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Financial Trust Index shows CUs outpace banks
NAPERVILLE, Ill. (11/6/12)--As the economy continues to be a top issue for voters in the final days of the presidential campaign, said the Illinois Credit Union League, trust in credit unions has remained high at 61% among Americans, according to the latest Chicago Booth/Kellogg School Financial Trust Index.

The index also found that 23% of Americans say they trust the U.S. financial system. That is an increase of two percentage points since the last issue of the index in June and reflects a rebound of trust in the banking sector.

The index measures public opinion during three-month periods to track changes in U.S citizens' trust in the private institutions in which they can invest their money, including the stock market, banks, mutual funds and large corporations. The index has consistently reported notably more trust in credit unions than local and national banks, quarter over quarter, since it began in December 2008, said the league.

Monday's report is the 16th quarterly update and is based on a survey conducted in September.

The gain in the banking sector was largely driven by an increase of trust in national banks in particular, which rose by five percentage points to 28% since the last report, said Luigi Zingales, co-author of the Financial Trust Index and the Robert R. McCormack Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business. Also, trust in community banks remained at 56%.

The Financial Trust Index also was developed and spearheaded by Paola Sapienza, Merrill Lynch Capital Markets Research Professor of Finance at the Kellogg School of Management at Northwestern University. Professors Sapienza and Zingales define trust as "an expectation that a person (or institution) will perform actions that are beneficial or at least not detrimental to others. While trust is fundamental to all trade and investment, it is particularly important in financial markets, where people part with their money in exchange for promises."

Data is analyzed quarterly from more than 1,000 U.S. households, randomly chosen and surveyed via phone by Social Science Research Solutions. In different quarters, this information is supplemented with data on additional topics.

"This is a story we all already knew. Credit unions are trusted," said Dan Plauda, president/CEO of the Illinois league. "To have this kind of academic pedigree backing what we knew to be fact, is great."

Credit unions also have scored high in other national and local surveys on trust, loyalty and member satisfaction studies this year. They include:

  • Credit unions were rated No. 1 in a survey of 5,000 consumers asked to rate the reputation of 34 business sectors in a study conducted by Denver-based Prime Performance (News Now May 14). Credit unions topped all business sectors in reputation with an average reputation score of 5.78 on a seven-point scale with seven as "very good."  They were followed by grocery stores (5.50), and community banks (5.40). Regional banks came in seventh at 5.04 and national banks 18th at 4.15.
  • Credit unions topped the list of U.S. financial institutions in member/customer satisfaction, according to the 2011 Customer Experience with Call Center Representatives Survey by Prime Performance (News Now March 9). Members/customers claim they were more satisfied last year in their interactions with credit union and bank call center representatives than in 2010. Based on a recent interaction with a call center representative, credit union members rated their overall satisfaction with a net score of 83%. The comparable score for small banks is 79%. The industry average is 70%.  Falling below that are: large banks, 66%; Chase, 62%; Wells Fargo, 61%; and Bank of America, 56%.
  • Credit unions were among the top customer satisfaction rankings in Temkin Group's release of its 2012 Temkin Customer Service Ratings, which examines how U.S. consumers rate the customer service of 174 large companies across 18 industries (News Now June 28).
  • A National Cooperative Business Association (NCBA)/Consumer Federation of America (CFA) survey found more Americans think credit unions and other cooperative businesses have the best interests of their members and customers in mind more than do for-profit businesses (News Now May 3). The survey also revealed a favorable view of cooperatives in regards to their business trustworthiness and quality of service. Co-ops received higher marks across the board than for-profit businesses.
  • Credit unions outshone banks in consumers' perceptions of safety and soundness, with 40% of respondents saying they believe credit unions are the safest financial institutions, compared with 34% naming banks (News Now Feb. 23). Nineteen percent of respondents said they trusted both types of institutions equally. The numbers are the results of the 2012 Credit Union National Association (CUNA) National Voter Survey.
  • A CUNA survey in February found that 43% of respondents said credit unions were the best place for consumers to keep their day to day savings and checking accounts (News Now Feb. 22).


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