What The Drop In Satisfaction Means To Credit Unions

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In the ACSI’s most recent customer satisfaction survey, satisfaction among credit union members dropped four percentage points — about 5% — from 84 to 80. ACSI chalks this up to:

“Difficulties in managing rapid growth are partly to blame, as regulators have allowed credit unions to expand offerings to include more mortgage and investment banking activity. Financial losses by several individual credit unions have taken a toll. Since credit unions can’t raise capital by selling stock, the only recourse to recover losses is through cost-cutting, which usually leads to less customer service, or raising fees, which leads to higher customer cost.”

Personally, I’m not buying these reasons. Losses by “several individual credit unions” should have no material effect on CUs’ overall score, unless there is something terribly flawed in ACSI’s methodology. And I don’t think that there is. In addition, there’s no evidence to show that credit unions are providing “less customer service” (what does that mean, anyway?) or raising fees.

As a matter of fact, let’s look at some statistics from the Q3 2010 Quarterly Report published by Callahan & Associates:

  • Assets increased 3.8% year over year in Q3 2010
  • Loan originations increased 16% to $70b in Q32010 from Q2010, the highest third quarter volume in five years
  • Delinquency increased two basis points from June to 1.76%, but is down from where credit unions ended 2009.
  • Share balances increased 5.6% over the last 12months
  • Total membership rose by 440K over the last 12months to 92.0M
  • Through the third quarter, net income is up 79.2% annually to $3.0B, the highest since 2007.

With these kinds of results, I’ll take a drop in customer satisfaction. ANY DAY.

There may be folks out there who might want to paint the drop in CU satisfaction as some indicator of impending CU trouble (Keith Leggett?), but whatever troubles may be out there for CUs, they’re not being caused by declining member satisfaction.

I’m more inclined to believe that the drop in satisfaction is due to the impact of new members to the credit union movement (oh geez, I didn’t really use that term, did I?) who either:

  1. Believe that their credit union isn’t living up to the expectations they had and therefore gave lower scores to their CU than existing members, or
  2. Haven’t been with their CU long enough to reach the higher levels of satisfaction the long-standing members have.

The other thing to keep in mind here is that CU scores are head and shoulders above the top 4 banks. Wells Fargo scored 73, Citi was at 69, BofA 68, and JP Morgan Chase came in at 67.

To put things in further perspective, let’s compare the CU score of 80 to other industries reported in the June 2010 survey. As a whole, full service restaurants scored an 81, which represented a 4% drop from the previous year.  Hotels were flat at 75, and no individual hotel scored higher than 80. Airlines’ score came in at 66, and the highest rated airline, Southwest, was rated at 79.

And by the way, credit unions also beat out YouTube and Facebook, which were rated in the July 2010 survey at 73 and 64, respectively.

So….

What does the drop in credit unions’s member satisfaction mean to CUs? Nothing. Ab-so-lute-ly nothing. Back to business as usual, ladies and gentlemen.

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