The question credit unions can’t afford to have consumers ask

Congress passed the Federal Credit Union Act in 1934. Since then, credit unions have consistently provided their members better pricing and service than banks. So why is credit union market share so small?

The answer is field of membership. Even though everyone can join a credit union (at least eight based solely on where they live), according to CUNA’s Awareness Research, 40% of consumers don’t believe that they can join a single one. This shows that consumers are familiar enough with credit unions to know that they need to be eligible. Fortunately, eligibility itself isn’t an insurmountable impediment to growth; we just need to make it easier for consumers to navigate.

Finding A Credit Union You Are Eligible To Join

Credit unions have done exceptionally well in situations where eligibility is solved for the consumer, such as when a salesperson assists in the process of determining eligibility in the branch or through indirect lending. However, the industry has failed to solve the issue in the most critical place: online.

The majority—88%—of consumers research products and services online before they buy. Credit unions are generally excluded from the websites that consumers use to find solutions to their financial problems. 

In most states, it is simply too difficult for consumers to find a credit union they are eligible to join. I think this passage from a Vice article captures it best: “I was pretty much sold (on joining a credit union) at this point and headed to an online search tool that helps people find credit unions in their community. The list I got back was disappointing: Everything in my area was named something like Epiphany FCU, or else was clearly meant for the Polish population of the neighborhood to the north of mine. I had to ask: Would any of these places even take me as a member?”

CUCollaborate runs the website creditunionmatch.com, which helps consumers find credit unions they are eligible to join. However, aggregators like LendingTree or NerdWallet cannot support most credit unions because they can’t navigate eligibility issues for consumers, and while Credit Union Match is nice, without greater online visibility credit unions won’t even be in the running.

Joining And Borrowing From Credit Unions

Field of membership also has a huge impact on consumers that somehow happen to find your credit union’s website and want to join. Unfortunately, most credit union veterans don’t realize the significance of the problem because online account opening and loan origination providers don’t share that data with the credit union.

Let me put it in numbers: 84% of consumers who abandon online account opening with credit unions do so on the step that asks how they’re eligible to join. 40% of consumers complete banks’ account opening forms compared to only 16% for credit unions. The only meaningful difference between bank and credit union forms? Field of membership. In other words, credit unions spend more than double what banks do to attract a new member through online channels because of field of membership.

If you don’t think this applies to you because applicants can join the American Consumer Council or some other association to become eligible to join your credit union, think again. Only 7% of consumers will check a box to join an association that makes them eligible, even if there is no cost associated with doing so.

How Credit Unions Can Beat Banks

Capturing greater market share doesn’t require a big budget marketing campaign or perfect messaging—consumers already want to join credit unions. However, consumers will continue to believe that isn’t an option if we set them up to continuously fail in their efforts to find and join a credit union. While legislators and regulators may tinker around the edges, field of membership isn’t going away any time soon, as good as that would be for consumers and credit unions. So, the only way to take market share from banks is with a solution that makes it easier for consumers to find, join, and borrow from any credit union—not just your own—because “credit union” is a shared brand, and the industry can’t afford it to stand for inaccessibility.