Credit unions do good but could do better

Every year about this time, at least for the past 14 years, credit union spokespersons start to crow loud and long about how much more consumers are satisfied as members of a credit union than as customers of a bank. Focal point of the annual good news since 1989 for credit unions is the annual American Banker/Gallup opinion poll. The results of the 2002 version, based on 1,000 telephone calls to U.S. households, were released on July 23rd. Lost in all the credit union self adulation is the fact that the consumer satisfaction gap between credit unions and banks has gradually narrowed over the years. I for one would have thought that credit unions would have pulled out of sight of banks by this time. At least based on the fact that banks continually seek new ways to make a fatter profit from customers while credit unions serve members as not-for-profit cooperatives. Consider for a moment that banks buy and sell each other and change names with the speed of a fast food joint. In the process, they seem intent on feeing their customers to death. Banks charge higher loan rates and pay less in interest than credit unions. It is well known that many banks have an attitude problem. Consumers are well aware that bank executives and boards enjoy compensation levels unknown to their CU counterparts. There’s more, but the point is, how, with all this negative baggage, do banks score as well as they do in this annual survey? And why isn’t the gap between banks and credit unions widening? Let’s look at some of this year’s numbers that bring smiles to credit union trade group executives. When it comes to fees, for example, credit unions get giddy over clobbering the banks by 24 percentage points. Fifty-three percent of survey respondents gave high marks to credit unions compared to a 29% fee rating for banks. Doesn’t it only make sense that credit unions would shine in an area that generates massive consumer criticism of banks-high fees? I don’t think either number is anything to be proud of. Although more and more credit unions are charging more and more fees, they haven’t come close to the profit-driven level of the typical bank. Credit union fee ratings should be much higher; bank fee ratings should be even lower. What about overall satisfaction levels? Seventy-six percent of respondents who indicated that they consider their credit union to be their primary financial institution said that they were “very satisfied” with their CU service. Shouldn’t it be higher? Seventy-six percent is very good, of course, and it is up from 75% last year. At least it is headed in the right direction. But banks, despite not providing the warm and fuzzy care and service credit unions claim to provide, also went up. While CUs classified as PFIs went up 1%, banks advanced 3%, from 58% to 61%. Granted 75% is better than 61%, but is it that much better as credit union spokesmen are claiming? And isn’t 61% “very satisfied” a pretty high mark for banks considering their recent track record? Each year I am troubled by this survey because nobody can tell me how many of the 1,000 consumers called actually belong to a credit union, and more specifically, belong to a CU that they consider their PFI. Virtually all bank customers would answer that their bank is their PFI. By virtue of what they offer and don’t offer their members, not all CUs can be considered PFIs. It is also troubling that credit unions took a big drop this year in “service improvement,” going from 40% last year to 31% this year. Banks on the other hand went up, from 16% to 20% thus closing the gap from 24 to 11 percentage points. Considering that both banks and credit unions are in the service business, the service improvement rating by both is pretty sad. One of the survey’s big surprises was that credit unions really topped banks in the online realm. The CU numbers for online bill pay rose from 15% to 24% compared to only 11% for banks. As Johnny-come-latelys in the high-tech business, it appears that credit unions are utilizing the latest technology in serving a growing number of receptive members. There are many other findings of interest to credit unions. For example, it identified a need to step up financial planning and brokerage offerings. Seventy percent in the 18-34 age group want them. What it appears that they don’t want is aggregation services or the ability to do transactions on a wireless device. Survey results also reinforce the need to pay attention to convenience, a word that is uppermost in the minds of consumers. Finally, credit unions can no longer take their leadership role in the area of consumer trust for granted. The overall level of trust, possibly fallout from Enron, WorldCom, et al, has gone down. Worse, some respondents rank banks more trustworthy than credit unions. As it does every year, the most important message that this survey delivers is that credit unions continue to do a very good job serving those members who consider their credit union their primary financial institution, certainly better than banks on a consistent basis. But it also sends a message that just maybe credit unions are starting to slip a bit more than they should. Why? It is obvious to me that credit unions can no longer get by on their good name, the slogan of the week, or by providing member service that is anything but of the “knock your socks off” variety. The credit union goal should be to find ways to get all important numbers as close to 100% as humanly possible. Good survey results or not, this is not the time to only look in the credit union’s rear view mirror. This is definitely not the time to become smug and complacent. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected]