Movement leaders often talk about "the credit union difference," but rarely has it been so broadly measured as it is in a recent report from a public relations firm for fintechs.

Scott Mills, CEO of the William Mills Agency of Atlanta, combed public records, industry reports and, where necessary, crunched numbers to produce a 12-page report called "U.S. Bank Customers vs. Credit Union Members: Comparative Analysis of Deposits, Demographics, Products & Channel Behavior."

In an introductory note, Mills wrote that his goal was to create a resource for a better understanding of the differences between bank customers and credit union members.

"Why is that important? While both types of financial institutions have some similar products, the ownership, operational styles and expectations of customers create differences," he wrote. "If you are selling technology, services or data to banks and credit unions, it's best to have an appreciation of the nuances of each."

Scott Mills

For example, the report said credit union members have historically been older than bank customers, but credit union membership is becoming younger.

Credit unions historically have a higher proportion of Gen X and baby boomer members, and a disproportionately high number of mid-career and public-sector workers, such as teachers and municipal employees.

The large national banks tend to attract more of the young digital adopters, "particularly through mobile-first and fintech-adjacent offerings."
"Credit unions are investing in digital to attract younger members and gradually closing the age gap," Mills wrote.

Some of the other key differences Mills found between credit unions and banks include:

  • The average bank has about $97 million in deposits per branch, with a larger portion from affluent individuals or businesses. Credit union branches hold about $69 million per branch with an average lower income than bank customers.
  • "Credit unions generally offer more favorable rates on term deposits and key lending products," while banks pay better rates on regular savings and interest-bearing checking accounts.
  • Credit union member activity is more weighted to checking, savings, auto loans and personal loans. Bank customers have several types of deposit accounts, are more likely to have a mortgage or HELOC, and are more likely to use wealth management or other specialty services.
  • About 55% of bank customers use mobile banking, compared with about 50% for credit union members. However, the report noted mobile usage is rapidly growing at credit unions.
  • Bank customers are more likely to expect end-to-end service via their phone, while credit union members use digital with the expectation of being able to call on a human for help.
  • Approximately 65% of Americans said they trust credit unions vs. roughly 25% who trust large banks – a gap that has persisted since the recession of 2018-2019.
  • Banks compete on convenience, scale and technology – "but product unbundling and rate shopping erode relationship depth."
  • Credit union members are more loyal than bank customers, which means they're less likely to switch based on rates.

One unusual difference at the institutional level was that credit union deposits grew steadily through the COVID-19 pandemic that began in 2020, while bank deposits dipped from the end of 2021 to the end of 2022.

Mills wrote that the bank deposit decline "was concentrated at the largest institutions and driven by post-pandemic normalization, rising rates pulling funds into higher-yield alternatives, and outflows following several prominent bank failures in early 2023," while the steady gains by credit unions reflected "lower rate sensitivity among members."

Contact Jim DuPlessis at Jim.DuPlessis@arc-network.com.

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