Hello, budg-ga!
There is very little unbiased information regarding the reasons
individuals choose to belong to credit unions versus banks. The
majority of articles I found touting the superior benefits of joining
a credit union were either produced by the individual unions
themselves or their umbrella organizations.
I did find several seemingly objective articles that highlight some of
the real and perceived qualities about credit unions that attract
individuals. These reasons can provide some insight into customer
values when conducting business.
The predominant values cited concerning credit union membership are:
A more personal business relationship
A more intimate atmosphere
A more trustworthy customer/business relationship since the credit union is
not motivated by profit
A feeling of group membership
A feeling that each individual has a voice in how the organization functions.
A belief that credit unions offer lower rates
Credit union customers value the fact that their financial
institutions are non-profit entities that look out for the interests
of the individual, while banks are perceived as being more interested
in making money for their shareholders.
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"Although credit unions usually offer fewer services than banks do,
those services are often more favorable to customers because credit
unions are nonprofit financial institutions owned and operated by
their members. That means they aren't obligated to return profits to
their stockholders, as banks are; instead, they return earnings to
credit union members in the form of better interest rates and lower
fees.
From "Credit Unions Offer Employees Financial Options at No Charge to
Employers," By Alicia Abell. Chronicle of Philanthropy. October 23, 2003
http://philanthropy.com/jobs/2003/10/30/20031030-213134.htm
Credit Unions allow each individual to own a share
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"These days, most people who use credit unions think of them as "the
bank." Credit unions generally provide a full range of financial
services from savings accounts to mortgages, with some of them even
venturing into
insurance and brokering. The main difference is described in the
motto: they're non-profit and they are cooperatives, not corporations.
What that means is that everyone who deposits money at a credit union
owns a share of it. It also means that any profits earned by the
credit union are used to benefit members, rather than being paid out
to stockholders. This practice results in lower loan and credit card
rates, higher interest on savings and checking accounts (called
shareholder and share draft accounts, respectively), and low or no
fees for services."
From "Alternative Banking: Credit Unions," by Amanda Bader. Chronogram Art
of Business. 2002. http://www.chronogram.com/issue/2002/10/artofbusiness/business_2.html
Credit union customers value the bond of common membership
============================================================
"Aside from being fellow members, participants in a credit union
usually share a common bond or belong to a particular field of
membership. Employers, municipalities, and occupations are common
fields of membership.
"While credit unions may seem like banks, there are marked
differences. Members can vote and participate in annual meetings. They
elect the Board of Directors and can serve as volunteer
representatives."
From "Credit Unions: Deals Draw More Members," by Dola L. Deloff. Oswego
County Business. April/May 2003.
http://www.oswegocountybusiness.com/issue65/65SpecialReport5.html
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"For many years, credit-union membership was available only to
employees of large corporations. Each credit union was originally
formed to serve a single group of people with some sort of "common
bond," typically employment by the same company. In the 1980s and
early '90s, due to a loosening of federal regulations, the number of
different employer groups that could belong to a single credit union
started to increase, says Jay Johnson, executive vice president of
Callahan & Associates, a credit-union research and consulting company
in Washington. In the late '90s, membership started to become even
more open. Today, the "common bond" required at many credit unions is
geographic. The standard rule is, "if you live, work, or worship
within the community -- defined by county, multiple-county, or perhaps
city limits -- you're eligible," says Mr. Johnson."
From Credit Unions Offer Employees Financial Options at No Charge to
Employers," By Alicia Abell. Chronicle of Philanthropy. October 23,
2003 http://philanthropy.com/jobs/2003/10/30/20031030-213134.htm
Credit unions members value a more personal relationship
=========================================================
"Bullard joined First Choice Credit Union in West Palm Beach, Fla.,
when he first started working at the post office. Thirty-three years
later, he's still a member. "Personal touch is everything to me," says
Bullard. He's been so happy with his service over the years that he's
recruited several of his friends and family members to join. He says
the employees at First Choice are the reason for his enthusiasm. "They
make you feel that they are there to get you a better deal," Bullard
says."
"Bullard cited one more reason he is so dedicated to his credit union
-- security. "They know my name and face," he says. "If someone came
up to the counter and said they were me, had my personal information
and wanted to get my money, the teller would know 'That's not Mr.
Bullard.'" Bullard says he knows there are other security measures in
place, but he feels safer knowing that the tellers know him."
From "Own your own bank -- join a credit union," by Amy C. Fleitas.
Bankrate.com. http://www.bankrate.com/brm/news/cu/20021015a.asp
Credit Unions customers value the philosophy of "giving back to the community"
==============================================================================
"Another hallmark of credit unions is community service. Credit unions
strive to benefit the communities in which they exist. While many
local banks are tremendously active supporters of community businesses
and civic and charitable organizations, credit unions have a stated
goal that emphasizes volunteerism and service as a key part of what
they do."
"We feel we need to give back to all of the communities we're in.
Without the communities, we don't exist," says Lil Ackerman, VP of
marketing and public relations at TEG Federal Credit Union, based in
Poughkeepsie. "We don't go for the single big donation that gets your
name in the paper, we give something to each of the towns we're in."
Their name says it all: TEG stands for Together Everyone Grows. Among
the programs that TEG sponsors are School Savers, which teaches
elementary school students to run their own little credit union-taking
deposits, stamping and processing, and balancing the end of the day.
And TEG is in the process of setting up a virtual credit union at
BOCES as part of the accounting academic curriculum."
"Nan Greenwood, director of marketing of the Mid-Hudson Valley Federal
Credit Union, describes the employees as being deeply involved with
the community. "Not only are they given time off for their community
service,"
she says, "they are encouraged to do as much as they can. The staff
really gets behind the fundraising efforts-last year, as just one
example, they raised over $15,000 for the National Cancer Society
Relay for Life."
From "Alternative Banking: Credit Unions," by Amanda Bader. Chronogram
Art of Business. 2002.
http://www.chronogram.com/issue/2002/10/artofbusiness/business_2.html
Credit Union members value the perception of lower rates
==========================================================
"People join credit unions for a number of reasons, but at the top of
the list is the fact that members own the credit union. This means
that members reap the benefits of strong financial years through lower
rates and cash bonuses."
"For Dante Williams, a doctoral student at Florida State University in
Tallahassee, joining the school's credit union meant not only an
inexpensive checking account that earned dividends each month but a
credit card with a low 10.9 percent interest rate."
"Williams says he was "bombarded" with literature from area banks
before he arrived in town, "So I didn't think to go to a credit union
when I moved here from Syracuse. I think what did it for me was the
consistently low rates on the credit cards." Williams now is
considering applying for a used car loan through the credit union."
"Each credit union's board of directors determines what the rates and
fees for products will be based on several factors: the cost of
operating the credit union; the credit union's ability to woo
potential members in an area that already has many banks; and its
ability to offer members more than one product."
From "Credit union members aren't just customers -- they own the
place," by Michelle Samaad. Bankrate.com
http://www.bankrate.com/natl/news/cu/19990405.asp
Some additional References follow:
A 2002 report by Acumen Research provides a general overview of
Canadian customer attitudes concerning their banking preferences:
"When it comes to customer satisfaction, Canadians give low marks to
the financial industry as a whole, but award higher grades to credit
unions over big banks on the delivery of key relationship drivers such
as making customers feel valued and problem solving, and on core
services such as competitive service fees and interest rates,
according to initial findings in a groundbreaking study on financial
sector customer relations. Conducted by Acumen Research Group, a
consumer behavioural research firm, ConsumerEyes 2002 Financial
Services Report is based on over 2,000 recent interviews with banking
customers nationwide."
From "Credit Unions Best Big Banks in Service, but We?re Not Happy in
General, say Customers. Acumen Research. June 26, 2002
http://www.acumenresearch.com/output1.asp?id=161&sid=5
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Though the following article is posted on the Wisconsin Credit Union
League website, it provides some information presented by the Opinion
Research Corp. concerning the qualities that credit union customers
find valuable.
"Consumers prefer cooperative businesses such as credit unions over
investor-owned businesses due to quality, trust, value and ethical
governance. A recent poll of over 2,000 Americans by the Opinion
Research Corp. on perceptions of corporate governance practices showed
that more than two-thirds of consumers were more likely to patronize
credit unions. In fact, consumers had a 95 percent confidence level in
cooperative businesses, which outscored investor-owned corporations on
a majority of attributes. They include: meeting consumer needs (81%
vs. 65%); commitment to the highest quality service (79% vs. 58%);
having the best interests of consumers in mind (77% vs. 47%);
conducting business in a trustworthy manner (76% vs. 53%); providing
products and services of high value (74% vs. 63%); and being ethically
governed (68% vs. 45%)."
"Credit unions? high regard with consumers is no doubt due to the many
differences between credit unions and other financials. Among them:
* "Credit unions are owned and operated by the people who use their
goods or services. Banks are controlled by a select group of
shareholders."
* "Credit unions are locally owned and controlled. Banks buy each
other out, creating mega-banks whose lending decisions are made out-of
state."
* "Credit unions allow customers (members) to democratically to
democratically elect their boards of directors. Bank customers have no
say over who is in control."
* "Credit unions return earnings to members in the form of more
competitive rates of return on accounts and loans, lower fees and
improved services. Banks exist to make a profit, usually at their
customers? expense."
From "Credit Unions Rank High with Consumers." Wisconsin Credit Union
League. Nov 2003
http://www.wcul.org/content/gov_affairs/FTR/03_Nov_For_the_Record_5.pdf
** (Please see a more in-depth summary - "Detailed Findings Survey of
Consumer Perceptions of Business Structure, Public Corporations and
Cooperatives." By Opinion Research Corporation. Conducted July 24-28,
2003 http://www.co-opmonth.coop/about/survey03.html
Some individual preferences are highlighted in the following blog articles:
See "Why You Should Join a Credit Union," by Joshua Prowse
http://www.yoursinwriting.com/content/whyyoushouldjoinacreditunion.php
"Campaign to Save First Calgary - First Calgary: Save Our Credit Union!
http://www.grantneufeld.ca/firstcalgary/
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I hope these insights have proven helpful to you. As I stated
earlier, unbiased information was extremely difficult to find - from
either side!
Sincerely,
umiat
Search Strategy
Banks versus credit unions
comparing credit unions to banks
customer preference for banks or credit unions
research AND consumers prefer banks or credit union
how many people belong to "credit union" instead of bank
values OR qualities of credit union customers
why do people join credit unions instead of banks?
customer values AND banking |
