Who Do You Trust? A Credit Union Misstep

By Robert McGarvey

For CU 2.0

 

Call it a core credit union marketing misstep: there’s wide assumption that consumers trust credit unions more than banks.

Rubbish.

They should, I’ll readily acknowledge that, but there is no persuasive evidence that credit unions in fact score any higher in consumer trust than do banks.

And banks really stumble in trust ratings, a fact underlined in the recent Landor Pulse analysis of financial services organizations. Guess what came in first?

PayPal, which, per Landor, emerged “the clear leader.” It came in as the most trustworthy. By a sizable margin.

Remember this about credit unions. Kirk Drake, the author of CU 2.0, has pointed out that in the aftermath of the 2008 banking meltdown, which costs innumerable Americans their jobs, their houses, their retirement savings, and everywhere banks were excoriated by angry consumers, credit unions “saw their market share grow by a measly 1%.”

Chew on that. In 2008, credit unions were handed the ball on the opponent’s one yard line and they could not drive it in for a touchdown. How terrible is that?

They couldn’t even kick a field goal.

The Landor research findings help clarify what has happened here and it starts with the low esteem in which all financial institutions are held.

Maarten Lagae, Landor’s senior manager of insights and analytics, said, “Comparing BAV [BrandAsset Valuator, a Landor proprietary metric] data over the past 10 years shows that perceptions of trust have eroded in all industry categories, but especially in the financial sector. In addition to secure assets, the ‘must-have’ for financial services brands is trust. Consumers are increasingly wary of institutions serving motives other than customers’ best interests. This is even more true with millennials, who are the first to engage with businesses that provide transparency and disrupt unequal power relationships.”

How many focus groups have you seen where consumers say about credit unions, “nope, I don’t belong, don’t like ‘em because I don’t like credit and don’t like unions.” I know I have seen and heard exactly that a number of times. It’s easy to dismiss it as rooted in misunderstanding. But that consumer still walks past your door without stopping.

Back to the Landor trustworthiness rankings: in second place is Visa with 25; Mastercard comes in third with 23; American Express comes in 4th with 17%.

Curiously, other than PayPal, digital tools did not fare well. Apple Pay and Google Wallet are each trusted by 13%. Venmo, PayPal’s kin and widely popular among the young, won just a 10% trustworth rating.

What about banks and credit unions? Hang on for bad news. Capital One and Chase are the highest rated at 17%. Bank of America came in at 16%. Wells Fargo, amid its avalanche of bad press, tumbled from 23% in 2006 to 19% in 2016 to 14.5% now. That last ought to trouble credit union and bank executives because it says that many consumers are paying attention to the news and they do know bad press when they read it. And it shows up in these trustworthiness ratings.

As for what the rankings mean, here’s Landor’s take. “Financial services brands are still seeing an impact from the 2007–2008 crisis, augmented by ongoing issues facing myriad financial institutions over the past two years,” noted Louis Sciullo, executive director of financial and professional services at Landor. “We see credit card brands faring better because of their daily place in consumers’ lives and the relative clarity of their fee model. Meanwhile, PayPal’s high trust ranking stems from the amazing job it’s done to establish confidence in its digital platform.”  

Some 55 financial services brands are rated by Landor.

No credit union bubbled to the surface in these trustworthiness rankings but don’t assume that means credit unions did fine.

There’s no indication any credit union scored high enough to win notice.

What to do about that?  Landor offers a six step program to win more consumer trust:

  • Be transparent. That means open.
  • “Be honest – it’s the best policy.”
  • Have true values you live every day.
  • Treat your employees well – they are brand ambassadors.
  • Deliver excellent products and services.
  • Protect customer data. Breaches are costing every FI reputationally.

None of that is hard. But many financial institutions struggle with taking these six steps. And that includes many credit unions.

Bottomline: a lot of financial services companies have sunk in trustworthiness rankings in the last decade. Credit unions have an opportunity to win wider public applause – and much bigger marketshare – but so far have not capitalized on this. Make doing that job 1 in 2018.

 

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