New England credit unions are gearing up for another onslaught of angry bank customers looking to become credit union members in the wake of the FleetBoston-Bank of America merger announced last week.
"We think the merger is really going to demonstrate what big banks are all about-the money to be made in a merger, that they enter and exit a market solely based on profitability and not the need of the community," said the Massachusetts Credit Union League's Rob Kimmett. "This is a real opportunity for credit unions. Some Fleet customers have been merged four, five, six or seven times, and you better believe customer service doesn't get better with each merger."
'It's A Win-Win'
"It's a win-win for us when BofA comes in and gobbles up one of the biggest banks around," said Tony Terrizzi, CEO of the $46-million Everett Credit Union, a community charter just north of Boston. "Who benefits from this merger? The board of directors stand to make an obscene amount of money, and then there's the stockholders and senior management. That's why banks merge. It does nothing for the everyday person. When a credit union merges, it's out of necessity or to create a stronger credit union for members-you don't see the board or senior management raking in millions of dollars. That's not why credit unions merge. We merge to benefit the member. They merge to benefit themselves."
Credit unions have good reason to believe they can capitalize on this latest merger: just look at what happened in 1999 and 2000 when Fleet Bank merged with Bank of Boston to create FleetBoston.
"We saw a tremendous shift toward credit unions during that merger," Kimmett recalled. "We saw about a 16.5% increase in checking accounts opened during 2000 and we saw a 23% increase in the number of dollars in credit union checking accounts. People do vote with their feet."
New Ads May Follow
During that merger, the league did a statewide marketing effort, and it's certainly something the state's credit unions are going to consider this time around, as well, he added, noting that the league does a spring and fall credit union image campaign via radio every year. "The fall flight is just ending, and of course we didn't know about this merger when we put it together. But I think our message isn't far off anyway. We'll definitely be taking aim for Spring."
And as the merger won't take place overnight, credit unions still have ample time to get the message out. "There's a pretty good-sized window of opportunity, and there are really three points along the time line. First, when the merger is announced and we have the first wave of people saying 'Oh no, not again!' The second point is when the new signs go up, and the third is about 45 days later when the first statement hits."
An Extremely Competitive Environment
Even so, it's going to be an extremely competitive environment due to the large number of financial institutions chartered in Massachusetts. "I do think New England is special in that there's a sense of independence here and wanting to keep private information close, which leads to a real affinity for local institutions," Kimmett suggested. "But we do have more than 400 financial institutions headquartered in Massachusetts, so the virtue of being local isn't enough. It's also a matter of trust, and that's another thing credit unions are known for."
While credit unions will have to work hard to get that message out, the good news is, for the most part, all they need to do is keep being credit unions, Terrizzi suggested.
"Credit unions do nothing but serve the everyday person. When the dust settles, we'll keep doing what we do best, and that's serve the everyday person, and that's what people want," he said. "We'll do everything we can to market to those customers who are unhappy because of the merger. We have to do what we can to show the residents that credit unions are competitive and a part of the community. We will put our best foot forward."
