When Bank Transfer Day maven, Kristen Christian sounded the charge to migrate from fee heavy banks to a kinder, friendlier credit union, she wasn't necessarily trying to start a global revolution.
Christian says that she simply wanted to let Facebook pals know how she felt but instead sparked a wildfire. However, thanks in part to Christian and Bank Transfer Day last fall, the fat cat banking industry began to experience a different type of phenomenon it hadn’t seen before--mass exodus.
“The National Credit Union Administration reported that credit unions nationwide gained nearly 400,000 members in the fourth quarter of 2011, while memberships had declined by 250,000 during the fourth quarter of 2010,” Christian told Credit Unions Online. “American Banker recently reported that nearly 6 million U.S. consumers have changed the way they bank since the Bank Transfer Day movement was founded. Considering I'd only intended to reach 500 Facebook friends, I'm humbled to have played a role in igniting this consumer reawakening.”
Patrick LaPine, President/CEO at the League of Southeastern Credit Unions backs NCUA’s finding and says. “We can definitively see the line of where membership growth began in Alabama and Florida. The third-quarter Call Report data in 2011 was the beginning. Florida credit unions have seen 110,000 new members since the third quarter of 2011, while Alabama credit unions have added 38,000 new members in the same time. The growth rate for the previous three quarters was much less. We found that Bank Transfer Day, along with the backlash toward banks debit card fees, was really the tipping point of getting consumers to switch their financial institution."
Regardless of whether memberships began to wane, a study conducted by SNL Financial reports that member deposit growth began to swell following the 2008 recession. Both banks and credit unions saw a deposit increase after the market imploded, however credit union deposit rates grew faster at a rate of 43% since 2008 versus banks at 31%.
LaPine, said that the writing was on the wall and consumers were poised and ready to jump the bank ship.
"From research the League conducted following the 2011 Cooperative Image Campaign in September and before Bank Transfer Day, we found that many consumers were researching a new financial institution. Our research found that 19% of bank customers had begun looking at a credit union.”
LaPine said that what surprised his team from the research was that 34% of credit union members who had a primary relationship with a bank were looking more at moving their money to a credit union. “Fourteen percent indicated that they in fact moved their money to a credit union. More credit unions told us that they were seeing good membership growth numbers but even more deposits. This reinforced that members who might have just had a loan or savings account with a credit union, but their primary checking was with a bank, flipped that relationship and moved their money to the credit union.”
Linda Garboczi, VP/Marketing at Andrews Federal Credit Union ($897 million, Washington, D.C.) says that Bank Transfer Day pushed credit unions to another level. “Membership grew slowly, but nothing like what we’ve seen in the last 10 months,” she says. “We’ve been hearing the consumers’ frustration with banks and the fees, and the not being able to talk with anyone who can help, etc for years. The difference now is that it’s at full volume and consumers are taking action, by opening a credit union account, and then gradually moving their accounts.”
Christian says that people simply became fed up with getting the runaround at banks and needed a change.
“The lack of service many consumers experienced at corporate banks came at a high cost to both ourselves and our communities,” she says. “In contrast, credit union membership is a breath of fresh air. Of the consumers who have researched credit unions as an alternative to corporate banks, many joined because of the people helping people mission that benefits both individual members and the communities they are a part of.”
Apparently those who have researched credit unions are telling others as Andrews Federal Credit Union reports significant member referrals. “Member referral is still the way 65% of new members arrive at Andrews Federal. They may hear our ads on the radio, receive something in the mail, or see something online, but when they mention it to a friend and the friend says, ‘Yes - that’s my credit union and they’re great, you should join,’ that’s the defining moment. We’re proud of that kind of word-of-mouth endorsement from our members.”
Garboczi adds that her credit union has created post Bank Transfer Day campaigns/products to maintain momentum. “We’re working on several new potential investment/savings products that will be targeted to our military members, and also to our civilian members in 2013. Our research indicates there’s a need for niche savings products and we want to fill that need.” Additionally the credit union has advertised no debit card fees as well.
“I'm particularly impressed with Credit Union Association of the Dakota's ‘We've Been Waiting For You!’ campaign, which has included existing members illustrating the benefits of doing business with a financial cooperative,” Christian says. “CoastHills Federal Credit Union ($630 million, Lompoc, CA) engages Facebook users through video blogs aimed at promoting financial literacy. Many credit unions have ‘switch kits’ available to make the process easier for potential members. All are great ideas that have proven fruitful.”
The challenge is real and consumers have had enough. Leave high fees and poor service and find a credit union for financial freedom today.By Gina Ragusa