Credit Union Members Focus Groups Executive Summary March, 1998
EXECUTIVE SUMMARY Top of Mind Credit union members top of mind reactions to the words credit union were overwhelmingly practical and functional in nature, and there was not an apparent emotional reaction. However, a significant proportion of participants referred in this exercise to the service aspects which they believe set credit unions apart from banks. These aspects, i.e., that credit union service is friendly, personal and caring, are certainly related to members having an emotional relationship with their credit unions. This perception of service was one of the key unifying factors in members descriptions of their relationships with their credit unions. There is an enormous variation in size and scale of credit unions, and this variation was reflected in members top of mind descriptions of the function of dealing with their credit unions. Some are large and offer levels of convenience comparable or superior to commercial banks, others are very small and limited in what they can offer members in terms of convenience, services and products. However, no matter the size of the credit union, members described the service they receive at their credit union as being more personal and supportive than the service they receive from banks. Another unifying factor concerns rates and fees. There was an almost universal perception among these members that credit unions offer significantly better rates on loans and savings and non-existent or significantly lower service fees than banks. The Credit Union Foundation 1 March 1998
Credit Union Collage While the theme of the collage was what credit union means to me, most of the images selected reflected what credit unions can do for me. In fact, more often than not the images reflected what credit unions can do for my family. This differentiation is key to understanding where credit union values overlap with the personal values of members. While car loans, mortgages and saving for vacations and education were represented consistently, so were the aforementioned service aspects of friendliness, caring and personal recognition. As well, participants chose images representing community and family as well as images which reflected a sense of well-being and comfort. As illustrated in these collages, credit unions were consistently seen as smaller, more personal, friendlier, more supportive of families and communities, as offering better rates and easier access to loans and as being safe places to save for the future. Many participants noted functional drawbacks to the fact that credit unions are smaller. Due to their size, many credit unions are seen to be unable to compete with banks in terms of offering a full range of services, from safety deposit boxes and complete investment services to ATMs in local grocery stores. Bank Collage Where credit unions were consistently described as small and personal, banks were consistently described as large, cold, impersonal and predatory. Interestingly, every group selected at least a couple of images of animals to describe banks, illustrating their predatory nature (tiger eating prey, alligator), their untrustworthiness (snakes) and their greed (hog and fat cat). Images of people reflected that sense of coldness and impersonality. Whereas the credit union collages included images of houses and small towns, all of the bank collages included images of skyscrapers and big cities. Banks were described as being motivated by greed and by the search for profits for a small group of stockholders. Participants in these groups believed that credit unions were motivated by a sense of wanting what is best for their members as individuals. Most participants in these groups did not deal exclusively with their credit unions, and the main reason for this was convenience. Many of those who described their credit union as their primary financial institution maintained accounts in commercial banks so as to have better access to ATMs and other services or conveniences not offered by their credit unions. As a result, most of the bank collages, even the most negative, included images relating to a perception that commercial banks offer superior convenience and a wider scope of products and services than do credit unions. Another consistent theme regarding banks related to bank takeovers and mergers. In every city, participants related stories of small local banks which had recently been taken over or merged with larger national banks. The result was seen to be an erosion of services (where there had once been personal service, it was now gone), an increase in bank fees and service charges, inconvenience and confusion. The Credit Union Foundation 2 March 1998
Trigger Boards It s about people, not profit The majority of participants in these groups found great resonance in the spirit behind this proposition, if not the exact language used to describe it. Certainly, a defining aspect of credit unions for members is that people come first. Many participants were surprised to find that while they agreed with the idea that credit unions are all about people, they did not include many images of people in their collages of what credit union means to me. So while this proposition is one that credit union members agree with and value, it appears to be at a subconscious, emotional level, not at a conscious, practical level. There was mixed response to the word profit in the proposition. Most participants would have preferred the statement to read It s about people and profit or It s about people, not just profit. Participants expected and hoped that all financial institutions would make a profit, including credit unions. The key differentiation was the end result of that profit. While there was not widespread understanding of the non-profit nature of credit unions, or if or how profits are returned to members, participants generally understood that where bank profits benefit the few, credit union profits benefit the many. Upon further reflection, most participants felt this board simply contained too many pictures of people, which they did not find particularly compelling or informative. They felt the images should have focused more on the things that people like themselves can achieve with the help of their credit unions (homes, cars, education for their children). They felt that their own collages illustrated the ways people can be helped by credit unions, which was seen as more compelling proof that credit unions are indeed about people. Further evidence of this was the many anecdotes respondents shared regarding the ease of getting a loan at their credit union, or the fact that credit union staff would discuss their financial situations with them and offer workable solutions. The Credit Union Foundation 3 March 1998
I feel like an owner Very few participants felt any sense of ownership of their credit unions. For the most part, participants would only support the proposition when the wording was changed to I feel like a member. However, even with that change, most participants were hard pressed to make the connection between membership (or ownership) and empowerment on their own. Upon reflection and after much probing on the part of the moderator, some groups came to accept that membership did give them more of a say and hence, more control than they would have at a commercial bank. A few participants were aware that as credit union members they could vote for the board of directors. Even fewer were aware that the board was made up of members like themselves. And an even smaller number had ever participated in an election by voting and/or attending an Annual General Meeting. However, when participants were made aware of their voting rights as members, they gained some slight sense of empowerment and the contention of the first trigger board, that credit unions were about people, was further supported. The advantages of membership related less to empowerment than to a sense of exclusivity for many participants. They saw the higher level of customer service, the friendliness and support, as resulting from the closed membership. Many participants worried that if credit unions were allowed to accept any Joe off the street as a member, they would become too large and as a result, too much like banks. Several worried as well about the increased potential for bad debt if membership were expanded outside of the current select group. The images used to support this proposition had little or no resonance for the majority of participants in these groups. This board contained an oblique reference to the history of credit unions. Participants had little or no knowledge of that history. Learning that the credit union movement came out of a desire for people to help and support each other was interesting to some participants and reinforced their acceptance that credit unions were about people first. There was some appetite for more information on the history of the movement, although participants had absolutely no sense that it was indeed a movement. All in all, ownership, whether taken literally or as a form of empowerment, had almost no emotional resonance to participants and therefore would not currently form the basis for a compelling brand proposition. The Credit Union Foundation 4 March 1998
I trust my credit union, that s why I bank here. While there was an immediate sense of agreement with this proposition from most groups, it was qualified in two ways. The first qualifier relates to the second part of the proposition. While most participants trust their credit unions, that is not the primary reason they bank there. For the most part, they bank at the credit union because they like it better they are treated better, they feel respected as individuals ( members, not numbers ) and they get better rates, pay fewer fees and have easier access to loans than they would at banks. Employment- who employs you- also dictated to a large extent why people bank with a particular credit union. As well, this trust is certainly not exclusive to credit unions, depending on how the participant interpreted the word trust. If they interpreted trust in a practical and functional sense of the word, for example as having the confidence that their money would be safe (i.e. protected by federal insurance, not subject to fraud), participants trusted their commercial banks as much as, and in some cases, more than they trusted their credit unions. However, when they interpreted trust in a more personal way, such as trust in the advice they might get from loans advisors, credit unions came out ahead. A key aspect of many participants relationships with their credit unions involved receiving advice and assistance in planning for their financial futures or rectifying difficult financial situations. Credit unions were said to be more trustworthy sources of this kind of assistance because their motivation was the financial well-being of the individual member. Commercial banks were generally not trusted for giving advice that would be in the best interest of the customer, rather, their motivation was seen to be increasing profits for stockholders or even increasing personal sales figures for the financial officer. Generally speaking, groups accepted most of the images on this board as supporting the proposition of trust. Of the images on the three boards tested, those supporting I trust my credit union had by far the highest level of acceptance. Participants found them more directly related to the proposition and easier to understand than the images on the other two boards. The Credit Union Foundation 5 March 1998
Ranking of boards Participants were asked to rank the three boards, paying special attention to the title of the board, rather than the images, in order of preference. The following table illustrates the results of this exercise. It s about people, not profit. I feel like an owner. I trust my credit union, that s why I bank here. First 87 30 67 Second 55 43 75 Third 32 101 32 Participants were allowed to give tied scores if they were unable to chose a clear preference. As well, some participants changed the wording of the titles to better reflect their opinions. Several participants changed the first proposition to It s about people and profits or It s about people, not just profits. As well, several participants changed the second proposition to I feel like a member. The tally above reflects the results including those changes. Interestingly, as previously mentioned, the people/profit proposition was most widely reflective of how respondents viewed credit unions yet, they did not consciously make that connection in their top of mind reactions to credit union. The Credit Union Foundation 6 March 1998
Thought Bubbles Participants were asked to write a conversation between a credit union and a bank. The themes expressed in the majority of the conversations fell into one or more of the following categories. Bigger isn t necessarily better Credit unions were characterized as smaller and trying harder, banks are bigger and don t care. Some participants used the country cousin, city cousin fable as a model for these conversations. Bank: You ll never be as big as we are. Credit Union: We don t want to be the biggest, just the best. Bank: We re big and slick and we re sponsoring the pro sports team this year and we really care about our customers. Credit Union: We re small and backwards, but at least we like to help... Friendly versus impersonal Credit unions were nice and cared about their members and banks were cold, impersonal and uncaring. Often, this related to banks being in the business only of making a profit and credit unions being in the business of taking care of their members. Bank: I have lots of money but no real friends Credit Union: Maybe you can learn from us. We have money and friends. Profits for the many versus profits for the few In these conversations, credit unions talked about making money for their members and banks talked about making money for the bank president or major stockholders. Bank: We are going to put lots of money in the bank president s pocket. Credit Union: We are going to put lots of money in the shareholder s pocket. Service charges versus good rates In these conversations, banks talked about the amount of money they earned through fees and service charges, while credit unions said that they aren t in the business of making money from their members, but rather for their members, and as such, they offer superior rates and lower fees. Bank: We offer low rates! (with applicable charges for checking, loan applications, fees, teller visits ) Credit Union: We offer low rates (period!). The Credit Union Foundation 7 March 1998
The pro-bank position A small proportion of participants described banks in positive terms in these conversations. In nearly all of these instances, the conversation revolved around the higher level of convenience that banks can offer through more ATM access, more branches and longer hours of operation. Not surprisingly, these participants tended not to use their credit union as their primary financial institution. Instead, these participants used their credit unions for small savings accounts, or for services like the Christmas or Vacation Club. The Credit Union Foundation 8 March 1998
The Credit Union Difference A first, and important, point in determining the credit union difference, is that participants used the verb bank to describe the activities they participate in at any financial institution. While credit unions are different from banks in aspects relating to relationships, attitudes and service philosophies, they are essentially the same in the purpose they serve in people s lives. Banks and credit unions are the places where one deals with money. Credit unions differ from banks in the ways they relate to the people who use their services. Where banks are cold, rigid, inflexible and in the business of earning a profit for the few, credit unions are personal, caring, flexible and in the business of helping the many their members. Members have a sense of personal relationship with their credit union. One of the most commonly noted differences between credit unions and banks was the recognition and acknowledgment of individual members by credit unions. The frequent comparison was that the credit union knows me by name, while the bank treats me like a number. This personal recognition was often attached to relationship attributes such as caring, friendliness and helpfulness and to perceived consumer benefits such as better service and more easily obtained loans. If there was a common theme to the emotion reactions of respondents regarding financial institutions, it was that they want to be respected and valued as customers and as people. While not often articulated in this way, there is a rich field of examples and anecdotes illustrating their anger, frustration and disappointment at being treated impersonally and arrogantly by banks and many equally clear examples of their appreciation at being treated well by credit unions, especially when that treatment made them feel they had received individual recognition and personalized support. A key word used by participants in characterizing their relationships with their credit unions is family. This had two-fold meaning. First, credit unions are seen to be in the business of taking care of families; of helping people provide the things their families need. Secondly, the word related to the way members feel when dealing with their credit unions; as though they are family members. Some participants went so far as to say that their credit union can be likened to a grandmother or favorite aunt; someone who cares for them and supports them, although not uncritically or unconditionally. The Credit Union Foundation 9 March 1998