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Credit unions should focus on better marketing, more mobile and self-service banking
September 14, 2009 - Tracy Kitten
The average credit union member is 49 years old and is likely to be a very loyal customer. But credit unions need to do a better job of attracting new, younger members, says Karen Morgan, executive vice president of San Francisco-based oFlows Inc. OFlows works with credit unions to help promote paperless transactions — pushing more "green" operations.
"The credit union industry needs to do a better job of explaining to members what the difference between a credit union and a bank is," Morgan said during her opening presentation at the Credit Union Services & Products Forum in San Diego. "They need to develop campaigns that get the word out about what they have to offer, and they need to do a better job of appealing to a younger audience."
Are credit unions actively driving traffic to their Web sites, and is the user experience on those sites enjoyable? And what about mobile banking? Are credit unions exploiting the mobile channel?
Those were some of the questions Morgan asked of the 80 or so credit unions represented Monday during the forum's opening day. Unfortunately, a lot of credit unions have not been able to successfully appeal to a diverse membership and attract the 18- to 35-year-old age group, while not turning the 45- to 54-year-old age group away.
One misconception younger consumers have, Morgan says, is that credit unions have too few ATMs and branches. In reality, because of cooperative alliances, such as shared branching and on-us ATM transactions through co-op arrangements, credit unions actually offer more convenience than some of the nation's largest banks. But credit unions are not getting the word out.
"Credit unions actually have the largest ATM networks in the United States," Morgan said.
Leading credit union ATM networks, such as Co-Op Financial Services' Co-Op Network and Credit Union 24, have large ATM networks. The Co-Op Network includes surcharge-free member access at 28,000 ATMs in the United States, and Credit Union 24's network includes more than 100,000 ATMs nationally and internationally.
"We need to promote the fact that we have a far-reaching network," Morgan said.
Marketing will be key for credit unions going forward, she says, as will enhanced technology.
I, too, gave a presentation yesterday about the need for credit unions to enhance their self-service channels and optimize their branches with more assisted self-service. Many conference attendees seemed reluctant to see the need for the leap.
But attracting younger members, or even unbanked consumers, will require a different approach — whether it is through stronger collaboration with retailers and ISOs for more off-premises deployments that offer advanced functions or through more mobile marketing.
Morgan says catchy marketing campaigns, such as the slogan oFlows helped one of its credit unions in Colorado develop, "ATM Fees Really Suck," are going to garner attention among younger age groups. She also suggested that mobile campaigns, such as the ATM-locator SMS/texting campaign that some of her credit union customers promoted last year, can make a big difference.
After launching the "ATMATM" texting campaign, participating credit unions, Morgan said, immediately noticed an uptick in ATM transactions. The texting feature was quickly adopted by younger members.
Also, credit unions that launched campaigns that appealed to younger users, such as the "ATM Fees Really Suck" campaign, did notice an increase in new members between the ages of 18 and 35.
"We were able to increase assets for our credit unions as a result of these campaigns," Morgan said.
Delivery channels need to be interactive and consistent, and technology will play an ever-increasing role — whether through self-service or the mobile channel. Morgan and I agree on that front.
More users, regardless of age and gender, prefer online banking. Making the leap to mobile banking won't be so difficult, since smart phones allow mobile browsing — the online and mobile experiences are similar if not the same.
And on the self-service front, basic transactions, such as cash deposits and cash withdrawals, can be moved to a self-service device very easily. I suggested during my presentation that even more complex transactions, such as funds transfers and bill payments also could be moved to the self-service channel — freeing tellers for more complex transactions and up-sell interactions with members.
Deposit-automation technology is the gateway to a whole host of new transactions. And the green element cannot be ignored. By removing envelopes from the transaction, credit unions improve efficiency and reduce paper. It's something members, especially younger members, will appreciate.
No one wants to bank in an environment perceived to be outdated or boring. To stay ahead of the curve, credit unions will have to be savvy and show their members that they can be cutting edge.
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