A new study from Forrester Research Inc. titled, "What Makes Credit Union Customers Different?" sends the message that credit unions should not ignore the opportunities that have come out of the recession.
"If there ever was such an opportunity for credit unions, it's now with such a backlash against banks," said Brad Strothkamp, Forrester senior analyst and co-writer of the report. "Credit unions have a really good story to tell. They just need to get it out there."
For the past five years, Forrester has found that credit unions have beat out banks when it comes to customer advocacy ratings. Credit union members have consistently given their credit union a customer advocacy rating in the high 60s while banks' ratings have been stuck in the low 40s. In the 2009 Forrester customer advocacy report, 68% of credit union members surveyed agreed with the statement, "My financial provider does what's best for me, not just its own bottom line." Credit unions were at the top of the list over State Farm, Wachovia, Washington Mutual, Bank of America and Chase.
Credit union members are also more likely to stay with their credit union right now. Eighty percent members said they are not at all likely to switch financial institutions, which was 13% higher than regional and local bank customers and 23% higher than customers at the top 10 banks.
Approximately 90% of credit union members said they are likely to consider purchasing at least one additional product from their credit union in the next year. Nearly 50% of those credit union members said that they are likely to consider four or more products for purchase, which was 78% higher than customers of local or regional banks and more than twice the percentage of customers of the top 10 banks in the U.S.
The study also found evidence that reflected the growing interest in credit unions among consumers during the recession.
Forrester cited a ComScore report that found that Web searches for the term "credit union" have doubled in the past year to more than 10 million unique searches. In its own study, Forrester found that of consumers that are likely to switch financial institutions, 60% of them are now more likely to move to a credit union or a local bank. Right now, 18% of the checking account market is held by credit unions, which is about the same share as local and regional banks each have.
In order to take advantage of the position credit unions have over banks right now, the study encouraged credit unions to re-think the way they are communicating the credit union difference.
Forrester cited Servus Credit Union, formerly Common Wealth Credit Union, in Alberta, Canada, for its Young & Free campaign. As part of the campaign, the credit union has three YouTube videos that tell about the difference between banks and credit unions. The videos have received more than 70,000 views on YouTube, and the Young & Free Alberta Web site generates a large number of visitors.
The report also encouraged credit unions to combine funds and coordinate marketing in order to match the marketing efforts of bigger banks. The report cited the "Got Milk?" campaign as an example of how collaborative marketing can work.
"Credit unions need to get a clear, concise and simple message out there about why they're not a bank and why a customer should consider them," Strothkamp said. "For some reason credit unions can't seem to get together and rally behind this. I hate to use this term, but they need to get their act together and start thinking strategically."
The final suggestion the report made to credit unions was to stress the proximity of their locations and do whatever possible to eliminate the barrier of a small ATM network. According to Forrester, 28% of checking account shoppers said that convenience to their home was one of the three most important factors in selecting a banking, provider and that percentage was consistent across all generations.
The report suggested credit unions develop an alliance for the reimbursement of ATM fees in order to compete with the convenience factor larger financial institutions can offer customers.
Looking at its Consumer Technographics, a survey sent out via mail to over 50,000 U.S. households, Forrester found that members with checking accounts at credit unions are around the same age as customers of local, regional and national banks. The average age for credit union members was actually lower, age 45, than customers of the top 10 U.S. banks, age 47, customers of local banks, age 46, and customers of regional banks, age 46.
Statistically, credit union members and bank customers are identical when it comes to perceived online security, hours spent on the Web, optimism about retirement and likelihood to research financial products online.
Credit union members and bank customers started to differ when it came to owning financial products and online activity. The average credit union member owns more than nine financial products from the credit union. The average customer of the top 10 U.S. banks owns more than eight, the average customer of local banks owns eight and the average customer of regional banks owns more than eight.
Fifty-six percent of credit union members bank online, which was higher than the percentage of customers at the top 10 U.S. banks, local banks and regional banks who bank online. A higher percentage of credit union members also view bills or statements online and pay bills online.
When the economy begins to pick up, Strothkamp said he thinks the interest in credit unions will wane a little bit. However, the high ratings credit unions consistently receive in consumer advocacy shows that the opportunity was always there, it is now just clearer, Strothkamp said.
–lsiegriest@cutimes.com

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Forrester Study Finds CUs Not Taking Full Advantage of Bank Backlash

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