Credit Unions' Achilles Heel?

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If you work in financial services — and like market research data — check out Prime Performance’s 2011 Bank and Credit Union Satisfaction.

If you work for one of a handful of large banks, you probably won’t like what you see, and will probably stop reading half way through. If you work for a credit union, then enjoy this cup of kool-aid.

I’m not disparaging the study with that last statement. The study is well executed, the sample size is more than adequate. But as with much of the market research in financial services — and I am as guilty of this as anybody — data about credit unions is reported at the overall level, which obscures the differences in individual institutions.

Instead, I’m taking a playful swipe at the credit union folks who will see that credit unions are rated highest in every category tracked except for one, and pat themselves on the back, as they do every time a survey comes out that shows that they’re superior to the big banks.

There are, however, two things credit union people should take away from the survey results:

1. There is some halo effect going on here. I’m not surprised in the least to see higher satisfaction and higher advocacy (“Doing What is in Your Best Interest”) scores for credit unions. But significantly higher scores for “reps offer higher quality advice”, “reps have the expertise to handle your financial needs”, and “satisfaction with Internet banking”? OK, maybe I can give in a little on the first two of those criteria, but there are a lot of credit unions out there whose public Web sites are atrocities and whose authenticated site design and functionality is serious lacking. I suspect that many respondents are just giving their credit union a high score across the board regardless of their actual experience, as well as the opposite for some of the large banks.

2. Mobile banking scores. In the scheme of things, credit unions’ scores on mobile banking are hardly a cause for concern — 68% of respondents are satisfied, 12% dissatisfied. But in comparison to the scores on the criteria — where the percentage dissatisfied average between 2% and 3%, and the percentage are often in the mid- to high-80s — mobile banking might be a cause for concern.

Is mobile banking credit unions’ Achilles heel?

I’m coming to the conclusion that channels are segmentation tools. Sure, Seniors may use the Internet, but they still rely on branches — and the branch is probably the most influential channel impacting their satisfaction. Boomers are big users of the call center (as well as the Internet), and Gen Xers are big users of their banks’ and CUs’ web sites.

Gen Yers? Well, the mobile channel is becoming — if it isn’t already — their primary access channel. As (pretty much) every credit union in the US goes about trying to lower the average age of their member base by attracting Gen Yers, the mobile channel will likely be — if it isn’t already — the competitive battleground and point of differentiation. 

The challenge for credit unions is to look beyond mobile banking. Looking up account balances, transferring money between accounts, an even getting alerts are basic features. Every institution will have those capabilities before too long. 

What credit unions should be exploring and experimenting with are what I like to call “purely mobile” apps — capabilities like location awareness, augmented reality, and mobile payments that are available only through the mobile channel.

Public villains come and go. You don’t see too many articles about BP anymore. With time, banks won’t be the whipping boys they are today. 

Developing innovative mobile capabilities may very well be one way in which they get back into their customers’ — and the public’s — good graces. Not to mention a way for start-ups like Movenbank and Simple, or even firms like Google and Facebook , to offer banking-like products that compete with established banks and credit unions. 

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I hope the mobile banking scores in the Prime Performance study raise some discussions in credit unionland. In the meantime, congrats to CUs for kicking bank butt on the Prime Performance satisfaction survey.

JAN 10 UPDATE: Well, at least I now know that CUs aren’t ignoring the mobile opportunity. Check out this article titled Credit Unions Gear Up for Mobile Banking Explosion on the Credit Unions Online site. 

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