WEST PALM BEACH, Fla.-All of the charges being loaded onto consumers' bank statements-such as Bank of America's well-publicized $5 debit fee-and the bonanza of pro-credit union headlines and news coverage that have followed have created a surge in interest among consumers in what these not-for-profit financial cooperatives might be able to do for them.
But beyond the headlines, how well are CUs capitalizing on the latest consumer flight from banks?
CUs across the country are reporting significant increases in new member sign-ups, but what remains unknown is how effective credit unions are being in creating profitable relationships with these new members. A number of vendors, meanwhile, have stepped up their communications in recent weeks, promoting their respective solutions as ideal tools for capturing not just members, but the business they have with other providers,a s well.
Credit Union Journal spoke with credit union executives across the country to determine if credit unions are-or are not-effectively "onboarding" these new members.
A number of credit unions admitted they need to dust off and rework the old onboarding process to fully capitalize on this latest opportunity. Others said they are staying with tried-and-true processes, while another group indicated that above-market rates and cross-selling will do the job.
Cross-Sales Close The Deal
CHARLESTON, W. Va.-At Pioneer West Virginia CU, onboarding isn't what gets new members to make the CU their PFI. Instead, it's cross-selling and the credit union's pricing that close the deal.
SVP/CFO Dan McGowan told Credit Union Journal that PWVCU's "financial advocate team" serves as the initial primary contacts for new members.
"Beyond simply opening the new checking and debit account relationship, their role is to actively look for other opportunities to serve the new member," said McGowan. "The success or failure of this program will be directly determined by how well we cross-sell other products and services."
But McGowan pointed out that shouldn't be hard right now. "According to Ratewatch we've been consistently paying well above average on our share certificates. Across the maturity spectrum, we average 31 basis points ahead of the market average."
The $140-million CU's premium money market account, at 50 basis points, is at the top of the market by more than 25 basis points. "Of course, we're really looking for loan relationships and we're in a position to make that decision relatively easy for a new member. For instance, we're currently promoting 1.49% APR and 1.99% car loans on 24 and 36 month terms, respectively. All of our loan products are priced well right now, enabled by an overall cost of funds of about 71 basis points."
Simplicity Is Vital
SANDUSKY, Ohio-With such a big opportunity to boost membership, it's time for CUs to pool resources and make it extremely simple for consumers to ditch their bank, one person is stressing.
Kevin Ralofsky, CEO of the $140-million Vacationland FCU, acknowledged that his credit union and most others could do better at getting consumers to make the change to a CU and then make those new members profitable.
"It is easy be upset with your bank. But it's really hard to change that relationship when your whole life is interwoven through that checking account. We really have to be smart about this. There is a lot of talk (about picking up new members) and very little action on that now."
Ralofsky believes an effective switch kit is needed in the industry. "That is the next big step for credit unions across the country for effectively onboarding these new members. Right now what we have is often just a letter and a directive on how the member can move forward in their relationship with the credit union. We need to get smart, invest money and band together, put our capital together and work on an electronic switch kit that will make the process much easier for the consumer to move their primary relationships over to the credit union."
Planning For Jan.
BAYTOWN, Texas-Community Resource Credit Union admits it could be doing a better job at onboarding, but has plans to improve its process to make new members profitable.
Mike Smith, VP of marketing and business development, said the $275-million CU plans to launch a new program in January 2012, right at the time it expects to see most of the new-member activity.
"Right now we are not seeing a big inflow of new members," said Smith. "But we expect the rush will happen at the first of the year when the BofA debit fee becomes effective and consumers see that charge on their statement."
Community Resource CU is working to develop a series of letters to members who will be prescreened for a credit product.
"We think this is the best way to capture the whole relationship," said Smith. "We know the members will be coming, and it has been proven that people are more receptive to information from their bank or credit union at the very start of their relationship. They pay more attention to communications from you then."
CRCU plans to target individuals who open up a new account in the previous month and offer them either a credit card, signature loan, or auto loan based on what best meet their needs. Currently, Smith said, the credit union is "not doing much" in the area of onboarding, sending out a thank-you letter and then a series of blank loan/credit checks.
