Rising fees and shoddy customer service prompt mass exodus from big banks.
In many areas of the country, credit unions have become the primary financial institution for the majority of consumers.
According to The Seattle Times, Scarborough Research reports that 28% of Seattle-area households bank mainly with a credit union now, up from 21.5% in 2008. The Times adds that Seattle-based credit union, BECU ($10 billion, Seattle, WA) is raking in a good chunk of the new members.
A growing number of consumers in the Seattle area are also choosing a credit union over opening an account with banking giant, Bank of America. "Bank of America, in particular, stands out as the only bank that is still below its pre-recession customer satisfaction level," Claes Fornell, founder of American Customer Satisfaction Index says in a statement. "It is clear that this is mostly because of fees. Customer satisfaction was probably set to deteriorate further as additional fees were in the making until a few weeks ago, when BoA backed away from the idea."
Customer satisfaction scores for many big banks dropped this year with Bank of America falling three points to a score of 66 for a new 10 year low. Citi and Wells Fargo fell a handful of points, while Chase gained six points in 2012 with a score of 74.
During an investor meeting earlier this month, Bank of America CEO Brian Moynihan said that internal customer satisfaction scores have actually improved since last year.
"As more customers move from large banks to smaller banks and credit unions, the overall customer satisfaction level for banks goes up as a matter of mathematics," Fornell says. "As the smaller banks do a better job with customers and therefore attract more of them, customer satisfaction for banks on the whole gets a boost."
Credit Unions Popular Throughout the Country
Whether its fees or service, Texans are also choosing a credit union over a big bank. The Texas Credit Union League recently reported that membership in the Lone Star state grew 3.3% through September.
“The current growth rate exceeds the national average of 2.7 percent and brings the total membership to 7.96 million Texas residents,” Dick Ensweiler league President and CEO said in a press release. “At the current growth rate, membership in Texas credit unions could easily top 8 million Texans by year-end.”
In North Carolina, Charlotte Metro Credit Union ($267 million, Charlotte, NC) hit a high note, adding 9,000 new members over the past year, which is 50% more than its average growth rate. In a press release, the credit union reported a 10% expansion in market share and experienced an asset increase of 11%.
And in Michigan, the Michigan Credit Union League reports that credit unions throughout the state have added 84,000 members this year and have increased deposits by more than $2 billion.
In a press release from independent credit union analytic firm Callahan & Associates, credit unions in nearly every state in the country posted positive loan growth as well. Only two years ago, approximately half of the country’s credit unions posted negative loan growth.
Although the growing number of new members, rising deposits and loans indicate that credit unions have become more popular, Fornell warns that too much of a good thing can be a slippery slope. "The large influx of new customers for credit unions, many of whom left banks because of rising fees, poses new challenges for customer service," says Fornell. "The question becomes, How to best serve a fast-growing customer franchise? The more customers you have, the more difficult it gets."
Have you joined a credit union. Make 2013 the year you save money and get the financial education and assistance you deserve.