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As taken from the bestest, snarkiest banking blog

Written by Ron Shevlin Thursday, 24 May 2012 21:46
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Ron Shevlin has been a marketing consultant for more than 25 years.

 

Since other bloggers, gurus, and authors feel compelled to mention it, it goes without saying that he has consulted to the leading financial services, consumer product goods, retail, and manufacturing firms in the world. And—needless to say—he is a frequent speaker at industry conferences and events.

 

Currently, Ron is a senior analyst at Aite Group where he specializes in retail banking issues including sales and marketing technologies, customer and marketing analytics, social media, customer experience and consumer behavior.

 

If you have a kindle, or even a quadraphonic pdf player then you MUST get hold off a copy of Snarketing

 

If Not For Everybody, Who Are Credit Unions For?

 

In an interesting post titled Credit unions: not for everybody on the Shared iDiz site, Brian Wringer writes:

 

“A whole lot of people — the majority of consumers, really — could benefit from switching to a credit union. Why, oh why, do all those people insist on throwing their money away with banks? But I prefer to look at it another way — CUs appeal to an elite, exclusive group of people. Overall, I’d say it’s a group of people who are paying attention. I’ve seen stats indicating that CU members on average are a little healthier, wealthier, and even better drivers than the average. CU members seem to make slightly better decisions in life.”

 

My take: An interesting assertion. CU members pay attention, and are healthier, wealthier, and make better decisions–OK, slightly better decisions–than other consumers. But is it true?

 

Based on a survey just completed by Aite Group and BancVue, I might be able to shed a little light. The problem is we didn’t capture data about CU members–we identified consumers who consider a credit union to be their primary financial institution.

That’s obviously just a subset of the overall member base, but if this subset isn’t more attentive, healthier, wealthier, etc., then Brian’s assertion holds little water, since CU members who don’t consider a CU to be their primary FI likely consider a large bank to be their primary FI, and that’s just not going to support Brian’s contentions.

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The first challenge we have is in defining what “pays attention” means. Could mean a million things, but I’d like to propose that from a financial services perspective, we could create a proxy for “attention” by looking at the various financial management-related activities that consumers do, and the frequency with which they do them.

 

The survey asked respondents about 14 different financial-related activities like creating and managing a budget, categorizing and forecasting their spending, analyzing the allocation of and returns on savings and investments, accessing financial educational content, and seeking advice on a variety of financial-related topics.

 

I assigned points based on the frequency with which respondents did the activities — ZERO points if not done at all, and up to 10 points for an activity that was performed on a weekly basis. Theoretically, credit unions could achieve a total score of 140 if 100% of the people who consider a CU their primary FI (let’s call them CU primary members) did each of the activities every week.

 

I computed the score not just for CU primary members, but for people who consider a large bank their primary FI, and for people who consider a community bank their primary FI.

 

The result: Large banks received a score of 22.3, credit unions scored 19.3, and community banks got a 17.5. Across the range of activities, large bank primary customers performed the activities, and did so more frequently, than CU primary members.

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Let’s take a look at income. Forty-two percent of large bank primary customers earn more than $60k per year. The corresponding percentage for CU primary member is 35%.

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Wondering about level of education? After all, they say (I don’t know exactly who, but you know, the royal they) that educated people are healthier than uneducated people. Among large bank primary customers, 52% have a college degree or higher. Among CU primary members, it’s 41%.

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In case you’re interested, large bank primary customers and CU primary members are equally as likely to “friend” their primary FI on Facebook (a paltry 12%), and about as likely to view videos on their primary FI’s YouTube page (a measly 5%). Large bank primary customers are nine times more likely their primary FI on Twitter than CU primary members, however (9% for large bank primary customers, 1% for CU primary members).

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Among CU primary members, just 34% are working full-time. Compared to large bank primary customers, CUs have a higher percentage of the unemployed, homemakers, and retirees. Not that I’m saying these groups don’t make good decisions, or aren’t good drivers.

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Bottom line: I think you get the picture. Any belief that CU members are healthier, wealthier, wiser, more attentive, more this, or more that, than other consumers might be the result of smoking something illegal. 

 

If you share those illegal things with me, though, I promise not to tell on you, and I’m sure I can find a way to massage the data to support your view of the financial services world.

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