Financial Literacy: Are Credit Unions Really the Answer?
And yet, are credit unions really the best for the job?
It's practically heresy to even question it, I know. But keep an open mind for a minute, and answer this question: Would you agree or disagree that banks should publish information to educate consumers on how to better handle their finances.
And, if you disagree, why?
You might feel that banks are just not impartial enough to advise their customers how to better handle their finances. What the bank will call financial education could turn into a thinly veiled technique for getting more consumers to use more of the loan products that are offered by that bank. Hypocritical? Maybe, but can't you see it happen? A bank has ulterior motives, and their ultimate purpose is to get more of their customers to use more of their products to drive more profit into the pockets of their board members and stockholders. So, as much as they might want to offer financial education, it would be difficult to consider their efforts objective, solid information that consumers can trust.
Now here's the really tough question: Isn't your credit union really promoting a lot of the same products and services?
Before you have me tarred and feathered, ask yourself if your credit union is really completely impartial. Would you recommend that members stop using credit cards completely-even yours? What if that were in the best interest of your members?
What if an online bank had a money market account with a better rate and a lower minimum balance than yours? Would you mention it in your newsletter or on your Web site?
What if you believed that someone saddled with debt should dump all her credit cards and never use plastic again? Could you come right out and say so? Or would you still promote "responsible use of credit," including your credit union's Visa that could be the worst thing for this member?
Is your credit union really impartial? Of course, you have your members' best interests in mind, but does it conflict-at all-with the credit unions' interests? Realistically, it probably does conflict every now and then. And if credit unions were like banks in that the bottom line was considered the bottom line, I'd be saying that there's no way your credit union could be impartial.
But credit unions are not just another name for banks.
Your first priority, unless a bank conversion is waiting to happen, is your member. So, yes, credit unions are different-very different.
This has become a sticking point with writers at CUcontent.com. Should they use the financial education content to promote credit union products and services? Having gone back and forth on the issue for several months, the decision is that yes, select products and services can be promoted. It's up to each credit union to decide which products will be best promoted for their membership and the members they want to target for those products.
For example, a payday loan alternative is great for someone who uses payday loans. But now that the credit union offers it, that doesn't mean you promote it to all members when most of them might find it tempting but would be better off without it.
We all remember Santa from "Miracle on 34th Street." Hired by Macy's, he advised people to shop elsewhere when prices were lower on specific items at other department stores. He almost lost his job over it, but nothing builds trust and loyalty like that kind of even-if-it-hurts-me, as-long-as-it-helps-you honesty.
If you want your financial education efforts to be that successful, don't hesitate to send members elsewhere for a specific product or service if you know deep down it's really better for them. That includes dealer financing on autos (though you should advise them of what 0% financing really means). It also means pointing out loans that they'd be better off without, products and services that your member should stay away from and even products that other financials offer but you don't.
I believe that, to a certain degree, many credit unions are already doing this. But you might want to take a look at your financial literacy materials and see that they measure up to the standard of objective, honest information that truly helps your member improve his financial situation.
Some financial literacy articles will lend themselves more to promoting your products and services in a way that is truly beneficial for your members, and that's wonderful. There's no reason why you can't use financial literacy as a marketing tool. But at the same time, it's important to ask-and answer-the tough questions. Financial literacy should be completely objective and completely about the member.
Under those conditions, there is no better platform for increasing financial literacy across the United States than your credit union.
Yes, credit unions are the answer.
Laura Enock is CEO of CUVA Inc. and can be reached at 877-288-2669 or firstname.lastname@example.org