Canadian Credit Unions’ Opportunity to Rethink ‘Banking’
Canadian regulators have put credit unions in a tricky spot with their wholesale ban on the B-word. But credit unions also have an opportunity to reposition their brands, and redefine what co-operative financial services means to Canadians.
By Jean-Pierre Lacroix President of SLDNXT
Canadian credit unions were blindsided by recent news from their regulators: they are no longer allowed to use the term "bank" in any communications or signage as of 2018. The new regulation puts strict restrictions on the use of the words "bank," "banker," and "banking", ostensibly to limit confusion between credit unions and traditional banks.
This represents an enormous change in the marketplace for credit unions, who will have to remove the term from their branding and communication, including on physical signage, their websites, and advertising. Importantly, staff members will no longer be allowed to define the customer transaction or consulting process as banking, which will require a significant shift in both culture and language.
For credit unions that have relied on their ability to be associated with the banking community because of the added credibility that comes with it, this change may have a significant impact on the confidence consumers have in their services. The new policy will require a huge investment to reaffirm consumer trust as credit unions are forced to reposition themselves without the inherent authority they earn by using the same language as traditional banks.
But it’s not all bad news. Because credit unions are owned by members who benefit from the profitability and stability of these financial organizations, their most important assets are their strong personal relationships with member-clients. That’s why the branch remains the most effective vehicle for creating brand loyalty and driving the acquisition of new members.
Members visit credit unions to engage with front-line staff members who remember their names and form personal connections with their communities. Although prohibiting credit unions from using the term "bank" will create some confusion, it will force them to put a greater focus on the traits that differentiate them from traditional banks. I believe that this challenge is, first and foremost, a chance for credit unions to strengthen their reputations and highlight their unique positioning. Leading credit unions – institutions with a clear sense of who they are and what makes them stand out in the financial services market – will see this as an opportunity to embrace the divide between their institutions and larger national banks.
SLDNXT’s research into stealth attrition from retail banks indicates that credit unions have a significant edge over regional and national banks when it comes to providing financial advice and developing trusted relationships with long-term benefits. When asked about their satisfaction with the in-branch experience, rates and fees, and the assortment of financial products available, survey respondents rated credit unions more highly than both traditional and online-only banks.
That’s the most important lesson that Canadian credit unions should keep in mind while scrubbing the word "bank" from their institutions: consumers already value the personal touch you provide. They trust you because they connect with you; not because of the language you use to describe that connection.
