I have just one word to describe the Vermont state regulator that recently ordered Vermont State Employees Credit Union to stop using the word “banking” in their advertising – stupid, insane, crazy, dumbfounding, confusing, silly, absurd, ridiculous, asinine……ok, maybe I had more than just one word.
Truthfully, this is one of the most disturbing misuses of authority by an industry regulator that I have ever seen. The Association of Vermont Credit Unions is right to challenge this directive – their assertion that “banking” is term used by consumers to describe the type of activity they are engaged in rather than the institution itself is spot on.
Seriously – let’s take a look at how silly this whole business is. I have been saying for many years that credit unions need to use a more recognizable and relevant vernacular when trying to attract new members – especially those from Gens X & Y (which, as a reminder, will supply future credit unions members.) When I was presenting at a credit union conference last year in Las Vegas, I asked the attendees in my breakout session to join me in an experiment. We went out to the “strip” and my goal was to ask 10 individuals that I thought were most likely in the Gen X or Y demographic if they knew what a credit union was. Only 1 of the 10 knew – and do you know why? It turns out that person was an attendee of this particular conference. Then I asked another question of the same group – I wanted to know if anyone knew what a “share-draft” account was. Having told the credit union employee that she was not allowed to answer – absolutely NONE of the remaining 9 had any idea what I was talking about.
It is true that this is a matter between one credit union and one state regulator; however, I fear there will be no limit to this silliness if this order is allowed to stand. The simple fact of the matter is that many consumers still think of financial institutions as banks – like it or not, credit unions have to adapt. There is nothing wrong with using more relevant terms to communicate with our members – can you imagine how silly it would sound if people started asking “where do you do your credit union-ing?” or “do you bank or do you credit union?” – as if “credit union” could be made into a verb. Credit unions can and should use terms and phrasing that people will understand and not be intimidated by – and they can do so without losing their identities as credit unions.
There will be plenty of people who will disagree with me on all of this. That’s perfectly fine – healthy debate is what makes our industry great. But in the end, it is my opinion that what the Vermont regulator is doing is just ridiculous. People will continue to refer to credit unions as banks and they will always refer to their financial business as “banking.”
Think about this – if you are a cola drinker and you go out to a restaurant, I would bet that the majority of you ask for a “coke” when you order your drink. And if the restaurant you are at happens to have a service contract with Pepsi, the waiter or waitress will ask “is Pepsi OK?” You’re nodding right now. That’s good! If you are a doubter, go to a local diner/restaurant and listen carefully to what people order. I don’t think you’ll hear too many people ask “do you serve Coke or Pepsi?” But many will ask for that coveted “coke.”
Back to the Vermont regulator – what’s next? Will credit unions have to start referring to their employees as “member-owners that are responsible for providing service to the rest of the member-owners?”