Is Your CU Seizing the Day?

CUNA's Escan
January 25, 2012 | COMMENTS

The Durbin Amendment has given financial institutions with under $10 billion in assets a remarkable opportunity to grow, according to a recent column in BAI Banking Strategies. Its’ all part of the scenario that, for credit unions, plays out around Bank Transfer Day. 

As banks face reduced debit income, they’re looking to incorporate fees elsewhere to replace that lost revenue. This puts credit unions and community banks in a position to offer dissatisfied customers a more attractive alternative, according to Christopher Leonard, chief operating officer and general counsel for strategic consultancy Velocity Solutions.

Credit unions can capitalize on this turn of events by aggressively pursuing new checking relationships by offering free checking, which will reinforce a consumer-friendly market position. 

Unfortunately, many smaller institutions aren’t making the best of the situation, according to Leonard. Many fail to proactively spread the word about their advantages.

As consumer awareness grows—and as big banks impose additional fees—credit unions can incorporate five methodologies to benefit from the good fortune brought about by the Durbin Amendment:

1. Take advantage of referrals. Simply ask your members to remember your institution in discussion with friends, family, and acquaintances. Remind them that the credit union provides free checking and stellar service. Consider handing each member a “tell-a-friend” coupon or informative brochure along with a transaction receipt.

2. Show your enthusiasm. Lack of “big bank status” can’t be your only claim to fame to achieve growth. Make sure your employees are enthusiastic and energetic about the credit union difference.

3. Simplify, simplify. Make it possible for new members to open accounts in less than 10 minutes. Account openings need to be painless and conducted with friendly ease.

4. Resurrect direct mail marketing. Because there hasn’t been much incentive for consumers to switch financial institutions in the last several years, direct mail marketing techniques haven’t been particularly fruitful. Potential exists now for direct mail to be more successful. Target marketing will help locate your desired demographics.

5. Fully engage current accountholders. “At a typical community bank or credit union, up to 40% of checking account holders are not actively using the institution’s debit card,” notes Leonard. Target-market these individuals and make them loyal members with increased use of services.

With vigilance, action, and dedication, Leonard believes community-based institutions can take advantage of the growth opportunities provided by the Durbin Amendment. 

Further, he suggests, it behooves those institutions to do so, as changes next year to the presidential administration or Congress could erase this favorable environment.