What's in a name? At an increasing number of credit unions, the question is what's not in the name — specifically, the words "credit union."
In the last five years, a growing number of CUs have dropped the words "credit union" (or "federal credit union") from their names or do business in a manner that downplays their credit union status.
For instance, in 2013 Erie General Electric FCU in Erie, Pa., rebranded to do business as Widget Financial, but is formally Widget FCU.
"There was some obvious brand confusion," said Chief Marketing Officer Trenton Mason, noting that several other CUs in the area had similar names that included the word "Erie." "We're blessed to have a very progressive board. A few of our board members said we don't want anything that even sounds like these other credit unions in the region. We didn't want it to sound like a stodgy old credit union."
Though neither CUNA nor NCUA keep track of the number of institutions that have dropped or downplayed the credit union moniker, industry insiders have noticed the trend.
NCUA's chartering manual states that "the last three words in the name of every [federal] credit union chartered by NCUA must be 'Federal Credit Union.'"
"All credit unions have the option of using other names as trade names, but they must be cognizant of not confusing the public and ensuring nobody jeopardizes their coverage by mistakenly thinking a credit union using both its legal name and trade name is two federally insured credit unions," said NCUA Spokesman John Fairbanks.
The solution at Erie was to focus on the word "Financial," which Mason said easily encapsulates what the institution does without burdening the name with potential barriers to entry that consumers might not understand.
Not only are people confused by the words "credit union," he said — noting that people often believe they have to be part of a labor union or a SEG to join — but "the word 'financial' lets them know immediately that all things financial are available." The word also sounds modern and makes consumers think of large, complex institutions.
As for Widget, he said, a widget can be anything or everything, "so why wouldn't we say we're 'everything financial'?"
Since rebranding in 2013, the $262 million-asset CU has seen growth in both memberships and loans. Lending is up by 12% in the last two years, from $140 million in loans at year-end 2013 to $158 million at the end of the fourth quarter of 2014, driven largely by increases in auto lending and mortgages. Membership is also up by 20%, despite an "aggressive" policy at the CU of shedding dead weight accounts.
In spite of its name, Widget doesn't hide that it's a credit union, insists Mason. The CU's advertising references the credit union difference, he said, and internally the staff talks with members about being a CU and what that means for both members and the institution as a whole.
No Confusion
Perhaps the highest profile CU to rebrand and downplay its credit union charter is Tampa-based GTE Financial, which has seen membership grow by 30% since it dropped the "CU" from its name several years ago.
The transition has been so successful that many CUs considering rebranding without "credit union" have consulted GTE. But Joe Brancucci, CEO at the $1.6 billion-asset institution, reminded that while the name is different, those in charge made sure that the institution's value proposition was that of a credit union.
"Through the marketing and branding we've done, our team has done an outstanding job of elevating GTE Financial to be this new form for this generation that's involved in its community, that does the right thing and is all about financial literacy," Brancucci said. "No one confuses us with a bank. They know there's a difference between us and a bank or us and a savings and loan."
Brancucci noted that the rebranding was about more than just changing the institution's name. It was about changing the perception of the institution in the community. And while "Federal Credit Union" didn't test well in market research, GTE — the original sponsor — was still valued and respected as a long-term member of the community.
Actions Speak Louder Than Words
While dropping CU from the name has worked for Widget and GTE, marketing and branding consultant Paul Lucas cautioned that all CUs shouldn't think they can drop that descriptor and automatically find similar success. If nothing else, he noted, many simply lack the brand awareness for this strategy to succeed.
"The largest credit unions have the ability to create and sustain a strong brand with or without the credit union name," Lucas said. "Navy Fed and Pen Fed don't need to say 'Credit Union.' There is strong awareness of who they are and what they do. Another example is billion-dollar ENT out in Colorado."
The larger issue, Lucas said, isn't how these institutions choose to self-identify, but that the industry as a whole has never been able to create enough consumer awareness around the not-for-profit banking model. On top of that, many CU marketing efforts aren't particularly sophisticated, which Lucas said is a significantly bigger roadblock than the words "credit union."
Allan Prindle, CEO at Power Financial CU in Pembroke Pines, Fla., however, stressed that while CU management and staff are "immersed in this industry and know a lot about it, to the average consumer [the phrase 'credit union'] has either no connotation whatsoever or quite frankly might have a negative connotation."
For many consumers, Prindle said, the term "credit union" connotes a mom-and-pop shop that might offer auto loans and savings accounts, but not a wide array of sophisticated financial services offerings.
Not For Everyone
To be sure, out of of thousands of CUs nationwide, only a handful have shed "credit union" from their name, and one Connecticut CU spent time last year considering doing just that, but ultimately decided against it.
Rocky Hill, Conn.-based Nutmeg State Financial CU switched from a federal to state charter in January, and last fall considered just going by Nutmeg State Financial, which it often uses as a shorthand. CEO John Holt explained that not only is the Connecticut market particularly competitive, but a large part of the population there doesn't understand what a credit union is.
"But we also recognized the importance of the credit union movement and the importance of what a credit union is, and banding together for the movement and helping to support some of the things the industry is trying to do," said Holt.
Having converted from Nutmeg State Federal CU to Nutmeg State Financial CU, said Holt, gives the institution the best of both worlds. Not only did the name change better reflect the new state charter, but "financial made sense because... hopefully that encompasses that we are a financial services agency and we can do anything."
The focus now is to try to communicate to the marketplace what a credit union is and that Nutmeg State can still offer all the same services as any bank or financial services firm.
"We don't want to lose our identity as a credit union and what that means."
