Credit unions are known for customer service. In fact, it's one of their biggest selling points. They've ranked well ahead of banks in the American Customer Satisfaction Index each year since they were first included in 2008, and their best feature is "staff courtesy." Yet credit unions are dropping the ball when it comes to one of the most cost-effective avenues for capitalizing on this perceived advantage over big banks: customer reviews.
Customer reviews are extremely important in today's connected, social society. And if you're not yet convinced of that fact, just consider that only 12% of people do not read reviews, while 85% say they read up to 10 reviews when shopping for a product or service, according to survey data from the web research firm Bright Local. Nielsen research also shows that 66% of people trust opinions posted online, which makes them the third-most-trusted form of advertising behind only personal recommendations and branded websites. And 83% of people say they've used reviews to make a decision about a financial product, according to Reputation Advocate.
Similarly, if you're not sold on the notion that credit unions drastically under-employ this critical marketing tool, take a quick look at your favorite credit union's website. It should provide some insight. Major banks highlight customer feedback with product ratings that are prominently displayed on the page, designed to catch the reader's eye and convey a sense of trustworthiness borne from the collective experience of others. Yet most credit union websites are devoid of such features.
But does it really matter?
Yes, it does, because the financial services industry – like the economy at large – is changing. Banks are increasingly becoming more like technology companies than traditional financial institutions, with an eye on ultimately holding their own against the Apples and Alphabets of the world. Meanwhile credit unions appear content to wave the brick-and-mortar flag on a ship that seems to be sinking into the concrete. One example of this shifting environment is the fact that online-only banks, not credit unions, now offer the highest deposit account rates on the market – averaging 0.61% and 0.23%, respectively. Industry-leading rates have long been another calling card for credit unions, but that advantage is no more.
Even more troubling is the fact that credit unions haven't been able to fully capitalize on the widespread distrust of the big-banking establishment that has simmered since the Great Recession. Yes, total credit union membership grew by 13% from 2009 to September 2015, according to statistics from the Credit Union National Association, but that's still well below the industry's historical norm. What's more, credit unions' share of the U.S. adult market only increased from 39.18% in 2009 to 40.98% in 2014, which simply isn't enough in the context of a once-in-a-generation opportunity for big-bank flight.
In light of all of this, my hope is that credit unions will soon realize that the technological revolution represents an unprecedented opportunity to cost-effectively level the everyday banking playing field and gain market share from banks. If embraced, the possibilities are enormous. If not, the future is in jeopardy.
Odysseas Papadimitriou is CEO of WalletHub, which provides an online directory of reviews on financial products, services and providers.
