MADISON, Wis. – A new study issued by the Filene Research Institute suggests that fewer service and product offerings may be more efficient and beneficial for credit union members.

Too many choices may be bad for members, concludes the study, called “Choice Overload + Studying Human Capital.” Specifically, the study questions the assumption that offering credit union members more choices in the form of ever more products and services is better than offering fewer, more curated choices. By curated choices, Filene means rather than reducing the number of available options offered by the credit union, consider focusing on a smaller number of options promoted by the credit union.

Interviews with credit union CEOs indicate many recognize the need to pare their offerings to an efficient core group.

“Thus, instead of overwhelming a new member, you might choose to promote only a subset of options that will most likely appeal to a new member. Sometimes just telling consumers which option is the most popular is enough to help them make a decision,” concludes the study’s author, Alexander Chernev, associate professor of marketing at the Kellogg School of Management at Northwestern University.

Chernev says credit unions should organize around default. “It is not enough to offer lots of choices anymore: Consumers expect you to do some of the hard deciding for them, to make their decisions easier.”

Every day, he writes, consumers reel from information overload and decision overload, so they look for easier decisions. “Larger product assortments also lead to higher expectations, which firms might not be able to fill. And the ongoing drive to build the ‘right’ product for every taste means, paradoxically, that not every need can be filled.”

All of these factors make it harder to choose, and when it is hard to choose, the easier option is to not choose at all, says the study.

“Credit unions have made great strides toward becoming full service financial institutions,” writes Chernev. “But the urge to be all things to all people has a downside. In addition to driving up operating expenses, offering an endless array of product varieties may not be best for credit union members.”

Instead, he suggested they consider following this behavioral science to its logical conclusion with a well-considered assortment of products. “Somewhere between Walmart and Rodeo Drive, your assortment should be big enough that members have choices, and small enough that those choices do not overwhelm,” he concludes.


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