The Credit Union Difference Shines Even Brighter in Difficult Times

It’s not just great rates and low fees that are attracting members to credit unions. After a difficult year, Americans are reevaluating how well the institutions they use and support can serve them during tough times. This is especially true for financial institutions; a recent McKinsey study found that financial strife has played a key role in Americans’ rising anxiety over the past year.

People are increasingly considering “soft factors” in their decision to use a financial institution. If they have an economic hardship or exceptional circumstance like a job loss or medical issue, will their bank or credit union work with them to make accommodations? Or does the institution only care about the bottom line?

Before COVID-19, America was enjoying a strong economy and record-high employment. It’s easy for financial institutions to provide superior service in affluent times. But it’s a lot harder in lean times. Here are four areas where credit unions can stand out in 2021:

1. Focus on ­consumer lending.

Soon after the pandemic hit the U.S., some big banks tightened their standards for mortgages and home equity loans, making it difficult for many of their customers to take advantage of low interest rates. In short, those banks put profits before people. In contrast, many credit unions worked closely with their members to ensure ongoing access to credit. Credit unions should publicize their consumer lending practices during recessions to show how credit unions put their members’ needs first.

2. Provide anywhere digital access.

A recent KPMG report noted, “Pre-COVID, digital ­transformation was a desire … it is now a demand.” Digital access to financial services became vital overnight. While there is a place for brick-and-mortar branches, all financial institutions are now expected to serve consumers remotely, on the web and through mobile devices. Credit unions are increasingly digitizing their services, making it easy to transfer money, deposit checks, pay credit card bills, apply for loans, access member services and more, electronically.

3. Support your community.

When a financial institution puts profits above people, it’s a red flag. Credit unions are known for doing good for the people in their communities, by donating to charitable community organizations, encouraging employee volunteerism, establishing financial literacy programs, training service dogs and more. If a credit union takes its corporate social responsibility seriously – through actions, not just words – it’s a good indication that the credit union will take care of its members.

4. Take care of your employees.

Edelman’s COVID-19 trust update found that “only 43% believe that companies are protecting their employees sufficiently from COVID-19.” This number should be much higher. How well a company treats its employees often directly translates to how well employees treat consumers. Credit unions have a reputation for valuing their employees’ well-being, not just their productivity. Let members and potential members know what you are doing for your employees, and it will give them greater confidence in your mission and integrity.

Richard Edelman, CEO of Edelman, which issued “The 2020 Edelman Trust Barometer Spring Update: Trust and the Covid-19 Pandemic,” stated, “In this extraordinarily difficult moment, institutions have a duty to outperform expectations and rebuild public confidence.” The Edelman survey found that only half of respondents believe businesses are putting people before profits, and only slightly more than half believe businesses are helping smaller customers stay afloat.

Credit unions have always put people before profits, and as a result they will continue to gain market share in 2021. I believe this year, credit unions will welcome a record number of new members by showing them the credit union difference of how we help our members through good times as well as difficult times.

James R. Schenck President/CEO, PenFed Credit Union CEO, PenFed Foundation McLean, Va.