‘Banking’ Isn’t the B-Word Credit Unions Struggle With

People still argue about whether credit unions should use the word “banking” or not. The concern is that if credit unions use the B-word, they make themselves more like banks. If legislators can’t see any difference between “banking” at a credit union or a bank, they may decide to tax credit unions…at least that’s how the argument goes.

Reality Check: Credit unions will not be taxed because of semantics.

A whitepaper commissioned by CUNA back in 2005 acknowledges the B-word’s ubiquity and the futility of trying to fight it:

  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.

CUNA acknowledges that there is no “reasonable alternative” for the word “banking” and trying to ban it is pointless. Keep in mind, this is CUNA talking.

Reality Checks:

  • Consumers are going to refer to basic financial services as “banking.”
  • Credit unions do 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 to expand, they match most banks’ product lineup all the way down to business banking.

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 substitute verb for “banking” the CU 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.

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