You see the signs; the caution lights are flashing. Members just aren’t flowing in through SEG relationships anymore. Without a serious change, the credit union’s membership will decline over the next few years, and loans and deposits will dry up. But this is not a time to stand still like a deer in the headlights.
As credit union consolidation escalates, management teams and Boards must look inward and decide, “Do we want to Grow or Die?” At the end of the day, perhaps a strategic “Death” makes sense for your credit union. Merging with a bigger, stronger institution means instant access to more technology, robust financial products and services, and potentially, additional branch locations. But for those credit unions undeterred by a challenge, to “Grow” means a complete transformation of everything - starting with a name.
What are the warning signs that a name may be holding your credit union back?
New members are the lifeblood of a credit union. As a membership ages out of prime borrowing years, you must have a flow of members moving into those years in order to keep the credit union alive. If you’re doing everything you can from a marketing standpoint, but the credit union is still losing members each year, it’s time to look for a bigger solution. Again, you have to choose: Grow or Die.
If your name only refers to one company or group, but your credit union actually allows the community to join, your name is disenfranchising the larger market. Credit unions inherently have an issue with the general public not understanding they can join. A name that sounds exclusionary is one more roadblock to gaining new business.
The days of exclusive company relationships are pretty much over. Nearly all credit unions allow new members from outside the original Field of Membership (FOM) to join. But while it’s a necessary strategy to survive, it also dilutes the tie that binds your credit union to the original group. The moment access to employees is limited or eliminated (and it’s coming, if it hasn’t already), it’s time to rethink your overall growth strategy. How will you now compete in the larger market against bigger players?
Speaking of accepting members from outside your original FOM, most credit unions have specified a route to membership for pretty much anyone who walks through the door. Once you notice the membership tide turning toward the general public vs. your original core membership group, it’s a warning sign. Track this data and set a point (which may be now) as a threshold to indicate when your name is irrelevant to the actual members you serve (i.e. 35% or less of your total membership is derived from the SEG in your name).
Four words is a mouthful. However, the ONLY time it’s OK to have a long name is if it directly relates to the single SEG the credit union serves. Otherwise, the name is causing another roadblock to the market you’re trying to reach. If the credit union’s name is long and hard to remember, do you really think a random person will take time to learn it?
If the name of your credit union is literally the same as another company or organization with the words “Credit Union” tacked on the end, then you’re inevitably going to have to include “Credit Union” in all your communications in order to avoid brand confusion. In a perfect world, the name could stand-alone as a unique brand - even if it has a strong tie-back to primary SEG.
If your credit union has even one of the issues listed above, it’s time to start thinking long and hard about long-term survival. Watch the membership trends closely. Set benchmarks and the thresholds for taking action. Will that action take you to growth or death?
