It's A Mystery

Register now

One regular mystery shopper of credit unions said she has encountered a big mystery herself: why are credit unions missing a golden opportunity.

As baby boomers edge toward retirement, their attitudes about money are taking a sharp turn, notes the same analyst. Instead of earning to spend, they are saving to pay off debts-all of which could be good news for credit unions (but often isn't).

Charlene Stern, SVP of NewGround Resources, Inc, a design/build and branding firm for financial institutions, said that Boomers' frustration with Wall Street and reports of corporate fraud have led to a willingness to exchange smaller returns for safer and more trustworthy institutions.

"They know they can't trust their brokers anymore," she said. "They look to their friends and see that they're in the same boat. And they certainly don't think of the banks, because the banks have been nickel- and-diming them for years. Enter the opportunity for the credit union."

But, she wondered aloud, "Are they thinking of credit unions?"

Stern believes the answer is, "No.... Credit unions are not particularly perceived as sophisticated. But this could be corrected."

How? Stern recommends that first, credit unions do away with their "burger-flipper" mentality.

"Credit unions have their hearts in the right place...but they will never get the opportunity if they don't reach out."

Part of Stern's job as chief experience officer for NewGround is mystery shopping at financial institutions across the country. Thus far, she said, she has been quite disappointed.

"When I walk in and mystery shop, I am ready to buy it all from them," she said. "But they are missing the opportunity at every exchange."

An Immediate Turn-Off

She said she is immediately turned off by the first question she often gets from credit unions: "Do you qualify?"

"Credit unions need to figure out how to forward the communication that they are there to serve without the big red flag going up at the first impression," she said. "It doesn't mean that you don't have to follow the legal issues. But, a welcome would be a better start."

Stern said she is also frustrated with the "burger mentality" service.

"If you come in knowing what you want, the (employees) will provide or fill out the forms," she said. "The issue is that the member may not be smart enough to know what he needs."

The sluggish economy has only made matters worse, she said.

"Members are never going to feel the way they did in the mid and late nineties," she said. "That security and sense that they were ready for early retirement has dissipated . . . Baby boomers who talked about retiring in their 50s now see extended work and unplanned financial issues."

With the right approach, she said, credit unions can seize their business.

That approach includes having ambition to grow, finding out what members think and creating a package that defines their value.

With so many closures and mergers within the financial industry, Stern believes credit unions need to look seriously at their names, their brands, their logos, their cultures and the effects they all have on members and potential members.

"What do your members mean to you and what do they think you can actually deliver?" Stern said. "Are you coming to grips with the fact that the members are changing? How are you building the meaning of who you are in their eyes?"

'Didn't Have Legs'

One client in Bridgeton, Mo., for example, switched to a community charter without immediately changing the name that represented its original sponsor-Education Employees Credit Union. "That name would not have meaning in the larger community," she said. "It didn't have legs to carry the credit union into the future."

The challenge was to come up with a brand, place and culture that told the credit union's story and still respected its roots.

While the new name, Vantage CU, had nothing to do with education, Stern said, education is at the center of its promotional materials.

"We were very respectful of the CU's birthright," she said. "You can't ignore that. But it doesn't mean you have to keep the same name. You just need to understand how to pay respect to that, what the values of your credit union are and how to orchestrate it all together."

Stern said she believes that CUs have their hearts in the right place, but are only revealing a fraction of what they can do for consumers.

"This is the last critical opportunity for credit unions or banks to reposition themselves as resources in the larger financial arena," she said. "If you are sitting and waiting (for other financial institutions to change) . . . what's it going to mean when you finally flip the switch?"

"Yes, revenue has to occur short term, but how do you lay the groundwork?" Stern continued. "The credit union industry was a very cooperative world at one time. Now, your best friend may be your competition. Everybody is scrambling for the future. If you do what everybody else is doing, you just stay on the same playing field."

For reprint and licensing requests for this article, click here.