TALLAHASSEE, Fla.—Credit unions are too inflexible and slow to adopt technology at the pace their bank competitors do, right? And not safe or convenient, either, correct?
“That’s one of the more false statements I’ve ever heard,” responded Bob Flanagan, business development director at United Solutions, a credit union service organization based here. “Credit unions don’t have the huge investments in hardware that some banks do.”
As a result, he said, many banks are saddled with legacy hardware they must constantly modify, while credit unions are able to deploy newer technology that is cheaper and doesn’t incur a lot of upfront expenses.
Flanagan’s remarks are part of a CUToday.info series on “fake news” in the credit union community; that is, myths and misperceptions by members and officials that may need some further thought and correction.
Credit unions have another technology advantage over banks, according to Flanagan: the ability to achieve economies of scale by using CUSOs to spread expenses over numerous CUs.
'We've Done That for Years'
“Credit unions adopt to new technology and special needs much faster than big banks and community banks,” he said. Virtual and digital banking? “We’ve done that for years.”
Bob Flanagan
Another myth Flanagan said he has continued to run into in his more than 30 years in the field is that, “credit unions don’t have locations that are convenient. They don’t have enough branches.”
But with the CO-OP shared network, members have access to thousands of credit union branches around the country, and tens of thousands of shared ATMs.
The result of that is that no longer does a member moving to a new state automatically translate into a closed account.
“But now they don’t have to do that anymore,” he said. “Unfortunately, we don’t do a good enough job of letting members know that’s available. We could do a much better job in getting that out.”
Another Advantage
There is another area where credit unions could have an advantage over banks, but the opportunity isn’t being well executed, according to Flanagan. Bigger banks have significantly bigger advertising spends, which forces CUs to be more efficient if to be effective in reaching potential members. Often that means “credit unions have to acquire e-mail addresses and send blasts,” Flanagin observed.
But those efforts are only as effective as the messaging, which he believes could use to improve, especially around services such as virtual and mobile banking.
“We’ve had those available for years,” he says, but a typical credit union may have only 10% to 20% of members using the technology.
The technology is fine, he said, before emphasizing again, “The messaging needs to be better.”
Credit unions need to do a better job of teaching members how to use new technology in person, he believes, including helping the member download an app to their I-phone or Android.
Flanagan sees another myth being that credit union safety and soundness isn’t as good as banks’. Bank depositors are aware their deposits are insured up to $250,000 by the Federal Deposit Insurance Corp., but not all credit union members or potential members are aware they have the same protection through the National Credit Union Administration.
A Final Misconception
Moreover, traditional bank architecture may be more imposing and connote safety and soundness better than the more modest style of a credit union branch, he suggested.
“Credit unions should put the NCUA logo on the bottom of every message they send out,” he says. “I want to have my money somewhere where it’s safe.”
A final misperception he sees is that it is hard to join a credit union. Flanagan worked for credit unions in the 1980s and 1990s (rising from a teller to chief executive) and saw that restrictive fields of membership made that truer at that time. But now with family ties and other modifications, “that opens thing up quite a bit.”
—Mark Fogarty