Chadwick Martin Bailey (CMB), a well-known market research firm, revealed recently that mobile and online banks are enhancing the accessibility ratings of credit unions to help the cooperatives and credit unions catch up with the bigger banks.
A survey of over 1,000 consumers taken sometime during February of 2012 revealed that credit union members utilize online banking as much as bank customers. Findings also gave higher service ratings to credit union members. The managing director of CMB’s Boston Financial Services practice, Jim Garrity said that there was a new banking value proposition emerging and that both mobile and online banking don’t essentially belong to the big bank customers.
The report indicated that this robust technology is leveling the playing field for credit unions and is threatening big banks. Ten years ago, customers’ bank choices were clear. If you wanted accessibility and convenience you chose a large bank, and if you valued personal service and lower fees, a small bank or a credit union was your best bet. But online and mobile banking options mean accessibility isn’t confined to larger banks as credit unions are also providing customers with remote banking services. This enhances their value proposition as big banks struggle to differentiate from them.
Contrary to anecdotal evidence, customers don’t feel all banks are the same. Many believe that banks can differentiate themselves and personalized service is just one of those ways. In addition, online services are a key element of banking convenience and this provides another area of potential differentiation. Credit union customers value physical branches less, and online services more than customers of other banks.
Further, customers of large banks and credit unions are the heaviest online banking users. And while consumers have long-standing ties to their banks, it is credit union customers that have the most enduring relationships. Nearly a third of credit union customers have been with their respective credit union for more than 20 years, compared to an average national bank relationship of 13.5 years. As credit unions also surpass others banks in strength of the relationship, large national banks are seen as much less valuable to their customers compared to credit unions/ community banks.
Credit unions also came out tops when compared with the banks on the value of their primary financial institution (PFI) relationship . Over 85 percent felt that they received value from their credit union relationship, in comparison to about 56 percent with large banks and 52 percent at regional banks. Credit union members felt that branches have less to do with convenience as 58 percent said that a nearby branch was of much importance, compared to 50 percent who revealed that online services were the key to convenience. Interestingly, 65 percent of bank customers valued branches in comparison to the 46 percent who favored online banking services.
Banks of all sizes have the opportunity to differentiate themselves with good service which includes online and mobile options. While credit union customers report the strongest relationship with their bank, there is an opportunity for banks of all sizes to differentiate themselves from the competition by providing convenient access to online and mobile services is an opportunity to shine.
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Edited by Jamie Epstein