Starting the Conversation
Posted by Matt Dean on June 13th, 2005
When the credit union movement was in its infancy, movement leaders like Edward Filene were the CU equivalent of gospel evangelists, preaching the idea that common workers could band together to provide inexpensive credit while earning interest on their savings. Their message was well-received. Members didn’t just understand why they belonged to their credit union, they spread the message themselves, converting their friends, their co-workers and their families.
What’s changed? In today’s competitive banking environment in which consumer credit is easily available and most financial institutions recognize the need for personal attention and service, credit unions have lost much of their differentiating appeal – and consumers are confused.
Don’t get me wrong, in each credit union I come across, both friendliness and genuine concern for members are certainly not in short supply. That’s evident in everyone from Board members to front-line tellers.
However, credit unions face a problem: an increasing number of members aren’t dropping by the local branch anymore. This comes as no surprise, really. The number of Internet users who bank online has nearly doubled over the last two years. Moreover, it’s the fastest-growing online activity, according to a Pew Internet & American Life Project study.
The good news (and this is REALLY good news for credit unions) is that credit unions aren’t the only institutions that are struggling to create real connections with their markets.
Some of the largest corporations in the world, including GM, Sun Microsystems, and IBM, are making dramatic changes to the way they communicate. Instead of relying solely on expensive advertisements and carefully crafted PR campaigns, these companies are realizing that the best way to reach their market is to speak to them directly. The Internet has provided a way for buyers to talk with sellers in a way that hasn’t been possible since the start of the Industrial Age and mass-production.
This is exactly what credit unions have been doing all along! Personal communication is by no means a new concept in the CU world. Credit union leaders just need to learn how to translate this to an online world. They’ll be able to communicate in a way that no bank ever can: openly, honestly, and sincerely.
That’s why we’re starting Open Source CU - to help credit unions communicate the friendliness and sense of community which have always set them apart by taking advantage of the same Internet that is keeping their lobbies so quiet.
This isn’t a speech. It’s a conversation. We look forward to hearing what you have to say!
Good comments Matt, as my membership continues to diversify (we now have members in over 30 countries)communication through all channels becomes more and more critical. An interesting paradox exisit in the financial arena with convenience. According to the Raddon Financial Group Mid-South region spring 2005 data 34.7% of all households have online banking. But of that group only 5.3% have electronic bill pay. While 60% of consumers bank close to home. In urban markets 71% of consumers bank within three miles of their home or office. So depending on the demographics convenience may be defined as having PC access and a free ATM by the 18-34 credit driven market. While personal service and a close branch may be the definition of convenience to the 55+ upscale and Middle income markets.
When I spoke with Chris Choat a few days ago about this topic, he pointed out that they haven’t noticed much of a drop in number of members visiting their branches. Even more interesting, the branch that’s had the most activity is the HP branch, which would presumably be the branch serving their more tech-savvy members. I wish I would have asked him more about the demographics of that branch, but perhaps if he reads this post he can provide more details.
On the flip side of that, however, when we visited with U.S. Employees in Oklahoma City last year they mentioned that their lobby traffic had dropped significantly in the past few years even while overall business has increased. Perhaps the main difference with them is that their main office probably isn’t in a very convenient location (it was fairly hard for us to find, but of course we’re not that familiar with OKC ).
I think there will always be a mix of in-branch, personal service and automated banking. However, I think that a growing percentage of members will be primarly using the online and automated banking channels.
The even more important need that I’m seeing, however, is for credit union leaders to start communicating the “credit union difference” to both members and non-members and begin engaging them in an active conversation. People my age don’t know what makes credit unions different from banks. And yet there are many socially-aware people who want to be part of something they can believe in. The Internet is the perfect avenue for communicating that message.