Credit Unions: The Name

by Mike Lawson, CU broadcast

Does the name “credit union” bother you? Probably not. Since we are all well entrenched in this industry and say those two words at least 101 times a day, we probably don’t think too much about it. But stepping out of our CU silo, does it matter to the consumer? The reason I ask: A couple of credit unions out here in California seem to be somewhat dodging the name – one directly and one indirectly.

I’ll get to them in a bit.

It’s easy to see the name “credit union” being a bit more cumbersome when compared to “bank”. It doesn’t quite roll off the tongue quite like “bank” does. I know it sounds petty, but from a marketing/branding perspective, it could be a challenge to overcome in educating the general consumer. It’s like comparing Nike to Sur la Table. One’s easy and one’s like … what is that?

Even as I grew up with my Dad espousing the virtues of credit unions, I still didn’t grasp the complete idea of what one was until I started working for an industry core processor back in the mid-90s. It wasn’t until then when I received my long-awaited indoctrination to credit unions. This industry has a fantastic story with humble beginnings and a wonderful “people helping people” philosophy that really resonated with me. Naturally, I was hooked.

But the name “credit union” still seemed like a dull thorn on a blooming rose. It was hard to explain to a newbie. It seems to require some (maybe, a lot) explanation to the general population turning a 30-second elevator pitch into a 330-second novella. Again, to any marketer, this is a steep and rocky climb compared to the smooth, Olympic luge-like slope banks have when selling their ubiquitous brand to consumers. This truly generous industry has to tote around a clunky name like a coconut-laden swallow.

Part of the marketing issue

I could be a dog barking at a wall with this take, but it seems the name is part of the marketing hurdle in getting the word out about the many benefits of credit unions. I think many consumers – the ones who care – get caught up in the name’s definition. I know I did in the beginning.

• Am I joining a union to get credit? Really? (That’s how naïve I was!)

• What does membership mean? Is it like Costco, where everybody can be a member and get a 500-inch flatscreen for $399? Or is it like the local country club where I have to pay a considerable up-front fee to get in and play some croquet? And what perks do I get once I’m a member?

• What does not-for-profit mean? Is this a philanthropy effort? Am I donating or giving to a cause? Where does my money go?

• And it’s member-owned? Do I have to attend meetings? Do I make any money on this deal?

We know “credit union”

Of course, all of us who live within this industry know the answers to these questions. The average consumer we are trying to reach with the “credit union” name as the spearhead, however, probably doesn’t. With the latest influx of new members joining credit unions in the last year or so, should we make our message more concise? Should we make it easier to digest? And should the industry have a cohesive message?

Working in the credit union industry for nearly 20 years now, the industry vernacular is as common to me as “fiscal cliff” is to Obama and Boehner these days. “Credit union” has become a way of life for me, so I don’t even notice the name anymore. It’s there to clarify a difference. My point, again, is everybody within the industry knows it. But most outside the industry don’t know it.

Like a steaming hot slice of apple pie a la mode magically served to you for dessert, Bank Transfer Day literally fell in our laps – and credit unions didn’t have to do much to hop on this gravy train. The banks have also continued to do their part in driving traffic to credit unions with their customers’ frustrations mounting: more than 740,000 new members in Q3 2012. (NCUA, Nov. 29, 2012)

But how many of those 740,000 new credit union members who joined in Q3 2012 really know what a credit union is? Hopefully, most of them. And how many more possibly confused consumers (potential members) took a right turn to a community bank instead of the left turn to the credit union? We may never know.

Two reasons for this topic

Ok, now for the two reasons why I’m writing this column: Those two California credit unions that are kinda sidestepping the “name” – which include my credit union’s new branch and a credit union that just rebranded itself without “credit union” in its new name.

First, my credit union, San Diego County Credit Union, (huge fan of their “stuffy banker” commercials, by the way) just opened its latest branch two minutes from my house. The branch itself is spectacular: clean, inviting with smiling faces inside to greet and help you. Very nice, indeed. But the lighted name on the outside of the branch facing the busy intersection simply reads “sdccu.com” in big bold, aqua-blue letters. Oddly, it doesn’t say “San Diego County Credit Union” or even “credit union”, at all. I figure there’s a reason for it, possibly to entice consumers sitting in their cars at the really, really long stoplight to visit the website because all the info is there waiting for them online. Probably quicker than stopping by the branch to check it out.

I don’t think SDCCU left off “credit union” on purpose as a slight to the credit union name. I’m thinking they chose the URL because few folks driving by know what a credit union is. I believe they felt people – being increasingly “mobile” these days – could get more information quicker from a quick visit to the website on their iPhone. Once there, they could even discover more about what a credit union is and how it can benefit them better than a bank. Sounds logical.

Then there’s Lockheed Federal Credit Union, which has recently dog-paddled against the CU tide with its rebrand launch this past summer. It renamed its credit union Logix because it’s field of membership is now broader than just Lockheed employees. I see the reasoning to reduce any confusion. But the term “credit union” is blatently nowhere to be seen in the logo, name, or tagline – just an itty-bitty reminder below it stating: “Formerly known as Lockheed FCU”. The tagline reads: “Welcome to smarter banking”. Even the web address is sans CU: www.logixbanking.com.

Logix is an overt example of escaping the credit union name – most likely appealing to its broader audience who is riding today’s trend of looking for a new financial service direction. Hardcore credit unionists must be a bit miffed at this move, while younger consumers may not care one way or the other – just as long as their money is still there in the morning.

A trend?

I realize the horse left the barn a very long time ago on this naming issue. But I’ve read a couple articles about it, as well, and the two recent examples with SDCCU and Logix prompted me to think a little bit deeper about it – especially with the recent uptick in interest. Could this no-credit-union-in-the-name-trend become a reality as more and more consumers look for new places to keep their cash?

What are your thoughts on this issue – if it even is one? Even though it requires some explanation, I’m essentially fine with credit union. It didn’t really percolate until I saw what Lockheed did with its new Logix rebrand and SDCCU’s URL on their new branch instead of their CU name. I started to think that perhaps there is something to it. Will more and more credit unions drop the CU name in future rebranding efforts in the hopes of attracting more mainstream members?

I love credit unions and what they stand for and will always champion this movement. That’s why I raised this issue. Is it good for the industry to stray from the name or not?