Fear Is Causing Credit Unions to Lose Ground to Banks

Banks tied credit unions a few years back in customer satisfaction, but now the trend is continuing to decline for credit unions. This data bothers me more than any other, particularly when you see the incredible trouncing credit unions gave banks just 10 years ago. So, what’s the real story behind the numbers?

During the recent Underground Collision Rock Fest and the Boutique Credit Union Underground before that, I think a couple of the extreme thought leaders hit the nail on the head: fear. “You're going to have to get over your fears, or your worst fears are going to be realized,” Alkami Chief Strategy & Sales Officer Stephen Bohanon said of credit union leaders. Alkami provides digital banking experiences for community financial institutions to compete with the big boys.

Credit unions have always tended toward being conservative because they have to protect their members interests. However, the world has shifted, and we must try new things to protect members interests. We mustn’t treat our members as a liability, afraid they’re out to steal or otherwise take advantage of us. Technology is our friend and a valuable investment, not our enemy just because we may not understand it as well as we should. 

CU Prodigy CEO Amber Harsin also pointed out that fear holds credit unions back from taking control of their technological destiny. I love that! We must demand more from our providers and, to do that, we need to work together and leverage our collective scale. But very often we’re afraid to collaborate, too, for fear of being seen as an acquisition target by a larger credit union. 

But guess what? Mergers are happening anyway. 70 mergers occurred in the first half of 2021, according to CU Times, at an average size of $61.3 million. So, our falling victim to our fears is not preventing the mergers of smaller credit unions; instead, as Stephen said, it’s making mergers a reality. We’re scaring ourselves into irrelevance.

Many great partners are out there to help credit unions achieve what they need to fulfill their mission and maintain their relevance in consumers hearts, minds and wallets. Because the areas in which credit unions lagged banks were all related to technology and convenience: quality of mobile app, reliability of mobile app, website satisfaction and ease of making changes to accounts. And where did credit unions exceed banks in customer satisfaction? Courtesy of staff and speed of in-branch transactions, so we have nice people and excel in an area that accounts for a rapidly shrinking number of transactions.

Branches are still important, but we must rethink them to ensure our investment dollars are going in the right places. According to The Financial Brand, branches must be smaller and more self-service oriented for the transactional pieces with real estate instead focused on consultative interactions. Wescom Resources Group’s Tellergy provides that blend of efficiency for the transaction while providing time for the social interaction people who’ve been couped up for 18 months crave.

Register for Wescom Resources Group’s Modernize Your Member Experience today!

Both CU Prodigy, a core processor, and Wescom Resources Group, which provided managed IT services in addition to Tellergy, are CUSOs. CUSOs were developed to help credit unions innovate and build at scale what they cannot do on their own. Supporting CUSOs when possible, should be a consideration of credit unions as they look for various providers. CUSOs are collaboration in action! And you can have a lot more say in what they do because they’re cooperatives. Hm, sounds an awful lot like what credit unions preach about why they’re different. If it doesn’t get your credit union to invest in and use CUSOs, do you expect it to work on your members?

Which brings me to one of my favorite subjects: messaging. Your Marketing Co. has spent the last decade working with credit unions for continued innovation, relevancy and growth. And guess what CEO Bo McDonald says is holding back credit unions from these three things: fear. He says when a credit union hires Your Marketing Co. for marketing assistance, marketing isn’t the problem keeping the credit union from reaching its potential, although that’s a piece of it. Sometimes the underlying issues are cultural or operational that hold the credit union back from growth. Messaging is not only about what you say – it’s about what you do or don’t do. 

I’ll close out by repeating Stephen’s comment, because it’s very powerful: “You're going to have to get over your fears, or your worst fears are going to be realized.” Fear can be a motivator or lead to paralysis. Only credit union leaders can decide which path they will take.