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Spreading Savings Stories At Your Credit Union

Originally published on CUInsight.com

Why would someone want to join your credit union? Or keep their relationship over switching to a seamless app-based fintech (or snazzy big bank) platform?

It’s easy to talk about the mission, how members are the owners, and that the institution is not-for-profit. But these tell people nothing useful, nor do they give them a tangible reason to bank there. People think they’re making decisions rationally, but they’re really acting on emotion.

Between my business partner (who’s also my dad) and myself, we’ve dedicated over half a century to providing for credit unions. I don’t share that for accolades (applaud if you’d like), just so you can understand the perspective from which I approach this topic.

Most credit union marketing goes in one of two directions:

  1. Explains what the credit union is, making the assumption this is sufficient to convince someone to want to bank there
  2. Shares what your institution offers, and sometimes even how you do so

The first has no direct bearing on a person’s financial life (yes, I get that it’s what enables lower fees and whatnot, but that’s all abstract and intangible to your target audience). The second is what marketers call “features and benefits”.

There’s no emotional connection to either. Both assume a rational decision-making process, which we know now doesn’t exist.

“Hold up, Joe! We’re a credit union, and our mission is always about the why. We strive to help people create stronger financial lives.” I hear you, truly. But read that again. Where is the emotion focused? It’s not to the individual you’re trying to attract, but rather a “big picture” that’s hard to pin down.

Dollars and Sense

Vegetable Pizza
Well, great. Now I’m hungry.

Think of fast food and restaurant commercials. Do they spend their limited time talking about the mission of affordably satiating everyone’s hunger? No, they feature macro shots of their food items, make you hungry, and probably end with a “by the way, check out all you get for just this much money!”.

Bonus points for implying you’ll have a better social life if you choose to eat there.

So how can your credit union use this successful strategy? Focus on your members’ stories! (Chime does this ridiculously well with buyer personas.)

Our partnership with protection product providers as well as being credit union members ourselves gives us access to some compelling stories…and by stories, I mean, “big dollar numbers that will catch people’s attention”. 

Regularly, I learn about paid GAP claims of $8k, $10k, even $14,000, and more! For the average American, that kind of avoided out-of-pocket expense can be life-changing. Surely worth including in marketing efforts, don’t you think?

Our own vehicle enjoys a bit too much vacation time in the service center. Using a VSC policy purchased at a local credit union, paid warranty claims have exceeded $6000 so far. Yet when we reach out to the institution to encourage promoting their impact, it’s been radio silence.

Talking about your mission is one thing. Showing examples of how that mission of financial empowerment saves members thousands (people like you, dear viewer!) connects emotionally. Plus, choosing to save money sounds like pretty rational decision-making to me.

Make Your Credit Union An Easy Choice

Path Choice
Help more members find the rainbow.

Insurance commercials focus on the ease of filing claims, speed of payment, and how their prices are better than competitors. That’s fine when you already know their products; usually it’s homeowners insurance (basically impossible to get here in Florida) and auto insurance.

Do your members (and prospective ones) even know the insurance products you offer?

And how often is their first and last response to them, “I decline”, on the loan documents?

Instead of talking about how “credit unions are different”, share the stories that will catch people’s attention:

  • How Tasha avoided an out-of-pocket $8,400 expense after her car was totaled (with CU’s GAP)
  • When Steve could get his $3,500 car repair completed for only the $150 deductible (with CU’s VSC)
  • That time when Andy unexpectedly lost his job, but had his $545 monthly loan payment waived for 4 months, when he found another position, relieving the financial stress (with CU’s payment protection)

If your marketing simply said, “our credit union offers GAP, Payment Protection, and VSC, and they’re cheaper than the dealer”, would it generate an emotional connection?

Use your data. Surface the real stories. If you can get the members to tell them, even better.

Sure beats promoting that members get a vote in your operations.

Data Journey: Eureka & Meditation…Together

So your credit union is on a data journey. Congratulations! Wherever you are on this path, know that it’s further along than taking no action. And the insights you’ll gain will help you become a better institution internally and for your members.

A question I keep seeing asked is, “how long will this effort take?” We both know credit unions love their planning sessions. Predictability helps set other goals and focus priorities. Bring that question to a data expert, they’ll probably ask you another: “where are you today?”

It’s the Journey

Joe Winn Black Karate Gi Punch
Motion and stillness. Together.

A martial arts proverb imagines a new student and their teacher. The student asks how long until they will achieve a Black Belt. (As a Black Belt myself, this resonates strongly.)

“Five years,” says the instructor. “But what if I train twice as hard as your other students?” asks the student.

“Ten years,” the instructor calmly responds.

“I’ll train every day, all day; surely I can achieve that rank faster!” exclaims the motivated student.

“Twenty years.”

The moral, as you may notice, is that when you’re so focused on the goal, you miss out on the lessons gained during the journey. The point of gathering, understanding, and acting upon your data isn’t to be “done”; it’s to create a better credit union for everyone.

Science: Awesome. Often Slow.

Microscope and Slide
Think. Test. Observe.

Since I’m an old-school geek, science is an important part of my background and passion. For this topic, it’s also the grounding of what makes it “tick”. Some of you may have data scientists on staff to make sense of it all. Science rules!

It might look like scientific discoveries happen solely through “ah, ha” moments scattered throughout history. Electricity, zap! Density, eureka! Gravitational waves, groovy.

In reality, scientific advances come after a slow buildup of data, followed by a long period of analysis. Niels Bohr took years to determine that electrons “orbit” in stable energy levels. A black hole was only identified in 1971, though they were proposed hundreds of years earlier.

Data Journey: Essential. May Be Slow.

Binary Data Ball
Think. Act. Learn.

Ask Anne Legg, author of Big Data/Big Climb, if you can rush this journey. Like climbing a mountain or answering a question of the universe, you have to plan out the steps to take. And then be ready for slow movement towards insights and discoveries.

Will you stumble into moments of newfound clarity, where a big mystery of your members will suddenly become apparent? Quite possibly! Should you celebrate those memorable insights? Of course!

However, the real, lasting change at your credit union comes from “what you learn along the way”.

It’s an ongoing process that needs continuous attention and motivation. When you’re looking for a quick solution, it’s easy to get distracted and discouraged. Treat it like the scientific research it is. And don’t expect a single moment where your data journey is “complete”.

Make Data Discoveries Your Mission

Slowly, your credit union will discover improved ways to operate, engage staff, empower members, and provide for your community. Which sounds an awful lot like your mission.

Your data journey is the path to your other goals, though only if you take what you learn and implement, beyond just into your processes, but also throughout your culture.

Whether you’re working towards a Black Belt, looking into the deepest questions of the universe, or trying to figure out the best way to grow member relationships, focus on what you gain during the journey.

Are 80% of Credit Unions in Trouble?

Originally published in CUInsight.com

This was going to be an article about holiday cheer and Christmas music. The first paragraph would be asking you when you first heard that holiday song this year. And then there would be a section on how holidays seem to be starting up earlier in 2020.

Which is totally fine, because if there was ever a year we needed some extra cheer…well, yeah.

Instead, a coworker (ok, my dad) shared a recent Credit Union Times article about the performance of the industry, separated by segments. He noticed they are now calling all institutions smaller than $1B in asset size “small”.

$1B Is Small?

Kids Shoe
Small for an adult shoe or huge for a kid’s shoe?

Are you from a $750M asset size credit union? Do you feel small? Because now you are. Join 4,875 others that fall under that classification. Not to mention you make up 92.3% of all credit unions.

Doesn’t that seem, odd, to you? It did to us as well. So I started digging into the numbers. Spreadsheets, here we come! Don’t worry, you’ll only get the highlights. I’m not subjecting you to more columns and rows than you already have at work!

Feel free to check my data using the publicly-available 5300 call reports. I’d love to be wrong in this. You’ll see why soon.

It’s Good to Be King

Lion
It was either Mufasa or Mel Brooks.

First, let’s take a look at the top of the top…our $4B+ credit unions. There are 70 of them as of December 2020. Here’s their big stats:

  • $705B in total assets (industry as a whole has $1.81T, or $1810B for consistent decimal points)
  • 42.7 million members out of a total 125.1 million (34% in 1% of CUs)
  • 18.2% average asset growth (17.6% median growth)
  • 5.7% average member growth (5% median growth)

In addition to those positive numbers, none posted any losses. Overall, big credit unions are doing great! It is a testament to the hard work of thousands of credit union employees. Congratulations on helping serve millions of Americans through a not-for-profit financial cooperative.

So I’d assume if the top is doing so well, everyone else must be, too! “A rising tide raises all ships” is a phrase heard often in our industry. And I love seeing the cooperation between institutions.

I mean, there are hard-working and dedicated people at credit unions of every size, whether “small” or actually just a few thousand members strong! Good things for all, right?

“Small” Credit Unions Doing Well

Sapling Growing Out of Dirt
Growth is great!

You can check out some of their data in the aforementioned article. In general, the numbers look positive. But remember, that’s counting all credit unions under $1T asset size in one pot. A bit crowded, don’t you think?

Plus, it’s important to have some social distancing.

I wanted to dig deeper, and not into that group, but one which you’re more familiar.

And, it was time to put that one statistics class I took to good use. Besides, it wouldn’t be the first time I highlighted how you can make stats say almost anything.

A Different Picture <$250M

Fingers Holding Tiny Dollar Bill
Are you getting the full dollar, ahem, story?

I remember not long ago when “small” credit unions were considered those with an asset size below $250M. Even today, you make up 4230 of 5,244 institutions. That’s 86.8% of the total!

In speaking with some of you, I’ve learned that you serve members whom the larger ones cannot. You fulfill a need for financial services in our country that no one else does. Thus, you’re important!

Here are some of your numbers:

  • $210.6B assets (11.6% of total CUs)
  • 19.6 million members total (15.7% of total)
  • 11.2% average asset growth (10.9% median)
  • 8.75% average member growth

Despite making up a small portion financially, and even numerically, you’re doing well. Asset growth is strong, whether we use average or median. In case you’re wondering, I used median to eliminate the effects of “extreme outliers”.

Essentially, using both gives us confidence that the numbers we see are representative of the group.

“But, Joe, you forgot to include the median for average member growth!”

Great catch. I was saving it for right now! Because something really interesting happened when I ran this value. In fact, I even did it a few times to make sure I hadn’t messed up.

For credit unions with a $250M or less asset size, median member growth is currently -0.92%. Yes, negative! Small credit unions are, in general, losing members.

“But the average was up so much!”

True. I looked at the data and some credit unions post 40% or higher member growth (and some with similar swings downward). Since they only have a few thousand members, it takes less to create large swings. Hence why I checked the median as well.

Deeper Still and More Concerns

Scuba Diver and Rocks
Let’s bring some light to that darker dive.

That made me want to see if the member loss was more prominent on one side of the group or another. Sadly, it was. I looked at the 2811 credit unions with <$50M asset size, composing 53.6% of the total. Their average member growth is 13%. Hooray! But…

Their median member growth is -1.3%. Nearly .4% lower than the larger segment. 

So why are the numbers so divergent?  PPP loans could have had something to do with the success of large credit unions, but not likely the member growth numbers.

Sure, they proportionally did more PPP lending, providing part of that boost. Truly smaller credit unions didn’t have an opportunity to provide as much of this assistance.

I recall hearing about how difficult the processes were. If you were filing them manually, you were getting fewer done, and that’s even with the enormous amount of time and energy you put into it!

At the end of the day, large credit unions benefited and smaller ones, as a whole, did not.

Though that alone shouldn’t explain the disparity.

With Your Data, You Can Act

Group of People at Table with Notes and Laptop
Make your plans with the best information.

I’m not here to ponder the reasons. You have a whole bunch of really smart people ready to dive into analysis. Sometimes I’m one of them, but not today. As I said above, this was just to share the data.

I believe it’s essential to have good information before you make any plan or take action. It’s why our company runs an unbiased and honest Learning Library, filled with insights and guidance for a range of products and services.

So seeing an article that puts a $900M credit union in the same group as one which has 4,000 members forced me to take action. You know you have different challenges and strategies for growth (or survival). Addressing you together isn’t helpful.

So, are 80% of Credit Unions in Trouble?

Caution Cone on Keyboard

That’s not a question I can answer. And yes, I may have triggered Betteridge’s law of headlines, though I really don’t know if it’s definitely a “no”.

There are definitely concerns which you may not always get to see. If viewed widely, this article likely won’t make me many friends in high credit union industry positions. It points out some concerns about a large portion of credit unions that many would not like promoted.

But data doesn’t exist to make you happy, sad, satisfied, or frustrated. It exists to be processed, so you can act on it. And you know what? I hope I’m wrong in my analysis. That I made some silly mistake.

Take a look at your own data. Does it line up with what I shared? Regardless, learn from it and take appropriate actions.

Because everyone deserves the best information so they can make decisions which benefit their credit unions, communities, and the members they serve. Isn’t that what the credit union movement is all about?

And in case you haven’t heard it a thousand times already…”I don’t want a lot for Christmas…”

Holiday Candle and Pinecones

Happy holidays to all!

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