How Can US Credit Unions More Effectively Compete Against Banks?

US credit unions often face stiff competition from larger and better known banks. But they boast several unique strengths that can give then a competitive advantage. Consider implementing the following operational enhancements and marketing campaigns. Doing so could help drive long-term growth for your credit union.

Emphasize A Member-Centric Approach

Explain the Business Model: Credit unions are not-for-profit institutions owned by their members, which allows them to focus on meeting their members’ needs rather than on shareholder profits.

Personalized Service: Credit unions are known for offering more personalized, member-focused service compared with larger banks. Many banks are scaling back their branch presence and have a hard time attracting and retaining competent and caring customer-facing staff. It comes down to earning the trust of your members; they want to know that their credit union has their best interests in mind, and shares the goal of empowering them to succeed in their financial lives.

A recent study by JD Power found that US retail bank customers are losing faith and trust in their banks. This shift has been driven by unexpected fees, poor customer service and bad press. Thirteen percent of bank customers say they are likely to switch institutions in the next year. This spells a big opportunity for credit unions.

By utilizing personalized service, credit unions can provide tailored financial advice, personal interaction, and a better customer service experience that feels more like a partnership than a transaction. It pays to remind your staff of this advantage often.

Community Involvement: Highlight your credit union’s deep ties to the community. Credit unions can organize or sponsor local events, participate in community service projects, and support local businesses to build strong relationships and differentiate themselves from impersonal national and regional banks. Remind your members that the money they deposit in your credit union is reinvested into the local community in the form of business and personal loans and mortgages.

As Jim Nussel of America’s Credit Unions said at the recent WCUC event in Boston, “When credit unions win, people, small businesses and communities win.”

Invest in Digital Transformation

Enhanced Digital Banking: To compete with the convenience of large banks, credit unions must offer robust digital banking solutions with strong features and functionality that will deliver a great member experience. This includes easy access to account information, the ability to open accounts or transfer funds, making remote deposits and paying bills. Investing in mobile apps, online banking platforms, and other digital tools is critical – it ensures that members have access to the same (or better) technology that banks offer.

Take advantage of data analytics and AI: By leveraging digital technology, credit unions can offer more personalized services and convenient, 24/7 access to financial products and services. For example, credit unions can use data analytics and artificial intelligence to offer personalized financial advice and product recommendations to members.

Fintech Partnerships: Partnering with fintech companies can help credit unions quickly adopt cutting-edge technology, such as AI-driven financial planning, peer-to-peer payment platforms, or digital wallets (including Venmo, PayPal, Cash App, Zelle, Google Pay, and Apple Pay) which appeal to tech-savvy younger members and prospective clients.

Highlight Competitive Interest Rates and Fees

Never underestimate the power of “selling on price,” especially against banks. Consider promoting:

Lower Fees: Credit unions typically charge lower fees for services like checking accounts, loans, and credit cards. They can promote these savings to attract cost-conscious consumers who are frustrated by the high fees at traditional banks.

Better Loan and Savings Rates: Credit unions often offer more favorable interest rates on loans and higher yields on deposit products. Marketing these competitive rates can attract members who are seeking better financial returns.

Provide Superior Customer Service

24/7 Support: Offer 24/7 customer support through various channels: by phone with local customer service reps, through AI-driven chatbots, and via social media. Superior customer service can be a significant differentiator from larger banks, which may not provide the same level of personalized attention.

Problem Resolution: The ability to effectively resolve complaints or issues is a key driver of client satisfaction. Your members expect quick and adequate resolutions to any problems they encounter. Be sure to provide your customer service reps with “one and done” problem-resolution training. Empower them to fix problems – like reversing contested fees.

Member Feedback: Actively seek and act on member feedback to continuously improve services. Try easy-to-use and affordable online survey platforms like Survey Monkey. Show members that their voices are heard and that their satisfaction is a top priority. Most banks simply neglect to do this with their personal banking customers.

Offer Unique and Flexible Financial Products

Tailored Loan Products: Credit unions can offer specialized loan products that cater to the specific needs of their members, such as lower interest rates for first-time homebuyers, flexible repayment terms for student loans, or loans and lines of credit for local small businesses.

Niche Financial Services: Consider offering services that banks may not provide or may overlook, such as payday-loan alternatives, credit-score-building products, or special accounts for underserved communities.

Product Innovation: Credit unions can stay competitive by developing and offering innovative products that meet the evolving needs of their members. For example, consider offering digital-only accounts, cryptocurrency savings options, or “buy now, pay later” financing solutions.

Bundled Services: Promote bundled financial products that offer better value to members, such as combining checking accounts with auto loans, credit cards, and home equity lines of credit at discounted rates.

Focus on Financial Education and Wellness

Financial Literacy Programs: Credit unions can differentiate themselves by offering free or low-cost financial education resources. Workshops, webinars, and one-on-one counseling sessions on topics like budgeting, credit management, home finance and retirement planning can provide real value to members.

Financial Wellness Tools: Provide tools that help members manage their finances more effectively. These might include budgeting apps, debt-reduction calculators, or personalized financial planning services. These tools reinforce the credit union’s role as a trusted financial partner.

Expand Membership Eligibility and Outreach

Broaden Membership Criteria: If feasible, credit unions can expand their membership criteria to include a wider range of potential members, such as through partnerships with employers, schools, or community organizations.

Targeted Marketing Campaigns: Develop targeted marketing campaigns aimed at specific demographics, such as young professionals, small business owners, or underserved communities. Tailor your messaging to address their unique financial needs and concerns.

Operationalizing and promoting the many advantages credit unions can offer consumers and small businesses makes sense but may beg questions like “Where should we begin?” or “What if we don’t have the operational expertise or marketing savvy to take full advantage of this?”

Getting some outside advice on creating a plan of action and launching a few initiatives may be a great way to start. Consider working with Copylab – we can provide a full range of business and marketing expertise, inclusive of campaign development, deployment and measurement. We’re more affordable that you might imagine, and we can help you more effectively compete with the banks that serve your area.