Many credit unions are hoping that their members will use more of their products and services. Quite a few have implemented cross-selling programs, offered discounted loan rates, and have tried other methods to help increase the all-important “services per member (or household)” ratio. Many credit unions have made great strides in increasing that ratio and are enjoying significant growth.
While this is good news, I would like to see more credit unions try to capture the members’ checking account as part of their cross-selling efforts. Some credit unions have very low share draft (that’s the checking account for you non-credit union folks!) penetrations – 12%, 18%, 25%, etc. Anyone who has experience in retail banking, credit unions, investments, etc. knows that the PRIMARY account for most people is the checking account. There is substantial evidence and industry agreement on the old belief that a person’s primary financial institution is defined as the one that holds the checking account. Think about it – credit card payments, loan payments, money for living expenses, mortgage payments, insurance, etc. – most of that money comes from a person’s checking account.
So why are some credit unions ignoring the importance of the checking account? At a time when many banks are now charging their customers fees to even open or maintain a checking account with them or are implementing outrageous minimum balances, why aren’t more credit unions designing promotions around the all-important checking account?
When I ask this question of my credit union clients, here are a couple of answers that I hear most (and my usual response to them.)
Members think it’s too much of a hassle to switch. The credit union should do everything for the member. Stop requiring the member to print out forms, letters, etc. from Switch Kits. The credit union should do all of the paperwork for the member.
We don’t pay interest on our checking accounts so the members are not interested. The banks usually don’t pay interest either – unless of course, the balance is very very very high.
The bank will charge the member for closing the account. The credit union should offer to pay the fee for the member. THAT will go a long way in building trust and rapport.
The member has payments and debits set up through online banking and would have to change everything to the new account at the credit union. Again, offer to do all of that clerical work for the member. It will be pretty easy to do it with the member at your desk since along with opening the new checking account, you will be enlisting them in your online banking and bill pay suites automatically. Take care of everything at one time. Do NOT tell the member to “come back” once they have completed everything on their own.
Credit unions have an awful lot to gain by acquiring a member’s checking account relationship. Get those checking penetration numbers up and so much more will follow.
More to come on this topic……
Yes, there is a pretty major announcement coming from us here at Your Full Potential, LLC…..