Be Careful In Throwing Doors Open To The Hordes
Be careful what you ask for, credit unions.
Last week's newspapers, online news services and blogs were filled with the kinds of headlines credit unions couldn't buy (literally and figuratively): "New Bank Fees Push More Americans to Credit Unions," from DailyFinance.com; "New Card Fees Have People Leaving Big Banks for Credit Unions," distributed by several news services; and "Bay Area Bank Customers Switching to Credit Unions" from WTSP.com.
All of that was in response to the much-reported move by Bank of America to begin charging a $5 a month fee on debit cards, to the news that Wells Fargo continues to test a $3 a month debit fee of its own, and to an announcement that Citibank would be offering a "free" debit card as part of a $15-a-month checking account.
The conclusion being drawn in much of the media is that you apparently do not have time to read this column. No time for your morning paper or RSS feeds. Not even a minute to catch up on the sports scores. Not with consumers supposedly lined up out the lobby doors and across the parking lot like you're giving away free samples.
The problem with all this? It's great to be loved, but be careful about who's lovin' ya.
Old School Rules
There is no doubt that credit unions will see some type of uptick in membership as the result of negative press surrounding the bank fees being handed out like punishments in the wake of the Durbin Amendment's rules, but unless that 80/20 rule (which is often closer to 90/10) has been suspended, a lot of those new members aren't going to be the type who put the "cooperate" in the co-op.
Instead, without some solid work on the front end by credit unions, many of those new members are going to be single-service households that bring very little "R" to the "OA."
I've already talked to a few credit union leaders who see a potential silver lining in forecasting that those new members will be frequent overdrafters who will bounce additional revenue all the way to the bottom line. But that scenario has more holes than that high school T-shirt you refuse to part with. First, and most importantly, credit unions' reason for being isn't to operate like some sort of not-for-profit check-casher. Financial education, improved money-management skills and overall betterment of the member are among the reasons charters are granted.
The Last Straw?
Moreover, a lot of people have learned, albeit the hard way, to do a better job of living within their means. Many may not have much money in that checking account, but the days of using "courtesy pay" and just forking over the $40 fee as a cash-flow strategy are over. Those people who continue to behave in that manner are likely to stick with their bank. After all, when you're paying more than a hundred dollars a month for bounced checks, what's five bucks for a debit card?
I heard one TV reporter say of the B of A fee, "For a lot of bank customers this is the last straw." Yeah, well, for many more it won't be and they will keep right on drinking. Consumer inertia has always been the Big Banks' BFF.
The credit unions that will be the real winners in all of this will be those that already have in place an effective member onboarding strategy. That's the consultant's way of saying, "Doing a good job at sign-up time." That means membership based on understanding why there is value in joining a credit union, not based on simply being PO'd at their bank.
That means telling the credit union story, and telling it again and again at every available touchpoint. That means more than just filling out a membership form and pushing it back across a desk with the minimum needed to open a checking account. It means asking about the new member's loan needs-whether it's a refi of loans they already have, or a new loan-or pulling their file and proactively seeing where they have outstanding loans already.
And that also means making sure that online sign-ups aren't just "fast," but potent. After all, what's the rush to sign up someone who doesn't bring any value to the credit union? The most important number isn't the number of members, but the number of members who contribute.
Time For Social Media To Step Up
All of this attention around bank debit fees offers something else: an opportunity to prove that social media really can work. People are angry. Confused. Upset. They are looking for a place to turn. That's the "social" piece to go with the "media" of Facebook and Twitter that many credit unions already have in place. Most social media usage I've seen to date out of credit unions hasn't been worth tweeting. Here's something to tweet about, along with an actual legitimate reason to "like" the credit union.
Bank of America has 38.7 million debit card holders. Wells Fargo and Citibank tens of millions more. Sadly, most of them will continue to take it in the shorts. But many others will move, or at least inquire about moving to a credit union.
When they do, how prepared are you to do more than just sign them up?
Frank J. Diekmann can be reached at firstname.lastname@example.org.