Members Don’t Like You, They Like Your Low Fees

The credit union story often revolves around affinity, and the taglines are there to support the idea: People Helping People and Not for Profit But For Service.

by. Ben Rogers, Research Director, Filene Research Institute

It’s not your service, it’s your fees. Or rather your lack of fees.

The credit union story often revolves around affinity, and the taglines are there to support the idea: People Helping People and Not for Profit But For Service. These are true, and these are good. But when we asked 7,000 credit union members why they did business with their credit union and why they did business with others, it became clear that fees and pricing were ruling the day.

Consider the graph at the bottom of this infographic:

A four-part layout shows that on the factors of Coverage-Service-Financial Competitiveness-Products, large and small credit unions aligned most closely with the desirable traits of deposit interest and fee competitiveness. It’s not that credit unions are bad at branches or product offerings or internet banking (OK, they’re often bad at internet banking). It’s just that when asked to say why they did business with credit unions, members gravitated toward the economic advantages.

In the chart, proximity matters. And retail banks (your regional and community bank competitors) actually scored equally well if not a bit better than CUs on service. Big money center banks aren’t beloved because of their service, but they sure take top prize for ATM networks and internet banking in the eyes of everyday consumers. And for millions of consumers, that’s enough.

These findings, from the recently released Linking Member Satisfaction to Share of Deposits, help show something we’ve long suspected: that the elements that drive credit union members’ satisfaction are not always the same things that drive members choice. Look elsewhere on the chart and you’ll see that, at large and small credit unions alike, internet banking drives satisfaction but doesn’t necessarily encourage members to bring more dollars over. Interesting: the same thing that drives deposit behavior at big banks, doesn’t  really move the deposit needle at credit unions.

So what do you do?

First, recognize that these are broad findings that may do more to illuminate trends rather than the situation at a particular credit union. But the findings are illuminating.

Next, invest time and effort in the Wallet Allocation Rule behind these findings. The report’s author, Prof. Lerzan Aksoy, has shown the strategic value behind measuring not just your own satisfaction ratings, but throwing those up against the feelings your own members have for the other financial institutions they use. Better yet, the methodology is open source, and you can read how to do it in the Share of Deposits report shown above.

Finally, once you’ve given the Wallet Allocation Rule a spin, you’ll see what your competitive differentiators are. Maybe you dominate in product features or maybe members love how easy it is to get a loan. Once you know, you can double down on that difference. It is much easier to market and generate word of mouth buzz around something members already love than something you’d like to be known for … but just aren’t.