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From Praying Over Finances to Claiming to Do God's Work

Noticed an ad recently that appeared in Enterprise, the magazine of Canada's credit union movement. The ad was from AIG and was headlined, "We can't predict the future..." Talk about living your message.

• While credit unions have done more than just about anyone when it comes to financial literacy, perhaps one reason more Americans don't pay attention to those efforts is they feel they are not only literate, but apparently, financial linguists.

Case in point: a new study from Javelin Strategy & Research found in Q3 2009 that 67% of consumers rate themselves as good or very good money managers (you can find more at www.javelinstrategy.com).

The survey found a number of other things worth paying attention to, including a few surprises that may affect your business, or at least some of your assumptions about member behavior. Among the findings:

  • Eight out of 10 consumers say they have had to get smarter about their finances and polled have adopted a money management system.
  • 59% report using online banking. Of those, one in three check their balances daily and half check their balances weekly.
  • "Surprisingly," noted Javelin Research, 50% of consumers still use old-fashioned pen-and-paper techniques to track finances by hand.
  • 20% track their finances on spreadsheets such as Excel.
  • Despite the "buzz" about personal financial management (PFM) software and websites, only 12% employ software like Quicken and a mere 5% use PFM websites.
  • Less surprising, 35% struggle with saving.
  • 28% have cut back on buying basic goods.
  • 23% said they found it harder to pay off their credit card bills each month.

What do consumers want from their financial institutions? Sixty-three percent would like to see all of their accounts in one place, even if they hold accounts with multiple financial institutions. The operative word there, I believe, is "see." The Bank Administration Institute (BAI) released findings two years ago that found a mismatch between financial institutions' desire to be "one-stop shops" and consumers' desire for the same, with consumers feeling it is safer to spread around whatever funds they may have with more than one provider.

But what consumers may have been indicating in the Javelin poll was a strong interest in account "aggregation" on one site. Aggregation was the buzzword du jour when the Internet was taking hold in the 1990s, but for a variety of reasons it never became the killer app so many had predicted. Maybe it's due.

• In case you missed it: during International Credit Union Day a few months back, Lebanon FCU in Pennsylvania had planned a nice celebration: a live radio broadcast, an Italian Ice cart, food, and more. But an armed robber changed all that when he burst into the credit union and fled with a bag of money. The events the CU had planned were cancelled, and the branch closed. But there was some good. LFCU ended up donating hundreds of spray sanitizers ordered up as a giveaway to local elementary schools.

• It's been push/pull for credit unions and banks in 2009 and now 2010. As much as many CUs would like to pat themselves on the back for pulling in an increase in membership numbers, the fact is many consumers were pushed out by banks, whether the result of their own egregious pricing policies, or just overall anger at the bailouts and then arrogance of those who received them. But why haven't even more people left their banks in favor of CUs?

Writing in the New Yorker, James Surowiecki offered his view. That, in turn, was picked up b the "Money Builder" column on Forbes.com, which examined, "Why Some Consumers Still Stick With Banks Over Credit Unions." Noting credit unions "generally offer a better deal," it pointed to Surowiecki's conclusion that the hassles of opening a new account may be one reason why people stay at one financial institution when a competitor, such as a credit union offers a better deal.

"What economists call switching costs ... are very high in the banking industry," Surowiecki suggested. "...One other factor that's similar to the switching-costs problem, but not identical to it, is the fact that banks charge hefty fees for non-customers to use their ATMs."

It's worth keeping in mind that a marketing campaign may have a big budget behind it and its creative may win awards, but its effectiveness ultimately comes down to very basic issues.

• Speaking of banks and credit unions, apparently the former aren't just upset over the latter's tax exemption anymore. Now banks want — indeed are claiming — a piece of what some CU leaders see as their higher purpose. In an interview with The Times of London, Lloyd Blankfein, the CEO of Goldman Sachs, not only does "God's work," but that the company has a "social purpose." That purpose, Blankfein suggested, is to help companies raise capital, create wealth, and create more jobs.

Apparently the devil must indeed lie in the details, because Blankfein didn't elaborate on where the social purpose was to be found in playing a key role in creating mortgage derivatives and other securities that helped lead to the economy's collapse.

Goldman Sachs has since painted itself as a victim rather than a perpetrator of that mess. But as was noted on Saturday Night Live recently, when you've got "gold" and "sack" in your name, don't expect much mercy.

Frank J. Diekmann is publisher of Credit Union Journal and can be reached at fdiekmann@cujournal.com.

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