HONOLULU–Credit unions know a fair amount about their members, but what about those people who have declined to join credit unions?
Research from CUNA Mutual is offering some insights into the non-member population.
In the third year of its “What Matters Now” research, which it conducts in conjunction with its TruStage insurance offerings,
CUNA Mutual looked this year at “the non-member.”
In remarks to NAFCU’s 50th annual meeting here, Tina Gefke Buttchen and Scott Graffius of CUNA Mutual Group said the goal of the research is to make it easier for members to engage with the TruStage product line. But it also seeks to share its findings with credit unions to help guide their decision-making, as well. The “non-member” research looked at families earning between $25,000 and $100,000 annually.
One big surprise in the research: many “non-members” are actually members of credit unions.
It seems obvious, said Gefke Buttchen, but it was discovered that one in four people who has a credit union product does not identify as belonging to a credit union, even if they have a checking account or credit card. Surprisingly, it’s only about 11% of non-identifiers joined through an indirect relationship.
What the research revealed was what Gefke Buttchen called “shades of the non-member.”
Consumers were asked: Are you a member of a credit union? and 37% said yes, 63% said no.
When members were asked if a CU is their PFI, 59% said yes, 41% said no. “So, this started to paint the opportunity for us,” said Gefke Buttchen.
Of the 63% who said they did not have a credit union product, 19% did in fact have a CU relationship. Gefke Buttchen said these are disengaged members.
The 81% who said they have no relationship at all, according to Gefke Buttchen, represent what she called “opportunity number three.”
Of hardworking families, 22% are fully engaged members, and 15% are partially engaged, 12% are disengaged, and 51% are true non-members, said Gefke Buttchen.
The research found three key themes when it came to misconceptions around credit unions, said Gefke Buttchen:
- Credit unions are only for special groups. “So, it would be helpful if we started sharing more inclusiveness messaging.”
- Credit unions are limited, less convenient or only offer specialized products and services (often for just basic needs).
- They aren’t as secure as banks. There was a belief that CUs are less incented to improve services or to be at the forefront of innovation (a perception developed by a belief CUs aren’t aggressive), including security. “So, something we need to keep in mind is that we have that box members can check so they know the credit union is secure,” said Gefke Buttchen.
The opportunity segments discovered in the research, said Graffius, was primarily in Millennials, followed by Gen X and then Boomers. Graffius reminded the number-one reason Millennials don’t join is a simple lack of awareness they are eligible to do so.
Graffius recommended credit unions restructure referral programs differently if done with the idea of influencing Millennials through their Boomer parents.
The research also probed for the percentage of banked customers who use a large, national bank, versus those who use a community bank? Fifty percent use a national brand, while the other half uses a local or regional bank.
Why? According to the research, there is a belief the bank does not care for “the little guy.”
How satisfied are bank customers and credit union members with the service they receive? Seventy-one percent of CU members said they were satisfied, while 45% said the same about banks.
So why don’t those bank customers move their business? The CUNA Mutual research found complacency, belief it’s a hassle, and a number of misconceptions.
“Unfortunately, there is still a lot of skepticism out there around credit unions,” said Graffius. So, how does a credit union overcome that? He cited CUNA Mutual’s own approach, which is to cite its A rating in its communications to emphasize solidity.
Graffius said the research has also probed consumers for how they define financial success. What the research found was that engaged members especially associate being debt free with financial success, and many take pride in being able to pay in cash.
A third concept in financial success: giving back.
Spotlight on New Members
The research examined what drove the transition to becoming members. Approximately 15% of the newest members joined in recent years, according to CUNA Mutual’s research.
Of those newer members, word of mouth was the number-one reason for joining. For more tenured members, they were driven more by the idea of the CU being member-owned or a cooperative.
The research also found:
- 57% of new members are under 35 years old
- More than one-third rent their home
- 42% are parents
- Almost half are minorities