People still argue about whether credit unions should use the B-word or not.

The concern is that when credit unions use the B-word, they are blurring the distinction between themselves and banks. Someday, the difference could become so fuzzy that legislators decide to tax credit unions. At least that’s how the argument goes.

Reality Check: The issue of credit union taxation will not be affected by semantics.

A whitepaper commissioned by CUNA back in 2005 acknowledges the word’s ubiquity and its generally-accepted definitions:

1. Trying to ban “banking” it is a fruitless task — not worth the trouble because it is no big deal to consumers.
2. Bank is a generic term, and there is no reasonable alternative.
3. Creative and clever marketers can, and should, take on the challenge of finding words to describe the credit union experience, and establish “credit union” as a brand.

“Finding words to…establish ‘credit union’ as a brand,” as CUNA puts it, is certainly worthwhile, but CUNA didn’t include “finding a substitute or synonym for ‘banking’” as part of that task, acknowledging that there is no “reasonable alternative,” and banning it is pointless.

Remember, this is CUNA talking.

Reality Check: Consumers are going to refer to basic financial services as “banking.”

The credit union brand does struggle with a different B-word: “Branding” — real, meaningful differentiation.

Credit unions, especially those with broad community charters and billions in assets, have an increasingly tough time distinguishing themselves from banks, not to mention each other. As they continue expanding, they match most banks’ product lineup all the way down to business banking (or ‘business services,’ if you like).

Key Question: If credit unions haven’t been able to successfully communicate the fundamental differences between them and banks in the last 50 years, how can they ever hope to train the public to use whatever verb the industry may prefer?

There is certainly a difference between using the noun “bank” and the verb “banking.” But if the differences between banks and credit unions boils down to rhetoric, everyone (taxed or not) will be competing on things like rates and how many branches they have.

Here are recent stories of interest from around the web.
Click on the hotlinks to read the full story.

Size Matters: In banking, small is better now

Ad-vice: More thoughts on how to communicate the “safe & sound” message

B.S. Triggers: Comparing “safe & sound” ads to cigarette commercials

P2P or not to P2P? Prosper closes down while Loania starts up

Brand Design: Looking at bank logos and how they evolve

Love or Money? Gen-Y prefers cash, tyvm

Aussie Innovation: ANZ launches account aggregation service

Up and Down: CUNA says credit unions business is mixed

“UTFCU Rocks” Hey, the headline pretty much say it all

I just gave another webinar through CUES titled “The 7 Deadly Branding Sins.” These are the 7 biggest strategic errors financial institutions make. They are broad generalized observations based on my first-hand experience evaluating 75 financial brands over an 8-year period.

Here is the executive summary:

1. DELUSIONS OF BRANDEUR
   Thinking you have a brand strategy when you really don’t.
2. TOXIC SAMENESS
   Looking, acting and sounding like everyone else.
3. LCD SYNDROME
   Trying to appeal to everyone (e.g., the Lowest Common Denominator).
4. CRIMINAL NEGLECT
   A failure to commit. Not supporting the brand with time, energy and money.
5. CULTURAL AUTISM
   Staff don’t know what the brand is or understand how to live it out.
6. BRANDING SCHIZOPHRENIA
   Delivering an inconsistent look-and-feel and/or experience.
7. COSMETIC FIXATION
   Undue significance or attention placed on the brand’s identity (it’s look and feel).

Tip of the Hat: To Ron Shevlin, for his coining of the phrase “Delusions of Brandeur.”

Here are over a dozen references to credit unions in the mainstream media in recent weeks. Most of them stop shy of outright endorsements, but many of them unabashedly urge people to make the switch.

[The Financial Brand has a similar article on the media's newfound love for credit unions: As if credit unions need another reminder...]

“Credit unions, not-for-profit financial institutions owned by their members, may be among the safest financial institutions in the nation, despite our nation’s current economic struggles.
— West Orlando News

“As banks fail, credit unions deserve a look.”

— News Observer

“Forget banks, join the credit union.”

— West Orlando News

“Ditch your bank for a credit union.”

— MSN Money

“Wall Street turmoil is credit unions’ ‘golden opportunity.’”

— Seattle Times

“Who says you have to settle for a bank? Relief could be as close as the nearest credit union.”

— MSN Money

“Oregon credit unions boom as lenders flee some banks.”

— The Oregonian

“Anxious consumers, looking for save havens for their money, are steering millions of dollars into Oregon’s credit unions.”

— The Oregonian

“Credit unions are gaining recognition among consumers for not only having avoided the problems that created today’s financial mess, but for being a huge part of the solution.
— West Orlando News

“Local credit unions benefit from customer ‘exodus’ from national banks.”

— Register Pajaronian

“Credit unions, having escaped the financial crisis, are chipping away at their larger rivals’ customer base.”

— TheStreet.com

“If there’s a calm in the economic storm, it may be credit unions, whose investors are sleeping through the night.”

— CNN’s Susan Lisovicz

“Most of the folks I talk to who have abandoned banks for credit unions are thrilled they made the switch. If you’re sick of your bank, why don’t you follow suit?”

— MSN Money

“If you want to own part of the financial institution that you do business with without buying their stock, it’s time to look at a credit union.”

— The Star Ledger

“Data show credit unions to be an appropriate, safe choice among financial institutions.”

— The Washington Post

“This is a good time to consider an alternative to for-profit private banks—like credit unions.”

— Lifehacker (the 6th most-respected website on the internet)

Oh, how times have changed. Less than a year ago, you’d almost never see an article about credit unions in the mainstream media. These days, in the wake of a massive economic meltdown, it seems the press can’t stop itself from singing the praises of credit unions’ “safety and stability.”

To the Credit Union Industry: This is your wake-up call. Market conditions for credit unions have never been more ripe. (If there was ever a time for a national credit union campaign, this is it.)

Bottom Line: If you’re a credit union, the smartest thing you could do is double your marketing efforts — right now — including the budget.

We keep hearing from United States’ leading economists like Ben Bernanke and Henry Paulson that a bailout is needed because some banks are simply “too big to fail.”

This raises some questions about the financial industry going forward: Is any legislation or regulation needed to avoid repeating a similar crisis in the future? Or does the system essentially work well? Is this just an anomaly that requires no long-term response?

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Key Considerations:

• What does “too big to fail” mean?
• If banks should be allowed to become “too big to fail,” what are the remedies or options when/if a bank flirts with failure?
• What constitutes a financial institution that is “too big?” Who decides? How would it be calculated or monitored?
• What would happen to a financial institution if it was deemed “too big to fail?”

Please Note: The Financial Brand is not suggesting nor advocating any position on this issue. All questions and their phrasing are intended to stimulate thoughts and comments among the readership.

Orange County Teachers becomes SchoolsFirst (April)
“After years of research,” the nation’s largest credit union for school employees picks a new name that is more geographically representative and inclusive of all school employees, not just teachers.

METRO Credit Union becomes Extra Credit Union (May)
What was the reason for this name change? The credit union serves the educational community in Southeast Michigan. What was wrong with “Metro?” There isn’t much information out there on this name change. Making the tie back to the credit union’s educational roots, the name is actually “Extra Credit.”


Marion Schools Employees CU becomes Via (May)
The interesting thing here is that the credit union gave members a choice of two names and let them vote. The change takes the credit union’s name from 33 characters to three, and from 12 syllables to two.

Bank of Eureka Springs becomes Cornerstone (May)
The bank changes names so it can expand beyond its Eureka Springs roots. The only problem is that the Cornerstone name is pretty popular in the financial industry.

Tooele FCU becomes HeritageWest (June)
TFCU was originally formed in 1948 as Benicia Arsenal Federal Credit Union in Benicia, California. In 1962, the name changed to Tooele Army Depot Federal Credit Union. This latest name change reflects a consistent pattern of credit unions tied to military bases changing names, many due to base closures or “realignments” (i.e., “cuts”).

Jefferson County Teachers CU becomes eCO Credit Union (July)
Designed to remove perceived barriers the new name is derived from a blend of ‘Educators’ and ‘Community.’ That may be the credit union’s rationale, but with a name like “eCO,” they better be green, too.

The Education Credit Union becomes Athena (July)
This Ohio credit union picks the name of the Greek goddess of wisdom and warfare to support its new community charter.

Commerce Bank of Folsom becomes SierraVista (July)
Only a year after the bank was founded, it decides to expand beyond Folsom. The CEO also said the old name had too many syllables and too many consonants.

First State Bank becomes Legence (July)
The bank said the name change was made to accommodate future growth outside of Southern Illinois. When First State was founded more than 100 years ago, it was the only bank going by that name South Illinois. Now Googling “First State Bank” generates nearly 20 million hits. A good reason not to pick a safe, “financial-sounding” or geographic names in the first place.

Farm Bureau Credit Union becomes Interra (Aug)
American Farm Bureau Federation tells its largest credit union to change names.
Eventually, every well-established brand will ask their credit union(s) to change names (ala John Deere, Weyerhaeuser and others). If there’s any credit union out there with a name connected to a well-known brand, this is your wake-up call. Most people haven’t even heard of American Farm Bureau, so if they’re out to defend their brand…look out. How many big-brand, single-sponsor credit unions are left anyway?

Two First Federal banks merge
and become RiverWood (Aug)
Two banks in Minnesota with the same name merge and pick a new name. These two join other “First Federals” that have opted new monikers. Apparently, there are just way too many banks with that name.

DOT Federal Credit Union becomes Bridgeway (Sept)
The credit union gets a community charter and changes names. The new name makes a connection back to the credit union’s roots serving the Department of Transportation — a strategy that is usually well-received. Apparently, there are also three major bridges that connect the residents of the three counties the credit union now serves. 3Bridges (or Three Bridges) would have been a cool name too, but there’s nothing wrong with Bridgeway. It looks like a pretty clean trademark.

Conclusion & Analysis

Community charters continue to be the #1 reason credit unions change names, although changes with employee sponsor groups like military bases are another common reason. That’s why Fort Belvoir FCU dropped the word “Fort” from its name earlier this year. Back in 2002, Motorola was cutting jobs and scaling back operations, so its credit union had to change names and became TruWest.

Most credit unions were founded with Where+Who names like Jefferson School Employees, Marion School Employees and Orange County Teachers that clearly say which people in which community they serve. As credit unions expand their reach, they find that the names that once served them well are awkward and confusing. You can’t just tack the word “community” to your name. People will still think Acme Employees Community Credit Union is just for Acme employees.

The vast majority of bank name changes are the result of mergers. Either one bank absorbs the other, or, if the banks are similar in size, they may mashup their names like RBC Centura.

Geographical names make perfect sense and work well in the beginning. But both banks and credit unions alike find geographical names can be very challenging when the expand beyond their initial service area. This is the #2 reason after mergers that banks change names.

How To: Avoid legal cow pies when rebranding

Text for Tix: Chase gives away US Open tickets via texting promo

Cash Cow Gets Plugged: Banks put stopper in home equity spigot

DeNovo: Investors pick strange time to launch Britain’s first new bank in 100+ years

Give Me 20: PSCU Financial launches financial education site for parents

No Waiting: Issue “flat” debit cards instantly

The Wedding’s Off: Two credit unions have no urge to merge

School CU: 200 credit unions have student-run branches, a 27% increase

Do Not Disturb: Lawyer says Navy FCU harasses member in bankruptcy

Cease & Desist: Credit union threatens defamation suit against YouTuber

Filene just released an interesting study called “Who’s Joining Credit Unions.” Of particular interest is data that suggests a paradox between how people feel about branches and how they actually use them.

While credit union members think they need a branch nearby, the data tells a different story. According to the report, the majority of credit union members use a branch once a month or less.

Despite their low usage of branches, they want more of them. When asked what would improve their experience with their credit union, members’ #1 answer was “More ATMs.” The #2 answer: “More branches.”

Key Question: What the heck is going on here?

Branch and ATM convenience can’t be the only way to win deposits…can it?

Do people only want the perception of convenience?

To take a trip to a branch once a month (or less) doesn’t seem like that big an ordeal, even if it’s over five miles. There are plenty of people who drive further than that to go to Home Depot or Costco once a month. Heck, there are plenty of folks who drive five or more miles to get a coffee from Starbucks.

Key Question: Does branch and ATM convenience apply to people looking for loans? Or does it only apply to depositors and transactors?

Perhaps the problem lies in the type of question we — as financial researchers — pose to people. Give them a choice and they seem to say, “Hey, it doesn’t cost me any money when you build more branches, so go for it. Give me some more.”

What do you think? What’s going on here? Can you explain it?

Key Takeaway: If you don’t have a large branch presence — and most financial institutions don’t — your marketing needs to stress your delivery-channel alternatives to branches and ATMs.

Other insights from the Filene report:

• Credit unions look to have the most success targeting families with household incomes between $70,000 and $130,000.
• Friends and family continue to be the #1 way in which people hear about a credit union. Essentially, one-if-three new members come from the referral of a friend of family member.
• For credit unions with an open charter, one-in-16 new members are enticed by a newspaper ad. Around one-in-ten people learn about their credit union by driving by. One-in-100 come from the internet.

You can download the entire report from Filene here (registration required).

Check out this interesting article that came out yesterday, 10 Things Your Bank Won’t Tell You. It’s a candidly cynical perspective on financial marketing, and attacks many of the common messages financial institutions use in their advertising.

Here’s the list:

1.) “Our branches are there to sell you, not serve you.”

2.) “Our fees will only go up.”

3.) “We change our interest rates all the time.”

4.) “College campuses are gold mines for us.”

5.) “In debt? The courts won’t help.”

6.) “We’re excited about your trip to Europe, too!”

7.) “For all the fine print, we don’t disclose very much.”

8.) “Your money might be better off elsewhere.”

9.) “When it comes to banks, smaller is sometimes better.”

10.) “Your online account information isn’t necessarily accurate.”

In the article, the author goes into detail for each item on his list.

What would you add? How about:

11.) “We can’t stop phishing attacks.”

What do you think belongs in the list?

There’s an old adage in financial marketing: “It’s all about the rate.” Recent evidence from two different case studies suggests that’s wrong.

Case Study #1

Take BankWest’s promotion to launch a new savings account, where they tested two versions of their online ads. Both versions of the ad were animated. In the first version, the ad started by introducing a big rate. In the other version, they led with a photo.

Bottom Line: The version of the ad leading with the photo generated three times as many deposits as the version leading with the rate.

Key Question: Have you ever tried testing two versions of your marketing?

Case Study #2

Yesterday, some well-respected voices in the financial industry blogged about a South African bank that conducted an interesting marketing test. One version of the bank’s loan mailer had a man’s photo in it, another version had a woman’s photo.

Bottom Line: The woman’s photo impacted the bank’s male customers about as much as dropping the loan’s interest rate by 4.5%. (Women, it seems, were less impressionable.)

Key Takeaways:

• With both deposit and loan promotions, there’s a lot more to it than just the rate. Other psychological and emotional factors are at work.
• Be brave and have the courage to experiment. Financial marketers need to conduct more tests like these.
• Pay attention to what’s really driving your results, but be prepared to have your assumptions challenged.
• The next time you do a rate-based promotion, shift your focus from the rate to a photo and see what happens.

Little details can have a huge impact on the bottom line. As one credit union marketer recently pointed out, even something as subtle as a pronoun can make a big difference.

Further Reading:

• A Pretty Woman Beats a Good Loan Deal
• Sexy Nude Chicks by Ron Shevlin
  
• If sex is selling then I am buying! by Tony Mannor
• The Little Things by Andy LaFlamme

Today, I gave the following presentation, “The 11 Cs of Breakthrough Brands,” in a CUES webinar.

It’s a fairly visual presentation, so not everything will make sense without hearing the script, but you should get the general idea.

Also, check out the critical 9-point branding self-exam you can take over at CUES Skybox. It’s a follow-up to the presentation.

If you missed today’s presentation, don’t sweat… I’ll be giving this presentation a few more times in upcoming months, starting with the DOXIM Industry Focus – Forum 2008: Financial Services, Thursday, September 18th, in Vancouver, B.C. There’s a PDF of the DOXIM forum’s agenda here.

If you’re interested, you can also have me present “The 11 Cs of Breakthrough Brands” at your next event. Just shoot me an email. There’s a version specifically for credit unions, and another version that applies to all financial institutions.

“You know something has begun to be
less-than-cool when banks are doing it.”

– butesch, refering to financial institutions using Web 2.0 tools

Looking out 10 years at the landscape of financial brands, what will we see? Here’s six trends in this two-part guest post from The Financial Brand over at OpenSource CU.

Read Part 1

• Prediction #1: More of the same
• Prediction #2: More self-deception about service
• Prediction #3: More me-too names

Read Part 2

• Prediction #4: Traditional branches will thrive
• Prediction #5: Innovation will come from extensive R&D
• Prediction #6: Being green won’t make a difference