Although it’s always made sound financial sense, being a credit union member hasn’t always been “what the cool kids” were doing in the past.
Credit unions were often misunderstood, leaving consumers wondering if they had to be part of a union or could only join if they worked for a certain company. Of course the other misunderstanding, which continues today was one that credit unions didn’t have the same robust product, service and technology offerings as the big banks.
If the term “slow and steady wins the race” could be applied to any situation, it certainly works in credit union world 2012. As fast and furious mega banks appear to be tanking by desperately adding more fees to prop up fat salaries, an increasing number of consumers are seeking solace at a local credit union.
Following Bank Transfer Day and the subsequent news of increasing fee structures at big banks, it’s no surprise that the National Credit Union Administration (NCUA) reported that more than 1.3 million Americans opened an account at a credit union last year, considerably higher than the 600,000 who made the move in 2010.
The latest numbers brings credit union membership to a record 91.8 million. Credit union advocates believe that these numbers are only going to rise as big banks try to court that 1%.
Christianne Gribben, AVP/ Marketing at Clearview Federal Credit Union ($740 million, Moon Township, PA) says that consumers are starting to focus on their bank statements only to find they are being charged fees for transactions that should be free. “There has been an increased amount of consumer education and awareness due to some of the new bank fees that received less than favorable media coverage,” she explains. “That has prompted some consumers to start to pay more attention to their bank statements and ask questions about how they can avoid paying fees. In many cases, consumers have realized that they can avoid unnecessary fees by switching their accounts to a credit union.”
In fact people are so fed up the Consumer Financial Protection Bureau has created a complaint board for consumers who are overwhelmed and feel taken advantage of by big bank practices.
"Deposit accounts play a critical role in the lives of most Americans, but these products and the laws governing them are complicated," said the bureau's director, Richard Cordray. "Consumers need someone on their side to keep banks and credit unions accountable -- that is our job at the consumer bureau."
Credit Unions Report Upward Trend
Mike Bridges, VP, Marketing and Communications from the League of Southeastern Credit Unions released the latest data demonstrating that the increase in new members and account was not a fluke.
Bridges reports that Alabama and Florida credit unions added $2.7 billion in assets in 2011 year over year from 2010, which includes $1.3 billion added in the fourth quarter.
Membership rose in the fourth quarter with southeastern credit unions adding 34,000 new members for a total of 110,000 new members between the states for 2011 - 75,000 new members in Florida, the largest gain in more than five years, and 35,000 in Alabama, the largest gain in four years.
“When we look at the membership and asset numbers for 2011, it’s certainly some of the best we’ve seen in years,” said LSCU President/CEO Patrick La Pine.
“The membership numbers are most likely higher for credit union members that are using a credit union for their primary financial institution,” he adds. “Through our Image Campaign research, we found many people moved their money from a bank to a credit union after already having a savings account or loan with the credit union.”
In the northeast, accounts and membership also continue to swell. “2011 proved to be a strong year for Northeast Credit Union as our brand promise, built on trust and personal relationships, resonated with our members and attracted new members to the Northeast Credit Union family,” says Amy Moy, Senior Marketing Communications Specialist for Northeast Credit Union ($697 million, Portsmouth, NH). “Our net income grew by $2.2 million -- a growth rate of 45.7% and we loaned $581 million dollars to members -- growing loans outstanding by 2.8%. In 2011, we also had net membership growth of 3,684 new members, allowing us to reach a total membership of 72,437-- an annual growth of 5.4%.”
Gribben sees the trend continuing, despite numerous regulatory hurdles thrown at the financial institution industry. “There is quite an opportunity for the credit union industry to grow. Clearview has been a big proponent of the iBelong campaign that originated in Pennsylvania and now has spread to several other states. One unified credit union messaging campaign could be very effective in educating consumers on the benefits of credit unions. Credit unions will certainly face increased competitive and regulatory challenges in the future, so it all depends on how they respond to these challenges.”
Why Credit Union Popularity Now?
Anyone who has lived through the “Great Recession” knows that troubled economic times have changed the way many people live and manage money. However, some credit union executives believe that the combination of the Occupy Movement and other grassroots campaigns finally resonated with consumers and made them act.
“With the attention that the Occupy Wall Street movement and the Move Your Money Project have received, public awareness about credit unions has increased dramatically,” Moy says. “ As people seek to learn about the alternatives to large for-profit financial institutions, they're finding that it is easy to join a credit union and that they don't have to give up the great online services that has made managing their money easy and convenient. As more and more people learn about their banking options, they are finding great products, free educational programs, sound advice, and personalized services - all available at their locally-based member-owned credit unions.”
La Pine also believes external factors and some internal promotions drove more consumers to credit unions. “These strong 2011 numbers, highlighted by the fourth quarter, shows us that the LSCU Cooperative Image Campaign along with Bank Transfer Day, created a powerful one-two punch for attracting new members and getting existing members to move their money to a credit union.”
Moy adds that as more reports in the media point to big banks increasing fees, an increasing number of consumers will turn to a credit union.
“Perhaps if there were just one or two isolated stories about bank bailouts or increases in bank fees, the attention being paid to credit unions would fade. Instead, the headlines continue to show large financial institutions settling claims for wrongdoing and testing fees for their products and services to penalize customers they deem unprofitable.”
She believes that there isn't one single event, headline, or movement responsible for the boom, rather each has contributed to a larger conversation that continues to be amplified. “People are watching and listening to what is happening around them and they are searching for information and options that they can trust. People want to feel good about the institutions they do business with, and credit unions offer people the opportunity to put their money and their trust in an institution in which they are a member-owner and one that is committed to putting the needs of its member-owners first.
Moy adds that the most important thing consumers should know about a credit union is that it is owned and controlled by its member-owners and exists for the benefit of its member-owners. “Credit unions are focused on helping their member-owners with their financial needs rather than making a profit for investors and are committed to the credit union creed of people helping people."By Gina Ragusa