New Survey Shatters Industry's Conventional Wisdom

For years, the industry’s conventional wisdom has been that consumers are more likely to do business with credit unions that offer financial education and are involved in the local community.

But a new survey report shattered that belief – and the results came in during the industry-wide celebration and promotion of National Literacy Month throughout April.

The Consumer Banking Preferences & Behavior Report from WebStrategies, a Midlothian, Va.-based credit union marketing agency, surveyed 500 credit union members and 500 non-credit union members on what they care about most when it comes to their financial institutions.

Consumers under the age of 45 were asked, “Besides favorable interest rates and low fees, which of the following factors do you value most in a financial institution?”

Transparency/no hidden fees came in No. 1 among 31% of members and non-members; 29% said customer/personal service; 28%, mobile app capabilities; 27%, easy access to account info; 23%, branches near home or work and 29%, free overdraft protection.

Only 9% of consumers said financial education and 5% said local community involvement were value drivers for them, according to the survey.

What’s more, among non-credit union members, the numbers were even lower: Only 6% said financial education and 3% said local community involvement were value drivers.

Even among members who use their credit union as their primary financial institution (PFI), only 10% said financial education and 8% said local community involvement were value drivers for them. Interestingly enough, among members who don’t use their credit union as a PFI, 12% said financial education and only 5% said local community involvement were valued the most.

The survey also revealed that credit unions have perception problems among non-credit union members, WebStrategies CEO Chris Leone said.

For example, the survey found that non-credit union members under the age of 45 rated traditional banks as most often the best at customer service, accessibility and local branches, and that online-only banks were most often rated as the best in mobile apps and online experience.

Among members who use their credit unions as their PFI, however, they view their credit unions as most often the best at accessibility, local branches and customer service, but they also said online-only banks are most often the best at the online experience.

What credit union executives might find concerning is that non-PFI members said their credit union and traditional banks were essentially tied at offering the best customer service. What’s more, non-PFI credit union members also found traditional banks were often the best at accessibility and local branches, and that online-only banks were most often rated as the best for mobile apps and online experience.

What also may keep executives up at night is that, on average, 60% of credit union members and non-credit union members use online-only banks in some capacity, which can possibly influence their expectations and perceptions of their credit union experiences, the study noted.

Another concerning finding from the survey revolved around auto loans, the primary moneymaker for many credit unions.

The study found that 44% of consumers are likely to consider non-traditional sources for their next auto loan, while 35% said credit unions with branches and 29% said an online-only bank or credit union. Non-traditional sources were defined as big tech, investment platforms or funds transfer companies. As more non-traditional sources offer auto loans, the study noted, it could threaten credit union market share.

Nevertheless, there was some good news for credit unions.

When members were asked what would prompt them to make their credit union their PFI, 41% said lower fees, 40% said lower rates on loans and credit cards, and 32% said higher rates on savings accounts and personal customer service.

The survey’s 1,000 responses posted a confidence level of 95% with a 3.1% margin of error, according to WebStrategies.

The report is available for free at webstrategiesinc.com/report.