LAS VEGAS–Every credit union wants to be a consumer’s primary financial institution. But Neil Goldman said winning the PFI race requires a reality check, because many consumers do not have great views of credit unions.

 

For starters, said Goldman, a credit union consultant specializing in consumer and member research,  98% of people identify their PFI as the one where they have their checking account. Once a CU has a checking account, it is the conduit to multiple relationships.

 

“Without checking, a financial institution is invisible and its marketing is not seen,” he said.

 

Banks have “opened a lane” for credit unions “on the PFI highway” due to the recession, Goldman continued. He said high fees and poor service have given CUs an opportunity.

 

“There is negativity toward banks, but people who are not members do not have that strong a positive feeling toward credit unions,” he said. “Credit unions are doing better in public perception, but there still are barriers to change.”

 

Avoid The Roadblocks

 

Among the “roadblocks” that prevent people from moving from a bank to a CU, Goldman said his focus groups have found consumers expressing worry about the amount of time and effort needed to change direct deposit and auto pay, while others are concerned the change could even be worse. He said there is an “emotional challenge” for consumers to switch.

 

“Banking is a maintenance activity,” he assessed. “Consumers are not playing to win, they are playing not to lose. They are fine as long as they don’t have to think about their bank too much.”

 

Hear Good Things, But…

 

Another problem: consumers perceive CUs as having limited branches or that they cannot join a credit union without an affiliation. Goldman lamented this “lack of education and knowledge,” and suggested working together is a powerful possible solution.

 

“Benefits are irrelevant if a credit union is not in the consideration set,” he said, citing a survey that found 58% of consumers nationally are unsure if they can join a CU (yes 40%, no 2%). To combat this lack of awareness, he said CUs must give incentives.

 

Credit unions “own” perceptions regarding personal service and price, while banks own technology and convenience, he said, meaning CUs must play in the banks’ field or change the game.

 

“Service is less important to young people who use more technology, and price can be negated,” he warned. “Credit unions need to open the door by capitalizing on negative bank perceptions. It is important to address the barriers consumers have. Build awareness through marketing and minimize the hassle by going beyond switch kits. Implement a 'do it for them’ transfer program for people who visit lobbies.”

 

The 'Southwest Airlines Moment’

 

CUs also need to be strategic in marketing, Goldman said, adding offering the “right” solutions and knowing what to sell is key. He pointed out the recent movement of consumers from banks to CUs often has been to find free checking accounts as those options dwindle at banks.

 

“This is our 'Southwest Airlines bags fly free’ moment,” he said.

 

Credit unions also have to address the convenience issue, he said. While “convenience” used to mean branches, now the term includes an FI having online and mobile banking options. Branches, he said, are for “defense”: people want to know a branch is nearby if they have a problem.

 

“A lane is open, and it is up to all credit unions to take it,” he said.

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