. population by 2050. Their median age is 27, as opposed to 41 for whites. And 40% to 50% of Hispanics don’t have a relationship with traditional financial institutions.
CUNA’s 2011-2012 Survey of Potential Members advises credit unions to:
• Appeal to young adults’ top priorities: financial stability, safety, and soundness; reasonable service charges and fees; and trust in the institution to do what’s best for the member or customer, not the bottom line. They value online banking more than any other demographic. Tie products and services to young adults’ current needs, and consider adding a youth advisory board.
• Retain baby boomers as they retire. Offer services for retirement planning, 401(k) rollovers, and tips on downsizing or restructuring debt. Make sure boomers know about your credit union’s savings and investment options.
• Attract Hispanic members by hiring a translator, posting notices about Hispanic-oriented events and promotions, and translating credit union hours. Offering remittances can be a good starting point for developing relationships with Hispanic members. But don’t overhaul your credit union to the point that non-Hispanics feel out of place
Nonmembers and PFI
CUNA’s survey also indicates some nonmembers are willing to change their primary financial institution (PFI) relationships. These findings note:
• 14% of nonmembers switched PFIs in the last two years;
• About 20% of satisfied bank customers say they’d switch banks with the right incentive, and that 5% are dissatisfied and are looking or willing to look for a new PFI; and
• Two of the top three reasons consumers left their previous PFI were lost trust and poor service, qualities credit unions pride themselves on.
Nonmembers say they can be best persuaded to join a credit union if it were more convenient than their current PFI, provided more free ATM locations, and gave them information about services and rate/fee advantages.
The top reasons nonmembers gave for choosing their PFI were convenient office locations, reasonable service charges/fees, and online/remote access to accounts. But if checking account fees were raised, 51% of nonmembers say they’d seek out a different financial institution.
The survey findings also indicate there’s significant value to:
- Using social media for marketing and connecting with nonmembers;
- Making sure consumers understand the concept behind a credit union (only 33% of nonmembers are “very” or “somewhat” familiar with credit union services and benefits); and
- Offering mobile banking and other new delivery channels.
LIBBY VERTZ is an editorial intern in CUNA’s publications department.