AUSTIN, Texas -
Mary Royston, marketing manager for Washington-based Callahan and Associates, said the challenge for CUs is strategic transformation- discovering a way for the industry to evolve without individual CUs becoming "large."
"It has never been a size game for us; we still are pygmies in a land of BofA giants," she said. "We must compete against more consumer choices and many other challenges."
One key element of this new era very much in the CU movement's favor: the Internet no longer is just for the tech-savvy, she said. Broadband access is expected to be in more than 60 million homes in the U.S. by the end of the year, or approximately 55% of American households. With this widespread adoption, Royston said the next step is for credit unions to leverage their position of trust by their members.
Research by Callahan's Internet consortium of 17 CUs found seven of 10 credit union members who are online regularly consider their CU's website a resource for unbiased advice regarding financial products and services.
"It is comforting that 70% of online members view their credit union's website positively," she said. "This is the best time ever to position credit unions as a trusted advisor to members. People are being manipulated, so they will listen to their credit union. There is an opportunity to go after the most active members and engage them."
The goal: make the CU site the first one members visit for information. Royston cautioned CUs to avoid acronyms and offer explanations for financial terms. CU websites should offer tools that explain the trade-offs of various financing options, both basic and detailed product information, and they should make it easy to access critical information.
Callahan's research shows 85% of existing members say they will continue to use their CU, but only 64% consider their credit union for their next product or service. Royston said this discrepancy shows: "they buy into their credit union, but when it comes time to put their money where their mouth is, they don't go to their credit union." To reach these members, Royston said CUs must create promotions to obtain e-mail addresses, including staff incentives and/or prizes (see related story).
The 17 CUs in Callahan's Internet consortium found e-statement penetration varies from 60% to 90% of online banking users and 42% of online members surveyed said they like receiving paper copies, so concentrate on the other 60%, Royston advised.
The same study found 23% of online members were unaware e-statements were available, demarking another opportunity, she said.
Another self-service channel Royston said CUs should be promoting is bill pay. United Southeast FCU in Illinois put a video clip on its website extolling the virtues of paying bills online. Last month, 30% of those who watched the video clicked through to enroll.
Royston said the Internet is a great way to attract the youth and Hispanic markets.
State Employees CU in North Carolina has a three-stage online program for young people. The "Fat Cat" portion targets small children and educates them about money. When a Fat Cat member turns 13, he or she is rolled to the "Zard" program for teens. At 18, the now-young adults are switched to "Off to College" or "Off to Work" accounts.
Another example of using the Internet to raise awareness among young people: Land of Lincoln CU tapped into one of the Web's hottest trends when it set up a page on MySpace.com. "The credit union is blogging about member education," said Royston. "Credit unions should create a MySpace profile for themselves-it's free."
As for the Hispanic market, she cited Founders FCU in South Carolina, which serves many first-generation immigrants. She said the credit union set up Web pages in Spanish. It encouraged members to use alternative methods of identification, such as the Matricula Consular, on their way to a secured Visa or an auto loan.
