The single most important asset of all credit unions is…

Considering how much law school costs it kills me to admit this, but if you look at how the financial industry is evolving it’s clear to me that the single most important asset of your credit union, irrespective of its size or charter type, is its brand.  And it is getting even more important by the day.  I should have gone into marketing.

First, let me tell you what I think a brand is with a wonderfully sterile legal definition courtesy of USlegal.com that encapsulates a lot of important attributes:  A brand is a name and/or a symbol that uniquely identifies a seller’s goods or services in the market.  In other words it’s the responsive chord that goes off when people hear your credit union’s name.  What do they think of?  Do they have a positive reaction? A negative reaction? Or, worst of all, do they just draw a blank and get on with their day?

To be sure, branding has always been important.  But technology is making it even more so.  As the ways in which banking can be provided expand and the type of businesses providing these services expands with the technology your brand will be competing not just against the big bad bank but the tech savvy retailer.

At its core, a depository institution is where savers and spenders meet.  The saver has a safe place to keep his money and the spender has a source of funds to borrow for a new car, invest in a small business and save for college.  Technology is upending this model by making it easy for borrowers and savers to directly connect without that nettlesome middleman called a credit union or bank.   Want to start up that new business?  Click on to one of the proliferating crowd funding platforms and make your pitch.  Need a place to deposit that paycheck from the summer job?  Just put it on a reloadable prepaid card.  Owe your friend some money? Just email a payment to his account.  Don’t trust money at all?  Well, open up a Bitcoin account and quickly transfer electronic coins to pay for everything from blog sites to a cup of coffee.

Not only does technology make large scale, person-to-person banking feasible, it expands the field of companies ready, willing, and able to provide financial services.  Think of all the financial transactions Apple and Amazon already facilitate on a daily basis and you realize that overnight these companies could start providing banking services to millions of customers.  As PWC commented in a report analyzing the future of banking, “[c]ompetitive reach is no longer determined by branch networks, rather by banking licenses, technology and advertising budgets.”

Before the Internet people would go to a credit union because they needed an account or a loan.   Parents or coworkers had a positive experience, so the member would go as well. When people thought of a credit union they thought of those experiences.

Word-of-mouth is still crucial, but today the formula is being reversed.  People are increasingly choosing their financial service provider by searching the web.  This means that the first thing people are going to know about your credit union is its brand.  You may provide the best service in the world but if people don’t know that the second they spot your logo they aren’t going to walk into your branch to find out.

To me, a credit union brand has two components:  the generic reaction to the credit union label and the reaction of potential members to an individual credit union’s value proposition.

No company can be all things to all people. When people think of Apple they think of great products not cheap ones.   Board planning is crucial because Boards have to decide what the strengths of their credit union are, what they should be and then commit the resources to making sure that the brand is synonymous with this value proposition.  This not only means larger advertising budgets; it means making sure your marketers are in the room when deciding what products will be offered.

As for the generic part of your brand, people are going to have a visceral reaction to the word “credit union”  and the entire industry can work together to make sure that reaction is a good one.  The industry has to do a better job of translating the “credit union difference” into a sales pitch that explains to a jaded public how they are benefited by credit unions.  (The best example of this approach is Nationwide which explains in its ads “We are a mutual company, which means we put members first because we don’t have shareholders.”)

Credit unions both big and small have a stake in advertising campaigns that translate the credit union difference into tangible benefits for the person who doesn’t have the slightest idea what a credit union is and doesn’t care.