Credit unions haven't stopped attacking banks in their marketing, they've just toned down the message.
Earlier this year a number of credit unions were reprimanded by their regulator for running ads at the height of the financial crisis claiming banks weren't necessarily a safe place to park deposits.
So now, instead of playing on consumers' fears, they are trying to tap into their frustration with fees, bailouts and whatever else might be bugging them about their banks. The Web has been a particularly popular medium as credit unions try to win over that all-important 18- to 34-year-old demographic.
Is the strategy working? Several credit unions are reporting noticeable increases in deposits over the last few quarters and data from the National Credit Union Administration and the Federal Deposit Insurance Corp. indicate that credit union deposits are growing at a healthier clip than bank deposits (though they remain a tiny fraction of the total deposit market).
The $472 million-asset City-County Federal Credit Union in Brooklyn Center, Minn., for example, credits a YouTube-based campaign (tagline: "Drop That Bank") with increasing its number of checking accounts among 18- to 34-year-olds by 50 percent.
Still, if community bankers feel threatened by the current crop of attack ads, they aren't showing it. They cried foul earlier this year when the ads questioned their safety and soundness, but, in general, they are far more concerned with losing market share to the larger banks, says Keith Leggett, senior economist at the American Bankers Association.
"Our focus has been to get them to tone down these messages," Leggett says. Attacking safety and soundness "is not fair game; you're just generating unnecessary anxiety."
Jeffry Pilcher, chief executive officer of branding consultant ICONiQ and publisher of The Financial Brand, says it's evident in their marketing campaigns that small banks are more preoccupied with big banks than they are with credit unions these days.
"I see almost as many [community banks] picking on their big brothers as I do" credit unions attacking banks, Pilcher says.
Smaller banks seem to be succeeding in stealing deposits from their larger competitors. Between Dec. 31 and June 30, banks with less than $10 billion of assets reported a 2.4 percent increase in total deposits, to $2.35 trillion, while banks with more than $10 billion of assets, showed a slight decline, to $6.67 trillion, according to the FDIC's Quarterly Banking Profile. (Sept. 30 data was not available at press time.)
But credit unions are making inroads as well. Member deposits rose 8 percent in the same six-month period, to $753 billion in deposits, according to the NCUA.
Credit union executives say that the "we're-not-banks" message is resonating with consumers. The $525 million-asset Seattle Metropolitan Credit Union says a Web site it created inviting people to vent their frustration with banks has been a big reason why it has seen a 4 percent increase in new members so far this year.
"Many of our new customers are coming directly from banks, much more than we normally get, and they were much more vocal about what their points of contention were," says Jill Vicente, the credit union's chief marketing officer.
The $2.3 billion-asset Addison Avenue Federal Credit Union in Palo Alto, Calif., is using a healthy dose of humor to try to get bank customers to make the switch. Its "Bank Intervention" campaign (left) takes a page from the anti-drug ads of the 1980s in which a teenager, when pressed by the father where he learned to do drugs, screams, "I learned it by watching you!" Replace "drugs" with "banks" and you get the gist of Addison Avenue's campaign.
Pilcher says credit unions have a window of opportunity to cut into banks' dominant market share and are taking full advantage. "Making the switch may not be any better, but many consumers want to change financial institutions so that they can send a message" to banks.
But Ron Shevlin, senior analyst at the Boston-based research firm Aite Group, wonders if that's giving credit unions too much credit. He suggests that deposits have increased simply because consumers are spreading their money around to more institutions.
"The truth is that money would've walked through the door no matter what those credit unions did. In fact, that money walked through the door no thanks to anything the credit unions did," Shevlin says.
