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Survey CUs biggest challenge--attracting new members
TALLAHASSEE, Fla. (5/2/11)--A majority (61%) of credit union industry leaders cited attracting new members as the greatest challenge affecting credit unions, after concerns over the U.S.’s economic climate declined, according to a recent industry survey by Credit Union 24, a deposit-taking ATM and point- of-service (POS) credit union service organization. Credit Union 24 announced the results of the industry survey conducted before and during the Credit Union National Association’s Governmental Affairs Conference this year.
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In 2010, attracting new members took second place to concerns about the economic climate. The second-greatest challenge facing the industry in 2011 is the uncertainty caused by the financial reform legislation at 53% (see Figure No. 1 to the right). Less than half (44%, compared with 70% in 2010) of leaders surveyed see the economy as a threat, rendering it the third-greatest overall challenge facing credit unions in 2011. For the third consecutive year, polled credit union leaders cited consumer misunderstanding of credit union benefits over banks as the greatest challenge in attracting new members. About 66% cited this as the greatest challenge, compared to 77% and 67% in 2010 and 2009, respectively (see Figure No. 2 below).
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The perception that credit unions have limited offerings compared with banks follows as the second greatest challenge in wooing new members for the third year in a row, with 52% of those polled--a seven point increase from 2010. “Results of our survey show that credit union leaders are feeling similarly to how they did in 2009; however, it also illustrates that credit unions are continuing to face the same challenges that have plagued our industry for many years,” said Jim Park, president/CEO of Credit Union 24. “This year’s financial reform legislation has understandably caused tremendous uncertainty among credit union leaders--and electronic funds transfer networks--as no one really knows the full effects of the legislation,” he added. “The challenge lies in analyzing the 'what-if' scenarios and developing contingency plans to address the legislation while continuing to remain focused on our industry’s core mission of delivering superior customer service to credit union members.” Also, 84% of credit union leaders surveyed cited that their credit union’s membership has either increased (45%) or remained steady (39%) year-over-year. This is a slight decline compared to 2010’s findings when 85% of industry leaders cited an increase (56%) or neutral (29%) movement in membership. The number of credit unions noting a decrease in membership grew 2% year-over-year to 17%, compared with 15% in 2010. For the second consecutive year, credit union leaders polled cited better customer service as credit unions’ strongest competitive advantage over banks; however, the percentage decreased by 12%. More lenders polled said that member ownership--a major hallmark of the credit union industry--is an increasingly important advantage over banks. Ownership nearly doubled in ranking to 21% in 2011 from 11% in 2010. Also for the second year, credit unions leaders said lower interest rates on loan products is the second strongest competitive advantage over banks. Lower rates grew in importance by 6% this year to 28%, from 22% in 2010. “For the third year in a row, more than half of industry leaders [surveyed] feel that credit union-owned service providers do a better job of serving credit unions. This sentiment is increasingly permeating our country and our industry,” he added. Member behavior has continued to evolve since 2010. 2011 saw a slower increase in members using point-of-sale (POS) and a more steady use of POS, at 54% compared with 45% in 2010. This is the first year that credit union leaders saw a decline in POS use among their membership. Other trends:
* ATM usage in 2011 has slowed; * The increase in ATM usage has continued to slow down and remain at a steadier pace; * The ongoing decline of ATM use has slowed as well; and * Fewer credit union leaders saw a decrease in ATM usage this year (5%) than last year (7%).
From the slower-than-last-year increase in POS, “we can infer that, given the economic climate and the national financial trends in consumer behavior, consumers have moved more towards cash transactions,” Park said. “While this is not a bad thing, it was a major focus of credit unions last year--as illustrated by survey data--to move members more towards cash-back at the point of sale, as this generates interchange income compared to an ATM transaction cost,” he added. “While the financial reform legislation has caused much uncertainty, the more that credit unions can continue to drive members to increase income-generating behaviors, the more it will benefit credit unions in the long term.”


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