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Improved perceptions could boost CU growth
TALLAHASSEE, Fla. (4/15/10)--About 77% of credit union leaders surveyed said consumer misunderstanding of credit union benefits over those of banks is the greatest challenge in attracting new members, according to a new survey. Credit Union 24 conducted the survey in February at the Governmental Affairs Conference sponsored by the Credit Union National Association. The number is an increase of 10% from last year when 67% of credit union leaders cited perception as the greatest challenge, said the credit union service organization. (See Figure No. 1).
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For the second year in a row, the perception that credit unions have limited offerings, when compared with banks, was the second greatest challenge cited by 45% of credit union leaders surveyed. While consumer misunderstanding is the greatest challenge, attracting new members is a key overall concern of credit union leaders. Nearly three-quarters, or roughly 70%, of those polled cited the current economic climate and National Credit Union Administration assessments as key challenges facing credit unions today, an 11% increase over last year. Retaining current members and developing successful marketing tools were also cited as significant challenges. (See Figure No 2). “An economic cloud still hovers over our nation’s credit unions, as evidenced by credit union leaders’ concern about attracting new members having decreased by only 2% since last year,” said Jim Park, president/CEO of Credit Union 24. “It’s rather interesting that the concern of attracting new members and the economic situation have reversed this year, with the economy being the No. 1 cause of anxiety among credit union leaders. “We’re starting to see rays of sunshine peek through,” he said, yet “credit unions are focusing very intently on maintaining and enhancing their bottom line as the economy slowly starts to rebound,” he added. “Credit unions are being cautious yet proactive, and are taking advantage of the potential member-recruitment opportunities created by the capsizing of numerous banks.” In 2009, about 61% of polled credit union leaders cited attracting new members as their greatest challenge, while 59% of those polled said the economic climate is their greatest challenge. Despite the challenges, 56% of credit union leaders said their credit union’s membership increased since 2009, with 41% of credit union leaders citing failing banks as a major factor in the uptick in membership. About half, or 51%, of respondents believe that better customer service is credit unions’ strongest competitive advantage over banks. Roughly 22% cited lower interest rates on loan products as their strongest competitive advantage. (See Figure No. 3). “Even though credit unions are still experiencing challenges in educating consumers of credit union benefits over banks, the volatility of our economy is changing consumer behaviors, many of which are in favor of credit unions,” Park said. “Many credit unions are finding unique ways to remind consumers who fall within their charter’s target audience of the benefits they provide to consumers. “These methods of member outreach, which include marketing competitive interest rates on savings and loan products, can be implemented by nearly every credit union and have a positive impact the industry overall,” he concluded.
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