What Exactly Are Banks Doing?
I have been watching with interest this new advertising message that a few of the bigger banks are using (Washington Mutual and Capital One spring to mind). Washington Mutual has billboards up all over the Seattle area with the mug of a sourly looking older gentleman with captions like “free checking? I was born rich, not stupid” or “free checks for life? Over my butler’s dead body”. I am sure I am not getting them exactly right, but it is the correct sentiment.
Capital One has these great tv commercials that have tiny little Lilliputian people that are supposed to represent small business owners. The big bankers actually catch them on fire with their magnifying glass.
I assume that Washington Mutual is trying to say that all other banks are owned and run by a bunch of thoughtless rich guys. Probably, Capital One is trying to say that other banks are careless and clueless when it comes to small business owners.
I find it really interesting that these two major players are trying to separate themselves from their categories. They are basically saying, ‘we know banks stink, but we are different’.
Then you look at credit unions. In Washington State, there is a co-op of credit unions (a co-op of co-ops, if you will) that have pooled our resources with the main mission of spreading the word about credit unions. We feel that the credit union category is a good one and if more people knew about them, we would all be better off.
In essence, we are trying to do exactly the opposite of what banks are doing right now. Banks are trying to distance themselves from their reputation, while we are trying to embrace ours.
Credit unions currently have about 6% market share in the financial industry. That seems so odd to me. It seems like people complain about their banks (they must or WAMU and Capital One would not spend as much money as they have in recognizing that fact). Why don’t more people join a credit union? I don’t know.
posted by shari storm @ 8:08 AM
2 Comments:
Shari - what a great point! "In essence, we are trying to do exactly the opposite of what banks are doing right now. Banks are trying to distance themselves from their reputation, while we are trying to embrace ours."
Keep fighting the good fight at Verity! And regarding the WCUL, pooling resources to spread an effective message is key to growing the credit union movement.
""Why don’t more people join a credit union?"
Seriously, you have no idea? I suspect the answers fall into the following categories:
1) Number and location of branches.
Traditionally, that's one of the main factors in choosing a bank. When I moved from one state to another years ago, I chose a bank that had locations near my house and my work, and that I noticed seemed to have a lot of ATM branches available.
Credit unions can compete in this feature, of course. While some CUs have a decent number of branches to attract customers, CUs also have the Credit Unions Service Center Shared Branch Network and the CO-OP ATM Network, but the average person doesn't know that. If they see "Alice's Credit Union" and "Bob's Credit Union" they'll think of hose as two separate entities and not realize the two have teamed up to basically extend each other's network.
2) Features and Rates
Even for those who are savvy enough to know that a CU can offer an equivalent amount of "physical" service as the traditional bank, CUs still need to compete well with their features and rates. WaMu's free checking offers "free checks for life," for example, which may be compelling for someone who writes a lot of checks in a year. HSBC's online savings account offers a 5.05% APY, and while I've seen CUs offer better rates with CDs, I can't recall a similar competitive rate with a traditional savings account.
I consider this the "internet" or "virtual" factor, as opposed to the physical factor on my first point. With online tools, savvy consumers can comparison shop between all banks and CUs and get a mix of services from various places that best meet their needs. So while someone may go to their CU for, oh for example, an auto loan, they may go elsewhere for another service.
This area, of course, is tricky to consider as there are a number of features people are looking for, and coming up with the right mix to offer people and to stand out from the competition is not an easy task. The main point here is that as time goes on, people will probably be more picky as they can do research online faster than calling or visiting all the financial institutions in their area.
3) Knowledge and Wisdom.
Finally, many people don't really know what a credit union is. I heard one person tell me once he wouldn't consider a CU because of the S&L scandal of the eighties. He had mistakenly confused CUs as S&Ls! More commonly, most people just figure all places that take your money and allow you to write checks, etc. are all one thing; i.e. "banks". People need education to understand how CUs are different.
Beyond that, people also need to have the wisdom to understand why a CU is better for them than a bank. One may understand the difference between a CU and a bank and still decide to go with a bank based on (1) location factors and (2) specific features offered as listed above.
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