Amid the Bank Transfer Day marketing hype, credit unions seem well on track in taking advantage of competitive opportunities but the temptation to overreach by “bashing the banks” remains strong, according to the Raddon Financial Group, the Chicago consultancy.
“The challenge for credit unions is this,” maintained Bill Handel, vice president-research/development: “If indeed consumers do begin to migrate their accounts to credit unions, the credit unions have to be willing to take the bad with the good. The bad is the single-service, low-balance checking accounts which will need to be subsidized by the rest of the membership.”
The good part, said Handel, “is the accounts where relationships are built, but if too many ‘bad’ checking accounts are attracted and the credit union is not successful in cross-selling, then at some point I believe they will need to move away from free and move towards a relationship-based pricing structure.”
Handel spoke out Monday on the latest CU tactics to ride the anti-bank wave spurred on by CU leaders who argue a consumer revolt and subsequent switch is under way with CUs needing to prepare their internal operations for deposit inflows.
“What seems to be clear in the strategic picture is that the big banks have decided they can no longer support the consumer mass market in a totally free environment,” observed Handel. “Reductions in debit card income, coupled with reductions in NSF income, have reduced the viability of a free checking account on a stand-alone basis.”
Research, said Handel, does show clearly that consumers detest additional fees but surveys also show that big banks “no longer have as much of a concern with the mass market for checking. They will not impose debit card fees on valuable accounts.”
Handel urged strongly that CUs in their advertising shy away from claims, statements or oaths that “we will never impose fees and never do evil.”
Statements like that “can come back to haunt us two or three years later,” he warned, adding that includes “throwing so much mud” against big banks.
Meanwhile, the $859 million First Entertainment CU of Hollywood, Calif. maintained Monday that “one of the great things to come from movements like Bank Transfer Day and Move Your Money is that more people are learning about the true differences between banks and credit unions.”
“Old school credit union members know well the philosophical difference being part of a non-profit credit union but that message has been harder and harder to get across to individuals who are the next generation of members during the past 20 years or so,” said Roy MacKinnon, vice president of marketing.
“With actions like BTD, credit unions can seize the moment and really educate people about how they do have options,” said MacKinnon whose CU was initially listed as a recipient of funds transfer from Bank of America by Kristen Christian, the Los Angeles art gallery owner whose Facebook posting suggesting Nov. 5 as Bank Transfer Day ignited the movement.