LAS VEGAS–The findings of a large research project that probed consumers in California and Nevada for their opinions and behavior around financial services have been released here, and they offer both some reassuring news as well as data points that should serve as a “wake-up call.”
The research was conducted by Dr. Neil Goldman, president of Goldman Consulting and Strategy, who has a long history of working with credit unions. Goldman shared the findings during the California and Nevada league’s REACH Conference. The survey involved people ages 18-39.
In releasing the findings, Goldman told meeting attendees his challenge for them was to “build and leverage your focus for greater success, so you stand for something, so that you can be different than the competition and you can connect with your target, whoever that is. My challenge to you is to be that exceptional leader and to be the best in the world at whatever it is you're trying to do.”
It's Not So Simple
For credit unions, saying they want to “lead” the market isn’t so simple, he said, sharing the chart below to highlight all of the category options that exist for leadership.
“If we assembled all of your leaders in your organization--your board, your senior team, your management--all of the team and we asked them, ‘Which one are we working towards or should we be working for?’, what do you think they would say?” Goldman asked. “We typically see answers all over the board. How much more effective would it be if we could align that with a fine focus…the group we're trying to build our business for. Consumers buy on perceived value. What is your perceived value, particularly with younger folks today?”
It is all about putting together the “little puzzle pieces” that add value to organizations, he said.
What is Value?
“Value equals contribution,” Goldman said. “I'm saying this because I want us to think about the contributions we are making consciously to our members, and that starts with which members we're trying to make contributions for. The other thing is we have to have a good fit between what those members are seeking and what we are offering. It has to be hand in glove.”
Goldman advised credit unions to think in terms of the factors included in the graphic below.
The factors above are not unique to financial services, said Goldman, pointing out that numerous fintechs have leveraged these “tablestakes” to stake their businesses. One effective way they have done that is by being “hyper-personalized,” he said.
The Research
In conducting the research project for the California and Nevada leagues, Goldman said it began with a Net Promoter Score (NPS) that asked consumers how likely they would be to make recommendations of financial service providers on a 0-10 scale.
The results can be seen in the slide below.
When asked about the kind of Primary Financial Services Provider (PFSP) consumers use, credit unions were rated highest at 59.5, which is the industry average for relationship PFSP.
“But going one layer deeper, when asked about specific providers, credit unions were at 67.25, digital banks at 55.9, regional banks at 42, and national banks at 26.6%,” Goldman told the meeting.
Chime Rings Loudly
Goldman pointed out that the “target-driven, focus-driven Chime outperforms all providers."
But there is good news on one front when it comes to the question of whether CUs still own “trust” as a perceived attribute, he said.
“The good news is yes, credit unions are doing better than large multistate banks and digital banks overall,” he said. “But credit unions don’t win on safety and fraud.”
What do consumers value most in providers? According to Goleman, the research shows:
- Safety, security fraud protection
- Trustworthiness
- Access and convenience
- Financial Stability
- Customer service
Where Credit Unions Win and Lose
The research shows credit unions have a different kind of consumer they are attracting. To that end, credit unions “win most” in perceptions around learning and growing.
In California and Nevada, when it comes to current primary financial service providers, as income goes up the more likely the consumer is to use multistate banks.
On the inverse, as income goes up, digital banking usage goes down.
“As education and income goes up, so, too, does the number of providers used,” Goldman said. “With credit cards, as income goes up they are most likely to use credit cards, and as income goes down, they are most likely to use debit cards.
“Again, the question is for whom are you building your business?” he asked.
The Wake-Up Call
The slide below, said Goldman, should be a “wake-up call” for credit unions for what it reveals about whether consumers will consider a credit union as a provider. The survey found large banks are most likely to be considered.
“What you see in the dotted lines is their likelihood to choose each provider, so people who've chosen credit unions are the only place we win,” Goldman said. “But this is our opportunity.”
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