Member engagement is regressing, Gallup says

We all know the credit union movement will always have an advantage over banks – member engagement and service is always higher, and, effectively, better. Banks’ need to cater to shareholders on Wall Street doesn’t exist with cooperatives, so credit unions can therefore focus and listen to the people who truly matter – their members, while prioritizing their financial health needs above all. 

This level of focus and attention pays off. According to Gallup and reported by The Financial Brand, 73 percent of members who believed their credit union cared for their financial health and well-being were “engaged,” meaning they display an emotional or loyal connection to the cooperative’s brand. Of those members who did not feel their credit union cared for their financial health or well-being, only 20 percent were engaged. 

With higher member engagement, credit unions will obviously see palpable increases. Engaged members are clearly going to purchase more products, invest more capital, remain with the cooperative long-term, and be more likely to claim it as their primary financial institution. The question confronting the movement these days materialized out of the same Gallup study. Is that advantage running out of momentum? 

Gallup has researched the concept of member engagement in credit unions versus banks for years. Nearly a decade ago in 2014, credit unions sported a +21 percent engagement premium and a +29 percent net promoter score (NPS). By 2021, however, the engagement premium for cooperatives was cut nearly in half to +11 percent, with the NPS dropping to +17 percent. 

This reduction in member engagement is a multi-pronged challenge, but a challenge that can be overcome. There are substantial changes credit unions are undergoing. To start, we are all witnessing the shrinking of the credit union industry through buy-outs or mergers to accomplish efficiencies that bring scale. The number of credit unions possessing less than $10 million in assets, in fact, nosedived by two-thirds in the last decade, from nearly 3,000 to just over 1,000. 

Shifts in demographics also play a major role in the member base for credit unions. The World Council of Credit Unions found the average age of North American credit union members rests at 53 – older than the average age of the general population. This finding should put a chill up the collective spin of the credit union industry, as long as it never loses sight of the ability to correct trajectory. 

How credit unions can muscle up on member engagement

Re-engage with principles of financial well-being

While other competing financial institutions are beginning to resemble cooperatives in how they exemplify their stated goals in financial well-being, the truth is their very mode of operation and ultimate loyalty to shareholders or other key corporate stakeholders will always betray them and unveil their true motivations. 

Credit unions’ true north is their ultimate focus on financial, inclusion, health and well-being, and how they maintain their purpose in serving their members. The key to do that is how clearly they define their specific strategy in helping members achieve financial well-being.

Gallup defines financial well-being as “managing one’s economic life to reduce stress and increase security.” In summary, the work involves helping members’ relationship with money be productive, stable, beneficial, and ultimately, healthy.

Analytics and guideposts built around members’ daily spending and consistent relationship with money should be front and center, and followed to map their progress over weeks, months, and years. Even more than measurement, however, cooperatives have a great chance to highlight testimonials and document the financial well-being achievements of their members. These stories can construct an organizational culture that reinforces well-being rather than transactions. 

Transparency and clear, upfront communication

Making the effort to clearly communicate every aspect of your credit union is essential to produce better member engagement. Transparency plays a central role in achieving this goal. A lot of consumers choose credit unions for the low fees, high-interest savings accounts, low interest rates, and their efforts in community engagement. The best thing cooperatives can be is upfront and clear about rates, product offerings, your community initiatives, and the specifics of what you’re doing to make your members’ lives better. 

There are multiple community engagement tools to keep your members updated:

• Individual outreach from your staff
• Email
• Consistently updated website
• One-on-one appointments
• Targeted mailings
• Social media channels, Facebook, Twitter, LinkedIn, Instagram, etc. 

If there is something that needs to be communicated or is imminent in nature, do NOT hesitate. There is nothing more important than building trust and creating deeper relationships, save for maintaining them!

Learn to build across the digital divide

While the pandemic certainly accelerated the incorporation of digital banking into their cores, the inexplicable fact remains that cooperatives still need to adopt digital resources and fintech tools faster. 

Many credit unions appear to be still holding out on the costs of upgrading, and the perceived hassle of introducing fintech like QCash digital small-dollar lending, apparently to see how others handle it first. Another Gallup finding in 2021 shows the segment of cooperative members who were “digital forwards” – those who use digital banking for simple needs, but also attempt digital for more complex ones – was 38 percent. That figure was up from 27 percent in 2020.

The challenge here occurs when we realize the segment of digital forward national bank customers came in at 52 percent in 2021, and 40 percent for large regional banks. A strong segment of these digital forward customers are also found to be Millennials. There is clearly ground to make up in this area.

Credit union staff and employees are crucial sources for communicating the advantages of digital tools and fintech. And we have room to make up compared to our competitors. Additional research from The Financial Brand shows that only one in three members strongly agree that their credit union provides digital adoption support and education. Credit unions’ improvement in this area should involve the focus of educating and training their employees first. Members are more interested in digital resources than ever before, and credit union employees need to stay ahead of the curve in being a helpful and consistent resource for financial literacy inquiries. 

Enhance financial literacy efforts

In a 2019 study conducted by Zogo, students between the ages of 20-22, more than 75 percent of those Gen Z respondents were unaware of what a credit union even was, how they differ from banks, and how it would help them. Millennials fared only slightly better. Sure, many of us can probably relate to having no ability to tell the difference between different financial institutions. Conversely, that may be part of the problem why America’s financial literacy, health, and inclusion challenges have largely unchanged in recent decades. 

While financial education in K-12 schools has improved scattershot around the country, uniform, year-long curricula has yet to be established nationally. The U.S. education system as a whole has yet to imprint the importance of maintaining an informed awareness of personal finance on our youth’s individual lives. Naturally, students themselves aren’t interested. They’re kids! Unless they’re spending it, why would they care? It’s our jobs as parents, tutors, and community members to make them care about financial literacy and why it’s important to their present and future wellness. As it stands currently, our youth remain separated from fundamentally understanding how financial institutions work and how credit unions can benefit them now and in the long-term future. 

Here’s the good news: the same Zogo researchers also found that once they explained the purpose of the credit union movement, most students were far more likely to look into becoming a member. Yet another example of why re-engaging the right audiences with the right tools to help them in today’s economic environment is the key to long-term success for everyone.