New Study Highlights What Makes People Switch Credit Unions

Fee transparency, inertia, and friends and family are three of the biggest determinants in whether a member joins a new credit union or engages with another financial institution, according to new research from Chicago-based Yes Marketing.

The firm’s survey of 1,000 financial services customers found that 43% of respondents first heard about their current financial services provider from family or friends, and 57% said the thing that most influenced their trust in that financial institution was whether it provided comprehensive, up-front information about fees, rates and services.

“More than 40% of customers selected their last financial services company based on the recommendation of family and friends,” the report said. “Additionally, more than half (53%) say they chose not to use a company because of negative feedback from family/friends.”

Competitive rates and fees were the biggest draw to a new financial services provider for 42% of the respondents; 22% said it was the variety of services available. Only 13% of the respondents said the institution’s ability to protect member information would influence them to use a financial services provider they’ve never used before, and only 10% said the same for branch and ATM proximity. Five percent or fewer said the mobile app, customer service reputation and the convenience of the enrollment process were the most significant factors for them.

“When it comes to selecting a new financial institution, customers say that practical, bread-and-butter variables like interest rates, range of services and convenience of locations are the most important service factors. Factors like customer service and convenient enrollment processes are less important at this stage,” the report said.

The findings were consistent across generations, though younger customers were less likely to trust financial institutions to protect their personal information. They also placed more importance on the ability to use a mobile app.

The results suggested that credit unions that win over friends and family can also win new members, especially if they incentivize members to share their experiences, highlight customer reviews on their websites and create shareable social media content.

Credit unions and other financial services providers should also be sure to be transparent about their rates and fees, diversify their offerings and highlight convenience, Yes Marketing said.

“Don’t bury the details,” it warned. “Customers want clear, accessible information about rates and fees. Lead with practical content that helps them make an informed decision.”

Offering relevant services is also important, it said — 42% of respondents reported rarely or never receiving relevant marketing communications from their financial services companies.

“If you’re not communicating with your customers about the services they are interested in, you’ve lost them before you get to know them. For example, if you know based on third-party data that a consumer has recently had a child, your first point of contact shouldn’t be a standard offer for opening a checking account. Instead, you should highlight financial planning options that include long-term savings for college, child care and more,” the report said.

Other notable findings from the survey included:

• 72% of respondents said they aren’t considering switching to a new financial services provider.
• 36% said negative feedback about a credit union or other financial services provider has motivated them to leave that provider.
• 73% of consumers said rewards strengthened their loyalty, though ideal loyalty rewards varied by age.
• 35% said their financial institutions didn’t do a good job of rewarding them for their loyalty.