The Survey Says-Time To Stop Believing Just What You Want

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It's a little known fact that any gathering of three or more credit union people is required to begin not with the Pledge of Allegiance or national anthem, but by citing the fact credit unions have outperformed banks and thrifts in consumer satisfaction in the annual American Banker/Gallup survey.

Wonder if that will change?

If you caught the story on page 1 of this issue, or as first reported on The Credit Union Journal's online edition at www.cujournal.com, then you know that in the most recent survey credit unions saw the sharpest decline among financial institutions in terms of consumer satisfaction. When consumers who identified a credit union as their primary financial institution were asked if they were "very satisfied" with that relationship, just 63% agreed.

Frankly, that's not much better than the banks and thrifts (just over 55%) credit unions are always criticizing for providing poor and indifferent service to their customers, according to the new survey published last week by The American Banker, an affiliate of this newspaper. And it's a whole lot worse than in 2002, when more than three-out-of-four members indicated they were "very satisfied" with their credit union.

As the analysis on page 1 indicates, the reasons for the slide in satisfaction among members may have to do with some factors outside credit unions' control, chief among them the huge volume of mortgage refinancings in which members were forced to deal with overworked third parties. And, as the chart on page 1 also demonstrates, the "very satisfied" numbers can dance up and down like a porpoise through water.

What credit unions don't need right now is a dance from the leadership of the various trade associations dismissing the numbers as some sort of anomaly. After all, you can't crow about the American Banker/Gallup numbers when they're in your favor, then turn right around and forget them when you don't like what they have to say.

In anything, credit unions should be paying the most attention to numbers and data that makes them feel uncomfortable. Having been involved in starting up a couple of small businesses, one motto that always stuck with me was that the "best-run businesses are paranoid businesses." The credit union community has some work to do, and CEOs and managers aren't going to be able to wait for the leadership of the trade groups to tell them to roll up their sleeves and get paranoid.

It would be most interesting to know how many folks within the credit union community are actually surprised by the new survey numbers. Surely some people are. The reason has everything to do with the fact people tend to believe what they want to believe. Just look at the White House and the postwar situation in Iraq.

The same holds true for a credit union community that has seen great change since 1998, when the Credit Union Membership Access Act was passed-yet credit unions have wanted to believe that change won't change them. It has, and for a number of reasons:

* Community charters. When a credit union is granted a charter to serve a million people, the days of the CEO knowing the members by name are over. Heck, he or she likely doesn't know all the employees.

* Outsourcing. It's one thing to outsource backoffice functions the member never sees or touches, quite another to outsource the touchpoints. As noted here two weeks ago, I received a solicitation from the bank that now owns my credit union credit card informing me that as a "special customer of the bank," I deserved more benefits. Let me stress there's nothing wrong with the short-term cost-savings that come with outsourcing. The question is whether credit unions have examined the long-term price of those savings.

* There's been so much of an investment in the Washington lobby, credit unions have forgotten about the most important lobby of all-the one inside their branches.

* CEO contracts. During the Internet bubble, credit unions struggled to match the type of stock-options available to executives at other employers. One answer was bonuses for growth. That's great for the CEO. But it created a new challenge: a realization by many that the larger the credit union, the smaller the member. (And whatever happened at all those Internet companies from which so many executives cashed out?)

* ROI. Return on investment is the key operating principle at a growing number of CUs. In many cases, it's come at the cost of forgetting the other ROI: Remembering the origins of the institution.

* Name changes. Few folks warm up to or identify with the new names many credit unions have selected. Is it a mutual fund? A cold spray? Their credit union? Who knows!

You can bet the banks and thrift lobbyists are already on the Hill with laminated copies of the Banker survey findings, claiming it's another example credit unions have forgotten where they came from and have outgrown the tax exemption. The time will come again when credit unions will need to turn to their members to write letters, make phone calls and lobby their congressman.

Will they?

To be sure, the 2003 "satisfaction" numbers were down in the survey for all financial institutions. Nevertheless, despite what you might want to believe, all the changes outlined above and more are adding up. At credit union meetings, it's time for more discussion of how to make those numbers a blip, and time for less "kumbaya."

Frank J. Diekmann is editor of The Credit Union Journal. He can be reached at fdiekmann cujournal.com.

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