Better Than Banks: 3 New Competitive Advantages For Your Credit Union

by Justine Rivero, Credit Advisor of Credit Karma™

Generally speaking, the mantra of credit unions emphasizes three key concepts: consumer-friendly practices, community-oriented focus, and higher-yield, lower-interest products. This core mission is what helps nonprofit, member-owned local credit unions outdo and outperform big banks.

But as big banks start to wise up to consumer-friendly products and policies, are you taking your credit union to the next level too?

The three key ingredients in your secret sauce should be articulated in relevant and concrete ways to ensure your competitive advantage isn’t just a mission statement, but a real tool that retains current members and delivers more membership growth.

Here are three questions to pose to your credit union to determine if you’re using that X factor to your best competitive advantage.

1)  Are you committed to being tech-savvy? In a recent annual survey on consumer online banking satisfaction, credit unions fell behind large banks for the first time. Credit unions are challenged with pushing more tech-savvy initiatives, from improving online banking to enabling mobile banking. Of the top 50 credit unions in the nation according to assets, 1 in 3 credit unions were lacking a mobile banking platform. Online and mobile banking, the next frontier of the banking industry, is a place credit unions can’t afford to fall behind.

• Strategy #1:  Online banking and mobile banking platforms are just the tip of the iceberg—it’s what you should already have to keep pace with big banks. Add value to your credit union with differentiated online services that aren’t just tech-savvy, but truly useful. There are already some great examples out there. To help members go paperless, Oregon Employees FCU offers a free service that gives members a secure, digital filing cabinet for long-term online document storage—a “digital vault”—through the startup doxo. UW Credit Union teamed up with Credit Karma to provide the Free Credit Score for Members Service, which provides members with free online access to their credit scores; UW Credit Union recently won an award in innovation thanks to the service. Sharpen your competitive edge with innovations that marry technological advancement and your core commitment to promote members’ well-being.

2)  What would your members say about you? Boil your branding initiatives down to that single question. The truth is that your brand isn’t what you say it is, but what your members say it is. While Citigroup, Bank of America, and J.P Morgan spent a combined $6 billion on advertising alone in 2010, marketing initiatives are wasted if the consumer’s actual experience with the company doesn’t align with the brand’s message. Without a multi-million dollar budget, credit unions must create more than a flashy brand, but an authentic experience.

• Strategy #2:  A unique brand experience is all in the details, and members get a real taste of it every time they interact with your credit union. So start with your staff; they are the first real, tangible experience members have with your brand. Whether you realize it or not, your employees are your brand evangelists. Have a clear brand message that your employees can deliver on. For example, Canadian credit union Coast Capital reminds its employees to start every day with the mantra, “I will change the way my customer feels about banking, today.” Branding is an outside-in approach, so if you are unclear what your brand message is, brainstorm with the staff and survey your members. Incorporate your brand messaging into internal communications and staff training to truly create a living and engaging brand experience.

3)  Jump on the social media bandwagon yet? Filene’s study on the state of social media in credit unions reports that 76% of credit unions use social media, mainly Facebook and Twitter. However, 62% describe their social media activities as “neither successful nor unsuccessful.” Many big banks are far advanced on the social media curve, using Twitter and Facebook successfully for customer service, product feedback and development, community outreach, and more. How can your credit union use social media in meaningful ways?

• Strategy #3: If you are plan to use social media, make sure it supports your overall marketing strategy and company goals. Filene reports that the most successful and effective campaigns were the purposeful ones that align with a credit union’s strategic goals. Start with a clear purpose of why your credit union will use social media.  For example, Truliant FCU’s $1,000 Facebook Fan promotion in 2010 gave away $1,000 to anyone who “liked” their Facebook page; the contest also added 3,000 fans in 48 hours and 5,000 fans in a week, which both reengaged current members and potentially gained new members. Gain initial traction by promoting your social media channels to your existing members; they already know and love your credit union, and are the best spokespeople to infiltrate your credit union into their extended social media networks.

If you want to know how to innovate, start by looking at your credit union with fresh eyes—what has made your members come back again and again, how do you amplify that, and how do you make that into a tool to get new members through the door?

Big banks have the resources to serve customers nationwide, but they aren’t well-equipped to serve your community. You possess the history and interactions to know what your community needs best; use those learnings to innovate and propel your credit union to the next level.

Justine Rivero is the Credit Advisor of Credit Karma™, a completely free credit management service that provides free credit scores, financial education, and personalized savings recommendations. The company believe free access to one’s credit score is a fundamental consumer right. Credit Karma helps more than 2.6 million consumers realize the everyday cost savings of having a good credit score.