Why Don't More People Join? Some Are Just 'Idiots'
LAS VEGAS-Credit unions in Australia are preparing a national advertising campaign to lift their profile and overcome a seemingly hardheaded attitude displayed by their countrymen.
Louise Petschler, CEO of Abacus-Australian Mutuals-an industry body that represents CUs and mutual societies-told a general session audience at the 1 Credit Union Conference hosted here by CUNA and WOCCU that the four biggest Australian banks have 90% market share in financial services. Asked why more Australians are not joining credit unions-and why more people around the world similarly aren't joining despite the advantages-Petschler replied, "Perhaps this is a Vegas observation, but some people are idiots. You can offer them the best deal in the world and they are not joining."
Petschler was part of a panel that discussed "What lies ahead" for CUs, along with Bill Hampel, SVP of research and chief economist for CUNA, and Herve Guider, general manager of the European Association of Cooperative Banks, headquartered in Belgium.
Hampel blamed credit unions' small market share in the U.S. not on consumers' mental deficiencies, but their long memories. "Credit unions have the legacy of field of membership. In the near past is was difficult to join a credit union. Today, everyone is the U.S. is eligible to join at least one, but people still think credit unions are exclusive."
In addition, Hampel pointed out, the technology involved in a modern checking account has added to the inertia of leaving one's primary financial institution. It can take several weeks to clear all the automatic payments, which he said makes switching more difficult.
Australia is one of the most regulated credit union systems in the world, according to Petschler. She said board members are required to undergo skills tests, and in some cases the director is appointed by the board, not elected by members, in cases where the board feels a skill set is missing.
"Directors are paid because they take on big responsibilities," she said.
As for what lies ahead in terms of recovering from the "Great Recession," Hampel said CUs "will be OK," but he warned many households will need to deleverage the huge debt Americans have built up over the last 20 years. "Loan demand will be down, therefore credit unions must come up with creative ways to meet members' needs," he said.