Even if CUs are successful at doing this, it will take years before the effects will really be seen. It’s too late to convert the Boomers, and the Gen Xers are slipping away. Gen Y is the greenfield opportunity, but they don’t have the money or the needs just yet (beyond checking accts/debit cards and car loans).

So for the next 5-10 years, what’s next? Pretty much,, more of the same. CUs will pick up a few percentage points of market share, but the “I hate banks” movement will die down (these things ALWAYS peter out), and things will revert towards the old normal.

The underlying problem for CUs is the business model. For all the yelling and screaming that CUs do about how they’re “different” from banks, the business model is the same. They make money from account fees and interest spread. Unfortunately, consumers don’t seem willing to pay for advice/guidance (like they could get from PFM-type tools), but I’d love to see some firm turn the model on the head, and charge for advice/guidance and give away the accounts.

I also want to apologize and correct any impression I might have given that the CEOs in the sessions lack “vision and courage”. Hardly the case. Most of them have been competing with the large banks for a long time, and have survived if not thrived. I think you’ve nailed it, though, regarding what’s missing, in your example re: marketing strategy. The lack of a cohesive marketing strategy is missing in many cases, but I’m not sure the blame for that falls only on the CEOs’ shoulders.

We simply have to be the most convenient, most easy-to-do-business-with financial institution.

I was surprised to read the following mission statement from the CU CEOs: <>

Now, outside of a hand fold of supersized CUs, who in their right mind would position a CU as a convenient institution to do banking with? Not too many people. Convenience is a service attribute that the BofAs and the Well Fargos of the world have invested a lot of capital in it, and they are very good and entrenched in it. Hence, they have, and will always have, deeper branch penetration, ATM networks, superior online banking platforms, sales capacity etc. CUs will lose that battle 10 out of 10 times.

And then the comment on financial education made me chuckle (as I am sure it did that to you as well), as if customers, who are mostly pretty darn busy as it is, want to take the time to peruse financial information after working hours and educate themselves on their financial mishaps or shortfalls.
Those CEOs did not come across (at least from the way I interpreted your blog) as leaders with vision and courage. What about going after small businesses (most large banks would not touch a SB with $500,000 or less in revenue), or using the lower overhead that CUs have and differentiate yourself on the fee side (# 1 cause in checking attrition with large banks), or pick some niche products with heavy referrals w/in business community – HSAs for instance – and become the number 1 provider of that product in your market. Those examples would give you true proof points to support a CU marketing strategy: the rest (like convenience and education, for instance) is just a regurgitation of what the big boys with deeper marketing budgets are already doing.

Chris del Balzo

Another key idea you’ve got there is about the CUSO. I’ve talked with a number of FIs (banks and CUs) who are exploring ways to “add more value” to the small business relationship. The firms I’ve been talking with are realizing that doing what you’re suggesting is a big, strategic commitment.

Then we set about to open a credit card for him – a credit union account. Or so we thought. The credit unions that we looked at made the process difficult or did not seem interested, including where he had a checking account since age 16. All they had to do was look at account relationships – parents would have been willing co-signers. Yet, if “we” chose to open a student credit card at Well’s Fargo – it would have been easy. Still assessing what “we’ll” do.

On a different note – whether it’s because people are busy, apathetic, confused, fear (back to the under the mattress mentality”, or some other reason they are not paying attention to their finances, might credit union’s have a golden opportunity to figure out how to come along side members to help them know if their financial decisions (or lack of) are positioning them for their future goals/dreams? What if credit unions considered providing CUSO type services designed to help small businesses succeed (strategic planning, marketing, legal, hr, etc.)?

I’ll never forget the focus group I attended, hosted by the Washington Credit Union League and our friend, Denise Wymore.

I remember watching the row of 15, 16, and 17 year olds and thinking how foreign they were to me (if you don’t have kids of your own, they can feel like a different species). Anyway…

When asked where they did their banking and why, they ALL said they bank (and will bank) where their parents do.

Then they advised another fascinating thing – give out stickers and suckers to teenagers, not just little kids.

Ron, I’ll give you ten bucks if you tell your next group of CEO’s that stickers and suckers are their key to the next generation.

Love your post.