Survey Uncovers Some Interesting Consumer Views

If you haven't seen any of the numerous consumer surveys by now (or the credit union associations pointing them out) regarding how consumers and big bank customers prefer credit unions, you probably haven't heard of that faddish Internet thing, either.

In one recent survey, this one from Mintel Comperemedia, there was the usual stats, but also some findings that are worth noting. For instance, while Mintel pointed to the large gap between bank customers and CU members who trust their institution (36% vs. 57%), that 20-percentage point gulf isn't what's notable, at least not for credit unions.

More than four-in-every-10 CU members don't trust their credit union? That should be some cause for alarm; perhaps CUs-most especially as they grow larger-aren't feeling as personal to members, or all CUs are finding themselves being caught up in the overall dissatisfaction with financial institutions more than many believe.

Another note from the survey: Approximately 60% of respondents said trust in a brand is more important than price. The study further found that "consumers would feel less resentful about paying fees if larger banks made a greater effort to do more relationship marketing with their customers."

• While on the subject, credit unions are fond of pointing out how much consumers like or even love them and how satisfied members are, as was proven by all the press releases churned out during International CU Week last week. But one analyst at a colloquium sponsored by the Filene Research Institute reminded that just because they love ya, doesn't mean they won't leave ya.

Harvard Business School Professor Frances Frei observed that plenty of businesses fail, even though nobody disliked them. "Credit unions particularly have to be careful about trying to be all things to all members, because a drive for across-the-board excellence is much more likely to lead to mediocre performance in all areas," Frei said (see related story).

• What about the criticism that regulators just aren't up to the task of overseeing sophisticated operations, such as corporate credit unions? NASCUS Chairman Tom Candon, who is Vermont's regulator, dismissed such criticism, noting that in many states the financial regulatory agency oversees both banks and credit unions, and that many of those banks are as large as or even larger than many corporates.

• Two CEO readers e-mailed me to make sure we didn't miss the headline on the "Chairman's Corner" in the NCUA Report of July/August 2010. It read, "Assessments are primarily determined by credit unions, not NCUA"! There's a headline just a few CUs would like to dispute.

• Being in a rush when it comes to decision-making typically only compounds the likelihood (and expense) of a mistake. Consider this. In Philadelphia, New Century Bank was going along nicely when another bank with the same name, based in California, failed (it was the second bank called New Century to do so.) That led to some confusion in the media and among customers, so the Philly-based bank's CEO ordered that a name change be made.

An internal suggestion was made proposing the name Customers 1st Bank. Reportedly, the bank's only trademark research on the name Customers 1st was a Google search and a search of GoDaddy.com for the domain. Finding the name not being used, New Century had its new moniker, and in short order invested $500,000 in changing its signage to Customers 1st.

But there was a problem. Actually several of them. It seems Alliance Bank already had registered Customer First as a trademark on its checking product, and the U.S. Patent and Trademark Office declined to grant New Century (the bank) its own trademark. Alliance Bank soon got an injunction in court preventing New Century from changing its name (the judge who heard the case called the quick move "impulsive.") Two other banks also use the brand their checking accounts as "Customer First."

New Century must write off the half-million-dollars and the related court costs, and now must invest in a new name (again). Sometimes it's great to be nimble, and sometimes not so much.

• Luggage fees have led to the rush (and some sneaky strategies) to board airplanes and grab overhead compartments before they fill. Received a text from a friend in credit unions recently that said, "Just got off my flight from Phoenix to Detroit. Eight people needed wheelchairs to board; just two to exit. It's a miracle!"

• It isn't just credit unions in the U.S. that are dealing with special assessments that don't feel so "special." In Ireland, the country's 414 CUs will likely be asked to come up with 24 million Euros to cover government-related costs related to guaranteeing 12 billion Euros in deposits. Banks in the country have already faced a bill of their own.

"The credit unions have not yet been billed for their participation in the deposit guarantee fund, so they receive the benefits of that but they have not yet had a charge for that," said Financial Regulator Matthew Elderfield. The premium being charged Ireland's CUs is 0.2% of eligible deposits, with a minimum of 25,400 Euros per credit union.

Frank J. Diekmann can be reached at fdiekmann@cujournal.com.