Big Time Service, Small Town Feel

Written by Luke Arnett, CPA

 

In today’s digital world, it is more and more important for businesses to reach their customers in a variety of ways to foster loyalty. Nowhere is this more true than in the credit union industry. First of all, we should ask, what is the difference between a credit union and a bank? A credit union is a membership. You become a member rather than a customer and can directly impact the credit union by being able to vote and even run for a board member position at the credit union. Secondly, credit unions are nonprofit organizations so their profits are distributed back to their members. This results in lower fees and higher interest rates on savings accounts, money market accounts and certificates of deposit, for example.

Knowing this, you might ask, why would anyone choose a big bank over a credit union? Once upon a time, credit union memberships were limited to a very specific group of people. However, this is changing and more credit unions are expanding their eligibility requirements to surrounding areas rather than limiting them to a certain company, school or union. Another reason is accessibility. With big banks, people know that they can go anywhere and still have access to their account. Since credit unions are generally local, this creates the perception for members that if they go out of state, they won’t be able to access their money. This too has changed over the years. Credit unions can now join a nationwide ATM network where members can access their funds surcharge-free.

According to a recent Fair Isaac Corporation (FICO®) survey, most Millennials (68%) use banks with a national presence as their primary bank, with only 15% using credit unions and 9% using regional banks. Millennials are more likely than older generations to use a large national bank as their primary institution, and tend to have more products at those banks. But, they’re less loyal than other customers. FICO reported that Millennials are five times more likely than those over 50 to close all of their accounts and three times more likely to open a new account with a different bank.

For credit unions, this presents both an opportunity and a risk: The willingness of Millennials to switch banks makes them an attractive target for new customer acquisition campaigns. At the same time, their lack of loyalty places credit unions at risk of losing their own customers.

So, what can you do to attract and retain your members? In working with credit unions and performing research, we have found that loyalty seems to come down to three main areas:

1. Customer Service
2. Technology
3. Social Media

Customer Service

Believe it or not, according to a survey conducted by Michelle Bloedorn and Jake Foreman which took NPS Scores from 19 credit unions across the country, the number of members in the 18-34 age group visited a branch location just as much as older generations. This means that great customer service is essential. When members walk into their credit union, they want to be greeted in a friendly manner but also have the ability to quickly and easily have their business handled by someone who is knowledgeable and efficient. In addition, credit unions who had someone available to help them understand their options and even educate them on their finances went a long way in garnishing loyalty. In short, people want to feel like they’re in a small-town branch but have the capability to perform complex transactions.

Technology

This shouldn’t come as a surprise. With the every-growing number of mobile technology users out there, more people are relying on conducting financial business through their phones or tablets when they cannot get to a branch. It is imperative that credit unions have an app or mobile website that is intuitive and easy to use but that also provides the information members need at their fingertips. Availability and ease of access are crucial and even integrating a form of chatting or texting via phone or website has been viewed positively. Basically, your mobile strategy should begin with finding out what is important to your members and how your mobile banking can help them accomplish those things reliably and efficiently.

Social Media

Lastly, credit unions need to have a way to stay in front of their members to provide information about new products, rewards and other pertinent communications. This can be done through Social Media. Millennials, in particular, are using social media in all aspects of their lives. Being able to reach them by providing a blog about financial education, a post about a new loan service or simply allowing them access to sharing tools can keep you in the forefront of their minds as well as providing the ability to share the information and possibly attract new members. Staying up-to-date and relevant is key to social media and should be consistent.

At BMSS, we have been working with credit unions for the past 20 years and, we too want to provide the small-town atmosphere while providing national firm services. We work and live in your area and it is our goal to provide you with the peace of mind that comes with knowing your services are being handled knowledgeably and efficiently. Just like you are there for your members to help them with their needs, we’re here to help you with your needs. Our goal is to help you succeed. If you have any questions about our credit union practice or services, please contact our office at (205) 982-5500 or visit our website at www.bmss.com.