'Like A Bank. Without The Bank Part': How 1 CU Has Managed A Transformation

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"Like a Bank. Without the Bank Part."

The wry humor behind that slogan is reflective of a significant change that has occurred at one Manhattan Beach, Calif.-based credit union. It reflects a new attitude, a new name and a new, expanded field of membership for Kinecta Federal Credit Union.

Originally named after the famed aviator and aircraft manufacturer, Kinecta FCU was for most of its life known as Hughes Aircraft Employees FCU after being founded in 1940. Today, it's the 11th largest credit union in the nation, fourth largest in California. It is one of many credit unions that have evolved from a single-sponsor beginning into a powerhouse financial institution.

Attacking Misconceptions

In remarks before The Credit Union Journal's SEG & Business Development Conference here, Teresa Freeborn, Kinecta's senior VP-marketing and communications, offered glimpses into how the credit unions business development and marketing strategies have evolved and what form they will take in the future.

The most obvious change is the name, reflecting ownership changes in its original sponsor company but also change in the market, as well.

"The credit union also recognized an opportunity due to the changing regulatory and competitive landscape," said Freeborn. "It wanted to select a name that would express energy and its future direction, while being useful for branding."

The name, drawn from the words "kin" and "kinetic," required significant behind-the-scenes work, beginning with the board and long-time members who felt a loyalty to the Hughes name. During the second year-2002-of transitioning to the new name, the CU talked to the public. "The credit union wanted to reassure its current members and retain their loyalty. At the same time, it needed to expand its brand identity and reach out to new employee groups," explained Freeborn.

In the early days of CUs, a single sponsor was the norm, and being single has its benefits. The common bond of members was the "glue," she said.

Today, Kinecta is a multi-SEG credit union, which virtually anyone in the South Bay area of Los Angeles can join because so many large employers are involved. There is opportunity in the region because banks are "too big and too slow."

According to Freeborn, Kinecta is looking for what it calls "suburban individualists," which she described as planners who are fiscally conservative and active in their community. They enjoy being different, but within boundaries. Their average age is 35-49; they are married, affluent, and have children. They are proficient online. They eat at California Pizza Kitchen, not Sizzler. They are active, pursuing outdoor pursuits such as sailing, boating, skiing and skating.

"These people are numbed by poor service and treatment at their banks, they prefer ATMs and online banking to visiting tellers, but breaking up is hard to do-it requires a lot of physical and mental work," she said.

One factor hampering CU growth is a continuing image and awareness problem, Freeborn asserted. "People think a credit union is for union members. People don't realize Kinecta offers the same things a bank does, only better," she said.

Kinecta is looking to advertise, planning campaigns in major newspapers, community newspapers and radio. To make sure it is properly focused, Freeborn said it is breaking down relevance marketing for each age group.

The good news: Kinecta found consumers primarily associate CUs with being "member" oriented. The bad: they assumed they only could join through work, and it probably wasn't available to them. The fact they could join was a happy surprise, surveys found.

Another drawback: CUs were seen as not as convenient as banks, with not as many ATMs, less convenient hours and fewer account offerings.

"Consumers want it all," Freeborn declared. "They want a broad assortment of products, access and convenience, little or no cost, great rates, an established name with stable employees, and the ability to reach a person, not a recording, when they call." "Most of all," she continued, "they want good and caring service, which includes short waits in line and personable employees who know them."

In an effort to appeal to these demanding standards, Kinecta developed a slogan: "Like a bank. Without the bank part."

Overall, Freeborn said, the slogan was well received and struck a positive chord with both members and non- members.

"People liked the humor, and felt it was true. People have dissatisfaction with their banks, but they don't necessarily want to hear or see you bashing them. Banking is a part of life, but not a high-interest category. Therefore, there is some complacency."

Attacking Misconceptions

Kinecta is continuing its marketing push to position itself as a "better alternative" to banks, without being outwardly aggressive in tone, she said. Information is necessary, because there are a lot of misconceptions. For example, people don't realize a large network of ATMs is available.

Freeborn said Kinecta does everything it can to make whatever it does look, act and be perceived as "better than a bank."

"Rates are important, but the CU's perception by members and non-members as 'better than a bank' are more important. Offers need to be plain, simple and easy to understand," she said.

There are concerns among members that Kinecta is becoming more "bank-like" as it gets bigger, warned Freeborn. She said even with growth, people expect a better experience compared to a bank.

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