Is Bellco Crossing the Line?
If you haven't read about the spat between Bellco Credit Union and Security Service Federal Credit Union, it presents a very intriguing case of the credit union philosophy vs. "co-opetition".
Co-opetition is a buzzword that's being sung more and more in credit union land. You hear it a lot in the corporate credit union network, where we see corporates competing rather fiercely for the same credit union business. However, corporates also collaborate in a lot of areas to bring value to the movement as whole.
Credit unions are known for being collaborative. Credit union leaders readily share their secrets to success with other leaders. Some folks tell me that's slowing down a bit, but I still see it whenever I am with credit union leaders.
The Bellco/Security Service case brings up an interesting question: Should credit unions be competing with each other in a public manner? In other words, credit unions of course are competing with credit unions in their market, but should they target each other in campaigns, which is what is happening with Bellco and Security Service?
Competition is good across the board. Aren't credit unions always telling Congress that it is the credit union alternative that keeps bankers in check? How about all of those studies that show without a credit union competitive presence banks would run amuck over consumers and fee them to death? There is no question that competition is good, so the argument is not about that.
This issue is about how Bellco is going about it. The crux of its pitch is that Security Service is a Texas-based credit union going after Colorado members through its new presence via the New Horizons acquisition. Bellco says in its branding material, "Don't Let Your Money Leave Town Behind Your Back." Bellco goes on to say, "New Horizons was recently bought out by a Texas-based credit union which means the money you've grown at New Horizons is leaving Denver. It will almost be as if you're with a big out-of-state bank instead of a friendly, local credit union."
Bellco's approach is clear: It is playing on Coloradoan's sense of Colorado pride. But there's more. Bellco has a financial kicker--it is offering $100 to any New Horizons members that open a Bellco checking account. The stakes just went up.
Security Service says Bellco's campaign is "unprofessional and in poor taste," while Bellco says it believes locally-owned credit unions offer the best value and as a benefit Bellco is probably raising the awareness of credit unions overall with its campaign.
Here are some things to note. Bellco has members outside of Colorado. Should a Bellco member that moves away give up its membership and return all of its money because he or she no longer lives in Colorado? There are some credit unions that have a lot of members out of state and even out of the country, so I think playing the card against Texas is dangerous. Some credit unions do very well operating in multiple states, so while I like Bellco's competitive nature, the out-of-state angle doesn't wash.
What is Bellco scared of? It can certainly compete head on with Security without playing the Texas card. I think Bellco should tout its advantages, benefits, products and services to all New Horizons members and let that stand on its own. If it wants a good local hook, how about showing a map of where its 14 Denver area branches are in relation to where New Horizons was. How about showing a rate comparison chart? How about showing a Yes/No checklist on products and services? In short, Bellco has every right to go after New Horizons members, but the Texas card to me is bad for credit unions as a whole. We don't want the world to think credit unions can't serve members who move out of state or that credit unions won't expand beyond state lines. Do we want to see bankers advocating that no credit union should cross state lines?
As for the $100 giveaway for new accounts, credit union leaders know that chasing money with money sometimes hurts. How many credit unions have to stop their lofty CD offers because they bring in too many dollars and can't keep it beyond the CD term? Or it ruins its cost of funds. There probably wouldn't be high enough volume in this case however.
Security Service should relish this challenge and fight fire with fire, but leave the "unprofessional and poor taste" comments to someone else. All Security Service leaders should be telling the press is the following: "Security Service brings a tremendous value proposition to New Horizons members through X, Y, and Z, and we are anxious to show them how they will be better served under Security Service. We face competition in all of our markets and have been able to succeed." That's it. Get out of the name calling game and take the high road.
Either way folks, credit union competition isn't going away. Credit unions need to have their marketing and PR machines tuned up to fight back any competition, whether it's the CU down the street, a mega bank, or an online competitor.
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