Only two financial institutions are left on the planet: one bank and your credit union. You are surrounded by nothing but Gen Yers, aged 14-34. The law requires every person to start a lifelong financial relationship today with either your credit union or the bank. And-get this-whichever institution a person joins, that person is required to use the products, programs and services of that institution for the rest of their lives.
You, being a wise manager, have been planning for this day. You've beefed up your marketing staff. Your credit union has become wired when it comes to social networking. Your website has been redesigned, and features the requisite youth emphasis. You offer smart phone banking apps, text alerts if a person is about to overdraw an account, Twitter alerts on loan specials and more. For once, your credit union is ready and staffed for the biggest day in its history. Good for you.
Trouble is, you're going to lose in this contest of bank versus credit union. At the end of the day, the bank is going to eat your toast. Whatever you've done to compete with them, you've failed. Their marketing budget is 10 times your budget-it will always be bigger than yours. The bank's staff is better trained than yours in the art of selling when the consumer doesn't need to buy (thankfully, you lose in that category). The bank beats your rates and product features enough that you're seldom a clear and consistent winner on price and features, and when you are a winner, the bank's budget and hard-ball marketing smother your win with marketing hype.
And to make it worse, the young people you earnestly need to reach don't have time to pay attention to the finer differences between banks and credit unions anyway. They want a credit card now. They want a car loan quick and easy. They'll get at least 10 of those loans in their lifetime, and even in this murky market, young people consider car loans to be as easy to get as filling out a form online. Why would they need your loan, specifically?
They may need a student loan and will eventually get a mortgage, maybe two. But other than those specific moments-which happen very infrequently over many years-young people aren't going to be thinking about you very much. And very few of them are going to regret choosing a bank over your credit union-even though that choice will probably cost them hundreds of thousands of dollars over their lifetime.
They don't see any differences.
How do credit unions change this scenario?
I am a consumer advocate, not a marketer, and I'm only 30. Many of you reading this are so much smarter and more seasoned than I am when it comes to "The Credit Union Problem." But in the past four years, I have had a chance to talk and work with literally thousands of high school and college students about their lives and money. Here's what they've told me actually catches their attention-what slows them down long enough to make wiser decisions, makes them believe one loan or one credit card or one checking account or one institution is really different than the other.
None of these things are going to surprise you, and none of them are rocket science. But frankly, there is something stunning about the fact that consistently, day in and day out, I hear the same messages, from 14-year-olds and from 30-year-olds.
The minute young people believe an institution is going to tell the truth rather that hype them, they listen. I was speaking at a senior marketing class in Boulder, Colo., sponsored by the credit union that issues the University of Colorado student credit cards. My talk was on never using credit cards for debt, and generally on the way credit cards hurt rather than help most unwary consumers. A student shot up his hand. "Are you telling me that you're sponsored by our credit card company, and you're telling us not to use that card?" the senior asked. Before I could even answer he said, "Where do I join?"
Young people have trouble believing that any financial institution really cares about them. Young people are cynics. They've been burned too many times, and as they get older, trust people who want to touch their money less, not more.
Young people can be wildly loyal to an institution if they really think that institution has a social conscience. The institution can be a school or a club or a credit union. But when it comes to money, their loyalty isn't going to be driven by the who is cheapest mentality, it is going to be driven by the who is really watching my back mentality.
If my little nonscientific poll is accurate at all, credit unions should be winning in the bank-versus-credit union battle. So, why aren't we?
Well, you tell me, What is your credit union doing right now that honestly and consistently shows consumers why you are an ethical upgrade from a bank? If I were a prospective member, what could I go to right now on your website-or in your branches-that would make me believe you aren't simply a bank in credit union's clothing? Where in your consumer materials do you consistently tell me the truth, rather than push today's cross-selling marketing objective?
At the very time banks are as low as dirt in the minds of many young people, credit unions must stand on their higher ethical underpinnings, and frankly, those underpinnings need to start with true consumer advocacy for members. That's the only way we will win this battle.
Will deHoo is the founder of FoolProof. He can be reached at 516-982-9134 or firstname.lastname@example.org