MADISON, Wis.-Credit unions in 2010 will need to overcome some historical tendencies to drive growth as the economy emerges from the recession, according to one person.
"We've seen credit unions have done well in the 20 cycles since St. Mary's Bank opened its doors," said Dave Colby, chief economist for CUNA Mutual Group. "What is new this time is we really have to toot our own horns, and we are not used to it."
While credit unions received substantial positive press in 2009, Colby wants to see the industry take more definitive steps to get the word out, with an emphasis on "local ownership."
"Let the community know credit unions are helping local businesses," he advised. "Credit unions tend to give better loan rates and dividend rates, but then they are very frugal historically about advertising and marketing. The mindset is: 'Everyone knows the credit union is the best deal.' But that is not the case with many community credit unions."
Another option to stretch the budget: "earned media." He advised credit unions to be aggressive with programs that help people, and then get their permission to highlight what the CU did for them.
One example: Colby said credit unions should follow the model of the "Biggest Losers" television show. "Turn someone's personal financial situation around through a 'Biggest Savers' contest, and get the local media to pick up on it. GECU in El Paso, Texas, has been very successful with this. Word of mouth brings business."
Colby noted the California and Nevada CU Leagues likewise have turned their focus from purchased media to earned media, and have had success.
"If a credit union can save the member a couple basis points, and the credit union picks up a couple basis points in yield versus an investment, it clearly is a win-win," he said. "There may be a bunch of people near retirement whose mortgages are nearly paid down, but it might be a 7% mortgage. If the credit union rewrites it at 5%, and the average investment is 2.76%, that helps the bottom line. And every credit union could use some help on their bottom line."
Another best practice Colby has heard during his travels on the CU circuit: pre-qualifying members for loans. Not pre-approval, he noted, as that carries risk, but pre-qualification. Colby reminded that 130-million people are still in the workforce. "There is too much focus on the negative," he asserted. "Credit unions need to let their members who may need credit in the future know what they are worth and what they can get from their credit union."
On the savings and investments fronts, Colby said the younger generations know high tech and what they can do, but have not been told what they should do. More importantly, CUs can do more to take on the role of trusted advisor in these areas-and not just with young people.
"Baby boomers have taken a couple of hits to their 401(k)s in recent years, so they might listen to a credit union promoting diversification," Colby observed. "Baby Boomers drove credit union growth, but we do not have enough to stay relevant. CUs need to elevate to a higher level of strategic discussion. We can become a place to manage retirement for Middle America, or we can fade into the sunset as our membership ages and no one is borrowing."
The overall challenge in the years to come, said Colby, is not to be "our own best-kept secret," Colby said. "We need to promote who we've helped-members, small businesses and more.' He cited one CU that tracked how much it had saved local businesses, which led to an ad that read, "Suzy helped area businesses save $500,000."
"There are ways to find basis points, and creating a celebrity out of a member of the staff is a good way," colby observed. "This leads to earned media. If the local news does a story on how an employee of XYZ Credit Union saved people money, you can't buy media like that."
