Why Is the Credit Union an Attractive Option to Consumers?
A credit union or local bank could be a national bank’s most important competitor, according to a Google Consumer Survey conducted in June 2013. Credit unions and local banks continue to attract new consumers, often at a faster rate than national banks. Large national banks are not only less personal but, at times, more expensive and harder to work with.
Paying attention to smaller competition
National banks continue to maintain overall control of the market, with some estimates indicating national banks maintain a combined 94 percent of all banking customers. Yet small local banks and credit unions continue to pull away unsatisfied users. The survey, reported in GoBankingRates.com, focused on 1,508 adults in the U.S. It indicated that:
- 51 percent of those over 65 prefer local banks
- About 34 percent of those aged 18-25 prefer the use of local banks
- 46 percent reported preferring a credit union, of those earning between $100,000 and $149,999 annually
The question for most large banks is why this is happening. One reason is that unions are not profit-driven. When profits occur, the shareholders, or members of the union, share in the profits. For many, this is a reason to make a switch. It may also be easier to obtain higher risk loans, since unions and local banks tend to know their customers better and base lending on more than just credit scoring.
National banks tend to lose points on customer service, whereas a credit union tends to gain in this area. Large national banks typically charge higher fees, as well. These organizations also often lose out to local banks when it comes to local car dealerships and retailers, who are more inclined to work directly with local banks.
Finding a solution
National banks must find a solution to attract, onboard and maintain relationships with those consumers who would otherwise turn elsewhere. Additionally, banks’ marketing investments must focus on attracting the right type of customer for their product or service.
Attracting the right consumer is the first step.
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