LAS VEGAS-With just 1,300 credit unions offering investment services to their members, Bill Handel believes too many CUs are missing out on an opportunity.
"Raddon's research shows public opinion of large banks is the lowest in 30 years," said Bill Handel, VP-research and development for Raddon Financial Group. "This is a real opportunity. With overdraft and interchange income declining, banks are willing to let checking accounts move over to credit unions-so the real challenge is to turn these into profitable relationships, not just single-service accounts."
Most consumers do not feel as if the recession has ended, Handel said, meaning CUs will continue to see low loan demand. And because there is so much uncertainty, people are looking for a trusted financial advisor.
"Non-interest income has been flat for credit unions for four years," he said. "Credit unions need to focus on building share of wallet through effective marketing and relational pricing, and offering new services."
According to Handel, the market is ripe for investment services, as many people are concerned about having sufficient retirement income. But awareness is a major problem, he noted, pointing to the 77% of consumers who have never used their primary financial institution as a source for investments.
"We have not built enough awareness," he said. "The more aggressive a credit union is, the deeper the relationship will be with its members."
Part of a successful investment services offering is cross-selling, Handel continued. He said CD balances should be converted to investments to boost ROA and the loan-to-deposit ratio. This can be marketed as part of a "money makeover" to get the word out to pre-retirees and emerging investors.
Handel is aware of at least one CU where members who call in to renew a CD are automatically referred to an investments person.
"Member awareness should be built holistically," he advised. "Target key products based on the demographics of members."
