Back in September, as the economy began disintegrating, an unusual trend began to emerge. The media — who had been ignoring credit unions for decades — all of a sudden started talking about these member-owned financial cooperatives that had managed to avoid the economic catastrophe. Hundreds of articles later, it doesn’t appear that the trend will stop anytime soon.

Reality Check: The biggest PR bonanza to hit credit unions — ever — will come to a screeching halt if they take TARP bailout money as part of a “rescue plan” to address “toxic assets.” Expect all the good news stories about how credit unions are “safe and sound” to evaporate. Poof! Gone.

This is Part IV of The Financial Brand’s on-going coverage of the media’s lovefest for credit unions. Here are the other installments in case you missed them: Part I, Part II. Part III includes a summary of the main themes the media has been hitting in their articles.

“Downturn sparks credit union rush.”

– BBC America

“Credit unions weather downturn.”

– San Luis Obispo Tribune

“Credit unions become new safe harbors.”

– Fort Worth Business Press

“If you think credit unions are single-location dinosaurs available just to employees of certain firms, it’s time to think again.”

– Yahoo! Finance

“As U.S. banks retreat, credit unions step up loans.”

– Reuters

“While banks struggle with risky investments, credit unions avoid the fray.”

– Business West

“A credit union can help you through these tough times.”

– Easier.com

“In today’s economic times, credit unions offer some better options.”

– Naperville Sun

Before September 2008, you would almost never see a story about credit unions anywhere in the news. For decades, the mainstream media essentially ignored this sleepy sector of the financial industry. But these days, the news media is pouring piles of positive press on credit unions at a dizzying pace. And from the looks of it, news outlets won’t stop singing the praises about credit unions anytime soon.

Reporters, eager to report on any ray of sunshine they can find in this dour economy, are frequently touting the safety, strength and stability of credit unions. There is a wide range of points these articles make, but the main themes include:

• Credit unions are not-for-profit and owned by members (no shareholders)
• Credit unions typically offer better rates and lower/fewer fees
• Credit unions have money to lend
• Credit unions are more willing to look at an individual’s credit situation when making loan decisions
• Credit unions have insulated themselves from the subprime mess
• Credit unions often service their own mortgage loans, requiring them to be more prudent in their lending practices
• Credit unions are local, and not run by Wall Street bankers
• Credit union deposits are insured through the NCUA up to $250,000
• Credit unions are well-capitalized compared to their bank peers

If you’re a credit union, these are the things you need to be telling your audience.

Here are some of the headlines and excerpts from mainstream news outlets… in just the last two weeks.

“Bad times for banks means boom times for credit unions.”

– Time Magazine

“With banks reeling, depositors turn to credit unions.”

– Triangle Business Journal

“Credit unions offer alternative to skittish banks.”

As the banking industry stumbles through the crisis that has gripped the financial world, consumers have a viable alternative to a traditional bank: a credit union.
– Chicago Tribune

“As economy swoons, more people are joining credit unions.”

With all of the troubles taking place in the financial industry these days, one sector that appears to have avoided the mess of subprime and other shaky loans is credit unions.
– Bellingham Herald

“The uncertainty surrounding banks is proving to be a blessing for credit unions in the state.”

– New Jersey Biz

“Banks’ losses prove to be credit unions’ gains.”

For the most part, area credit unions have sidestepped the worst of the financial upheavals that have taken down some of the largest banks.
– San Diego Business Journal

“As banks tighten credit, credit unions booming.”

The only trouble they have, they say, is getting the word out to more people that they are sitting on money and eager to loan it.
– Crain’s Detroit Business

“Credit unions a refuge in dodgy times.”

– News Wales

“Credit unions show stability in crisis.”

At a time when banks are staggering under losses from the subprime mortgage meltdown, most credit unions are dodging that bullet.
– Inland Valley Daily Bulletin

“In these rocky financial times, with banks going belly up, more people are turning to credit unions.”

– Fox Atlanta

“Credit unions increase in popularity.”

These days, a bank’s loss could be a credit union’s gain.
– Syracuse 10 News Now

“Credit unions are one division of the financial services industry insulated from recent chaos.”

– Seattle Post Intelligencer

“Credit unions a conservative alternative.”

– Maryland Gazette

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.

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.”

Need more proof that existing market conditions are creating an optimal environment for credit unions to flourish? Here it is.

“As banks struggle, credit unions get rush of new customers.”

— The News Tribune

“Credit unions make sense now more than ever.”

— Wall Street Journal MarketWatch

“Consumers are now thinking seriously about switching
their cash from banks to credit unions.”

— Northwest Cable News

“Wachovia customers use their feet, head for credit unions.”

— Wall Street Journal MarketWatch

“We’ve run out of switch kits.”

— TAPCO Credit Union, in the News Tribune

“Credit unions have a chance to attract new members to savings accounts right now.”

— Seattle Times

“There is going to be tremendous loan demand. You’re going to have to tweak your strategies, and let more members know you’re there.”

— Dave Colby, CUNA Mutual’s Chief Economist in the Seattle Times

“Despite national downturn, local credit unions are thriving.”

— Wisconsin State Journal

“Credit unions are attracting new deposits.”

— Santa Cruz Sentinel

[The Financial Brand has another article about the opportunities credit unions have in this economy: The media falls in love with credit unions.]

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

Taking the Initiative: Credit unions don’t wait for leagues to run ’soundness’ ads

Wanton Wants: Americans’ addiction to borrowing root of crisis

Allegedly Expensive: BofA’s Countrywide settles fraud case for $8.4 billion

Post-Bailout: Financial brands twist in the wind

Carpe Diem: Wall St. woes create opportunities for a new level of dialogue

Fail! 75% of online banking sites can be hacked

What Can I Say? Advice to financial brand marketers

Meltdown Fallout: How the crisis morphs the online banking landscape

Denial: People think banks are bad, but “Not my bank!”

Pre-PR: EON Bank suggests a name change is on the horizon

Buck the Norm: A brazen Gen-Y promo for credit unions

U Can: An empowering campaign from an African bank

Squat: Cybersquat your own names and thwart crisis-phishing scammers

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.

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).

Names selected for this list were based on their uniqueness within the credit union industry. In other words, there is only one credit union using that name (”Beehive” is the only exception.) Other criteria included:

• Each reflects something phonetically interesting and/or thematically evocative.
• Each name is memorable, and lends itself to a URL that’s easy to recall.
• Searching Google for these names is likely to yield the correct result in the top 2-5 results, especially when paired with the term “credit union.”

CLICK HERE TO SEE THE LIST

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.

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

“It’s very difficult to build a brand unless you have a good name.” – Laura Reis

Laura Reis, a co-author of “The 22 Immutable Laws of Branding,” says, “Many credit unions are saddled with long, complicated, generic-sounding names. That makes it hard to compete with Bank of Americas.”

This advice and other naming insights appeared in the January 2008 edition of Credit Union Business.

“Powerful names are short and unique, easy to spell, easy to say and easy to pronounce.” – Laura Reis

Reis says credit unions should work to simplify their names if possible.

Also in the article Rico Bautista, SVP of Altier Credit Union (formerly SRP Credit Union) says his organization went through an extensive name-selection process to find something unique, memorable and trademarkable.

“You just don’t pick a name that you can’t trademark,” he says. “You have to go through that process to make sure you can protect the brand.”

The name Bautista’s credit union selected, ‘Altier,’ is what he calls “an empty vessel,” meaning it is non-descriptive. He says it’s “a combination of ‘altitude’ and ‘tier,’ and represents a commitment to move forward.”

Bottom Line: Great advice from both Bautista and Ries.