Wells Fargo branch
A Wells Fargo & Co. bank branch stands in Washington, D.C., U.S., on Thursday, Jan. 7, 2016. Wells Fargo & Co. is scheduled to report fourth-quarter earnings on January 15. Photographer: Andrew Harrer/Bloomberg
Old scandal, new lessons
The Wells Fargo scandal last fall was yet another opportunity for credit unions to point to the big banks as an example of the exact opposite of how many credit unions do business. NAFCU CEO Dan Berger famously said “Someone needs to go to prison” for the fraud perpetrated by the bank, and many CUs hoped the disparaging headlines heaped upon the mega-bank – along with massive consumer outrage – would once again compel consumers to move their money to a credit union. In the end, however, while credit unions continued to see membership and loan growth, those figures didn’t tick up enough to accredit that growth to the negative sentiment against Wells Fargo.

Now that the scandal has largely receded from the headlines, does the scandal still matter to credit unions? Is there still a business opportunity there? And are there any new lessons to be learned? Credit Union Journal asked a panel of insiders and analysts to weigh in on the matter.
Dennis Dollar, Dollar Associates
Dennis Dollar, chairman of Dollar & Associates credit union consultancy in Birmingham, Ala., and a former NCUA chairman
Other than the public relations debacle that enabled credit unions to pick up some transfer accounts, the Wells Fargo scandal has not driven much credit union strategic thinking long term. Progressive, growth-oriented credit unions realize they need to map their own growth strategies and cannot count on any competitor to drive new members their way - they have to make their own managed growth happen.
John McKechnie
John McKechnie, credit union consultant and partner at Total Spectrum
I think the Wells Fargo situation writ large has given credit unions an opportunity to underscore just how pro-consumer we are, vis a vis much of the banking industry. The question now becomes do we want to do something with it? I think credit unions do best when on a daily basis we prove member-by-member that we know how to treat people and the banks don’t.

I don’t believe the window of opportunity has closed just because it’s not on the top headlines of the day. It may not be a splashy media or social media event, but the window is always open for credit unions to prove that we do better than banks…Wells Fargo in some ways is a gift that keeps on giving, because that’s what people associate with the big banks, and it was an egregious example of what people expect anyway. Credit unions need to recognize that and take the opportunity when it’s given, which I think is what they’re doing.
Bo McDonald, founder of Your Marketing Co., a South-Carolina-based credit union marketing firm
Bo McDonald, founder of Your Marketing Co., a South Carolina-based credit union marketing firm
It still matters for some credit unions. There’s always going to be an opportunity for the credit unions who want to compete against the big banks and have something that differentiates them. I can’t say all credit unions have that or can do that, but the ones that do, I think their members understand it.

We encounter a lot of credit unions – large and small – who look at what their counterparts in the banking world are doing and ask “How can we be different and be better?” And they get to that point and it all just falls apart. When we spend time in our credit unions, we hear stories from members talking about the time the credit union helped them out of a bind, or “I used to be with Wells Fargo or another big bank, and so-and-so told me to come join this credit union.” I think the members of those credit unions understand the impact of those stories better than the credit unions do. I think there’s a ton of opportunities for those credit unions to share those stories with other people.
Geoff Bacino, Bacino & Associates
Geoff Bacino, credit union consultant with Bacino & Associates and a former NCUA board member
I don’t know if there ever was much chance to pick up market share. When you look at things that have happened in the past like Occupy Wall Street that led to [Bank Transfer Day], there was kind of a goal in mind. I don’t think credit unions have forgotten about [the Wells Fargo scandal] but I think they’re using it as a cautionary tale or a learning tool for things that they are doing or had planned to do.

If you’re going to do cross selling, it has to be done correctly. Frankly, there’s nothing wrong with incentive selling; this one was obviously the Frankenstein monster of incentive selling. What credit unions have taken away form this is just “Hey, we don’t want to be like those guys.”I don’t know if there’s much chance to get any business opportunities I don’t see a lot of Wells Fargo customers saying ‘I’ve got to go join my local credit union!” It’d be nice if they did, but I don’t see that happening.
J. Paul Leavell, chief marketing and strategy officer at Nusenda CU
J. Paul Leavell, chief strategy and marketing officer at Nusenda CU
I still go back to my original concept that you can’t wait for the scandal to happen to be ready to market to it. You have to have the infrastructure in place to get the messaging to your members and the community relatively quickly when an event like that happens. Having said that, I do think the Wells Fargo thing has faded, but it’s always in the background; even if you have a local scandal, the Wells Fargo thing plays into that because it’s in the recent consciousness of the consumer base. What happened last year is still in the consumer’s mind, the question is “Is the next event going to be enough for them? Will that next event be the final straw that gets them to move?”

I don’t know that I see a lot of high-level opportunity from Wells now. The political news dominating the news pages isn’t making consumers think about it as much in terms of reputation risk of the big banks. They’re involved with their daily lives and what they’re trying to get done. The general economy and how they pay the bills is more of a focus for them now.
Kristen Christian, founder of Bank Transfer Day and community delvelopment consultant for Water & Power Community CU
Kristen Christian, founder of Bank Transfer Day and community delvelopment consultant for Water & Power Community CU
Absolutely, the moment is still here. I was speaking with a young woman the other day who is a target demographic for credit unions – she’s young, she’s hip, she’s a millennial and she’s on the verge of purchasing her first home – and it was interesting because she said “I don’t want to be with the big banks, but I don’t know what my options are.” I think that’s still a conversation we need to be having, and explaining ot people the idea of what a credit unions is.

The biggest selling point we have as credit unions is that actions speak louder than words, especially with millennials. The words “financial cooperative” really hit home with a lot of young consumers, because they know what a cooperative is, so tying ourselves in with that is a huge help. Beyond that, explaining the value of the not-for-profit model…don’t just harp on what the banks do wrong, but show what credit unions do right. Let’s show everybody who we are and what we stand for, because that will resonate.