There has been a flurry of discussion in recent weeks about the dissatisfaction and outright anger being felt (and displayed) by consumers. Most of the anger has been directed at the financial industry and bog banks are certainly feeling the heat.
Bank of America, Citibank, and Chase have all recently announced that they will start to charge fees for a variety of services. Other banks are sure to follow. Consumers are frustrated and many want to make a change. Of course, credit unions are a viable alternative and every credit union should be aggressively marketing their services to the masses in an all-out effort to capture more of the market share.
Credit unions have also been the beneficiaries of some favorable media coverage in the past few days. Many articles published in respected newspapers have mentioned credit unions as a sensible alternative to banks. Columnist Annie Lowrey recently wrote an article for New Jersey’s largest newspaper, The Star Ledger, entitled “Banking On Alternatives” (Oct. 16, Sec. 2 p. 3) that said, “(Another) option is the neighborhood credit union. The vast majority offer basic checking and debit cards for zilch, and many offer better customer service than the big guys, to boot.” Lowrey ends her article by telling readers how they can find a local credit union.
Just today, New York Times columnist Joe Nocera wrote an Op-Ed piece called “We Can All Become Job Creators” that discusses Starbucks’ foray into business lending. Starbucks is partnering with Community Development Financial Institutions or CDFI’s to make loans to small businesses by way of donations from its millions of customers. “Americans themselves would start lending to small businesses with Starbucks serving as the middleman. Starbucks would find financial institutions willing to lend to small businesses. It didn’t take long for Starbucks to find the perfect partner: Community Development Financial Institutions.” (Oct. 18, p. A27) Of course, many credit unions are CDFI’s and hopefully will be working on this initiative. The column ends with, “with the government and banks unwilling or unable, it’s time we took matters into our own hands. At this point, who else can we count on?” Indeed.
But the switch may not be so easy for consumers. While it makes complete sense for consumers to switch to credit unions, there is a hurdle that needs to be overcome – the all-important “sticky” issue. All financial institutions offer some kind of “sticky” services. These are the products that are designed to keep account holders loyal. Online banking is perhaps the most successful “sticky” product. Coupled with Online Bill Pay, it’s more like crazy glue. Another article from The New York Times addresses this obstacle – “Online Banking Keeps Customers On Hook For Fees,” (Nelson D. Schwartz, Oct. 16, p. 1.) Essentially, once customers set up all of their payment accounts, schedule payments, etc., as frustrated as they are with their bank, they think that changing everything and transferring to a credit union is too much of a hassle. So, they’re “stuck.” The article states, “…marketing studies like the one commissioned by Fiserv, which develops online bill paying systems, (shows) that using the Internet to pay bills, do automatic deductions and send electronic checks reduced customer turnover for banks by up to 95 percent in some cases.”
Credit unions have to find ways to overcome this formidable obstacle. They have to make it as simple and easy as possible for consumers to make the switch. A lot of credit unions use Switch Kits. That’s a good first step but a lot of the Switch Kits still require the consumer to print and mail documents. In the mind of the consumer, that might be considered a hassle. So, credit unions have to enhance their procedure for switching accounts. Perhaps add an incentive, offer a giveaway, etc. Here’s an idea for a “switch” campaign slogan – “UN-STICK Yourself….From Your Bank.” Hey, it’s worth a shot!
So credit unions have a lot of great advocacy right now. It’s time to get in the game, folks.