Operating under a different business model than their traditional counterparts, credit unions are not-for-profit, member-owned financial entities. Recently, credit unions have become an increasingly popular banking alternative for consumers in the United States. As a result, traditional banks have come to view credit unions as more formidable competition—often including key players in competitive research and social media analysis.
Continually improving customer retention requires deep understanding of consumer reception to new competitor programs and offers. The decision to migrate to the competition – both to retail banks and to credit unions – often boils down to product and service appeal. What, we wonder, makes credit unions so attractive and inviting?
Using Crimson Hexagon’s ForSight™ social media analysis platform, we analyzed over 220,000 relevant posts from our social media data library over an 11-month period to understand the reasons why consumers join credit unions.
Customer service tops the list of all major reasons cited for migration from traditional banks to credit unions (17%). At a growing rate, consumers believe that they will receive superior customer service through the credit union model. In fact, the proportion of conversation related to joining credit unions because of customer service has increased 20% since January 2012.
Other popular attractions stem from credit unions’ perceived helpfulness in improving personal financial health. Consumers find credit unions to be more advantageous for building credit and raising their credit scores (15%); and in a related discussion, 14% are drawn to credit unions because they seek out and are pleased by the award of a higher credit limit.
In addition, lower interest rates and fee savings with credit unions continue to appeal to consumers, representing 14% and 13% of the conversation, respectively.
Apart from more conventional needs and concerns with personal banking, consumers also identify with an intangible benefit of these institutions: credit union membership feels like you are part of a community.
In this industry, credit unions uniquely enjoy the reputation of being community builders. Consumers favor these institutions because they are perceived to foster communities – both among its own members and in local areas. Nuanced discussions within this conversation include the belief that credit unions are genuinely concerned with leaving a positive footprint in their regional areas of operation, and that they don’t view their members as numbers – or dollar signs. Though this social media analysis sentiment only represents 9% of the conversation, its proportion relative to all other reasons for joining credit unions has increased 12% since January 2012.
As a corollary to this social media analysis exploring the higher-level appeals of credit unions, we can use ForSight to dig deeper into the conversation about specific competitors, e.g. Navy Federal Credit Union. What do consumers find most enticing about that credit union’s offers and policies? Through social media analysis, banks have the opportunity to learn more about consumer expectations and motivations, and can use this information to inform product, service, and CSR strategies—as well as competitive positioning.
Do you believe credit unions will grow in popularity in 2013? Tweet us your thoughts @crimsonhexagon!