NEW YORK—For all the good that credit unions do for consumers, they could do a lot more if the movement could find a way to debunk the many myths surrounding the industry.
That was the focus of a panel discussion on the first day of CO-OP Financial Services’ THINK 17 conference here, as a group of bloggers, authors and credit union executives attempted to pin down the biggest misconceptions surrounding CUs and how to help consumers (and credit unions) get past them.
According to Laura Thompson, SVP and chief information officer at Orange County’s Credit Union in Santa Ana, Calif., the confusion starts with who exactly can join a CU.
“It’s actually quite easy to join a credit union, with few restrictions,” she said, adding that much of the public seems to believe that someone must belong to a particular profession or a specific geographical area in order to be eligible for membership.
Plus, she added, the name itself – credit union – confuses many consumers. The word “union” “carries a bad connotation for some people,” she suggested, in reference to the distaste many people feel towards labor unions in the country.
Panelists also tackled the concept of size, noting that while most individual CUs are small when compared with the big banks, credit unions do play a significant role in some markets.
Todd Clark, president and CEO of CO-OP Financial Services, noted that in Washington and Oregon credit unions already account for about 50 percent of all deposits at financial institutions – definitely not a small number.
And small doesn’t have to be a bad thing, said personal finance author Helaine Olen, since MSRs at many credit union branches know individual members by name and can offer direct, personal service in a way many banks can’t.
“They [credit union employees] know who you [the members] are,” she said, adding that technological developments like ATM networks help credit unions provide ”big” products and services regardless of the institution’s size.
And that type of technology is helping to level the playing field, said author and entrepreneur Jason Vittig. He emphasized that CUs must embrace a philosophy of “high tech and high touch,” embracing a digital strategy to make banking as easy as possible for members.
“Convenient, mobile apps are particularly important for millennials,” he stated.
Technology and mobile platforms, said Thompson, will allow credit unions to compete “on a national level” with banks.
“Now, anything you could once do at a branch, you can do online,” she added.
How to beat the banks’ big budgets
Credit unions also frequently lack the advertising budgets of big banks, and many CUs don’t advertise at all, observed Thompson.
”Most of credit unions’ new members come from business referrals or simply by word-of-mouth from friends and family,” she said. This stands in marked contrast to big banks, which often boast huge advertising and marketing budgets.
Olen observed bank branches themselves serve as a kind of “advertising vehicle,” citing that in large cities like New York, there seems to be a Chase or Bank of America branch on every block. Credit unions, in contrast, cannot afford to build and maintain a large number of brick-and mortar branches -- hence, their names and logos are not familiar urban landmarks to passersby in big cities.
“And millennials are very brand-sensitive,” she told the crowd. “We must be more proactive.”