While Americans are overwhelmingly bitter toward megabanks and truly understand the importance of banking locally, their banking choices usually don’t align with those beliefs, a recent study found. Why? It has a lot to do with brand names.
The Consumer Banking Insights Study (CBI)—conducted by Harris Poll in December 2013 on behalf of BancVue and more than 200 community financial institutions—found that more than five years after the financial crisis of 2008, 66% of Americans are still angry with the megabanks. Additionally, 78% of consumers say they believe banking locally is important. Yet, megabanks hold 70% of the nation’s deposits today, according to Federal Reserve data.
Blame the discrepancy on savvy marketing. According to the CBI, 73% of adults say a recognizable brand name is important when choosing where they bank—and that number jumps to 81% for Gen Y. The megabanks’ large advertising campaigns, combined with their broad network of branches, give consumers the impression that megabanks are the only game in town. In fact, 63% of megabank customers say they’ve never even considered switching to a community financial institution, the CBI found.
It seems imperative, then, that credit unions be able to consistently promote a brand with national appeal—but how? For many community-based credit unions, national institutional branding is close to impossible. That’s where branded products—which can be just as appealing as company brands—can help.
The Branded Advantage
My company, BancVue, recently analyzed data from the more than 600 community financial institutions offering either our nationally branded Kasasa® reward checking accounts or our white-label reward checking accounts, which are branded by the institution offering them. We found that, overwhelmingly, nationally branded checking accounts outperform those that a credit union or community bank brands on their own.
For example, self-branded reward checking accounts lifted institutions’ account acquisition by 20%. Nationally branded reward checking accounts, however, boosted account acquisition by 50%.
It is important to note that the accounts in the analysis work exactly the same. They are all free, require no minimum balance, offer ATM fee refunds, and come with rewards, such as high interest, cash back, or digital downloads. The difference that consumers gravitate to is the power of a national brand name. The phenomenon isn’t unique to checking accounts either; we see it playing out in our industry with mobile solutions, pre-paid cards, peer-to-peer payments, and more. The product with national brand support always seems to win.
Boosting Your Branding
The findings should come as a relief to credit union leaders. There’s no need to sell out to a larger organization in order to reap the benefits of branding.
Credit unions can attract more members by simply offering more recognizable products. If your institution offers self-branded versions of savings, checking or other products, it might make sense to switch to your vendors’ branded product options.
The shift is a small one, but it could potentially result in big gains, helping brand-name-friendly Americans finally act on their desire to bank with a local institution.