When credit unions talk about competition, the conversation often turns to a two-part rivalry where the enemy is a bank, a group of bankers, or, really, any noncooperative financial institution. This binary distinction is mostly political. What little thought consumers give to financial institutions has little to do with taxes or structure; instead, they mostly think about everyday factors like convenience, fees, and services.
In this report, author Rob Rubin unveils a trove of recent survey data that employ a much more consumer-focused breakdown among financial institutions: Large banks (those with more than 100 branches), online banks (those with no branch infrastructure), and, finally, credit unions are paired with community banks, whose products and footprint they closely match. As the bank vs. credit union dichotomy slips away, the challenges and opportunities for credit unions shine brightly.
What is the research about?
This research brief uses a 1,400-response survey to tease out the preferences online consumers, particularly young adults, harbor for their financial relationships. It expands on five years of Filene’s interest in helping credit unions connect with young adults through programs like COOL Solutions and CU Tomorrow, and with seminal reports like Attracting Young Adults (2008) and Reaching Generation Debt: New Products and Strategies (2009).
The survey considers respondents’ preferences in a financial institution, wonders why they stay, and asks them what it would take for them to switch. The report draws on those answers to encourage exploration and investment in better products and better electronic delivery of services.
What are the credit union implications?
The things that attract Gen Y are often the things that need the most work. For example, some credit union websites are more like “sales-prevention tools,” and it won’t make sense to invest heavily in social media or tout your online offerings until your online storefront is attractive and effective. Credit unions need to take honest stock of the competition from online banks and big banks alike. Only then will they double down on the services that will make them the financial institutions of choice among Gen Y.
This report is sponsored by PSCU Financial Services.