credit union

 

By Robert McGarvey

For CU2.0

 

Think very – that’s the question’s answer. But maybe you already have in hand the exact weapons you need to defend your position.  Surprised?

Read on.

Triggering this discussion is a recent Snarketing post by Cornerstone Advisors’ Ron Shevlin that  offered hard data about Amazon’s potential popularity as a consumer bank. 

Cornerstone had surveyed 2015 consumers – with both a bank account and a smart phone – and asked two questions: would you bank with Amazon for a free checking account?  Would you pay, $5 or $10 monthly, for a premium checking account that bundled in perhaps cell phone damage protection or roadside assistance?

Before guessing the answers – they will surprise you – feast on this recent headline from the Evening Standard newspaper in London: Is data the new oil? How information became the fuel of the future.

That question is deeply intertwined with Amazon’s possible banking play.

Ask yourself: what US company knows an incredible amount about you, probably more than any other?  Hint: it’s a company that sells just about everything, much of it delivered free within two days.

Amazon, very quietly, has emerged as a real king of the data mountain.  Google may know what interests you, Facebook may know who your friends (and enemies!) are, and Apple knows what tech bling you will splurge on, but Amazon – in many households – knows everything you buy, from groceries to clothes.

In 2017 Amazon tells me I placed 107 orders. Many were for multiple items.  From cat food to an Echo Look.  

Think how well that data resource positions Amazon to pounce into banking.  It knows its many millions of customers, it’s already providing credit cards and purchase credit to millions of them, and CEO Jeff Bezos has never shied away from offering discounts if he believes doing so will produce longterm profits.

Will Bezos take the plunge into the slow moving financial services world? Do we – consumers – want him to?

A free Amazon account just might seem to be a threat to a credit union sweet spot. According to Bankrate.com, 84% of credit union checking accounts have no monthly maintenance fee, up from 72% a couple years earlier. For many credit unions, this is a key marketing difference.

And yet Cornerstone’s research found something interesting.  Asked if they wanted a free Amazon checking account, 42% of consumers said nope.  Just 26% said they would open it.  Another 32% said they would consider it.

Matters get more intriguing when Cornerstone asked if they wanted a premium, bundled account with a small monthly fee of $5 or $10.  Only 34% said no thanks – that’s sharply down from the 42% who rejected the free account.

And 29% said they would open it, up from the 26% who said they would open a free account.

Does free carry less weight than you thought?

Is it maybe time to rethink using free as the centerpiece of the institution’s marketing?

Shevlin stressed that, at least superficially, the institutions that would be most impacted by an Amazon entry into banking would be the money center banks, mainly because they are courting millennials who, Cornerstone said, are the ones most attracted to the Amazon potential products.

But Shevlin tossed out this poisoned dart:  “The smaller financial institutions are already challenged in attracting younger consumers to their institutions. An Amazon entrance into banking will only make it harder for them.”

And remember this: Amazon may well know your members better than you do.

Frightening? You bet.  But there is that solution that already is in your hands.  The solution is to fight back by diving ever deeper into member data.  The data will tell you your next steps – if you learn to listen to it.

Plenty of credit union focused big data experts are adamant that credit unions can fight back against the Amazons.

Fight data with data.

You have lots of data, from sharedraft accounts, credit and debit cards, maybe car loans and home mortgages. Use the data you have to prepared a battle plan.

You will need it because, whether Amazon takes the plunge into consumer banking or not, other non banks will.  They already are circling this pond and they act as though they smell blood in the water.  

You have the data. It’s the only weapon you need.

And remember that in the 21st century data is indeed the new oil. Let it power your institutional growth.

 

 

By Robert McGarvey

 

For Cu2.0

 

A credit union leader has to break out in a cold sweat reading Aite Group’s new report on the top 10 trends transforming retail banking.

Here’s trend 1: Tech Firms Become Banks.

Trend 2 is blunter: Banks become tech firms.

That latter trend ends with this prediction: “Going forward, the banks that quickly adapt and recognize this shift will stay relevant to their customers and even gain a stronger foothold in the market. Those that do not will struggle to acquire and retain customers, and to survive.”

Read that again. What Aite is saying is that credit unions that don’t climb aboard the tech express are doomed.

Does that mean you?

I’m not aware of an exact count but I would be surprised if at least half of today’s credit unions aren’t hopelessly mired in a Luddite world of anti technology.  So many want to blather on about how great their branches are and what wonders their employees are, as though either matters in a 21st century technology world.

But back up.  Look at the threat. Increasingly, tech companies from Quicken Loans to PayPal are gobbling up traditional bank and credit union business.

Non banks are on track to very soon have more than 50% of the home mortgage business. PayPal and Venmo, meantime, are feasting on p2p payments, a niche many credit union executives saw as theirs just five years ago but between bad tools and bad marketing, credit unions are increasingly irrelevant in a sector that looms as one of the key financial tools used by Millennials,

Amazon, maintime, has made more than $1 billion in small business loans – how many bankers and credit union execs even know they are in that business?  Credit unions may want to up their business lending operations, but do they have a market that craves their offerings?

Non banks also are zeroing in on car loans.

Some techs may even unfurl official banking colors. Aite’s Julie Conroy, in an email, wrote this: “Square already has a bank charter application in progress, and I don’t think it’s beyond the realm of possibility that Amazon would set up a wholly owned sub to do something similar.”  

Amazon and PayPal both have been meeting with bank regulators.  Nobody knows exactly why but a good guess is that both are interested in expanding their bank-like activities (with or without bank charters).  

Conroy, in the report, also warns that banks – this also means you, credit unions – are increasingly becoming what she calls an ingredient brand to whom the consumer has little or no loyalty. The consumer uses Apple Pay, does he/she remember what financial institution it is connected through? Ditto PayPal. Android Pay. Etc.  They all run on financial institution rails but few consumers really care what card is connected. They see themselves as Apple Pay loyalists, period.

And she points to Asia where Alibaba and Tencent “have made substantial inroads” into banking.

There are no good reasons to think similar won’t happen here.

David Albertazzi, writing in the Aite report, offered this warning: “FIs need to change entering 2018. They need to fundamentally shift their mindset, business model, and operating model. They must be equipped to fight for the modern consumer—who, because of technology, has a whole new set of expectations. The modern consumer doesn’t want a traditional branch bank. They want their transactions to happen on their mobile devices in real time and on-demand. This is why FIs must become tech companies and provide elegant, nimble, and technologically sophisticated solutions to their customers.”

He also advised a “sharp increase in digital transformation.”  So right. It’s hard to find a credit union that doesn’t have a digital transformation committee. But it’s harder to find a credit union where that committee has any say beyond what doughnuts to serve at the next meeting.  It just is time to get very serious about digital transformation.

That’s because your institutional life depends on it.

Wrote Conroy in her email to me: “Effective use of technology will be increasingly important to competition for FIs of all sizes.  Those FIs that don’t invest (either in their own tech stack, or by finding progressive processing partners) and are constrained by legacy technology will increasingly be marginalized.”

What do you need to do now?  Commit to going digital – really – in the next year or two.  Poll members on what digital tools they want and offer them.  Keep hunting for powerful digital tools your members will want.

And ask yourself this: if I didn’t have to use my institution’s technology, would I?

If you wouldn’t, why are you offering it to members?

Do better.

Read the Aite report.  It’s short. But it will give you sleepless nights.

And that is good for you as you face a crossroads in consumer banking where those who take the wrong fork are heading towards extinction.

Take the other fork.

 

 

By Robert McGarvey

 

For Credit Union 2.0

 

You already know that non banks are fast in a race to seize a majority of home mortgages but the far, far worse news is that non banks may soon be grabbing your sharedraft business.

Credit unions have options. They can win this. But that will involve big changes in mindset.

Here’s a nudge towards that new reality: in November, the acting Comptroller of the Currency, Keith Noreika, said he believed it was time for a fresh debate on the role of non banks in traditional banking. Implied was an endorsement of a possible role for companies like WalMart in banking.

The current Comptroller of the Currency, Joseph Otting, has been on record supporting similar.

One more reason to worry: evidence mounts that a sizable slice of the population, mainly but not exclusively millennials, has been moving money out of banks and into other parking places. They are finding that just maybe they can get along fine without banks and credit unions.

Don’t assume a credit union future is a given. Ten years ago how many book and record stores realized they were at the end of the line?  How about consumer electronics stores? Now even grocery stores seem on life support, as WalMart on the one hand and Amazon-Whole Foods on the other seem primed to devour the market.

Banking services are very much in play.

Probably the most cogent arguing on this issue is from Ron Shevlin, now with Cornerstone Advisors. In a Snarketing post Shevlin points out that “the percentage of US households without a checking account dropped from 8.2% in 2011 to 7% in 201, and since 2000, deposits at banks have tripled.”

So,that means things are good? Nope. Shevlin continued: “there is a longer-term trend that will hamper financial institutions’ efforts to keep up the recent pace of growth. I have a name for this trend: deposit displacement.”

His point: huge volumes of money are shifting out of traditional checking and sharedraft accounts and into new vehicles such as health savings accounts, P2P tools such as PayPal, retailer mobile apps (think Starbucks, whose customers are believed to have multiple billions of dollars parked in their apps), also robo-advisors.

I’d add to the list the rise of prepaid debit cards which a growing number of consumers are using as a replacement for both credit cards and sharedraft accounts. Many billions of dollars already are funneled quarterly through the popular Visa and Mastercard prepaid debit card channels.

Personally I’ve had a Bluebird card, via Amex, for some years. It even comes with a checkbook option. 

I also use PayPal multiple times monthly, to pay some recurring charges (Netflix, NYTimes) and to put money in the hands of relatives and friends.

An advantage of options such as prepaid debit cards and P2P tools: most involve no credit check. Set up is nearly instant. The friction has been removed from the system.

Go ahead and attempt to open a new sharedraft account at a credit union near you where you have no present relationship. Word of warning: it won’t be easy. And it may be impossible to do it online. Just sayin’.

Why is money moving out of checking accounts? Simple: there often is no benefit to the member in keeping money in that account. And many accounts involve all manner of fees deemed sneaky by many consumers.

Try to use a prepaid debit card to buy groceries at Safeway and if the attempted charge is over the balance, there’s only a little embarrassment as the checker says the card has been declined. Try to pay with a checking account and there is maybe an overdraft fee of perhaps $35. For what? A few bits and bytes burping in the matrix?

Warned Shevlin: “Deposit gathering for all financial institutions will become more difficult over the next five years, as this trend toward deposit displacement accelerates. Combating deposit displacement means reinventing checking accounts.”

Read that again. It’s time to re-invent checking and sharedraft accounts. Burn the fees. Banish the friction. Make the accounts easy to use, easy to initiate, easy to predict the costs involved. Create incentives for use of the sharedraft account.  

Does your credit union offer a prepaid debit card option? Few do. But many, many big banks do, from Chase to Wells Fargo.

Navy Federal wins kudos for offering a prepaid debit card. How many other credit unions do?

Best advice: urgently slate a meeting to reinvent your sharedraft account. That’s just about the only way to stop the displacement of funds that Shevlin warns about. It will happen unless you take prompt steps to stop it.

 

5 New Year’s resolutions for credit union marketers – CUInsight http://bit.ly/2FlMcJV

 

By Robert McGarvey

For Credit Union 2.0

 

There was a time when traditional financial institutions owned the home mortgage business. No more.  Non-banks now are eating up this business. Their share is 45% of home mortgages, according to the Federal Reserve.

Just about all experts expect it to climb above 50% pronto.

In 2011, just three big banks – Chase, B of A, and Wells Fargo – lent a staggering 50% of mortgage money.  By 2016 their share had dropped to 21 percent, according to calculations by the Washington Post.  

By 2016, six of the top mortgage lenders were non banks, with Quicken Loans leading that pack with 4.9% of the mortgage market, more than Bank of America with 4.07%.

Also among the nation’s top 2016 mortgage lenders were PHH Mortgage, loanDepot, and Freedom Mortgage.

Credit unions so far are holding their own.  In 2015, they lent 8% of US mortgages, up from about half that in 2010.  

Before applauding, though, recognize that credit unions face big challenges when it comes to just maintaining the current market share as mortgages become more digital. More on this below.

So, why have non banks grabbed so much market share, so quickly? Mainly because money center banks have largely pulled out of the mortgage market and it’s the non-banks that have nimbly moved to fill the void.

Many money center banks pulled out for two reasons.  They were blindsided by the tidal wave of defaults on home mortgages in Great Recession.  Maybe five million homes were foreclosed on. Big banks lost a lot of money – and a lot of positive reputation – in the meltdown.  Many bankers accordingly resolved to get out of issuing home mortgages.

Enter the Consumer Financial Protection Bureau which sent more big banks running away.  In their minds, the CFPB was anti bank, hostile, capricious and just bad news for mortgage lenders – so why make home loans?

That set the stage for the rise of non banks which plainly saw there are many, many consumers who have gained more confidence shopping online, they also became more comfortable applying for credit cards, car loans, and, eventually, yes, home mortgages online.

Non banks also have higher tolerance for consumers with less than perfect credit than do big banks and many credit unions. Most non banks also have found ways to live with, or avoid, the CFPB.  And – crucially – they are pioneering and perfecting home mortgage processes that are essentially totally digital.

That means much lower loan origination costs.

It also means much, much faster processing, Quicken, for instance, has a “Rocket Mortgage” — where approval can be had in minutes. Not weeks. Not days. Minutes.

How many credit unions can match that – and know that this kind of speed is becoming crucial to holding onto a chunk of the mortgage market.

BMW and Mercedes can finance and roll a new car with $50,000 in paper in a matter of minutes and that car loses 20% of its value in the first year.

A house, in most markets, is very unlikely to depreciate.

Can credit unions match what the car companies and non banks can do in terms of speed?

A survey of banks and credit unions by Fairfax VA consulting firm CC Pace offered worrisome news. Some 80% of respondents said they were not even halfway there to being able to offer a fully digital mortgage experience. Said CC Pace: “Everyone recognized that this is where the future lies, but many owned up to the fact that they have barely begun the process.”

Keith Kemph, a CC Pace consultant, noted that credit unions have particular – and particularly troubling – challenges and may in fact now be falling behind even community banks in the battle to stay relevant against non banks.  Kemph said credit unions “have not been as agile in the marketplace,” especially as the marketplace changes.  

And he said “they are still plagued with technology challenges that limit their ability to grow without increasing their overall operating costs.”

Bottomline: there are big opportunities in the home mortgage market especially for credit unions.  But credit unions may also lose this market unless they adapt to the changes that are transforming it – especially the push into digital mortgages.

Finding your growth targets: How to market your credit union – CUInsight bit.ly/2o0y1W2 My reporting for #Culiance

 

By Robert McGarvey

 

For Credit Union 2.0

 

A new research report from Javelin on “Why Digital Banking Often Fails to Reduce Offline Volume” has an infographic that just popped my eyes. The subject: “Reasons Why Consumers Avoid Mobile Banking and Turn to the Branch or ATM for Check Deposits.”

Javelin offers answers but, first, why do you think your members do this?  Especially when, in theory, nothing could be more convenient than using a smartphone at your kitchen table to deposit a check that came in the day’s mail.

But lots and lots of consumers don’t use MRDC.  Why? The Javelin report explores that question.

I can give you a hint about why. A few months ago I opened a new account at Arizona Central Credit Union.  I deposited a check for around $25,000, drawn on Capital One (closing an account), and I deposited it at a branch a few blocks from my apartment.

Recently I opened the ACCU app to make a deposit and saw my MRDC limit is $500. I shut the app.

I opened a Chase app, where my limit is many times that, and deposited the check.

I’m not alone. 15% of the consumers who don’t use MRDC told Javelin they were afraid their check was too big.

They’re probably right.

Even Mitek, the principal MRDC cheerleader, in its 2017 Mobile Deposit Benchmark Report, moaned about this barrier to wider usage: “Deposit-limit policies at three quarters of FIs essentially represent penalties for customers who use mobile deposit, representing an unsustainable barrier to digital migration and growth….Many consumers state they have been prevented from using mobile deposit by the FI’s dollar limits, yet conversations with industry executives tell us that advanced risk management policies can enable customer-friendly deposit limits that also limit misuse.”

Yep, and that’s been true for years. But still most credit unions retain absurdly conservative deposit limits.

As for long holds – and I have personally seen holds as long as seven business days on a mobile deposit – there is no defensible reason for the practice, other than a desire to thwart MRDC usage.

Could be that’s exactly what some credit unions want to do. Processing fees are involved with deposits via vendors such as Mitek. Force the consumer to walk the check in and there’s no Mitek fee.

But maybe there also is no consumer, as the consumer does as I did and calls up a friendlier app such as Chase and makes the deposit.

Note, too, Javelin said 17% of consumers who did not use MRDC said their reason was that “I needed the funds quickly.”  Long holds chase away members.

Probably the biggest barrier to MRDC usage, per Mitek, is insecurity about the technology.  Reported Mitek: “Fear of fraud is the most powerful impediment to widespread mobile deposit
adoption, cited by 43% of non-users from large FIs. FIs must unequivocally assure customers that mobile deposit is every bit as secure as an ATM or bank branch. Immediate feedback and receipts upon deposit acceptance, and notification of funds availability will help resolve these fears. Walking customers step-by-step through their initial experience may also alleviate worry, as fear over making a mistake is holding back 34% of non-users at large FIs.”

According to Javelin, 14% of non users said: “I didn’t feel safe depositing a large check via the phone.”

A last, huge obstacle to MRDC usage – fortunately seen at ever fewer financial institutions – is charging fees for MRDC. That never made sense and certainly doesn’t make good business sense today.  Reported Mitek: “In 2017, for the first time, none of the major banks reviewed charged a fee for standard processing of mobile deposits. Still, worries over fees remains a block to nearly one out of three FI customers. Therefore, marketing the costfree nature of mobile deposit is an imperative to boost channel migration.”

Now, just maybe MRDC will never capture all deposits. Javelin research found that 27% of non users said they had to go to the branch for other reasons. 32% said they had to go to the ATM for other reasons (presumably withdrawing cash).  So they made their deposits through those channels.

But there remains huge growth potential for MRDC if credit unions raise deposit limits, erase unnecessary holds, stop charging fees, and go on the offensive to assure consumers that MRDC is as safe as making a deposit at an ATM.

That’s because, among those who do use MRDC, a consistent comment according to Mitek is praise for the “ease of use.”

But there’s even hope for capturing the non-users. Advised James Robert Lay, CEO of Digital Growth Institute who specifically addressed how to gain usage by those who so far are resisting MRDC: “What will increase mobile deposit use is credit union staff working with account holders that come into the branch to deposit checks. Hold account holder’s hands (and their phone) to guide them through the process. Heck, employees might find the account holder does not even have a credit union’s mobile app downloaded to their device.

It’s a bit of a paradox but to increase digital product use requires human interaction and intervention as change is hard, even though the mobile deposit is easy.”

So right. So smart.

 

 

By Robert McGarvey

 

For Credit Union 2.0

 

The good news for credit unions in this year’s MagnifyMoney survey of mobile banking apps: Many do very, very well, even against money center bank competition.

The bad news: Mobile banking apps, suggests MagnifyMoney, “have reached middle age.” That means, per MagnifyMoney, “overall, apps haven’t appreciably improved.” They have entered an era of complacency – and, listen up, that may well not be good enough.

A point not in the MagnifyMoney survey is this: non banks keep buffing their apps, benchmarking themselves not against financial institutions but best in class apps such as Uber, Airbnb, Amazon, and Venmo.  Before patting yourself on the back with congratulations about the quality of your mobile banking app, ask yourself how you stack up against the really good consumer apps that many people spend hours daily using.

Back to the MagnifyMoney data and the good news for credit unions: according to this survey, “in general, people still rate credit unions apps higher.  Probably unsurprising, as most CU users report a better experience in general. But traditional banks are catching up. 3 of the ten best overall apps are banks or direct banking apps. Last year all but 1 were CUs.”

Not all is cheery news in the survey. Chew on this: of the 10 worst mobile banking apps, per MagnifyMoney, four are credit unions. On the dishonor roll are VyStar Credit Union, Patelco, Northwest Federal Credit Union, and Tinker Federal Credit Union.

That means credit unions as a group can only get so giddy about their performance. Some appear to be in the same league as the worst banks.

But credit unions do score high in the round up of most improved apps.  Among the top 10 are Teachers Federal Credit Union, CEFCU, America First Credit Union, Schoolsfirst, Alliant, and DFCU.  That’s six of ten.

Among the top 10 most deteriorated apps are three credit unions: Desert Schools, Suncoast, and SECU of Maryland.

As for the 10 best overall, credit unions on this honor roll include Eastman Credit Union, ESL, Redstone, SEFCU, Wright Patt, and Delta Community, Visions.

The others in the top 10 are Discover, BBVA Compass, and Capital One.

How reliable are these ratings? Probably not very but at least this is a start. The issue is that the MagnifyMoney ratings start by sorting out the 50 biggest banks and 50 biggest credit unions, then looking at user ratings for the apps in the two big apps stores (iOS and Android).  As far as that goes, it makes sense but let me ask: how many apps have you reviewed in the apps stores?

Not many right.

I scratch my head in trying to remember the last time I reviewed an app in an app store. And whatever it was it was because the app was just terrible.  Or I was angry for other reasons with the provider.

So I’m unconvinced that app store ratings are the end-all when it comes to deciding the best and worst mobile banking apps.

Nonetheless, my advice is to look hard at the top rated credit union apps – and by all means scroll through the actual user comments in the app stores.

Do likewise for the worst rated,

Now ask yourself the really hard question: what are we doing right now to keep our app fresh and relevant for a new generation of credit union members?

What can we do?

How can we press our vendors to really upgrade the app to help us better serve our membership?

What do our members really want that they are not presently getting from the mobile app? Ask them if you don’t already know.

There’s no rest for the weary. This just came in from Bank of America in an email blast to media about upgrades to its mobile banking app: “Express checking account application —

With nearly one-quarter of all accounts opened digitally, Bank of America has introduced a new streamlined process for customers to apply for a checking account securely within the app. The enhanced, single-page design populates customer information into the application, simplifying the process.”

Can you match that?

What can you do to stay ready for the next wave of upgrades?

The process just doesn’t end and, at many credit unions, there’s resistance to the idea that continuous improvement is a must with mobile apps.

But give it up. Resistance is futile. With mobile banking, it has become improve or perish.

 

21st Century Member Education – The Credit Union Exchange http://bit.ly/2BujvYu My reporting

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.