Credit unions have been given a tremendous opportunity to reach consumers who may not know just exactly what a credit union is, but they still have lots of work ahead of them.
That’s the message from some observers who have analysed the new field of membership rules that took effect Feb. 6. And while some CUs are already lining up to take advantage of the rule changes, many CUs aren’t there yet.
“The rule changes related to geography present real opportunities for credit unions that have been prevented from serving people who are, for all intents and purposes, their neighbors,” said Teresa Freeborn, president and CEO of El Segundo, Calif.-based Xceed Financial CU. “I would suggest that credit unions who want to grow should leverage their positions as pillars in the community and really engage their neighbors.”
Whether they know it or not, credit unions are “ideally situated” to capitalize on the fact the consumer is “fully in the driver’s seat these days,” Freeborn continued. She noted consumers are no longer simply an audience for the financial products and services offered by the industry. Instead, they expect to be part of the process of shaping those products and services, she asserted.
“A key advantage this offers to credit unions is the nature of the existing relationships we have with our member-consumers. Unlike the big banks and other competitors, credit unions have always been our members’ financial partner. In an environment of information overload, people look for trusted advisors to help them sift through the hype and find individualized products and financial strategies that work for them. That is our sweet spot and it is a positioning the Wall Street banks cannot hope to match.”
Freeborn suggested – if they have not done so already – credit unions should take the opportunity to fully embrace the technology that makes banking easier, simpler and more convenient for the member.
“The new definition of what constitutes a ‘service facility’ encourages credit unions to make the technology investments that are essential to our survival if we are to keep up with what consumers want from us,” she said. “That is something we have done at Xceed, and it is integral to our competitiveness. We are able to go toe-to-toe with the big banks on technology, while eclipsing them with personal service and a real commitment to our members’ financial well-being. We do that in the workplace setting, but other credit unions can do that in their communities, too.”
Dennis Dollar, principal at Birmingham, Ala.-based Dollar Associates and a former NCUA board chairman, said any credit union that feels its ability to grow and/or diversify its field of membership is constrained should look at the new rule and see what is available to them.
“The new rule is not a panacea, but it can help,” Dollar assessed.
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“Credit unions must define the field of membership, they must have the financial ability to serve that entire area for which they are applying, and third, they have to have and develop a business and marketing plan showing they will be able serve the entirety of the community,” he said. “They cannot just cherry pick the best parts. If your credit union is sitting at 6.5% capital, you are not going to be approved. You have to be able to invest in branches, technology, marketing and involvement in the community. You cannot just add an area so you hope more people will come.”
